Explaining the distribution of franchised and company-owned outlets in franchise systems

Agency theory research on franchising, to date, has posited linear effects of franchisor characteristics on the distribution of company-owned and fran chised outlets in franchise systems. This study argues that many of these c haracteristics actually have curvilinear effects. Using pooled cross-sectio nal time series regression analysis on U.S. franchisors over the 1991-1994 period this study tests the curvilinear effects of geographic dispersion, r oyalty rates, system growth rate, system size, franchise fee and initial in vestment on the proportion of outlets franchised.