Motivations for franchisors to use flat continuing franchise fees

Frazer, Lorelle (1998) Motivations for franchisors to use flat continuing franchise fees. Journal of Consumer Marketing, 15 (6). 587 - 597. ISSN 0736-3761

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.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Published version deposited in accordance with the copyright policy of the publisher.
Faculty / Department / School: Historic - Faculty of Business - No Department
Date Deposited: 30 Nov 2007 11:47
Last Modified: 27 Aug 2013 06:21
Uncontrolled Keywords: Australia; fees; franchising; monitoring
Fields of Research : 15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150304 Entrepreneurship
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150314 Small Business Management
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150307 Innovation and Technology Management
Socio-Economic Objective: B Economic Development > 91 Economic Framework > 9104 Management and Productivity > 910402 Management
Identification Number or DOI: 10.1108/07363769810241454
URI: http://eprints.usq.edu.au/id/eprint/13711

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