Contract Theories and Franchising Franchising is an excellent field of application for contract theories. This paper aims at surveying the recent literature on franchise chains and contracts. It focuses on the choice of contractual terms (the « contractual design ») with an emphasis on incentive mechanisms, the choice of organizational form (vertical integration versus franchising), and « contractual mix », i.e. system in which both company-owned units and franchised units exist side by side. For each of these issues, we present both a theoretical overview and empirical tests (when they exist).