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A Calibration Analysis of McDonald’s Franchising in Taiwan
Fan, Yun Chieh
Wang, Shinn Shyr
Fan, Yun Chieh
|Issue Date: ||2017-09-13 16:05:17 (UTC+8)|
Fast food restaurants play an important role in our daily life; they are also one of the most important restaurant business types in Taiwan. The literature posits and examines models behind how franchisors and franchisees reach their franchising decisions, and how different factors affect optimal franchising rates. On that basis, they derive the optimal franchising rates, at which both franchisors and franchisees can maximize their utility. However, there is no literature on determining the reasonable range of variables in the model that we cannot observe in the real world. This study takes the initiative to unveil the model behind the franchising decision with proxies of variables by calibrating a basic economic model using data from McDonald’s Taiwan. Our finding are that a higher importance level of effort results in a higher optimal franchising rate, and the level of franchisees’ risk aversion and the market risk in metropolitan areas are higher than in non-metropolitan areas. In accordance with McDonald’s Taiwan’s strategy in the past years, we construct a more detailed model to capture the characteristics more accurately by adding a healthy food product line into the production function. The extended model can explain the real-world data better than the previous model. On the strategy side, we find that if healthy products account for a higher proportion of the production capacity, the model fitness level drops. In other words, the profit for both the franchisor and franchisees decreases when McDonald’s Taiwan introduces more healthy food to the menu.
Key Words: fast-food industry, principal-agent model, calibration, franchising
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|Source URI: ||http://thesis.lib.nccu.edu.tw/record/#G0103266002|
|Data Type: ||thesis|
|Appears in Collections:||[應用經濟與社會發展英語碩士學位學程 (IMES) ] 學位論文|
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