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The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

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Franchise Network Restructuring: Pressures, Constraints and Mechanisms

Mason, C.M. and Cox, Juliet (2009) Franchise Network Restructuring: Pressures, Constraints and Mechanisms. Entrepreneurship and Regional Development, 21 (50). pp. 503-527.

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Abstract

Franchised businesses operate on the basis of granting individual franchisees trading rights to serve territories or market areas on either an exclusive or non-exclusive basis. The design of these territories is generally undertaken during the roll-out phase of the franchise. However, these territories and market areas may become sub-optimal over time, necessitating restructuring. But if the franchisor has granted exclusive rights to a territory then this is likely to involve a breach in the franchise contract. In cases where existing franchisees do not have exclusive territories they may nevertheless make a legal challenge to the creation of additional franchises on the grounds of encroachment. This paper - which is based on a study of 40 franchisors in the United Kingdom - examines how franchisors go about network restructuring in constrained and non-constrained situations. Franchisors typically did not act on their legal rights, echoing findings of earlier franchising studies which reveal a divergence between contractual rights and operational behaviour. This focus on network restructuring also provides new perspectives on the reasons for ownership reversion and the growth of multi-unit franchisees.