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The Use of Up-front Fees, Royalties and Franchisor Sales to Franchisees in Business Format Franchising

  • Conference paper
Economics and Management of Franchising Networks

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

This article provides evidence on the determinants of compensation provisions included in franchise contracts. The results support for both the optimal allocation of risk and double-sided moral hazard explanations for franchise contracts. The results also reveal that the value of both the initial and ongoing services provided by franchisors to franchisees strongly affects the compensation arrangements, which implies that a capital goal of these arrangements is to recover the costs of the services offered by franchisors.

I thank numerous workshop participants for their comments and suggestions. The usual disclaimers apply. The study received financial support from the MCYT, a research agency of the Spanish Government, through grants SEC2001-1756 and SEC2002-04471-C02-02.

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Author information

Authors and Affiliations

  1. Department of Economics and Business, Universidad de Salamanca, Campus Miguel de Unamuno, s./n., Salamanca, Spain, E-37005

    Luis Vázquez

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  1. Luis Vázquez
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Editor information

Editors and Affiliations

  1. Center for Business Studies, University of Vienna, Brünner Straße 72, 1210, Vienna, Austria

    Josef Windsperger

  2. Center for Research on Economics and Management, University of Rennes 1, 11 rue Jean Macé, CS 70803, 35708, Rennes Cedex, France

    Gérard Cliquet

  3. Erasmus University Rotterdam, Rotterdam School of Management, Office F3-51 Burg. Oudlaan 50, 3000 DR, Rotterdam, The Netherlands

    George Hendrikse

  4. School of Business & Economics, University of Jyväskylä, P.O. Box 35 (MaE), 40351, Jyväskylä, Finland

    Mika Tuunanen (Research Fellow) (Research Fellow)

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© 2004 Springer-Verlag Berlin Heidelberg

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Vázquez, L. (2004). The Use of Up-front Fees, Royalties and Franchisor Sales to Franchisees in Business Format Franchising. In: Windsperger, J., Cliquet, G., Hendrikse, G., Tuunanen, M. (eds) Economics and Management of Franchising Networks. Contributions to Management Science. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2662-3_8

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  • DOI: https://doi.org/10.1007/978-3-7908-2662-3_8

  • Publisher Name: Physica, Heidelberg

  • Print ISBN: 978-3-7908-0202-3

  • Online ISBN: 978-3-7908-2662-3

  • eBook Packages: Springer Book Archive

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