The Economics Of Franchising

This book describes in much detail both how and why franchising works. It also analyses the economic tensions that contribute to conflict in the franchisor-franchisee relationship. The treatment includes a great deal of empirical evidence on franchising, its importance in various segments of the economy, the terms of franchise contracts, and what we know about how all these have evolved over time, especially in the US market. A good many myths are dispelled in the process. The economic analysis of the franchisor-franchisee relationship begins with the observation that for franchisors, franchising is a contractual alternative to vertical integration. Subsequently, the tensions that arise between a franchisor and its franchisees, who in fact are owners of independent businesses, are examined in turn. In particular the authors discuss issues related to product quality control, tying arrangements, pricing, location and territories, advertising, and termination and renewals.

Roger D. Blair is Huber Hurst Professor and Chair in the Department of Economics at the University of Florida. The books he has coauthored include Antitrust Economics, Law and Economics of Vertical Integration and Control, Monopsony: Antitrust Law and Economics, and two titles from Cambridge University Press: Intellectual Property: Economics and Legal Dimensions of Rights and Remedies with Thomas F. Cotter and Monopsony in Law and Economics with Jeffrey L. Harrison. Francine Lafontaine is Professor of Business Economics and Public Policy at the Stephen M. Ross School of Business at the University of Michigan. She is widely recognized as a world expert on the subject of franchising and, as such, has acted as consultant to various companies and the Federal Trade Commission.