Motivations for franchisors to use flat continuing franchise fees
Article
Article Title | Motivations for franchisors to use flat continuing franchise fees |
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ERA Journal ID | 19782 |
Article Category | Article |
Authors | |
Author | Frazer, Lorelle |
Journal Title | Journal of Consumer Marketing |
Journal Citation | 15 (6), pp. 587 - 597 |
Number of Pages | 11 |
Year | 1998 |
Place of Publication | Bingley, W Yorks. United Kingdom |
ISSN | 0736-3761 |
2052-1200 | |
Digital Object Identifier (DOI) | https://doi.org/10.1108/07363769810241454 |
Abstract | This paper compares the use of flat continuing franchise fees or royalties with percentage-based continuing franchise fees in Australian franchises. The population of Australian franchisors is surveyed to investigate why some franchisors choose a flat continuing fee structure. It is found that franchises using flat continuing fees offer their franchisees similar types of ongoing support throughout the life of the franchise agreement, but provide less ongoing support than franchises characterised by percentage fees. The flat fee franchises also conduct less monitoring of their franchisees, grow at a faster rate, and are less costly to enter than percentage fee franchises. The results suggest that whereas percentage fee franchisors can improve their ongoing income by helping franchisees to increase their sales, the flat fee franchisors are motivated to improve their ongoing income by increasing the size of their systems. |
Keywords | Australia; fees; franchising; monitoring |
ANZSRC Field of Research 2020 | 350704. Entrepreneurship |
350716. Small business organisation and management | |
359999. Other commerce, management, tourism and services not elsewhere classified | |
Public Notes | File reproduced in accordance with the copyright policy of the publisher/author. |
Byline Affiliations | Faculty of Business |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q05x3/motivations-for-franchisors-to-use-flat-continuing-franchise-fees
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