As a business model, franchising makes a major contribution to gross domestic product
(GDP). A model that predicts franchisor success or failure is therefore necessary to ensure economic
sustainability. In this study, such a model was developed by applying Lasso regression to a sample of
franchises operating between 2002 and 2013. For franchises with the highest likelihood of survival,
the franchise fees and the ratio of company-owned to franchised outlets were suited to the age
of the franchise. Surviving franchises were those that opened franchised outlets at a sustainable
pace, increased the franchise fee as intangible assets increased, and effectively managed profitability
and efficiency.
