Financial Stability, Sustainable Growth, and the Global Quasi-Franchising/Business-Opportunity Industry

Abstract

Franchising, Quasi-Franchising and Business-Opportunities have become major business models (particularly in the retailing and hospitality industries), and have substantial effects on company strategy, growth and survival Business Opportunities (regulated in some developed countries) and Quasi-Franchising (often un-regulated in many countries) are milder types of Franchising. There are at least 1,500 operating franchising networks in the U.S. that represent more than 760,000 franchisees and more than 18 million employees, and provide more than US$506 billion of payroll (or about 11% of the U.S. private sector payroll) and generating a total annual economic output that exceeds US$1.5 trillion (about ten percent of the U.S. private-sector economy). This chapter: i) critiques existing theoretical and empirical studies on franchise contracts, Business Opportunity contracts and incentives; ii) critiques the use of game theory in franchising studies; iii) introduces new mathematical models of Business Opportunities and Quasi-Franchising; iv) compares Business Opportunities, Franchising and Quasi Franchising.