<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper investigates the basic risk and incentives relationship in franchising companies. The results of past research reflect volatile influence of risk and incentives. An in-depth analysis of this relationship was conducted using case study approach, including 12 international franchise firms of two types. Our study included retail and service franchising. Findings from this research confirm basic agency theory predictions. The risk-incentives relationship is negatively correlated in retail franchise companies, due to lower royalties in the sector. Service franchise companies do not follow the same concept, due to their adaptability of franchise system to local markets. We believe service franchise systems might be responsible for volatility. However, both types of companies nurture and develop strategies based on experience and intuition. Findings of the research offer important insights in understanding the nature of franchisor’s risk perception, as the basic underlying mechanism to the risk and incentives relationship.</p></abstract>

This paper investigates the basic risk and incentives relationship in franchising companies. The results of past research reflect volatile influence of risk and incentives. An in-depth analysis of this relationship was conducted using case study approach, including 12 international franchise firms of two types. Our study included retail and service franchising. Findings from this research confirm basic agency theory predictions. The risk-incentives relationship is negatively correlated in retail franchise companies, due to lower royalties in the sector. Service franchise companies do not follow the same concept, due to their adaptability of franchise system to local markets. We believe service franchise systems might be responsible for volatility. However, both types of companies nurture and develop strategies based on experience and intuition. Findings of the research offer important insights in understanding the nature of franchisor’s risk perception, as the basic underlying mechanism to the risk and incentives relationship.

Organization in New Business Environment: a Franchisor’s View

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Organization in New Business Environment: a Franchisor\u2019s View"}

This paper investigates the basic risk and incentives relationship in franchising companies. The results of past research reflect volatile influence of risk...

Organization in New Business Environment: a Franchisor’s View

Publicado en línea: 06 abr 2019

Páginas: 83 - 94

DOI: https://doi.org/10.2478/zireb-2019-0006

Palabras clave
franchising, risk, royalties, incentives

© 2019 Matej Lahovnik et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Organization in New Business Environment: a Franchisor’s View

Publicado en línea: 06 abr 2019

Páginas: 83 - 94

DOI: https://doi.org/10.2478/zireb-2019-0006

Palabras clavefranchising, risk, royalties, incentives

© 2019 Matej Lahovnik et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Palabras clave
franchising, risk, royalties, incentives