The Analysis Of Market Equilibrium Between Franchised Outlets And Company-owned Outlets

In recent years，franchise is now developing very fast as a new business and It also hasgradually become recognized and familiar with us. As a kind of low cost, large-scale andflexible business expansion mode, franchise has become one of the most competitivecommercial management modes with hundreds of years’ history. In the1990’s, franchisewent into China successfully and become one of many enterprises’ main methods of rapidexpansion. It’s forming and developing has provided management a new research field andalso created a new experience space for economics. Most studies of franchise are from amanagement point of view, there is little research that is from the angle of economicsBased on the literature at home and abroad. Therefore, this paper tries to make a researchof franchise on the point of management based on the phenomenon of the commonexistence of company-owned store and franchised store. Firstly, describe franchise’s basicknowledge such as it’s nature, definition, classification, it’s history and current situation,summarize the economic philosophy about franchise. Secondly, Combined with the case inreal life, analyze the competition between company-owned store and franchised storebased on the economics model. Research the consumer surplus and producer surplus in thecases of company-owned store dominant, company-owned store non-dominant,company-owned store cooperate with franchised store and perfect competition. Thirdly,research the social welfare in the four cases above. In the last, come to the conclusion thatwe should create a fair and effective competition environment, and give policyrecommendations respectively from the government, members of the franchise system, thethird party regulators and consumers in order to provide the theory basis for franchise’soperation and management.