Franchise chains can choose to franchise their outlets along two types of governance structure: MUF (multi-unit franchising) versus SUF (single-unit franchising). The present paper addresses the following issue: What is the “right mix” of MUF and SUF in franchise chains? Specifically, we investigate the impact of the MUF-SUF mix on chain performance. Based on German and Swiss data and drawing on resource-based, agency, as well as transaction cost theory perspectives, we argue that the relationship between the proportion of MUF and chain performance is contingent on resources and uncertainties at stake. While the positive performance effect of MUF is amplified in the case of strong brand name and system-specific knowhow, this effect might become negative and/or cyclical beyond a certain level of MUF and uncertainty. Overall, the results of the study indicate that a mix of MUF and SUF is a more efficient governance structure than a pure MUF or SUF form.
