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The Effect of Franchisor Brand Name Capital and Competency On the Cost of Fast-Food Franchise

University of New Hampshire

This study empirically examined whether franchisors' brand name capital and competency significantly differentiate costs associated with fast-food franchise affiliation. The study's purpose was to identify the effect of franchisors' brand name capital and competency on the costs of fast food franchise systems. Proxy variables were developed to measure fran chisor brand name capital and competency followed by a series of hypotheses tests. The empirical results, based on 109 fast-food operations, indicated that the franchisor's visi bility, geographical market representation, contract period, and affiliation in a profes sional trade association were important factors in differentiating fast food franchise costs. The findings also offered recommendations for potential franchisees considering entering into a fast food franchise.

Key Words: brand name capital • competency • franchise costs.

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