Economics of Franchises
Franchising, which is common in many advanced economies, is a contractual form of vertical integration. This article examines the economic rationale for choosing franchising over vertical integration. It also examines the influence of the franchisor’s ability to maximize its own profit.
KeywordsDistribution systems Franchisee Franchising Franchisor Royalties Vertical integration
JEL ClassificationsL14 L24 M55
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