Motivations for franchisors to use flat continuing franchise fees

Article


Frazer, Lorelle. 1998. "Motivations for franchisors to use flat continuing franchise fees." Journal of Consumer Marketing. 15 (6), pp. 587 - 597. https://doi.org/10.1108/07363769810241454
Article Title

Motivations for franchisors to use flat continuing franchise fees

ERA Journal ID19782
Article CategoryArticle
Authors
AuthorFrazer, Lorelle
Journal TitleJournal of Consumer Marketing
Journal Citation15 (6), pp. 587 - 597
Number of Pages11
Year1998
Place of PublicationBingley, W Yorks. United Kingdom
ISSN0736-3761
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.

KeywordsAustralia; fees; franchising; monitoring
ANZSRC Field of Research 2020350704. 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 AffiliationsFaculty of Business
Institution of OriginUniversity of Southern Queensland
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