The Effect of Contract Regulation on Franchising [with comment]

Previous work on the regulation of termination clauses in franchise contracts has ignored the ability of parties to contract around state law. Using data on two national fast-food restaurants, we find that Washington, D.C.'s termination restriction which did not restrict choice-of-law provision...

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Bibliographic Details
Published in:Journal of institutional and theoretical economics 2012-03, Vol.168 (1), p.38-61
Main Authors: Klick, Jonathan, Kobayashi, Bruce H., Ribstein, Larry E., Eisenberg, Theodore, Roider, Andreas
Format: Article
Language:English
Subjects:
Business practices
Commercial regulation
Comparative analysis
Contract law
Contract provisions
Contracts
Economic regulation
Fast food
Franchise agreements
Franchising
Inference
Iowa
Opportunistic behavior
Pizzas
Regulation
Standard error
State legislatures
U.S.A
Washington
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Summary:Previous work on the regulation of termination clauses in franchise contracts has ignored the ability of parties to contract around state law. Using data on two national fast-food restaurants, we find that Washington, D.C.'s termination restriction which did not restrict choice-of-law provisions had little systematic effect on business practice, while Iowa's termination restriction which did prohibit choiceof-law provisions had a large negative effect on franchising.
ISSN:0932-4569
DOI:10.1628/093245612799440087