Stable Plural Forms in Franchise Systems: An Examination of the Evolution of Ownership Redirection Research

Abstract

The ownership redirection thesis within franchising governance research stream, originally proposed by Oxenfeldt and Kelly (1968), argued that successful, resource-flush franchise systems will ultimately tend toward becoming wholly company-owned systems due to opportunistic reacquisition activity by the powerful franchisors. For nearly 40 years this dark prophecy has precipitated an intense research dialog between the supporters and detractors of this thesis. More recently, the plural forms thesis, nested in seminal work by Harrigan (1984) has been advanced, which argues that since each type of ownership structure provides its own unique governance benefits, franchise systems are likely to continue to simultaneously invest in both, company-owned and franchised outlets. This paper attempts to provide a detailed review of nearly four decades of related literature and its transition from the ownership redirection thesis to the contemporary stable plural forms thesis.