Franchising in Spain: Agency and capital scarcity perspectives

Abstract

Franchising is currently perhaps the most interesting formula, financially speaking, for generating self-employment, as the capital risk on the investment needed to set up a business is kept to a minimum. Since the aim of this research is to combine the agency and scarcity theories, we conducted a study throughout the total number of observations existing in Spain to determine the importance of the sector. Factors under examination included the number of distribution units that are franchised units as a proportion of the total number of units, the number of years since the firm was set up, yearly growth rate, geographical scope of operation, average start-up costs and average royalty rates.