Our study of 75 franchise systems observed over nearly
two decades yields evidence that the additional disclosure
elicited by registration law serves to reduce the incidence of
serious conflict (i.e., litigation) between franchisors and their
franchisees systemwide. Across regulated and nonregulated
markets alike, registration law-induced transparency of
franchisors' operations effectively reduces miscommunication
and unmet expectations, thereby promoting more harmonious
relations. This negative association between registration
law and systemwide litigation incidence is, however,
reversed when litigation occurs in states subject to registration
law. Within registration law regimes, the well-specified
nature of franchisee obligations enables easier and more
complete verification of (non)performance. Franchisors are
therefore less reticent to press their claims in court.