THE EVOLUTION OF OWNERSHIP PATTERNS IN FRANCHISE SYSTEMS

Two sets of competing theories have been proposed to explain the exist ence of franchising; one set based on resource constraints and another on incentives issues. As individual franchise systems mature, these t heories predict different patterns in the evolution of the mix of fran chised and company-owned outlets. In this paper, we report the results of an empirical study of franchise system evolution. The findings gen erally support the incentives-based rationale for franchising, but the y also support a modified resource constraint theory, one which recogn izes the synergistic effects of dual distribution.