December 16, 2003
Starbucks vs. Subway
Professor Bainbridge writes,
There is one governance problem that vexes me, however; namely, why are Subway stores owned by franchisees, while Starbucks stores are owned by the corporation.
To answer this question, start with the fact that large franchise corporations are in the real estate business. Location is most of the battle in fast food or motels or what have you.
Starbucks has an unusual real estate strategy that involves "flooding the zone." They are willing to have several stores near one another. That is the opposite of traditional franchise fast food, in which territory is carefully carved up.
The theory of "flood the zone" is that it is better for the corporation to have a lot of franchises in one territory, even though they appear to compete with one another. You need a corporate ownership to implement such a strategy--you could never convince individual franchise owners to do it.
Posted by Arnold at 9:34 AM |
Email this entry
| Category:
business models
The Starbucks v. Subway Puzzle
Excerpt:
My day job is studying the legal rules that facilitate and define governance relationships with the sub-set of economic institutions known as business associations. I decided a long time ago that economic analysis was the only way to make sense
Read the rest...
Starbucks v. Subway: A Roundup
Excerpt:
It often surprises me which posts get picked up in the blogosphere and which sink into oblivion unnoticed. One recent post that generated a surprising amount of email traffic and responsive blog posts was my riff on The Starbucks v.
Read the rest...
Re: Join the "fuck Starbucks tribe" because they suck ass.
Excerpt:
"This all is well argued kristopher but I'm a little confused about a couple ...
Read the rest...
Excerpt: My day job is studying the legal rules that facilitate and define governance relationships with the sub-set of economic institutions known as business associations. I decided a long time ago that economic analysis was the only way to make sense
Read the rest...
Trackback from ProfessorBainbridge.com, Dec 16, 2003 11:10 AM
Excerpt: It often surprises me which posts get picked up in the blogosphere and which sink into oblivion unnoticed. One recent post that generated a surprising amount of email traffic and responsive blog posts was my riff on The Starbucks v.
Read the rest...
Trackback from ProfessorBainbridge.com, Dec 17, 2003 12:59 PM
Excerpt: "This all is well argued kristopher but I'm a little confused about a couple ...
Read the rest...
Trackback from tribe.net: www.corante.com, Feb 9, 2005 1:08 AM