Entrepreneurial Failure: The Case of Franchisees*

The causes of failure are central to entrepreneurship research. This study extends agency and resource‐based logic to explain how established franchisors affect franchisee failure. Analysis of 88 restaurant chains shows that franchisors reduce franchisee failure through contract design and by building strategic resources. Thus, franchisors' resource management and contractual policies play a key role in franchisees' survival.

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