Conceptualizing Industry Variations in the Survival of Franchising Systems

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ABSTRACT

Young firms grow faster through franchising than via the traditional organization. However, research shows that as much as three fourths of new franchise systems die within ten years of establishment. Although recent franchising system survival research has recognized industry as a potentially important variable, a theory for its influence has not been available. This paper develops propositions linking industry variations to the survival of franchising systems. Specifically, it suggests that franchising system survival is negatively related to the degree of decentralization of critical decision tasks, brand-space proliferation, and knowledge intensity, but positively …