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Papers by Patrick Kaufmann

Industrial Marketing Management

Journal of Public Policy & Marketing

Since the typical franchise arrangements permit the more powerful franchisors to simultaneously a... more Since the typical franchise arrangements permit the more powerful franchisors to simultaneously act as suppliers as well as competitors to their franchisees, apprehensions about potential opportunistic behaviors and allegations of antitrust violations are not uncommon. In turn, this unique structuring of franchises with dual distribution has drawn considerable scrutiny from the public policy platform. In particular, the ownership redirection hypothesis—that the powerful franchisors will reacquire the best franchised outlets relegating only the marginal units to franchisees—has received special attention because it verbalizes the worst fears associated with franchising. This paper provides an evaluation of this hypothesis. To do so, we examine (1) the key premises of the hypothesis from the perspectives of a number of related literatures and (2) the available empirical evidence on the hypothesis. Both aspects of the appraisal point to a number of unresolved issues with important publ...

Journal of Public Policy & Marketing

for their helpful comments and concriburions to this project. ' here are iwo general torms of ira... more for their helpful comments and concriburions to this project. ' here are iwo general torms of iranchising: bus i ness torma.t franchising and product n-ancbising. Business format franchisors are typicaiiy operating retailers Lhat license franchisees :o repiicaie t:ieir business fortriats or concepts :n another geographic location (e.g.. McDonald's. Midas. Jiffy Lube), Produci franchisors are typically manur'acturers that seek to control the channels of distribution by i^strlcring distribution of their produces to licensed franchisees. Some are retail franchisors (e.g., Generai Motors), and some are whoiesale S-anchisors (e,g,, Coca-Cola), We focus here on busi.nes.s format franchising.

Entrepreneurship Theory and Practice

An internal locus of control has been linked empirically to entrepreneurial activity. In changing... more An internal locus of control has been linked empirically to entrepreneurial activity. In changing to a market economy, therefore, the Russian Republic may face hidden psychological barriers if 70 years of a closely managed economy has Induced a perception of control located In powerful others rather than oneself. Levenson's (three-dimensional) locus of control scale Is administered In the former Soviet Union and the results compared to baseline data across various countries and cultures. The findings Indicate that when compared to most countries, the Russian respondents did possess lower Internal locus of control scores and In some Instances higher powerful other scores.

Two sets of competing theories have been proposed to explain the existence offranchising; one set... more Two sets of competing theories have been proposed to explain the existence offranchising; one set based on resource constraints and another on incentives issues. As individual franchise systems mature, these theories predict dryerent patterns in the evolution of the mix offranchisedand company-owned outlets. In this paper, we report the results of an empirical study of franchise system evolution. The jindings generally support the incentives-based rationale for franchising, but they also support a modified resource constraint theory, one which recognizes the synergistic efSects of dual distribution. franchise systems, like other organizations, have life cycles that predict various aspects of their structure and processes. More specifically, they reasoned that the resource scarcity that drove expanding chain retailers to embrace franchising early in their system's life cycle would lessen as the system became more established. The costs associated with managing franchisees gradually would outweigh the benefits associated with the resources that the franchisees provided, and the systems would move toward chains of company-owned, rather than franchised, outlets. Although the specifics of Oxenfeldt and Kelly's hypothesis have been questioned (see Dant, Kaufmann, and Paswan 1992 for a review of the empirical literature on this subject), its underlying insight remains compelling. Resources and motivations are likely to change over time in a franchise system, and such changes should impact the ownership structure of that system. In this paper, we explore some of the changes that take place within franchise systems as they proceed from the granting of the first franchise to maturity. The primary purpose is to determine whether the pattern of unit ownership, that is the mix of companyowned and franchised outlets, changes in a predictable manner over time.

Http Dx Doi Org 10 1300 J049v04n01_04, Oct 18, 2008

Master Franchising and System Growth Rates Patrick J. Kaufmann Sang Hyeon Kim SUMMARY. Master fra... more Master Franchising and System Growth Rates Patrick J. Kaufmann Sang Hyeon Kim SUMMARY. Master franchising is employed by a large proportion of franchise systems. Although the impact of master franchising on the control of franchise systems, and thus their ...

Journal of Law and Economics, 1994

418 THE JOURNAL OF LAW AND ECONOMICS ment of Commerce estimates that the number of business forma... more 418 THE JOURNAL OF LAW AND ECONOMICS ment of Commerce estimates that the number of business format franchi-sors increased from 909 in 1972 to 2,177 in 1986.2 Total nominal sales through outlets of business format franchisors grew by 442 percent be-tween 1972 ...

Http Dx Doi Org 10 1300 J049v14n04_05, Sep 7, 2008

... in a Local Retail Market Patrick J. Kaufmann Naveen Donthu Charles M. Brooks ABSTRACT. ... Pa... more ... in a Local Retail Market Patrick J. Kaufmann Naveen Donthu Charles M. Brooks ABSTRACT. ... Patrick J. Kaufmann is affiliated with the School of Management, Boston University. Naveen Donthu is affiliated with the J. Mack Robinson School of Business, Georgia State University. ...

Two case studies illustrate problems of fairness in consumer pricing. The May D&F case in... more Two case studies illustrate problems of fairness in consumer pricing. The May D&F case involves charges of deceptive advertising as a result of the retailer's “high-low pricing”; customers were allegedly deceived by artificially inflated “regular” prices and discounts promoted from these prices. The GDC case involves charges that 10,000 consumers were deceived into purchasing homes at prices higher than “fair market value”. Consumer policy and managerial issues are identified and analysis and recommendations provided. These cases are about fairness and trust within market exchange, and the responsibilities of sellers and consumers to provide and use information. Economic assumptions of nonfairness and caveat emptor are shown to be inadequate. The position that a fair price is the market price is questioned and an alternative suggested. Remedies which might be adopted by companies and pursued by policymakers are proposed. By creating more realistic consumer expectations, they would reduce problems of fairness in pricing. Gegenstand des Beitrages ist die Frage, ob Fairneß bei der Preisgestaltung eine ökonomisch angemessene Forderung ist, und die Frage, worin diese Fairneß eigentlich besteht. Als empirischer Hintergrund werden zunächst zwei US-amerikanische Fallstudien präsentiert, die die Schwierigkeiten der genaueren Bestimmung von Fairneß bei der Preisbildung in konkreten Fällen illustrieren. Im ersten Fall wurde einem Einzelhandelsunternehmen vorgeworfen, irreführende Werbung insofern betrieben zu haben, als mit Preisabschlägen von künstlich aufgeblähten “regulären” Preisen geworben wurde. Eine Gerichtsentscheidung fand dieses Verhalten nicht nur täuschend, sondern verlangte von dem Unternehmen auch die Offenlegung seiner Preisfestsetzungs-Methoden. Der Beitrag zeigt, daß diese Forderung nach Offenlegung unter verbraucherpolitischem Blickwinkel eine suboptimale Lösung ist. Im zweiten Fall wurde einer Immobiliengesellschaft vorgeworfen, in Florida 10,000 Konsumenten zu Kaufverträgen für Wohneigentum gebracht zu haben zu Preisen, denen vorgebliche Schätzwerte zugrundelagen, die 20% über dem eigentlichen Marktwert lagen. Die Käufer kamen überwiegend aus anderen amerikanischen Staaten und waren mit dem lokalen Immobilienmarkt nicht vertraut. Der Fall (und seine rechtliche Behandlung) weist deutlich auf ethische und rechtliche Probleme hin, denen Verantwortliche ausgesetzt sind, wenn sie Preise festsetzen. Die weiteren Folgerungen gehen über den Bereich des Einzelhandels und der Immobilienbranche hinaus. Bei beiden Fällen geht es um Fairneß allgemein und um Vertrauensschutz bei Kaufverträgen, sowie um die Verantwortlichkeiten des Verkäufers bei der Versorgung des Käufers mit Information und die des Käufers zur Aufnahme und Nutzung dieser Informationen. In Übereinstimmung mit sozioökonomischen Positionen wird dargelegt, daß Fairneß bei der Preisfestsetzung von beiden Marktparteien ein offenes und ehrliches Verhalten bei der Verständigung über den Preis verlangt, zu dem der Tausch stattfinden soll. Die Analyse stellt die traditionelle ökonomische Annahme in Frage, nach der der Marktpreis, den die Nachfrager freiwillig zahlen, ein fairer Preis sei. Diese Position ist insbesondere bei Vorliegen von Täuschung unbefriedigend. Das Prinzip caveat emptor stellt sich nicht nur in den Fallstudien als unzweckmäßig heraus, sondern allgemein dort, wo es begrenzte Suchaktivitäten und begrenzte Preisvergleiche durch Konsumenten gibt. Als empirisch gestützte Erklärungen für solche Begrenzungen werden genannt: Das Entscheidungsverhalten von Konsumenten ist häufig durch Anspruchsanpassung, Vereinfachung und Bequemlichkeit gekennzeichnet, zweitens sind Preisvergleiche schwierig, wenn die Informationen unzweckmäßig, unvollständig oder irreführend sind, und drittens vertrauen Konsumenten häufig den Aussagen der Verkäufer. Überhöhte Preise sollten nicht kriminalisiert werden — das wäre ökonomisch disfunktional. Konsumenten sind die besten Kenner ihrer Präferenzen und ihrer Nutzenvorstellungen. Jedoch sollten Anbieter bereit sein, freiwillig Principien der fairen Preisgestaltung zu befolgen, und die Verbraucherpolitik sollte sie in dieser Bereitschaft bestärken. Wenn es gelänge, die Verbrauchererwartungen an Produkte realistischer zu gestalten, würde sich das Problem mangelnder Fairneß bei der Preisgestaltung ohnehin reduzieren.

The main purpose of this article is to establish empirically, using financial data, that there ar... more The main purpose of this article is to establish empirically, using financial data, that there are both ex ante and ex post rents left downstream at McDonald's. We find that the present value of the ex ante rents is around 300K−300K-300K−455K 1982 dollars. Ex post rents are, of course, even larger. We argue that ex post rents represent an incentive

Marketing im Zeitalter der »Compunications«, 1988

Industrial Marketing Management

Journal of Public Policy & Marketing

Since the typical franchise arrangements permit the more powerful franchisors to simultaneously a... more Since the typical franchise arrangements permit the more powerful franchisors to simultaneously act as suppliers as well as competitors to their franchisees, apprehensions about potential opportunistic behaviors and allegations of antitrust violations are not uncommon. In turn, this unique structuring of franchises with dual distribution has drawn considerable scrutiny from the public policy platform. In particular, the ownership redirection hypothesis—that the powerful franchisors will reacquire the best franchised outlets relegating only the marginal units to franchisees—has received special attention because it verbalizes the worst fears associated with franchising. This paper provides an evaluation of this hypothesis. To do so, we examine (1) the key premises of the hypothesis from the perspectives of a number of related literatures and (2) the available empirical evidence on the hypothesis. Both aspects of the appraisal point to a number of unresolved issues with important publ...

Journal of Public Policy & Marketing

for their helpful comments and concriburions to this project. ' here are iwo general torms of ira... more for their helpful comments and concriburions to this project. ' here are iwo general torms of iranchising: bus i ness torma.t franchising and product n-ancbising. Business format franchisors are typicaiiy operating retailers Lhat license franchisees :o repiicaie t:ieir business fortriats or concepts :n another geographic location (e.g.. McDonald's. Midas. Jiffy Lube), Produci franchisors are typically manur'acturers that seek to control the channels of distribution by i^strlcring distribution of their produces to licensed franchisees. Some are retail franchisors (e.g., Generai Motors), and some are whoiesale S-anchisors (e,g,, Coca-Cola), We focus here on busi.nes.s format franchising.

Entrepreneurship Theory and Practice

An internal locus of control has been linked empirically to entrepreneurial activity. In changing... more An internal locus of control has been linked empirically to entrepreneurial activity. In changing to a market economy, therefore, the Russian Republic may face hidden psychological barriers if 70 years of a closely managed economy has Induced a perception of control located In powerful others rather than oneself. Levenson's (three-dimensional) locus of control scale Is administered In the former Soviet Union and the results compared to baseline data across various countries and cultures. The findings Indicate that when compared to most countries, the Russian respondents did possess lower Internal locus of control scores and In some Instances higher powerful other scores.

Two sets of competing theories have been proposed to explain the existence offranchising; one set... more Two sets of competing theories have been proposed to explain the existence offranchising; one set based on resource constraints and another on incentives issues. As individual franchise systems mature, these theories predict dryerent patterns in the evolution of the mix offranchisedand company-owned outlets. In this paper, we report the results of an empirical study of franchise system evolution. The jindings generally support the incentives-based rationale for franchising, but they also support a modified resource constraint theory, one which recognizes the synergistic efSects of dual distribution. franchise systems, like other organizations, have life cycles that predict various aspects of their structure and processes. More specifically, they reasoned that the resource scarcity that drove expanding chain retailers to embrace franchising early in their system's life cycle would lessen as the system became more established. The costs associated with managing franchisees gradually would outweigh the benefits associated with the resources that the franchisees provided, and the systems would move toward chains of company-owned, rather than franchised, outlets. Although the specifics of Oxenfeldt and Kelly's hypothesis have been questioned (see Dant, Kaufmann, and Paswan 1992 for a review of the empirical literature on this subject), its underlying insight remains compelling. Resources and motivations are likely to change over time in a franchise system, and such changes should impact the ownership structure of that system. In this paper, we explore some of the changes that take place within franchise systems as they proceed from the granting of the first franchise to maturity. The primary purpose is to determine whether the pattern of unit ownership, that is the mix of companyowned and franchised outlets, changes in a predictable manner over time.

Http Dx Doi Org 10 1300 J049v04n01_04, Oct 18, 2008

Master Franchising and System Growth Rates Patrick J. Kaufmann Sang Hyeon Kim SUMMARY. Master fra... more Master Franchising and System Growth Rates Patrick J. Kaufmann Sang Hyeon Kim SUMMARY. Master franchising is employed by a large proportion of franchise systems. Although the impact of master franchising on the control of franchise systems, and thus their ...

Journal of Law and Economics, 1994

418 THE JOURNAL OF LAW AND ECONOMICS ment of Commerce estimates that the number of business forma... more 418 THE JOURNAL OF LAW AND ECONOMICS ment of Commerce estimates that the number of business format franchi-sors increased from 909 in 1972 to 2,177 in 1986.2 Total nominal sales through outlets of business format franchisors grew by 442 percent be-tween 1972 ...

Http Dx Doi Org 10 1300 J049v14n04_05, Sep 7, 2008

... in a Local Retail Market Patrick J. Kaufmann Naveen Donthu Charles M. Brooks ABSTRACT. ... Pa... more ... in a Local Retail Market Patrick J. Kaufmann Naveen Donthu Charles M. Brooks ABSTRACT. ... Patrick J. Kaufmann is affiliated with the School of Management, Boston University. Naveen Donthu is affiliated with the J. Mack Robinson School of Business, Georgia State University. ...

Two case studies illustrate problems of fairness in consumer pricing. The May D&F case in... more Two case studies illustrate problems of fairness in consumer pricing. The May D&F case involves charges of deceptive advertising as a result of the retailer's “high-low pricing”; customers were allegedly deceived by artificially inflated “regular” prices and discounts promoted from these prices. The GDC case involves charges that 10,000 consumers were deceived into purchasing homes at prices higher than “fair market value”. Consumer policy and managerial issues are identified and analysis and recommendations provided. These cases are about fairness and trust within market exchange, and the responsibilities of sellers and consumers to provide and use information. Economic assumptions of nonfairness and caveat emptor are shown to be inadequate. The position that a fair price is the market price is questioned and an alternative suggested. Remedies which might be adopted by companies and pursued by policymakers are proposed. By creating more realistic consumer expectations, they would reduce problems of fairness in pricing. Gegenstand des Beitrages ist die Frage, ob Fairneß bei der Preisgestaltung eine ökonomisch angemessene Forderung ist, und die Frage, worin diese Fairneß eigentlich besteht. Als empirischer Hintergrund werden zunächst zwei US-amerikanische Fallstudien präsentiert, die die Schwierigkeiten der genaueren Bestimmung von Fairneß bei der Preisbildung in konkreten Fällen illustrieren. Im ersten Fall wurde einem Einzelhandelsunternehmen vorgeworfen, irreführende Werbung insofern betrieben zu haben, als mit Preisabschlägen von künstlich aufgeblähten “regulären” Preisen geworben wurde. Eine Gerichtsentscheidung fand dieses Verhalten nicht nur täuschend, sondern verlangte von dem Unternehmen auch die Offenlegung seiner Preisfestsetzungs-Methoden. Der Beitrag zeigt, daß diese Forderung nach Offenlegung unter verbraucherpolitischem Blickwinkel eine suboptimale Lösung ist. Im zweiten Fall wurde einer Immobiliengesellschaft vorgeworfen, in Florida 10,000 Konsumenten zu Kaufverträgen für Wohneigentum gebracht zu haben zu Preisen, denen vorgebliche Schätzwerte zugrundelagen, die 20% über dem eigentlichen Marktwert lagen. Die Käufer kamen überwiegend aus anderen amerikanischen Staaten und waren mit dem lokalen Immobilienmarkt nicht vertraut. Der Fall (und seine rechtliche Behandlung) weist deutlich auf ethische und rechtliche Probleme hin, denen Verantwortliche ausgesetzt sind, wenn sie Preise festsetzen. Die weiteren Folgerungen gehen über den Bereich des Einzelhandels und der Immobilienbranche hinaus. Bei beiden Fällen geht es um Fairneß allgemein und um Vertrauensschutz bei Kaufverträgen, sowie um die Verantwortlichkeiten des Verkäufers bei der Versorgung des Käufers mit Information und die des Käufers zur Aufnahme und Nutzung dieser Informationen. In Übereinstimmung mit sozioökonomischen Positionen wird dargelegt, daß Fairneß bei der Preisfestsetzung von beiden Marktparteien ein offenes und ehrliches Verhalten bei der Verständigung über den Preis verlangt, zu dem der Tausch stattfinden soll. Die Analyse stellt die traditionelle ökonomische Annahme in Frage, nach der der Marktpreis, den die Nachfrager freiwillig zahlen, ein fairer Preis sei. Diese Position ist insbesondere bei Vorliegen von Täuschung unbefriedigend. Das Prinzip caveat emptor stellt sich nicht nur in den Fallstudien als unzweckmäßig heraus, sondern allgemein dort, wo es begrenzte Suchaktivitäten und begrenzte Preisvergleiche durch Konsumenten gibt. Als empirisch gestützte Erklärungen für solche Begrenzungen werden genannt: Das Entscheidungsverhalten von Konsumenten ist häufig durch Anspruchsanpassung, Vereinfachung und Bequemlichkeit gekennzeichnet, zweitens sind Preisvergleiche schwierig, wenn die Informationen unzweckmäßig, unvollständig oder irreführend sind, und drittens vertrauen Konsumenten häufig den Aussagen der Verkäufer. Überhöhte Preise sollten nicht kriminalisiert werden — das wäre ökonomisch disfunktional. Konsumenten sind die besten Kenner ihrer Präferenzen und ihrer Nutzenvorstellungen. Jedoch sollten Anbieter bereit sein, freiwillig Principien der fairen Preisgestaltung zu befolgen, und die Verbraucherpolitik sollte sie in dieser Bereitschaft bestärken. Wenn es gelänge, die Verbrauchererwartungen an Produkte realistischer zu gestalten, würde sich das Problem mangelnder Fairneß bei der Preisgestaltung ohnehin reduzieren.

The main purpose of this article is to establish empirically, using financial data, that there ar... more The main purpose of this article is to establish empirically, using financial data, that there are both ex ante and ex post rents left downstream at McDonald's. We find that the present value of the ex ante rents is around 300K−300K-300K−455K 1982 dollars. Ex post rents are, of course, even larger. We argue that ex post rents represent an incentive

Marketing im Zeitalter der »Compunications«, 1988