On the Economic Geography of Dual Distribution – The Case of McDonald’s in Germany

Freiwald, Nisa E.; Juranek, Steffen; Walz, Uwe

On the Economic Geography of Dual Distribution – The Case of McDonald’s in Germany

NHH Dept. of Business and Management Science Discussion Paper No. 2019/14

14 Pages Posted: 1 Nov 2019

See all articles by Nisa E. Freiwald

Steffen Juranek

Norwegian School of Economics (NHH) - Department of Business and Management Science

Uwe Walz

Goethe University Frankfurt - Institute of Economics; Center For Financial Studies (CFS); Goethe University Frankfurt - Research Center SAFE

Date Written: October 29, 2019

Abstract

We analyze the allocation of ownership in a franchise system by focusing on location-specific characteristics of the outlets. This study uses a comprehensive data set on McDonald’s restaurants in Germany to investigate the drivers of the decision on whether outlets are companyowned or franchised. We find strong evidence for the repeat-customer hypothesis by showing that outlets are significantly more likely to be company-owned when they are located at places with relatively few repeat customers.We observe the same for outlets that are closer to McDonald’s headquarters. Finally, we find pronounced clustering of multi-unit franchisees.

Keywords: franchising, dual distribution, agency theory, geo-locational data, economic geography

JEL Classification: L24, L81

Suggested Citation: Suggested Citation

Freiwald, Nisa E. and Juranek, Steffen and Walz, Uwe, On the Economic Geography of Dual Distribution – The Case of McDonald’s in Germany (October 29, 2019). NHH Dept. of Business and Management Science Discussion Paper No. 2019/14. Available at SSRN: https://ssrn.com/abstract=3477909