Antitrust Implications of Franchise Agreements

  • Kai Hüschelrath
Part of the Contributions to Management Science book series (MANAGEMENT SC.)


It seems plausible that franchise agreements can be an efficient way to solve a firm’s distribution problem with certain products, services or concepts in certain environments. Notwithstanding the fact that the motivation to create franchise agreements are mainly efficiency driven and simultaneously welfare enhancing, it is clear that such strategies normally influence competition in upstream, downstream and/or ‘adjacent’ markets. Therefore, as far as some degree of market power is involved, there is the potential of an abusive use of franchise agreements to further increase a dominant firm’s markups. Such behavior normally harms competition and social welfare. Against this background, it seems important to discuss the essential antitrust implications of franchise agreements. First, a brief overview of the evolution of antitrust regulations concerning franchise agreements in the United States of America and the European Union is given. Afterwards it is argued first, why and how firms choose certain franchise agreements including certain restrictions (the so-called ‘vertical restraints’) to distribute their products. Second, it is shown through examples, why and under which circumstances such agreements might get into difficulties with antitrust regulations. Third, some major challenges for antitrust policy are assessed; these simultaneously highlight avenues for further research.


Market Power Resale Price Maintenance Antitrust Authority Antitrust Policy Vertical Restraint 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2004

Authors and Affiliations

  • Kai Hüschelrath
    • 1
  1. 1.WHU Graduate School of ManagementInstitute for Industrial OrganizationVallendarGermany

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