Ownership Without Control: The Erosion of Franchisee Autonomy — Lessons from The Balance of Power in Franchising
Jul 1, 2026 - Summaries of Great Academic Articles on Law by Goldstein Law Firm |Author Jeffrey M. Goldstein Introduction The Balance of Power in Franchising examines more than 33,000 Franchise Disclosure Documents covering 4,371 franchise systems between 2009 and 2023 to measure how authority and decision-making power are distributed between franchisors and franchisees. Ulrich Atz, Blake Eliason, Peter Norlander, Sérgio Pinto & Marshall Steinbaum, The Balance of Power in Franchising (Dec. 3, 2024). The authors find that franchisee autonomy generally declined over the study period, while franchisors expanded their control over important aspects of the business relationship, including territory, pricing, products, suppliers, information sharing, dispute resolution, and post-term restrictions. One of the paper’s most significant findings is the sharp decline in exclusive territorial protections and the corresponding rise in contractual provisions allowing franchisors to compete within a franchisee’s market. The study argues that economic power should be understood not only as market power or concentration, but also as the ability to make business-relevant decisions on behalf of others, making authority itself an important object of empirical study. Across numerous contractual provisions, the authors find increasing use of restraints that limit franchisee discretion, including exclusive supply requirements, full-line forcing, pricing controls, and restrictions on business conduct. Survey evidence further suggests that many franchisees perceive themselves as having more autonomy than their contracts actually provide, indicating a gap between contractual reality and franchisee understanding. The paper also rejects the argument that franchisees are compensated for surrendering autonomy, finding that greater franchisor control tends to be associated with higher franchise fees rather than lower ones. Ultimately, the […]
TWO SUMMARIES OF The Law and Economics of Vertical Restrictions: A Relational Perspective
Sep 29, 2025 - Summaries of Great Academic Articles on Law by Goldstein Law Firm |Author Victor P. Goldberg, Columbia Law School Document Type Article Publication Date 1979 SUMMARY OF HOW THE ARTICLE’S ECONOMIC THOUGHTS IMPACT ON FRANCHISING Insights and Discussions on Franchising, Franchisees, and Franchisors: Roles, Relationships, and Legal/Economic Implications Definitions and Nature of the Franchise Relationship Franchising encompasses various retail arrangements, including “business format franchising,” where a trademarked product, service, or method is licensed to a franchisee (e.g., fast food, muffler shops, convenience stores), and “traditional franchising,” which involves specialized retail services (e.g., automobile dealerships, service stations) where dealers often specialize in a single brand’s products, making the franchisee’s business identity heavily reliant on the franchisor relationship. Conversely, “franchise” agreements can also be extremely casual, resembling routine retailer-manufacturer transactions, such that the label “franchise agreement” may be attached to loose or minor arrangements. The franchise relationship is best understood as a long-term “relational exchange,” not as a discrete, one-off transaction; it involves parties entering an ongoing arrangement, partially insulated from market forces, with behavior within the relationship (not just market outcomes) being a key concern. Roles and Interests of Franchisors and Franchisees The franchisor typically designs the franchise agreement and presents it to franchisees, often on a take-it-or-leave-it basis. While franchisee interests may be considered to some extent, the franchisee plays a relatively passive role in the formation and structuring process. Franchisees invest in inventories, signage, promotion, and otherwise become closely tied to the franchisor’s business, sometimes making relationship-specific investments that lack value outside the franchise arrangement. Franchisors provide initial and ongoing training, […]
