Does Franchising Create Value? An Analysis of the Financial Performance of US Public Restaurant Firms

It is commonly believed that the franchising method of distribution provides strategic and operational benefits to the companies that adopt it. These benefits should result in superior financial performance as compared to that of firms that do not use franchising. Yet, the empirical evidence of the effects of franchising on financial performance is sparse and mixed. The purpose of this article is to examine the empirical evidence of the impact of franchising on US publicly traded restaurant firms. The results provide some evidence that franchising firms create more market and economic value than do non-franchising firms in the US public restaurant sector.