[논문]Franchise Market, Contract Conditions, and Welfare Implications: Evidence from Korea

LEE, JINKOOK; SEO, MYOUNGSHIK

doi:10.23895/kdijep.2022.44.1.49

Franchise Market, Contract Conditions, and Welfare Implications: Evidence from Korea 원문보기

KDI journal of economic policy, v.44 no.1, 2022년, pp.49 - 75

LEE, JINKOOK (Korea Development Institute) , SEO, MYOUNGSHIK (Korea Development Institute)

Abstract ▼ AI-Helper

This paper analyzes how franchise contract conditions are influenced by business structures as well as how contract conditions affect producer surplus by utilizing Korean franchise Information Disclosure Documents for the years 2014-2016. We find that franchise fees tend to increase in line with increases in the numbers of direct stores or the business period. Accordingly, it would be reasonable to check whether the franchise fee is excessive compared to the amount of reputation capital rather than to criticize the absolute level of the franchise fee. Regarding royalty contracts, the larger the discount in the raw materials purchase is, the higher the initial royalty is. Although this appears to be a royalty discount, it can be a means of inducing a raw materials purchase contract by initially setting a high royalty rate and then lowering it after the purchase contract is signed. Concerning the effect on producer surplus, the results show that an increase in franchise fees and royalties negatively affects the franchisee's operating profits but positively affects those of the franchisor's, leading to conflicts over the distribution of economic value added. Based on the findings here, we propose various policy recommendations, specifically reinforcing the contents in the Information Disclosure Document, further activating fixed-rate royalties, and strengthening the qualifications of franchisors when recruiting franchisees.

주제어

표/그림 (22)

그림 FIGURE 1. NUMBER OF FRANCHISORS AND BRANDS Source: Calculated by the author using microdata from Information Disclosure Documents (2014-2016).
그림 FIGURE 2. NUMBER OF BRANDS BY LARGE SECTORS Source: Calculated by author using microdata from Information Disclosure Documents (2015-2016).
표 TABLE 1-RISE AND FALL OF FRANCHISE BRANDS
그림 FIGURE 3. NUMBER OF FRANCHISE STORES AND DIRECTLY MANAGED STORES Source: Calculated by the author using microdata from Information Disclosure Documents (2014-2016).
그림 FIGURE 4. NUMBER OF FRANCHISEES AND NUMBER OF FRANCHISE STORES PER BRAND Source: Calculated by the author using microdata from Information Disclosure Documents (2016).
그림 FIGURE 5. TOTAL SALES OF FRANCHISES AND SALES PER FRANCHISE STORE Source: Calculated by the author using microdata from Information Disclosure Documents (2014-2016).
표 TABLE 2-RISE AND FALL OF SALES BY SECTOR
그림 FIGURE 6. PERCENTAGE OF BRANDS WITHOUT DIRECTLY MANAGED STORES (FOOD SERVICES) Source: Calculated by the author using microdata from Information Disclosure Documents (2014-2016).
표 TABLE 3-PERCENTAGES OF BRANDS WITHOUT DIRECTLY MANAGED STORES
그림 FIGURE 7. FRANCHISE SETUP COST OVERALL (LEFT) AND BY SECTOR (RIGHT) Source: Calculated by the author using microdata from Information Disclosure Documents (2016).
그림 FIGURE 8. NUMBER OF BRANDS PROVIDING ROYALTY DISCOUNTS CONDITIONAL ON RAW MATERIALS PURCHASES Source: Calculated by the author using microdata from Information Disclosure Documents (2016).
표 TABLE 4-ADOPTION RATE OF ROYALTIES
표 TABLE 5-ROYALTY RATES
표 TABLE 6-TYPES OF BUSINESS AREAS (Unit: %)
표 TABLE 7-SUMMARY STATISTICS OF VARIABLES
표 TABLE 8-ESTIMATION RESULTS OF THE FRANCHISE FEE MODEL (1)
표 TABLE 9-ESTIMATION RESULTS OF THE FRANCHISE FEE MODEL (1)
표 TABLE 10-ESTIMATION RESULTS OF THE ROYALTY MODEL
표 TABLE 11-SUMMARY STATISTICS OF RETAIL DATA
표 TABLE 12-ESTIMATION RESULTS OF FRANCHISEES' SALES
표 TABLE 13-ESTIMATION RESULTS OF FRANCHISEES' OPERATING PROFIT
표 TABLE 14-ESTIMATION RESULTS OF FRANCHISOR'S SALES AND OPERATING PROFIT

참고문헌 (17)

Fair Trade Commission Franchise. Franchise Disclosure Document (http://franchise.ftc.go.kr, last access: Nov. 11, 2018).
Gallini, Nancy and Nancy Lutz. 1992. "Dual Distribution and Royalty Fees in Franchising," Journal of Law Economics and Organization, Vol. 8, No. 3.

상세보기
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상세보기
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상세보기
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상세보기
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