The Economic Analysis Of Franchise

Franchise came into being in the 1960's, since the middle 20th century along with the global economy integration, the rapid development of science and technology and the information technology revolution, franchise obtained the swift and violent development. Thanks to the short development history of franchising, the research on it is far from sufficient. At present, the related franchising studies are primarily conceptual and descriptive, lacking analysis using the economic theories. This thesis applies economic theory such as contract theory, incentive theory and game theory to the study on the formation reasons, the contract characteristics and the governance mechanism of franchising. Bases on the microeconomic analysis, the theory frame advanced in this thesis is of some academic and practical value. The main purpose of this thesis is trying to provide the theory instruction to China's franchising development.The study method this thesis adopts is primarily theory reasoning and secondly empirical analysis. Introducing benefit concept into the transaction cost method, this paper firstly points out franchise is the result that both the external and the intrinsic causes interact; then, from the standpoint of contract theory, the paper thinks that franchise is one kind of relational contract, in this contract, residual rights of control and claim to residue are assymetrically assigned; in chapter four, based on the incentive theory, the game theory and the mathematical method, we has constructed the theoretical model of franchising governance, in which we particularly focuses on the study of the governance mechanism the incentive mechanism; in the final part of the paper, we take advantage of the practice of MacDonald's franchising to partially support the basic conclusions of the thesis, what is more, we refers to the links between these conclusions and China's franchising development policies.