Economic Analysis On The Franchise

As one of the most popular methods in the world for corporations to expand their operation and for individuals to build their business, franchise has already had a long history of over 100 years at abroad. However, it has been only over 10 years since franchise was introduced into China. Although it is developing rapidly in China, franchise is still at low stage of development and there is still a great gap between the franchise development in China and that at abroad. Now in China people only know a little about franchise and the analyses of it in terms of economics are even fewer. So, it is of imminence for our country to deeply investigate it.First, this paper summarizes the researches of franchise home and abroad, and analyzes the definition, formation, development and industry distribution of the franchise. Then, on the basis of animadversion and adaptation of the traditional explanation theories, this paper analyzes franchise in the terms of institutional economics in three aspects: analysis on generation science of the franchising in terms of transaction cost and resource collocation; analyzes the advantages of property right organization and intellectual property right, based on analysis on the characteristic of property right; on the basis of the principal-agent problem, analyzes the organization governance of franchise. At the same time, this paper analyzes the status in quo and the problems of franchise in our country, sums up foreign countries' experiences of franchise and puts forward corresponding measures aiming at the actualities and the existing problems.This paper doesn't discuss the specific processes of franchise system in depth; however it analyzes franchise as a form of organization from the point of Economics, and this is this paper's innovation. The aim of this is to take franchise into the framework of Economics, explain its theory and make people know more about it, and supply theoretical guidance for its future development. Furthermore, this paper thoroughly analyzes the organizational characteristic of franchise, and on the basis of the definition of intermediate organization, this paper precisely defines franchise as a quasi enterprise organization.