While discussing this with a friend, one thing they brought is the McDonalds franchise model. According to Megan McArdle, the point of McDonalds having a franchise model is because of incentives and skin in the game. i.e. if a store manager is also the owner, they are incentivized to do a much better job than if they are a mid-level corporate manager.
Was the thought that the incentives related to ownership of the product are a reason for franchising surprising to you? What was your previous idea of why there is franchising?
I don’t know that I had much of a model, I think I thought it was mostly to avoid legal rules for being a single organization (i.e. making it harder to unionize and stuff)
While discussing this with a friend, one thing they brought is the McDonalds franchise model. According to Megan McArdle, the point of McDonalds having a franchise model is because of incentives and skin in the game. i.e. if a store manager is also the owner, they are incentivized to do a much better job than if they are a mid-level corporate manager.
Linking this twitter thread for reference later:
https://twitter.com/asymmetricinfo/status/975409051180912640
Was the thought that the incentives related to ownership of the product are a reason for franchising surprising to you? What was your previous idea of why there is franchising?
I don’t know that I had much of a model, I think I thought it was mostly to avoid legal rules for being a single organization (i.e. making it harder to unionize and stuff)