Franchise Model Research Articles

Passenger rail privatization in Great Britain and its implications, especially for urban areas

Rail privatization and regulation in Great Britain are assessed in the context of ‘New Right’ political ideas. The initial effects of franchising passenger rail services are analysed with particular reference to urban areas. Factors examined include changes in Government subsidy, service levels, revenue generation, operating efficiencies and ownership. Three yardsticks, i.e. subsidy reduction, competition and consumer benefit, show limited but generally positive initial effects. Finally a very successful alternative model of rail franchising —Greater Manchester's Metrolink — is briefly examined.

The Operation of Transnational Degree and Diploma Programs

The development of an export oriented international student program in Australia in the mid 1980 provided the impetus for Australian higher education institutions to take their programs offshore. Now a decade later, 34 of Australia s 38 universities are offering 493 programs offshore to an estimated 20,000 students, predominately under taking Australian qualifications in their own country (AVCC, 1997). This paper discusses the various models that Australian higher education institutions have used to develop these transnational programs (including twinning, moderation, distance mode, joint awards, internet delivery, franchising and campus models), and explores a number of issues in their delivery (including why programs are offered offshore, quality assurance and the rules and regulations of the home country).

Transaction-efficiency analysis of franchising arrangements through chance cross-constrained game theory

In the literature of franchising arrangements, the focus of most research is on a relationship in which a franchisor is the leader and franchisees are followers. This relationship implies no control by franchisees over the franchisor. In this paper, we intend to explore the role of efficiency transactions between a franchisor and a franchisee by means of chance cross-constrained game theory. The chance constraint is formed as follows. The probability that the franchisee's profit from the franchise is less than the maximum profit to him from other opportunities should be less than his loss tolerance. Based on this chance constraint, we formulate two franchise models, i.e. the chance cross-constrained two stage game model and the chance cross-constrained cooperative game model. In the two stage game model, the franchisor is assumed to be a leader who first specifies the fixed lump sum fees and royalties. The franchisee, as a follower, then decides on the retail price. In the cooperative game model, the channel profit is maximized for every Pareto payment scheme, but not for any other schemes. The choice of the best Pareto efficient payment scheme is discussed via alternative bargaining models taking channel members' preferences and risk attitudes into account.

Divisionalization and franchising incentives with integral competing units

Existing game-theoretic models of divisionalization and franchising treat each firm's number of competing units as a continuous variable. We account for the integer constraint on divisions, and show that the continuous case reasonably approximates the equilibria of the discrete game.

The franchise model

The franchise model

The franchise model: A new way of funding and a tool for change?

The franchise model: A new way of funding and a tool for change?

Local Autonomy in a Franchise Age: Structural Change in National Voluntary Associations

Many national voluntary associations seem to be evolving toward franchise-like systems in which national headquarters sanctions and controls the operations of local affiliates. This paper identifies feder ated movements as the type of association whose participants are especially concerned about the evolution toward the franchise model. The environmental factors and organizational dynamics that pro mote central direction and standardization are identified, and the issues facing these associations in attempting to balance the benefits of central initiative and local autonomy are framed.

Franchising: Monopoly by Contract

This paper employs a simple franchising model to examine two common franchising practices and how they enable the franchisor to raise price, restrict output, and capture consumer's surplus to increase monopoly profit with a concommittant deadweight loss to society. For the purpose of this paper a franchise contract is defined as one in which the owner, or franchisor, of a product, service, or trademark has authorized other firms to produce and distribute a product under his tradename, subject to a number of conditions, such as: (1) the franchisee agrees to pay a franchise fee; (2) the franchisee agrees to certain business hours, credit, employee training, advertising as stipulated by the franchisor; (3) he agrees to adhere to certain quality standards for the product; (4) he agrees to purchase all or some of the inputs he needs from the franchisor; (5) the franchisee agrees to pay a royalty, usually a percentage of sales, to the franchisor [4; 5; 6; 9]. The focus of this paper is on the last two practices; namely full and partial-line forcing and revenue sharing. The economic theory of full-line forcing and the related practice of tie-in sales has been extensively treated in the literature, more recently by Burstein [2], [3] and Blair-Kaserman [1]. Two fundamental conclusions are reached by these authors. First, a requirement that the buyer purchase a full-line of inputs from the seller of one of these inputs, where the seller is a monopolist, permits the monopolist to extract all of the profit potential of his monopoly. Second, the profit potential of his monopoly is precisely equivalent to that which he could achieve were he to vertically integrate. In Section II of this paper these conclusions are reiterated in the context of franchise operations and their effects on the market for the franchised good examined. It is shown just how full-line forcing of the inputs used by the franchisee raises the price of the franchised good, restricts quantity, transfers consumers' surplus to the franchisor's profit, and involves a deadweight loss to society. In Section III revenue sharing is examined in terms of its potential to implement the franchisor's monopoly powers. In certain cases revenue sharing and full-line forcing are equivalent. Therefore, to the extent that full-line forcing has usually been ruled to be illegal by the courts, charging a royalty on franchisee's sales provides an alternative means of ex-