فرانچایزینگ و عملکرد مالی شرکت در میان رستوران های ایالات متحده

Franchising has attracted the attention of retailing and entrepreneurship scholars in the past three decades, but evidence pertaining to how franchising affects financial performance is mixed and inconclusive. Thus, the question remains as to whether franchising firms exhibit better financial performance than non-franchising firms in the same industry. In order to find an answer to this question, our study compares the risk-adjusted financial performance of franchising versus non-franchising restaurant firms over the 1995–2008 interval, using five different performance measures: the Sharpe Ratio, the Treynor Ratio, the Jensen Index, the Sortino Ratio, and the Upside Potential Ratio. For each measure, the results revealed that franchising restaurant firms outperformed their non-franchising counterparts. Thus, we provide very robust evidence that franchising is superior on average in the restaurant industry, which can help explain the increasing popularity of franchising as a business form.

The unprecedented growth of franchising businesses in recent decades sparked considerable research interest (cf. Bürkle and Posselt, 2008, Combs et al., 2004a, Lafontaine, 1992, Norton, 1988, Oxenfeldt and Kelly, 1968, Rubin, 1978 and Windsperger and Dant, 2006). Early franchising research sought to understand why an increasing number of firms adopt franchising, along with the characteristics of franchising firms (e.g., Caves and Murphy, 1976 and Norton, 1988). For example, a number of researchers (e.g., Carney and Gedajlovic, 1991 and Castrogiovanni et al., 2006) have examined resource scarcity and agency arguments as to why firms franchise. Others have considered alternative reasons for franchising such as innovation (Bradach 1997) and risk spreading (Lafontaine and Bhattacharyya 1995). Surprisingly little research has dealt with the ultimate effects of franchising on firm financial performance, however. Two major challenges have hindered research in this area (Combs et al., 2004a and Combs et al., 2004b). First, a large majority of franchising firms are privately held companies, which severely limits the availability of performance data. Second, some researchers maintain that franchising must be performance enhancing or else it would not be so prevalent. Still, franchising and non-franchising firms often coexist within the same industry, and so it is not clear whether either form of business is superior to the other. We set out to address this deficiency. Our central research question was, “Does franchising result in better risk-adjusted financial performance?” More precisely, our purpose was to investigate whether franchising restaurant firms outperformed non-franchising restaurant firms during the period of 1995–2008. To achieve this purpose, we examined a sample of publicly listed restaurant firms from a capital markets perspective using five different risk-adjusted financial performance measures. Prior studies have not considered both risk and return while also controlling for industry. Some (e.g., Aliouche and Schlentrich, 2009 and Hsu and Jang, 2009) controlled for industry but did not account for risk. Others (e.g., Spinelli et al., 2003 and Aliouche and Schlentrich, 2007) adjusted for risk but did not account for difference across industries. We thus contribute to the franchising literature by considering risk and return simultaneously, using individual firm level data (cf. Sorenson and Sorensen 2001). In addition, we contribute by examining both traditional risk-adjusted financial performance (the Sharpe Ratio, the Treynor Ratio, and the Jensen Index) and alternative conceptualizations based on semi-variance (the Sortino Ratio and the Upside Potential Ratio). As shown below, our findings were consistent in all cases, which gives us considerable confidence in our conclusions.

In recent decades, franchising has gained considerable popularity both as a form of business for practitioners and as an area of study for academics. Here, we obtained evidence that publicly held restaurant firms during our study interval on average performed better if they franchised than if they did not. For practitioners starting or developing chain organizations, these results emphasize that franchising should be evaluated to determine if it is right for them. For franchising scholars, this finding adds to evidence that their area of interest is important. For researchers seeking to explain firm performance among restaurant, retail, or service businesses, our study suggests that franchising should be considered. Executive summary Franchising is an important and growing form of business in the today's economy. Though it has been around for centuries, franchising has truly blossomed in recent decades. The combined impact of business format franchises (e.g., restaurant chains) and product franchises (e.g., soft drink bottlers or auto dealers) is more than $1 trillion annually in U.S. retail sales, or roughly 40% of U.S. retail trade (cf. Castrogiovanni, Combs, and Justis 2006). Despite its growing popularity, surprisingly little research has dealt with the ultimate effects of franchising on firm financial performance. Two major challenges have hindered research in this area (Combs et al., 2004a and Combs et al., 2004b). First, a large majority of franchising firms are privately held, which severely limits the availability of performance data. Second, some researchers ignore the question by simply maintaining that franchising must be performance enhancing or else it would not be so prevalent. Still, franchising and non-franchising firms often coexist within the same industry, and so it is not clear whether either form of business is superior to the other. Considerable research has assessed consequences of franchising that could lead to better performance among franchising firms (cf. Aliouche and Schlentrich 2007). Mechanisms through which franchising can influence financial performance have been explained by drawing on resource scarcity theory (Oxenfeldt and Kelly 1968), agency theory (Lafontaine 1992), risk sharing theory (Martin 1988), and others (e.g., Bradach 1997). These consequences of franchising are both positive and negative. On the positive side, franchising may be associated with greater (a) resource access, (b) motivation, (c) innovation, and (b) risk reduction. On the negative side, franchising may lead to (a) foregone profits, (b) free riding, and (c) diminished control. Research, has been inconclusive as to whether such consequences of franchising ultimately result in superior financial performance over non-franchising firms. We set out to address this deficiency. Our central research question was, “Does franchising result in better risk-adjusted financial performance?” More precisely, our purpose was to investigate whether franchising restaurant firms outperformed non-franchising restaurant firms during the period of 1995–2008. To achieve this purpose, we examined a sample of publicly listed restaurant firms from a capital markets perspective using five different risk-adjusted financial performance measures – (a) the Sharpe Ratio, (b) the Treynor Index, (c) the Jensen Index, (d) the Sortino Ratio, and (e) the Upside Potential Ratio. Together, these measures consider financial performance from a variety of different perspectives, grounded in different assumptions. The Sharpe ratio provides an indication of how well a firm's performance compares to the risk-free rate of return. The Treynor Index measures the excess return per unit of systematic risk. The Jensen Index is the average return on a portfolio over and above the return predicted by the Capital Asset Pricing Model. The Sortino Ratio is a measurement of return per unit of risk on the downside. The Upside Potential Ratio measures the upside potential relative to the downside variance of a stock or portfolio. Our working sample consisted of 102 restaurant firms – 54 franchising firms and 48 non-franchising firms. However, we retained franchising firms whose proportion of franchised to total units was above median (50.2%). Hence, our final sample encompasses 30 franchising and 48 non-franchising restaurant firms. We used an unbalanced panel which consisted of 499 firm-year observations (213 observations for the franchising firms and 286 for the non-franchising firms). We tested our hypothesis that franchising firms achieve greater risk-adjusted financial performance by comparing franchising firms with the majority of their units franchised against non-franchising firms, with no units franchised at all. Using multiple regression analysis, we included several control variables to rule out possible alternative explanations of our findings. In every case, franchising firms outperformed non-franchising firms. That is, performance was greater for the franchising firms with respect to each of our five financial performance measures. In various robustness checks, we substituted alternative measures, and we relaxed constraints on our franchising sample. Still, franchising firms outperformed non-franchising firms in each case. These very robust findings provide solid evidence that publicly held restaurant firms during our study interval on average performed better if they franchised than if they did not. For practitioners starting or developing chain organizations, these results emphasize that franchising should be evaluated to determine if it is right for them. For franchising scholars, this finding adds to evidence that their area of interest is important. For researchers seeking to explain firm performance among restaurant, retail, or service businesses, our study suggests that franchising should be considered.