Real options valuation of franchise territorial exclusivity

With the maturity of the franchise system, franchisors have to look for new markets to capitalize constantly. This continuing expansion comes at the expense of the existing franchise establishments, as it could lead to territorial encroachment. One possible solution to mitigate this problem is by of...

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Autor principal:	Lukito Adi Nugroho
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2017
Materias:	franchise real options territorial encroachment territorial exclusivity datar–matthews Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/6096b890e75e450da47e80933ea77ecd
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id	oai:doaj.org-article:6096b890e75e450da47e80933ea77ecd
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spelling	oai:doaj.org-article:6096b890e75e450da47e80933ea77ecd2021-12-02T14:35:46ZReal options valuation of franchise territorial exclusivity2331-197510.1080/23311975.2016.1262490https://doaj.org/article/6096b890e75e450da47e80933ea77ecd2017-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2016.1262490https://doaj.org/toc/2331-1975With the maturity of the franchise system, franchisors have to look for new markets to capitalize constantly. This continuing expansion comes at the expense of the existing franchise establishments, as it could lead to territorial encroachment. One possible solution to mitigate this problem is by offering territorial exclusivity rights (TER) of new potential location to the existing franchisee. Yet, pricing the value of TER is not simple due to contingent claim nature of this rights. Hence, the goal of this paper is to model the TER using real options approach, a financial options valuation method that applies in real business. The real options will be built using Datar–Mathews method and then simulated using hypothetical case data. Results and implications are also discussed.Lukito Adi NugrohoTaylor & Francis Grouparticlefranchisereal optionsterritorial encroachmentterritorial exclusivitydatar–matthewsBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 4, Iss 1 (2017)
institution	DOAJ
collection	DOAJ
language	EN
topic	franchise real options territorial encroachment territorial exclusivity datar–matthews Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	franchise real options territorial encroachment territorial exclusivity datar–matthews Business HF5001-6182 Management. Industrial management HD28-70 Lukito Adi Nugroho Real options valuation of franchise territorial exclusivity
description	With the maturity of the franchise system, franchisors have to look for new markets to capitalize constantly. This continuing expansion comes at the expense of the existing franchise establishments, as it could lead to territorial encroachment. One possible solution to mitigate this problem is by offering territorial exclusivity rights (TER) of new potential location to the existing franchisee. Yet, pricing the value of TER is not simple due to contingent claim nature of this rights. Hence, the goal of this paper is to model the TER using real options approach, a financial options valuation method that applies in real business. The real options will be built using Datar–Mathews method and then simulated using hypothetical case data. Results and implications are also discussed.
format	article
author	Lukito Adi Nugroho
author_facet	Lukito Adi Nugroho
author_sort	Lukito Adi Nugroho
title	Real options valuation of franchise territorial exclusivity
title_short	Real options valuation of franchise territorial exclusivity
title_full	Real options valuation of franchise territorial exclusivity
title_fullStr	Real options valuation of franchise territorial exclusivity
title_full_unstemmed	Real options valuation of franchise territorial exclusivity
title_sort	real options valuation of franchise territorial exclusivity
publisher	Taylor & Francis Group
publishDate	2017
url	https://doaj.org/article/6096b890e75e450da47e80933ea77ecd
work_keys_str_mv	AT lukitoadinugroho realoptionsvaluationoffranchiseterritorialexclusivity
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Real options valuation of franchise territorial exclusivity

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