Faculty of Economics and Business Administration Publications Database

On the economic geography of dual distribution — The case of McDonald’s in Germany

Freiwald, Nisa E.
Juranek, Steffen
Volume: 1919
Pages: 109140 -
Month: June
ISSN-Print: 0165-1765
Link External Source: Online Version
Year: 2020
Keywords: Franchising; Dual distribution; Agency theory; Geo-locational data; Economic geography

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 company-owned 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.