Effects of franchising on industry competition: The moderating role of the hospitality industry

This study investigates the impact of an industry's involvement in franchising on its competitive condition. Findings show that, for services industries in general, franchising involvement (a) discourages industry instability and dynamic competition, and (b) has a non-significant impact on industry concentration. However, in the hospitality industry, the negative effects of franchising on industry instability and dynamic competition are weaker: franchising decreases industry instability and dynamic competition less in the hospitality industry than in other services industries. These findings open up a new discussion of how franchising influences the competitive environment at the industry level.