A Research Of The Mechanisms Of Franchising And The Potimization Models In The Franchise Organizations

Franchising is regarded as a symbol of"modern commerical revolution",China stated its franchising from the mid-and late 80s, and the development of franchise system is rapid in a short period of time .Nevertheless, the theoretical research on franchising is also confined to the principles of management, quite a few related franchising studies are primarily conceptual and descriptive, center on purchasing management,location and arrangement of the franchise stores,standardization of products management,physical distribution and so on. There are few profound economic analyses on franchising, the analyses in connection with the essence and the optimizatinal governance of franchisng are even fewer. So the lack of economic analyses on franchising reflects the meaning of this article.On analysis of mechanism, we regard a franchise systerm as a semi-complex economic organization between the market and the firm. Compared with the market, suboptimization is reduced under the franchising; Compared with the firm, fanchising awards greater autonomy.On the problem of optimizational governance, we start our analysis from the perspective of cost design, investigate interrelationship between the franchise fee and royalty fee on the basis of maximizing the franchisor's profit.This article adopts mathematical analysis as the primary method, and analysis of cases plays a secondary or supplementary role. We use the transaction cost theory and principal agent theory to construct our theoretical model of franchising governance, and verify the conclusions of this article by instances.