Unlocking Local Market Information Through Franchising

• 成果类型: Article; Early Access
• 署名作者: Xiao, Steven Chong; Xu, Jiadi
• 署名单位: University of Texas System; University of Texas Dallas; University of Wisconsin System; University of Wisconsin Milwaukee
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2024.05903
• 发表日期: 2026
• 关键词: franchising; firm boundaries; house prices

摘要

This paper examines the role of franchising in enabling firms to access valuable local market information. Using comprehensive data on U.S. franchised establishments, we show that franchisee-owned establishment openings robustly predict future local economic growth reflected by house price appreciation, whereas franchisor-owned outlets lack such predictive power. Franchisee investments are especially informative in markets with greater uncertainty and complexity and when facing higher investment hurdles. Franchisors appear sensitive to information frictions, avoiding direct investment in new markets that are geographically distant and lack direct flight connectivity. Our findings support the long-standing but untested assumption that franchisees possess superior private information.