Navigating New Legal Demands for Franchisor Accountability

Journal of Organization Design, Vol. 3, No. 2, 2014

5 Pages Posted: 2 Sep 2014

See all articles by Carolyn Plump

Carolyn Plump

La Salle University School of Business

David J. Ketchen Jr.

Auburn University

Date Written: August 1, 2014

Abstract

Franchising is a relationship wherein one organization (i.e., the franchisor) allows other organizations (i.e., franchisees) to use its brand name, products, and processes in exchange for fees. Because franchising offers franchisors the opportunity to build their brands quickly, it is perhaps not surprising that many firms rely on franchising as a key tool for organization design. One caution about franchising is that its use brings a complex array of legal issues into play. As franchising increases in popularity, so too does the scrutiny paid to this organizational form by the legal system. Indeed, the courts appear to be demanding increased accountability from franchisors. The goal of this Point of View article is to explain how organizations can avoid problems associated with increased accountability and even benefit from it.

Keywords: franchising, franchise law, accountability, brand protection, transaction costs

Suggested Citation

Plump, Carolyn and Ketchen, David J., Navigating New Legal Demands for Franchisor Accountability (August 1, 2014). Journal of Organization Design, Vol. 3, No. 2, 2014, Available at SSRN: https://ssrn.com/abstract=2489900

Carolyn Plump (Contact Author)

La Salle University School of Business ( email )

1900 Olney Avenue
Founders' Hall - Office 443
Philadelphia, PA 19141
United States
(215) 951-1492 (Phone)

David J. Ketchen

Auburn University ( email )

Auburn, AL 36849
United States

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