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- W191605654 abstract "nnnnn This study contributes to the literature on franchising by examining the contracting clauses written into franchise agreements as a response to minimizing agency costs. The central argument developed through-out the study was that differences in the production functions of the franchise firms were determinants of the nature of the clauses in the franchise agreements. It was argued that while some contract clauses are industry-specific and therefore dependent upon the production attributes of the operation, other clauses minimize costs for the parties, exist independently of the production function of the firm and are therefore similar across the different franchise contracts. An analysis of fast-food and service franchise agreements indicated that uniformity of operations, monitoring and control, and a homogeneous product were important attributes of a fast-food franchise, while the production of a heterogeneous product for a repeat-clientele was essential for the success of a service franchise. nnnnn However, many of the cost advantages of franchising are reduced as the courts interpret many of the contract clauses, which differ according to the productive function of the firm, as anti-competitive. An examination of tie-in contracts, restrictions on termination and price stipulations indicated that the courts interpretation prohibited or restricted the use of clauses which represent the most efficient and least costly way for the franchisor to monitor the franchisee's operations and therefore maintain the value of the franchise trademark. nnnnn With the increase in franchise operations in Australia, the issues of how franchise agreements differ, whether these agreements are efficient and the effect of the legal system on this efficiency, are all important issues for the academic, the practising draftsman and the potential franchising parties." @default.
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- W191605654 date "1991-01-01" @default.
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- W191605654 title "Production attributes as determinants of the nature of franchise clauses" @default.
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