Why include royalties in distribution contracts? Evidence from France

Fadairo, Muriel

doi:10.1108/ijrdm-05-2013-0097

Cited by 6 publications

(4 citation statements)

References 22 publications

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“…Third, our paper draws on the literature examining the status and the autonomy of franchisees Dant and Gundlach, 1999;Pizanti and Lerner, 2003;Yongsun and Choi, 2007) by highlighting that, under certain conditions, the borders between franchisees and employees are sometimes fuzzy. Fourth, we extend the research on franchise contracts (Buchan, 2013;Fadairo, 2013;Cochet and Garg, 2008;Lapiedra et al, 2012;Solis-Rodriguez and Gonzalez-Diaz, 2012) by focusing on their potential reclassification as branch manager contracts or as employment contracts. Fifth, our approach is based on a double perspective stemming from business and law disciplines, thus extending recentre search which mixes both approaches (Barasnevicius Quagliato, 2008;Perrigot et al, 2013a, b;Williamson and Kleiner, 2003).…”

Section: Contributions To Researchmentioning

confidence: 99%

Network uniformity and risk of reclassification of the franchise contract

Perrigot

Basset

Briand

et al. 2014

International Journal of Retail &Amp; Distribution Management

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International audiencePurpose - Network uniformity is crucial in franchising, but an excessive number of imposed constraints to maintain this uniformity jeopardizes a franchisee's independence and too much independence given to franchisees jeopardizes franchise network uniformity. So, how to find an equilibrium and avoid the reclassification of a franchise contract as a branch manager contract or as an employment contract with all its related consequences? The paper aims to discuss these issues. Design/methodology/approach - The research is based on a multiple cases approach. The four complementary cases deal with Yves Rocher (cosmetics and body/face care), Bata (shoes), Fiventis (real estate, life insurance and tax-sheltered savings products), and France Acheminement (express transportation), all analyzed in the French context. Findings - A franchise contract can be reclassified as a branch manager contract if there is economic dependence or as an employment contract if there is a legal subordination relationship. These reclassifications have not only financial consequences, but also an impact in terms of image. Research limitations/implications - The research is based on secondary data. Collecting data along with interviews of franchisors and franchisees would be beneficial. Practical implications - The research is of specific interest to franchisors, franchise experts and lawyers in terms of minimizing the possible risks of facing such types of reclassification of franchise contracts. It can also inform franchisees who may be running their businesses under such conditions. Originality/value - This paper uses a business and law approach in order to analyze the paradox of network uniformity and franchisee autonomy and raises the question of "how to find equilibrium?

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Section: Contributions To Researchmentioning

confidence: 99%

Network uniformity and risk of reclassification of the franchise contract

Perrigot

Basset

Briand

et al. 2014

International Journal of Retail &Amp; Distribution Management

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“…Franchisors justify charging royalties to franchisees on the basis of their commitment to transferring concepts and know-how and to promoting the franchise network (Fadairo, 2013). As stated by signaling theory, potential franchisees are more disposed to open an outlet with a franchise that demands higher royalties.…”

Section: Franchise Royaltiesmentioning

confidence: 99%

Franchise fairs: A relevant signal in franchise choice in social activity

Mastrangelo

Monge

Huerta-Zavala

2016

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Potential franchisees encounter difficulties in gaining knowledge about a franchise before embarking on their first start-up venture. For this reason, it is necessary to research which information signals help potential franchisees choose the franchise chains with which they wish to enter into business. Working within the framework of signaling theory, this study's aim is to analyze the relationship between franchise choice and brand, price and participation in franchise fairs. The dynamic signaling model deployed to achieve the study´s aim draws on panel data methodology. This methodology allows us to analyze franchise chains over the period in which their parent franchises were using signaling to reveal information about their quality to potential franchisees. The results show that franchise fairs and up-front entry fees influence franchisee´s decisions. Therefore, it is concluded that potential franchisees prefer to garner information directly from franchise fairs, as opposed to heeding the other signals under study, and that when macroeconomic variables are exerting a strong influence on potential franchisees, up-front entry fees also constitute a signal that they consider. Finally, the managerial implications of the study are that franchise chains seeking franchisees should participate in franchise fairs to ensure that they are among the chosen franchises. Additionally, a franchisor should appropriately manage up-front entry fees as a signal, especially during periods of economic turmoil and recession.

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“…Empirical evidence in marketing literature also suggests that fairness in exchange relationships with channel partners plays a significant role in relationship development and maintenance (Kumar et al , 1995; Lund et al , 2013; Samaha et al , 2011). Thus, there is a need to explore issues of fairness in managing and developing relationship with franchisees (Fadairo, 2013; Perrigot et al , 2015). There is also a need to explore fairness and its impact on relational outcomes in a franchise relationship (Altinay et al , 2014; Croonen, 2010; Grace et al , 2013; Weaven et al , 2014).…”

Section: Introductionmentioning

confidence: 99%

Measuring fairness in franchisor-franchisee relationship: a confirmatory approach

Shaikh

Biswas

Yadav

et al. 2017

IJRDM

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Purpose The purpose of this paper is to develop, test and validate a measure of fairness in the context of franchisor-franchisee relationship and test for the dimensionality of fairness. Design/methodology/approach The authors surveyed 300 franchisees of a large-scale franchisor in India. The authors employ confirmatory factor analysis (CFA) to analyse the data. Findings The authors tested four models of the fairness construct through CFA using structural equation modelling. The three-factor corrected model of the fairness construct exhibits comparatively better goodness of fit indices as compared to the other correlated models of the fairness construct. It clears the threshold level of validity and reliability test. The findings of the study suggest that the factor structure of fairness is three-factor correlated model with aspects of procedural fairness and informational fairness getting subsumed into one construct. Research limitations/implications Factor structure of fairness construct differs with earlier empirical research findings with both interpersonal fairness and informational fairness subsuming into each other to form one construct. Practical implications This measure can be utilized by franchisee managers to track perceptions of fairness among franchisees to manage the franchise relationship in a better way. Franchisees expect information sharing from the franchisor and not the representative of the franchisor. Originality/value To the best of the authors’ knowledge, this study is the first to develop a valid and reliable measure of fairness construct in the context of franchise relationship. This study also identifies factor structure of fairness construct.

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Why include royalties in distribution contracts? Evidence from France

Cited by 6 publications

References 22 publications

Network uniformity and risk of reclassification of the franchise contract

Network uniformity and risk of reclassification of the franchise contract

Franchise fairs: A relevant signal in franchise choice in social activity

Measuring fairness in franchisor-franchisee relationship: a confirmatory approach

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