• The Korean Journal of Franchise Management
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• v.3 no.2
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• pp.20-38
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• 2012

After being introduced into franchises industry, franchise has made a phenomenal growth in a short time and a substantial contribution to job creation and economic revitalization. Nevertheless, franchise business operators failed a business or low profit because of a lack of information and indiscriminate foundation. Therefore the first object of this study is characteristics of franchise's factors on disclosure agreement in franchise associate website. second is examinations about casual relationship between factor and franchise performance with using Excel and SPSS 18.0 versions. The findings of present study were as follows. First, franchises manage small business mostly(financial data, scale so on) and franchise's type focused the food service industry. Specially, a business district select unprotected contract. Second, in franchise's factors, we could find statistically significant effect on annual average sales and annual average net profit. However growth rate of franchise don't have statistically significant effect. Third, we could find statistically significant difference on analysis both franchises' factors and financial data. In conclusion, we must consider of franchise industry environment and success effect on performance in starting one's business. Furthermore franchises plan ways for their sustained growth and protection of rights and interests. Finally business operator draw up their information and upgrade continuously for franchises industry growth. Discussion and theoretical and managerial implications of the results were described along with future franchise research suggestions.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.15 no.4
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• pp.245-261
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• 2020

The aim of this study is to investigate the correlation between the support activities provided by the franchiser and how they affect the intention of the contract renewal and business performances made by franchisees, developing dynamic trust between these transactional partners. Various supportive activities between franchiser and franchisees were divided into financial and non-financial activities and dynamic trust into Transitional-based trust, Calculative-based trust, Relational-based trust, and Balanced-based trust. These trust types, which are variable and adjustable based on the opportunistic behaviors of business parties, were applied to define the impact of the support activities on the contract renewal intention and the performances. This study was developed around domestic franchisees. An investigator visited business owners and manager level-employees, explained the purpose of the survey prior to the response, and the answers were directly written by hands. A total of 348 copies were used for the analysis. As the results of the analysis, first, financial support activities were found to have a positive(+) effect on transitional-based trust, calculative-based trust, and balanced-based trust. On the other hand, non-financial support activities were found to have a positive(+) effect on calculative-based trust, relational-based trust, and balanced-based trust, and there was no significant relationship on transitional-based trust. Second, the dynamic trust had a statistically significant positive(+) effect on inducing the contract renewal. Lastly, in the relationship between the dynamic trust and its impact on business performances, only transitional-based trust, and relational-based trust were found to have a positive(+) effect on the financial performances. In addition, relational-based trust showed a meaningful positive(+) relationship on the non-financial performances, and non-financial performace showed a meaningful positive(+) relationship on the re-contract intention. From the results, it can be concluded that the financial and non-financial activities for a win-win partnership between franchiser and franchisees are essential in not only forming dynamic trust but also boosting business performances as well as maintaining the business relationship. Thus, it suggests that building a win-win partnership can be promoted more efficiently by specifying activities best suitable for a particular relationship. In addition, a specific set of activities could be presented for establishing the level of trust that is formed in situations that vary depending on transaction risks and interdependency arising from having the transactional relationship based on the contract as the franchise industry features. Eventually, it is expected that this study can provide a way to promote the qualitative improvement of the franchise industry by identifying factors essential to establishing a sustainable win-win system and relationships that can improve the business performance of franchisees.

• Journal of Regulation Studies
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• v.27 no.1
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• pp.153-188
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• 2018

This paper reviews the literature regarding exclusive territory restraint and encroachment and compares the development of related policies in the United States, the European Union, and South Korea. Furthermore, using coffee franchise industry data in South Korea, this paper analyzes the effects of the exclusive territory restraint on entry and exit of coffee shops. The results show that the growth rates of regulated brands' entry have stagnated during the implementation period of the KFTC's Franchising Best Practice Code. Moreover, the exit rates of coffee shops in two years after its entry decreased under the Best Practice Code and the revised Franchise Law.

• The Korean Journal of Franchise Management
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• v.3 no.2
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• pp.1-19
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• 2012

This study intends to suggest the cooperative, win-win collaboration, as methods for settling disputes with the existing self-employed people over back-street business areas and disputes and conflicts between a franchiser and franchisees. In addition, it intends to analyze the Dunkin' Donuts purchasing cooperative in the US, where the franchising industry has been well developed; and to find the implications of cooperation strategies between Dunkin' Donuts and its franchisees that may be helpful for the South Korea's franchising industry. This study tries to discover a new model of the Korean-style franchise cooperative out of the basic principles and practice guidelines of cooperatives ranging from an early American franchise cooperative in 1955 to ARCOP, KFC, and Dunkin' Doughnuts in the late 1970s. Further, it looks into successful programs of a purchasing cooperative at Dunkin' Donuts such as TDP (Total Distribution Program), SFP (Shortening Futures Program) and DCP (Distribution Commitment Program). The case of the US Dunkin' Donuts, which operates the purchasing cooperative, suggests the following for the improvement of franchisees' profitability. First, relations of cooperation rather than of power are necessary between a franchiser and franchisees. Second, mutual solidarity of franchisees is necessary. Third, problems proper to the Korean franchise system should be improved. Fourth, an entrepreneurial spirit of going together rather than going fast is required. Fifth, complete satisfaction management is required. Considering different system environments between the two countries such as quantitative expansion within a short franchising history of 30 years or so and franchise profit models, there is a limit to generalizing down to a successful model of the win-win partnership cooperative. It is hoped that the sustainable management of the domestic franchising industry will be promoted in the future through the in-depth analysis of successful cooperatives.

• Journal of Arbitration Studies
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• v.27 no.1
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• pp.161-182
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• 2017

The purpose of this study is to investigate the factors of conflict formation, conflict resolution type, and relationship performance between convenience store franchise headquarters and franchise stores operated by the franchise system located in the metropolitan area. The conclusion could be summarized as follows. First, according to factor analysis based on the previous research, the factor of conflict between convenience store headquarters and franchisee was tied to three factors such as goal disagreement, doctrinal discrepancy, and interdependence, whereas conflict resolution type was linked to three factors such as cooperation type, attack type, and avoidance type. Finally, the relationship performance is tied to three factors: financial performance, long-term cooperation, and non-financial performance. Second, as a result of Hypothesis 1, the interdependence was positively correlated when the cooperative type was the dependent variable. The target discrepancy was significantly positive(+) when the aggressive type was the dependent variable. The interdependence was significantly negative(-) when the avoidance type was the dependent variable. There also was a significantly positive(+) relationship in the target disagreement. Third, for Hypothesis 2, it is shown that target inconsistency is negative(-) for all cases where financial performance, long-term cooperation, and non-financial performance are dependent variables. Fourth, for Hypothesis 3, when the financial performance is the dependent variable, only the cooperative type shows a positive(+) relationship. On the other hand, when the long-term cooperation and the non-financial aptitude are the dependent variables, the cooperative type has a significant positive(+) relationship.

• Journal of Distribution Research
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• v.13 no.3
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• pp.55-77
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• 2008

The purpose of this research is to understand the effects of environmental uncertainty on transaction characteristics, industry factors, and performance in Korean franchising markets. This research tried to investigate both the characteristics of B-to-C service factors and B-to-B industry factors of franchising industry from the perspectives of CLalt, trust, communication, and other important variables. Hypothetical research model was proposed and, by using SPSS and AMOS, research hypotheses and structural equation models were empirically tested and supported. The results showed that environmental uncertainty has negative effects on relationship characteristics and industry characteristics of franchise. Trust showed positive impact on the performance. Managerial implications and limitations of the study results were also discussed. Future research direction was suggested.

• The Journal of the Korea Contents Association
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• v.8 no.11
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• pp.364-374
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• 2008

The study demonstrably begins with the franchise system that found management of member store for office, the satisfaction that the relation between main office and member store and the difference with renewal of the contract. According to the result of the study that analyzed the difference in the rate of satisfaction that depended on individual peculiarities, the study found the statistical difference in a part of a category of business, a school career, a business career, a floor area, a selling level and presence of experience. The floor area and the selling level are distributed into 3 groups and the category of business, the school career, the business career and presence of experience are distributed into 2 groups. In addition, the result that analyzed the difference in the rate of satisfaction that depended on the motive found that improvements were distributed into 2 groups and there was the difference between the rate of satisfaction that depended on renewal of the contract intent.

• Journal of Distribution Research
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• v.17 no.1
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• pp.37-63
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• 2012

In franchise business, exclusive sales territory (sometimes EST in table) protection is a very important issue from an economic, social and political point of view. It affects the growth and survival of both franchisor and franchisee and often raises issues of social and political conflicts. When franchisee is not familiar with related laws and regulations, franchisor has high chance to utilize it. Exclusive sales territory protection by the manufacturer and distributors (wholesalers or retailers) means sales area restriction by which only certain distributors have right to sell products or services. The distributor, who has been granted exclusive sales territories, can protect its own territory, whereas he may be prohibited from entering in other regions. Even though exclusive sales territory is a quite critical problem in franchise business, there is not much rigorous research about the reason, results, evaluation, and future direction based on empirical data. This paper tries to address this problem not only from logical and nomological validity, but from empirical validation. While we purse an empirical analysis, we take into account the difficulties of real data collection and statistical analysis techniques. We use a set of disclosure document data collected by Korea Fair Trade Commission, instead of conventional survey method which is usually criticized for its measurement error. Existing theories about exclusive sales territory can be summarized into two groups as shown in the table below. The first one is about the effectiveness of exclusive sales territory from both franchisor and franchisee point of view. In fact, output of exclusive sales territory can be positive for franchisors but negative for franchisees. Also, it can be positive in terms of sales but negative in terms of profit. Therefore, variables and viewpoints should be set properly. The other one is about the motive or reason why exclusive sales territory is protected. The reasons can be classified into four groups - industry characteristics, franchise systems characteristics, capability to maintain exclusive sales territory, and strategic decision. Within four groups of reasons, there are more specific variables and theories as below. Based on these theories, we develop nine hypotheses which are briefly shown in the last table below with the results. In order to validate the hypothesis, data is collected from government (FTC) homepage which is open source. The sample consists of 1,896 franchisors and it contains about three year operation data, from 2006 to 2008. Within the samples, 627 have exclusive sales territory protection policy and the one with exclusive sales territory policy is not evenly distributed over 19 representative industries. Additional data are also collected from another government agency homepage, like Statistics Korea. Also, we combine data from various secondary sources to create meaningful variables as shown in the table below. All variables are dichotomized by mean or median split if they are not inherently dichotomized by its definition, since each hypothesis is composed by multiple variables and there is no solid statistical technique to incorporate all these conditions to test the hypotheses. This paper uses a simple chi-square test because hypotheses and theories are built upon quite specific conditions such as industry type, economic condition, company history and various strategic purposes. It is almost impossible to find all those samples to satisfy them and it can't be manipulated in experimental settings. However, more advanced statistical techniques are very good on clean data without exogenous variables, but not good with real complex data. The chi-square test is applied in a way that samples are grouped into four with two criteria, whether they use exclusive sales territory protection or not, and whether they satisfy conditions of each hypothesis. So the proportion of sample franchisors which satisfy conditions and protect exclusive sales territory, does significantly exceed the proportion of samples that satisfy condition and do not protect. In fact, chi-square test is equivalent with the Poisson regression which allows more flexible application. As results, only three hypotheses are accepted. When attitude toward the risk is high so loyalty fee is determined according to sales performance, EST protection makes poor results as expected. And when franchisor protects EST in order to recruit franchisee easily, EST protection makes better results. Also, when EST protection is to improve the efficiency of franchise system as a whole, it shows better performances. High efficiency is achieved as EST prohibits the free riding of franchisee who exploits other's marketing efforts, and it encourages proper investments and distributes franchisee into multiple regions evenly. Other hypotheses are not supported in the results of significance testing. Exclusive sales territory should be protected from proper motives and administered for mutual benefits. Legal restrictions driven by the government agency like FTC could be misused and cause mis-understandings. So there need more careful monitoring on real practices and more rigorous studies by both academicians and practitioners.

• Journal of Distribution Research
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• v.10 no.2
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• pp.27-47
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• 2005

This study is basically focused on the relationship between the franchisors and franchisees. The goal of this study is mainly to inquire the variables of relationship characteristics affecting the commitment which lies in internal polity, and secondly to comprehensively analyze the performance resulting from commitment and examine the efficient alternatives onto relationship management. The practical methodology using in this study has been done in a national representing food franchise system. This study has been resulted in following: First, the variables that show significantly to the commitment are noncoercive influential strategy, dependence, cooperation, and goal divergence. In the contrast the coercive influential strategy hasn't showed significantly; Second, the result has showed that the commitment when it would be related with performance furthered the financial performance and role performance; and. therefore, we finally conclude that it would be more important to make lots of efforts of establishing the win-win relationship through the long-term commitment between the franchisor and franchisee in order to develop the more effective relationship of the franchise system.

• Journal of Distribution Research
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• v.16 no.2
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• pp.95-118
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• 2011

The purpose of this study is as follows. First, we investigate empirically the effects of social network properties such as social network density and centrality of a franchisee on its information sharing with various subjects such as the franchisor and other franchisees in the franchise system. Second, we examine exploratively if tie strength between a franchisee and its franchisor plays a moderating role on the relationship between social network properties and information sharing. The study model was established as shown in