International franchise distribution: Theory and empirical evidence
Zietlow, Dixie Sue
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https://hdl.handle.net/2142/20819
Description
Title
International franchise distribution: Theory and empirical evidence
Author(s)
Zietlow, Dixie Sue
Issue Date
1995
Doctoral Committee Chair(s)
Hennart, Jean-Francois
Department of Study
Business Administration
Discipline
Business Administration
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Marketing
Economics, Commerce-Business
Language
eng
Abstract
The objective of this study is to determine how US franchisors in the food service, hotels/motels, and business services industries choose between owning the wholesaler or contracting with an independent wholesaler to distribute their franchise system in host countries. US franchisors own the wholesaler when they make an investment in a wholly-owned subsidiary or a joint venture. Alternatively, US franchisors can sign contracts with independent wholesalers called sub-franchisors or area developers.
This study, based on transaction cost theory, is the first to empirically examine the ownership form of the wholesaler in international franchise distribution. Through primary and secondary data, I collected a sample of 376 wholesalers representing 42 franchisors in over 85 countries. All franchise systems in the data set originated in the United States. The results of this thesis reveal that US franchisors with more international experience, greater concern for quality control, and larger average investment requirements are more inclined to own their wholesaler. The greater the cultural distance between the United States and the host country and the smaller the host country market for the franchise service, the more likely the US franchisor will contract with an independent wholesaler. Host country restrictions on foreign direct investment and trademark protection did not significantly affect the US franchisor's decision to own or contract with the wholesaler in the host country.
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