Thread by @patio11

An interesting principal/agent problem in Japan regarding convenience store franchisees, exacerbated by a regulatory environment which considers it a principal/principal relationship.

japantimes.co.jp/news/2019/05/2…

If you enjoy looking under the hood of capitalism as much as I do franchise disclosure documents and the regulation thereof are endlessly fascinating topics, btw.

Contra some other commentators I actually think both the franchisor and franchisees have understandable POV here: konbini *really are* indispensable public infrastructure and the brand doesn’t want Store 6483 doing a $10k LTV hit by turning away a single customer to competitors.

And franchisees *really do* operate on the economic and social margins while being relatively unsophisticated at business and mostly dependent on the franchisor, who they expect will deal with them like a Japanese company does with full-status employees.

And the government *really does* look at this relationship and see two for-profit businesses which have tax returns and opportunity for legal advisors and everything and says “Well then, best of luck with spirited capitalism.”

In the US the regulations are tilted a bit more in franchisees’ favor and there have been decades of often-times acrimonious disputes. Also, because franchising itself more competitive, franchisor have to compete for franchisee time and attention.

(There is a very prominent word starting with I and ending with -ation not mentioned in the article whose implications are very obviously sweeping through Japanese convenience stores right now. I would expect 80% of them to not be owned by ethnically Japanese people in 20 years.)