Survival of New Firms in the Brazilian Franchising Segment: An Empirical Study

32 Pages Posted: 29 Mar 2011

See all articles by Luis Otavio Facanha

Luis Otavio Facanha

Universidade Federal do Rio de Janeiro (UFRJ)

Marcelo Resende

Universidade Federal do Rio de Janeiro (UFRJ); CESifo (Center for Economic Studies and Ifo Institute)

Vicente Cardoso

Banco Nacional de Desenvolvimento Econômico e Social (BNDES)

Bruno H. Schroder

affiliation not provided to SSRN

Date Written: March 24, 2011

Abstract

The paper investigates survival patterns of Brazilian franchising firms during the 1994-1999 period. First, at a more descriptive level one considered the (percentage) survival of newly created franchisors in the following years. The evidence indicated a drastic decay in survival after only a few years and contrasts with the higher survival of firms in the franchising firms in more developed economies. Survival functions were obtained by means of the Kaplan-Meier estimator for the selected sectors and indicated sharp declines in survival rates over time but with differential patterns across sectors. Finally, an econometric analysis based on Cox’s proportional hazard model was considered by exploring explanatory variables pertaining size, age and support regarding legal aspects, location choice and training. The evidence indicates that those supports provided by the franchisor have a positive impact on the probability of survival of new firms whereas there is partial evidence favoring a positive role for firm size on survival.

Keywords: franchising, survival

JEL Classification: L810, M130

Suggested Citation

Facanha, Luis Otavio and Resende, Marcelo and Cardoso, Vicente and Schroder, Bruno H., Survival of New Firms in the Brazilian Franchising Segment: An Empirical Study (March 24, 2011). CESifo Working Paper Series No. 3388, Available at SSRN: https://ssrn.com/abstract=1793765

Luis Otavio Facanha

Universidade Federal do Rio de Janeiro (UFRJ) ( email )

Rua Sao Francisco Xavier, 524
Rio de Janeiro RJ 21949, 23890000
Brazil

Marcelo Resende (Contact Author)

Universidade Federal do Rio de Janeiro (UFRJ) ( email )

Rua Sao Francisco Xavier, 524
Instituto de Economia
Rio de Janeiro RJ 21949
Brazil

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Vicente Cardoso

Banco Nacional de Desenvolvimento Econômico e Social (BNDES) ( email )

Av. Republica do Chile
100 - 12nd. Floor
100 Rio de Janeiro, 20001-970
Brazil

Bruno H. Schroder

affiliation not provided to SSRN ( email )

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