Ownership Structure and Relation between Franchiser and Franchisee

.As a method of doing business, franchising is becoming an important force in U. S. economy and it continues to offer great opportunities to individual and business firms that desire to expand the number of distribution outlets to handle their products and service. Among the many reasons to join a franchise, awards and public recognition serve as two of the strongest advantages of a franchise association. Franchising is certainly less risk but it also brings the additional requirement of team and system responsibilities. Empirical analyses of ownership structure in franchising typically rely on an agency-theory approach and consequently focus upon risk sharing and efficient reduction of monitoring costs arising from moral hazards as primary considerations shaping ownership structure. This study is to review the relation between franchisee and franchisor. In this study, it is also intended to explore the ownership structure in franchising in the last three decades.