Restaurant Franchising In The Western U.S.

Abstract

This paper studies the effect of both economic and demographic factors on restaurant franchising (RF) in the Western United States. The study utilizes regression analysis of pooled cross-section (6 states) and time series (10 years) data. It is found that among the economic factors, the market size, measured by per capita gross domestic product, is the most significant. Also found important is the cost of raising capital, which is measured by the real rate of interest. On the demographic side, the level of urbanization is found to be positively related to restaurant franchising.