【正文】 ut issues concerning prospective franchisersentrepreneurial firms and managers of established panies who are considering the franchise option. We shall describe the benefits that motivate firms to franchise and illustrate how productmarket char acteristics shape these motivations. Benefits of Franchising Prospective franchisers can better assess the suitabilityof this option if they understand the benefits that motivate firms to franchise. In other words, they must ask what advantages they can derive from operating franchised stores versus operating panyowned stores. Resource Constraints. Firms often franchise because they cannot readily raise the capital required to sat up panyowned stores. John 1’. Brown. former president of Kentucky Fried Chicken, maintained that it would have cost KFC $4 j0 million to establish its first 2,700 storesa sum that was not available to the corporation in its initial strlges. It is interesting to note that even though KFC can now readily raise capital through traditional mercial means, it still continues to franchise. On the other hand, a firm seeking growth may be able to raise capital, but it may lack the managerial resources required to set up a work of panyowned stores. Recruiting and training managers accounts for a significant percentage of the cost of growth of a firm. Franchisees supply labor and capital together。 often the joint cost of both labor and capital to the franchisor is lower than what it would be if the two inputs were procured separately. This hybrid nature of franchising enables firms to overe the managerial resources and capital constraint problems simultaneously. Specialization/Functional Benefits. Franchising also provides an effective way to trade off certain functions and thereby minimize production costs. In general, franchisers are more cost efficient than franchisees in performing functions that decrease in cost with a substantial level ofoutput. And franchisees are more efficient in performing functions whose average cost curve turns up relatively quickly. For example, in the fastfood business, product development and national promotion are more efficiently handled on a large scale (the franchiser), whereas the production of fast food is handled better on a relatively smaller scale (the franchisee). Monitoring Costs. Companyowned retails tores are run by employee managers who may often perform poorly if they are not supervised. A pany, therefore, has to supervise its store managers. As a result, it will incur monitoring costs. But because franchisees have invested capital in their own stores, and because their earnings e from the profits of those stores, they are motivated to work harder than pany managers who do not have as much stake in the profits and success of the outlet. The corporation does not have to monitor managers who are selfmotivated and are likely to take the initiative needed to make their store succeed. Thus, franchising helps a firm lower its monitoring costs. Promotion Efficiencies. A service firm’s trademark and brand image