دانلود رایگان مقاله آیا سرمایه فرانچایزینگ رستوران مکملی برای بدهی است؟

abstract

Since Oxenfeldt and Kelly’s 1969 study, the resource scarcity hypothesis has been considered a representative theory to explain franchising motivations. Whether franchising capital is a substitute for or a complement to debt has been discussed in the franchise literature but the relationship remains unclear. Using Frank and Goyal’s (2003) financial deficit model along with trade-off and pecking order theories, this study shed light on whether franchising capital acts as a substitute for and/or to complement debt in the restaurant industry. This study discovered that the adjustment speed of long-term debt leverage was faster for franchise restaurant firms than non-franchise restaurant firms. Further, the average long-term leverage target was lower for franchise restaurants. Consequently, this study revealed that franchising capital functioned as a substitute for long-term debt. In contrast,the adjustment speed of short-term debt leverage was slower for franchise restaurants and, thus, franchising capital complemented short-term debt.

5. Conclusions

To verify the influence of franchise capital on firms’ financial behaviors, this study incorporated traditional finance theories and adapted them to the resource scarcity theory using restaurant firms. Some scholars argue that franchising is a substitute for traditional financing (Norton, 1995), while others contend it merely complements debt (Gonzalez-Diaz and Solis-Rodriguez, 2012). However, prior studies did not consider the effect of franchise fee-based income on short and long-term debt under traditional finance theories. This study found that franchise funds play a heterogeneous role in short and long-term financing. Franchising capital is a substitute for long-term debt and a complement to short-term debt. Thus, this study expanded the theoretical and practical understanding of franchises in corporate finance.

The results of this study suggest several implications. Franchise firms could lower their optimal target for long-term debt leverage, which could expedite long-term debt adjustment speeds. It can be concluded that franchise funds are used as a substitute for long-term debt. This sequential pattern looks optimistic for franchise firms. Theoretically, the results of this study confirmed and expanded the resource scarcity hypothesis in the franchise literature. Clearly, this study showed that franchise funds replace long-term debt in the restaurant industry. However, this should be carefully interpreted in practical business situations. To actualize this pattern, franchise businesses should obtain sufficient funds from franchise operations. That is, from another point of view substitutionary franchise funds could be a double edged sword for franchise firms. If a franchise business is not successful, the firm could experience a difficult period due to long-term financing. In turn, the long-term financing deficit from franchising funds could result in an under-investment situation. Specifically, such undesirable situations might occur when a firm is about to expand into the initial stages ofthe franchise system and experience an unexpected economic shock.