This research investigates the informativeness of organizational-form in retail entry decisions. Retailers have the option to set up their stores as company-owned or franchisee establishments. We explore the extent to which expansion via franchisee (as opposed to company-owned) establishments might serve as negative signals about market quality, as franchising offers retailers an opportunity to expand into new markets, but with risk that is shared with the franchisee entrepreneurs. Franchising serves as an informative signal and eventually captured by potential investor reflected on the growth rate of entry.