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Location of Franchise Networks in the United States

What Lessons for Networks Strategies?

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Abstract

This article focuses on the issue of location strategies for distribution networks. Our approach, essentially exploratory and empirical, is based on a cluster analysis from which we define and build an original indicator to study network location choice. First, we propose to identify clusters of franchise networks based on the endogenous characteristics of the networks. From these clusters, it is possible to identify standard location choices based on the location of the headend, the distance between the headend and its franchisees, and the spatial distance between the headend and the largest state in term of outlets. This method allows to estimate distances and construct an indicator, Network Linear Density, based on physical linear density. Our results, which confirm the lessons learned from the literature, show that franchise networks have specific location strategies, in line with the characteristics of the type of cluster in which they operate. We can foresee that if the characteristics of a network predispose it to belong to one of the three identified clusters, then we are also able to predict what the network’s location strategy might be.

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Notes

  1. Jacobs (1969).

  2. With reference to Marshall (1920), Arrow (1962) and Romer (1986).

  3. All variables in the data set have equal means (0) and standard deviations (1) but different amplitudes.

  4. We use the longitude and latitude of each state and calculate a distance using the formula developed by Vincenty (1975).

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Authors and Affiliations

  1. Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, 42023, Saint-Etienne, France

    Magali Chaudey

  2. Univ Lyon, CNRS, Archéorient, UMR 5133, 69365, Lyon Cedex 07, France

    Sofiane Bouzid

Authors
  1. Magali Chaudey
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  2. Sofiane Bouzid
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Correspondence to Magali Chaudey.

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Appendices

Appendix 1

Table 4 Correlation matrix
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Appendix 2

Table 5 Correlation between variables and components
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Chaudey, M., Bouzid, S. Location of Franchise Networks in the United States. Appl. Spatial Analysis 14, 755–776 (2021). https://doi.org/10.1007/s12061-021-09375-6

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