The effects of management and environmental factors on franchise continuity

Abstract

There is abundant evidence that franchises boost the economies of developed and emerging market economies. In Mexico, for example, despite its limited growth, the franchise system is dynamic. Over the past three decades, the inconsistent continuity of the global franchise business format may also be noted. The aim here is to analyse the factors linked to franchise continuity in the Mexican hospitality sector by applying panel data methodology to a sample of 253 hospitality sector chains between 2002 and 2016. The results showed that franchised outlets, proven and improved know-how, and market factors, under conditions of endogeneity, maintained a positive effect on the continuity of the franchise business format.