Brighter Prospects? Assessing the Franchise Advantage Using Census Data

55 Pages Posted: 1 Mar 2017

See all articles by Francine Lafontaine

Francine Lafontaine

University of Michigan at Ann Arbor - Stephen M. Ross School of Business; University of Michigan at Ann Arbor - Department of Economics

Marek Zapletal

The Brattle Group

Xu Zhang

London Business School

Multiple version iconThere are 2 versions of this paper

Date Written: February 01, 2017

Abstract

This paper uses Census micro data to examine how starting a business as a franchise rather than an independent business affects its survival and growth prospects. We first consider the factors that influence the business owner's decision about being franchised, and then use different empirical approaches to correct for selection bias in our performance analyses. We find that franchised businesses on average benefit from higher survival rates and faster initial growth relative to independent businesses. However, the effects are not large and, conditional on first-year survival, the differences basically disappear. We briefly discuss potential mechanisms to explain these results.

Keywords: Independent Business, Business Survival, Business Growth, Franchising Decision

Suggested Citation

Lafontaine, Francine and Zapletal, Marek and Zhang, Xu, Brighter Prospects? Assessing the Franchise Advantage Using Census Data (February 01, 2017). US Census Bureau Center for Economic Studies Paper No. CES-WP-17-21, Available at SSRN: https://ssrn.com/abstract=2925249 or http://dx.doi.org/10.2139/ssrn.2925249

Francine Lafontaine (Contact Author)

University of Michigan at Ann Arbor - Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109-1234
United States
734-647-4915 (Phone)
734-936-0279 (Fax)

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Marek Zapletal

The Brattle Group ( email )

201 Mission Street, Suite 2800
San Francisco, CA 94105
United States

Xu Zhang

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

HOME PAGE: http://www.london.edu/faculty-and-research/faculty/profiles/x/xu-zhang

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