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

14 Pages Posted: 1 Nov 2019

See all articles by Nisa E. Freiwald

Nisa E. Freiwald

Goethe University Frankfurt

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

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

Nisa E. Freiwald

Goethe University Frankfurt ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Steffen Juranek (Contact Author)

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

Helleveien 30
Bergen, NO-5045
Norway

Uwe Walz

Goethe University Frankfurt - Institute of Economics ( email )

Postfach 81
D-60054 Frankfurt
Germany

Center For Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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