【正文】 ket. Productmarket characteristics, and their influence in deciding whether or not to franchise, differ for various firms. To evaluate the franchise option, a prospective franchiser needs to outline the linkages between the productmarket characteristics of its business and the different advantages franchising provides. An illustrative set of these characteristics and their implications for the franchising decision are discussed below. Price Competition. Pricing, a key marketingfunction, is often petitionbased. For example, when setting prices, a gas station has to take into consideration the prices of its petitor across the street. It would not be feasible for the management of a large oil pany to set petitive prices in hundreds of gas stations across the country. In contrast, the initiative and profit involvement of franchisees ensures that they will perform the pricing function more effectively than pany managers. In markets where pricing requires considerable discretion and flexibility and may not be managerially efficient to entrust to a pany employee, it is beneficial for the firm to franchise. With modern munication technology, it is possible for corporations to make appropriate price decisions across a fairly large work of outlets. However, many firms, especially those just starting out, cannot maintain a sophisticated munication system. Such firms, then, can franchise and allow their franchisees to set prices in response to local petition. Physical Dispersion of Retail Stores. Monitoring costs of retail stores are affected by the degree of their physical dispersion. If geographically dispersed stores are kept under pany ownership, supervisors will have to spend a lot of travel time and money going from one store to another to monitor them. Thus, the cost of monitoring panyowned stores will be high. If these scattered stores are franchised, pany supervisors do not have to monitor them as much, and costs e down. On the other hand, if closely clustered stores are panyowned, a firm’s supervisors will not have to spend as much time or money visiting them. For these stores, the monitoring costs under pany ownership are already quite low, so there is little to gain by franchising. Whatever small gains there may be will be offset by the costs of the problems associated with franchising. The degree of store dispersion varies with market regions. For example, in more remote, rural markets, retail stores may be widely scattered, whereas in dense urban areas they are often closely clustered. Consequently, a firm will generally prefer to franchise stores in rural areas and retain locations in dense urban areas under pany ownership. Consumer Preferences. Certain businesses need to be knowledgeable about the tastes and preferences of their consumers at local levels. Such firms can incur high search costs for marketrelated information. It is advantageous for a firm to entrust such a business to a franchsee, who is familiar with the local market and is able to gather reliable market information more efficiently.