Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162092
Authors: 
Mastrangelo, Leonardo Martin
Calderon-Monge, Esther
Huerta-Zavala, Pilar
Year of Publication: 
2016
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2084-0845 [Volume:] 10 [Year:] 2016 [Issue:] 3 [Pages:] 275-282
Abstract: 
Potential franchisees encounter difficulties in gaining knowledge about a franchise before embarking on their first start-up venture. For this reason, it is necessary to research which information signals help potential franchisees choose the franchise chains with which they wish to enter into business. Working within the framework of signaling theory, this study's aim is to analyze the relationship between franchise choice and brand, price and participation in franchise fairs. The dynamic signaling model deployed to achieve the study's aim draws on panel data methodology. This methodology allows us to analyze franchise chains over the period in which their parent franchises were using signaling to reveal information about their quality to potential franchisees. The results show that franchise fairs and up-front entry fees influence franchisee's decisions. Therefore, it is concluded that potential franchisees prefer to garner information directly from franchise fairs, as opposed to heeding the other signals under study, and that when macroeconomic variables are exerting a strong influence on potential franchisees, up-front entry fees also constitute a signal that they consider. Finally, the managerial implications of the study are that franchise chains seeking franchisees should participate in franchise fairs to ensure that they are among the chosen franchises. Additionally, a franchisor should appropriately manage up-front entry fees as a signal, especially during periods of economic turmoil and recession.
Subjects: 
Entrepreneurship
signals
price
franchising
GMM
franchise fairs
JEL: 
M13
M31
Persistent Identifier of the first edition: 
Document Type: 
Article

Files in This Item:
File
Size
242.15 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.