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Brighter Prospects? Assessing the Franchise Advantage using Census Data

Author

Listed:
  • Francine Lafontaine
  • Marek Zapletal
  • Xu Zhang
Abstract
This paper uses Census micro data to examine how starting a business as a franchise rather than an independent business affects its survival and growth prospects. We first consider the factors that influence the business owner's decision about being franchised, and then use different empirical approaches to correct for selection bias in our performance analyses. We find that franchised businesses on average benefit from higher survival rates and faster initial growth relative to independent businesses. However, the effects are not large and, conditional on first-year survival, the differences basically disappear. We briefly discuss potential mechanisms to explain these results. U.S. Census Bureau. All results have been reviewed to ensure that no confidential information is disclosed. Support for this research at the Michigan Census Research Data Center is gratefully acknowledged.

Suggested Citation

  • Francine Lafontaine & Marek Zapletal & Xu Zhang, 2017. "Brighter Prospects? Assessing the Franchise Advantage using Census Data," Working Papers 17-21, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:17-21
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    File URL: https://www2.census.gov/ces/wp/2017/CES-WP-17-21.pdf
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    References listed on IDEAS

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    Cited by:

    1. Calderon-Monge, Esther & Pastor-Sanz, Iván & Sendra-García, Javier, 2021. "How to select franchisees: A model proposal," Journal of Business Research, Elsevier, vol. 135(C), pages 676-684.
    2. Steven C. Michael, 2022. "Investing in entrepreneurs: The case of franchising," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3785-3794, December.

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    Keywords

    Independent Business; Business Survival; Business Growth; Franchising Decision; Survey of Business Owners; Retail; Services;
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