• Journal of Distribution Research
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• v.8 no.1
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• pp.47-67
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• 2003

The purpose of this study is to investigate three issues. First, we investigated four control mechanisms that might increase the franchisee's perception of franchiser commitment: a franchiser's TSIs, relational norms, monitoring, and qualification programs. Second, we proposed that appropriateness and efficacy of these control mechanisms in fostering franchiser commitment might be changed over the relationship life cycle. Third, we examined how bureaucracy and levels of franchiser's commitment related to relationship satisfaction. Through empirical analysis, research results indicate that a franchiser's TSIs and relational norms are positively associated with the franchisee's perception of franchiser commitment. In detail, what increase franchisee's perception of franchiser commitment in short-term relationship are franchiser's TSIs but relational norms are more important in the long-term relationship. In addition, the results show that franchisee's perception of franchiser commitment, participation and formalization are positively related to relationship satisfaction.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.14 no.3
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• pp.141-151
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• 2019

This paper aims to investigate the moderating effects of relationship quality between support services of food service franchisor and performance(re-contract intention) in food service franchise. For analyzing the relationship of them, the support services of food service franchisor categorized with initial service and continuous service. Also, the factors of relationship quality(satisfaction, trust, commitment) classified into detailed subfactor by confirmatory factor analysis. As a result, we found some statistically significant effects between the support services of food service franchisor and factors of relationship quality, and they sequentially affects to re-contract intention. Also, it's analyzed that factors of relationship quality have a role as a moderating variables by research model. That is, as a presented with previous research, there is verified that relationship quality is caused by support services of food service franchisor. Also, relationship quality factors significantly affect to performance(re-contract intention). Some guidelines for practicing potential food service franchise as a result of this would include; first of all, it is important to support the potential food service franchise consulting approach for some competitive advantage; secondly, effective governmental support programs for food service franchise should be developed for positive impacts of according to these results.

• Journal of Distribution Research
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• v.17 no.3
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• pp.1-24
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• 2012

Franchises have recently emerged as the most rapidly expanding industry positioned to create a large impact in the domestic economic. The Chinese franchise industry developed rapidly in the period prior and subsequent to WTO accession with more than 50% of new franchises brands emerging since 2000. M&A transactions in the Chinese franchise industry have progressed actively. In the period from 2005-2007, due to the wholesale and retail market opening in accordance with the guidelines laid forth within the MOU by the WTO the Chinese franchise market is now the largest market in the world all despite a short history of only 20 years. The amount of franchise market research on China is disproportional to its current size and development potential. Beginning in the 1990s, market research conducted by the International Franchise Association focused on emerging markets in Eastern Europe and China. While the research dealt with the Chinese investment environment, it insufficiently explained the market region and cultural environment. The purpose of this research is (i) to investigate the determinants of the performance of franchise systems in China and (ii) new contract renewals based on performance factors. This study will complement existing research in terms of the franchisee perspective. This study may also prove of the benefit to the franchise companies entering the Chinese franchise market enabling them to develop an effective strategy. This study shows that support, incentives, and system standardization by franchisor yielded a positive effect on management performance. This is consistent with previous studies by Shin (2000) and Kim (2008) targeting Korean franchises. Therefore, in the Chinese market, the franchisor must focus on support, incentives, and system standardization rather than concentrate only on the recruitment of franchisees in order to improve revenue. Hypotheses regarding franchisor control have been dismissed in existing research, in the opinion of this study, due to their complexity and inability to control the merchant as a one-kind-assessment-standard. Our findings show that the franchisees' financial condition, management ability and entrepreneurial spirit, among franchisee's characteristics, have a positive effect on franchisor's business performance and satisfaction for the franchisee. This is consistent with previous studies on headquarters' management performance of Lussier (1996), Heo and Jang (2008), and franchisees' financial condition, management ability and entrepreneurial spirit effect on franchisor's satisfaction of Weaven and Franzer (2007), Kim (2009), Han (2009), and Yoon etc. (2008). Therefore, when permitting a franchisee, financial condition, management ability, entrepreneurship of the franchisee should be carefully considered. Among relational factors between franchisor and franchisee, trust has the positive influence on the management performance of the franchisor while conflict has a negative effect. However, trust, commitment and conflict factors have been shown not to have any impact on the satisfaction of the franchise headquarters. This result is consistent with the previous studies of Pavlou and Ba (2000), Morrison (1999), Weaven and Frazer (2007), Kim and Park (1994), Sohn (2007) which show that trust between franchisor and the franchisees have a positive effect and that conflict has a negative impact on franchisor's management performance. Other factors causing a negative effective on the franchisor's management performance are a rapid environmental changes and uncertainty in the business. This is consistent with Campbell et al (2007), Kim and Kim (2009), Han and Baek (2008). Finally, the high management performance and satisfaction of the franchise headquarters has a positive effect on the intention of franchise renewal. In the case of large markets such as China, the franchisor's strategy and the role is very important. In this study, we also investigated the characteristics of franchisor and franchisee, relationship, and environmental uncertainty affecting on the management performance and satisfaction of franchisor. Recently, Korean franchises are attempting to enter foreign markets through the rise in popularity of Korean culture and entertainment commonly referred to as the Korean wave. This study provides recommendations for Korean franchises intending on entering the Chinese market. First, in order to achieve stable profits, the franchise corporation needs to support the operation of the individual franchisee through incentives and standardization of services. Second, because trust between the franchisor and franchisee has a positive effect on management performance, on-going discussion and cooperation is necessary to reduce the level of conflict.

• Journal of Distribution Science
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• v.8 no.2
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• pp.23-32
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• 2010

This study attempted to investigate the impact of relational characteristics just like level of perceived communication, support, conflict and justice between optical franchisor and franchisees on relational performance. Data collected from A Optical Franchisees supported two hypotheses such as communication and relational satisfaction, relational satisfaction and long-term commitment that were proposed. Another result between justice and relational satisfaction in this study shows that the other research and interpretation for this phenomenon was attempted. In accordance with the results, the following conclusion was made: it is very important to communicate with franchisor, and the core mean for that would be the enhancement of the long-term commitment of franchisees through the perceived relational satisfaction of franchisee's in optical franchise system. To accomplish this, to understand characteristics of franchisor and franchisees and fit of their characteristics should be preceded.

• Journal of Distribution Science
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• v.9 no.2
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• pp.49-59
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• 2011

A franchise can be said to be the main method of distribution and marketing. It appears to be the future of the retail industry and is one of the world's fastest growing businesses sectors, as many policy reports and research results have acknowledged. Korea's franchise industry began in the 1970s, spread out into many areas (including food services, retail, and the service industry), and has grown by over 10% each year ever since. The industry's influence on the national economy becomes ever greater. Although the size of the franchise industry is expected to grow as it spreads and as the government expands its support, it has not yet attracted much academic interest. Research has so far been very fragmented. The main interest has been the relationship and conflicts between the head offices and the affiliates. No study has yet occurred on whether the concepts of satisfaction and intent to conclude a contract directly affect the success or failure of the affiliates. Few studies have empirically inquired into the demographic characteristics and abilities of the affiliates that significantly affect their results. Domestic franchise industries must prepare to leap from quantitative to qualitative growth. Most important is the need for affiliate headquarters and affiliates to build confidence between them. A friendly and reliable relationship between affiliate headquarters and affiliates will eliminate distrust from the franchise and maintain a healthy franchise system. This study suggests that current and prospective heads of affiliation should concentrate not on attracting affiliates but on investment and techniques of affiliate support. They should work on the reinforcement of brand power, the appropriate affiliate business environment, systematic education/training, taking burdens off the affiliate business persons, consolidating the relationship with the affiliate business persons, marketing mix factors (e.g. products, price conditions, logistics and shipping services, promotion, supervising and supervisor, operation procedures/processes, and material evidence); these all greatly affect the success or failure of the affiliate business. Supporting the affiliates is an important factor that enhances their results and satisfaction and consequently increases the positive recommendations to others and the ratio of recurrent conclusions of contracts, which ultimately generate the growth of the franchises. In addition, it is suggested that prospective franchise founders should make every effort to choose a good head office since the characteristics of the head office greatly influence the success of the affiliates. This study is significant in that it grasps the characteristics of the head office of affiliation and of the affiliates that influence affiliate results in ways not yet academically attempted.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.2 no.2
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• pp.69-91
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• 2007

This study is aimed to analyze the impact of the perception of fairness on the relationship quality as a way to enhance the competitiveness through the establishment of a long-term relationship between food service franchisors and franchisees. An empirical analysis found that the more positively the fairness of franchisors is recognized, the more positive impact it has on the relationship quality. As both the distributive fairness and the procedural fairness, the two concepts of fairness, are perceived in a more positive manner, the trust and satisfaction over franchisers were found to be higher, with the conflict shown to be lower. Though both the distributive fairness and the procedural fairness showed a significant result, the procedural fairness, in particular, has a greater impact on the trust and satisfaction over franchisers than the distributive fairness. In addition, the quality of relationship between franchisor and franchisees has a positive impact on a long-term commitment. That is that as their trust and satisfaction over franchisors are higher with less conflict, franchisees will become more cooperative with their franchisors. The greatest impact on the long-term unity, among the factors that constitute the relationship quality, appeared to be trust. Accordingly, it is advisable persons in charge at franchisors place the greatest focus on fostering trust to establish a long-term relationship, inducing it in a positive direction. From such result, suggestions can be made in establishing a strategy for developing an appropriate relationship between food service franchisors and franchisees. Firstly, persons in charge at food service franchisors will have to induce the perception of franchisors' procedural fairness by franchisees in a positive direction in order to enhance the Quality of relationship with franchisees. Secondly, as an alternative strategy for forming a long-term relationship between franchisors and franchisees, the effort should be made to foster a greater trust in franchisors first. In many cases, franchisors currently focus more on their convenience in management than the development of systems to satisfy the franchisee needs. This contravenes with the essence of relationship marketing and thus, it can be said it is the most important of all that focus should be directed at trust and fairness in the effort toward a sustained relationship between franchisors and franchisees in the future.

• The Korean Journal of Franchise Management
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• v.2 no.1
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• pp.152-172
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• 2011

This study aims to analyze the effect of franchisor's pre-open support services on franchisee's relationship quality and performance in foodservice franchise system. The analysis data was collected from 500 franchisees located in Seoul and Gyeonggi-do of Republic of Korea. The finding are as followings: firstly, the factors of information providing, market researching, interior and equipment supporting, education and training supporting, sale and promotion supporting, and legal supporting influence positively franchisee's satisfaction. Second, regarding relationship among relationship quality, satisfaction positively influences trust and commitment, and trust positively influence commitment. Third, relationship quality influences positively both financial and non-financial performance.

• Journal of Distribution Research
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• v.17 no.4
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• pp.81-101
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• 2012

A franchise system develops competitive products for a franchise store through the system established by the franchise head office. Therefore, it has advantages of expanding the marketing effect since the risk of failure is reduced for a founder and the franchise head office supports the overall sales, advertisement and promotional activities. Also, a franchise store has advantages of fulfilling necessary facilities and tools on advantageous terms, reducing expenses by purchasing in bulk, and getting a supply of products with stable qualities. However, aside from such advantages, franchise head offices are forcing franchise stores to make unnecessary investments in equipments and remodel the interior. Also, franchise business operators are being made to share the cost of marketing and multiple franchise stores are being approved within the same business district, and franchise business operators are suffering damages. Therefore, cases of shutting down a franchise store or not renewing the contract are frequent. From the position of a franchise head office, profits that are generated from franchise fees, interior remodeling fees and supplying facilities and materials will increase as the number of new franchise stores increases. However, franchise stores are faced with difficulties due to excessive competitions between similar types of businesses and the overlapping of business districts that come from increases in the number of stores, and they eventually end up shutting down. Therefore, in order for a franchise business operator and franchise head office to grow and develop continuously, opening new stores is important, but successfully renewing the contract by maintaining a relationship with an existing franchise business operator is desirable. In this aspect, a study that examines the elements that can affect the relationship between a franchise business operator and franchise head office is believed to be important for the development of the franchise industry and creating safe jobs for the public. With an emphasis on the relationship between a franchise head office and franchise store, this study attempted to examine the effect of characteristics of a franchise head office and franchise business operator on the bilateral relationship such as the faith and immersion, and wished to review the effects of such faith and immersion on the satisfaction of a franchise store, including an intention of renewing the contract. In particular, in the current situation of great uncertainties in the market, this study also wished to examine how uncertain market elements will affect the relationship between the characteristics of a franchise head office and franchise business operator, and the faith and immersion. The study revealed that among the characteristics of a franchise head office, the standardization management of a franchise head office hinders a franchise store's faith and immersion in a franchise head office. Also, a franchise head office's support was shown to increase a franchise store's faith and immersion. However, it was revealed that a franchise head office's regulation and incentive policies for a franchise store do not affect a franchise store's faith and immersion. Among characteristics of a franchise business operator, a franchise store's healthy financial status and entrepreneur spirits were shown to enhance the faith and immersion in a franchise head office. However, it was shown that excellent business abilities of a franchise business operator actually reduce the immersion for a franchise head office. Also, the faith and immersion in a franchise head office were shown to enhance the intention of renewing the contract by increasing the satisfaction for a franchise head office. In addition, it was originally believed that the effects of a franchise business operator's characteristics on the faith and immersion in a franchise head office will vary depending on the market uncertainty, but the effect of a franchise business operator's characteristics depending on the recognition of uncertainties was shown to be insignificant. Such findings show that instead of making a franchise store pay for equipment investments and marketing and obtaining profits by force, a franchise head office should actively support a franchise store so that a franchise store's business activities can be conducted well, which will bring profits to a franchise store and ultimately to a franchise head office. This is a more desirable direction for the development of both parties. Implications of such findings are summarized as follows. First, it was shown that a franchise head office's standardization management actually reduces a franchise store's faith and immersion. Therefore, it is believed that instead of conducting standardization managements for regulating and managing franchise stores, measures should be developed so that franchise stores can actually participate voluntarily. For this, a head office should put in efforts to develop and provide standardized manuals, and make sure that a self-review system takes root. Second, a franchise head office's incentives did not have significant effects on the faith and immersion, but the support was shown to be effective. Therefore, it can be seen that instead of taking post-measures for a franchise store, taking pre-measures of actively supporting is more effective in maintaining a franchise store. Third, among characteristics of a franchise head office, it was shown that a franchise store's healthy financial status increased the faith and immersion in a franchise head office. Therefore, when selecting a franchise business operator, instead of thoughtlessly opening up franchise stores for the profit of a head office, it is believed that reviewing a franchise business operator's financial firepower and credit status is necessary. As for academic implications, previous studies examined the relationship by focusing on the characteristics of a franchise head office and franchise store, but this study focused on the characteristics of a franchise business operator. Therefore, this study dealt with the importance of a franchise business operator's competence, and is significant because it revealed the fact that a franchise business operator's excellent commercialization ability can become an element that hinders the immersion in a franchise head office. It was originally believed that a franchise store's characteristics will have different effects on the faith and immersion depending on the market uncertainty, but it was shown that the effect of a franchise store's characteristics depending on the recognition of uncertainties was insignificant, and that is the limitation of this study.

• Culinary science and hospitality research
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• v.15 no.3
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• pp.54-68
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• 2009

This study is to examine the structural relationships between relationship learning, their antecedents such as transaction specific assets, and environmental uncertainty, and long-term orientation, overall satisfaction and recontracting intention in the context of the foodservice franchise industry. The data is analyzed with structural equation modeling with Amos 5.0 and SPSS 14.0. The result of the overall model analysis appeared as follows: $x^2=57.75$, df=9, p=0.00, GFI=0.95, AGFI=0.81, RMSR=0.03, NFI=0.92, CFI=0.93. Since the result of the overall model analysis demonstrated a good fit, we could further analyze our data. The results of this study are as follows: First, information sharing of relationship learning had a significantly positive effect on long-term orientation. Second, information sharing of relationship learning did not have a significantly positive effect on overall satisfaction. Third, shared interpretation of relationship learning had a significantly positive effect on long-term orientation and overall satisfaction. Fourth, developing memories of relationship learning did not have a significantly positive effect on long-term orientation and overall satisfaction. Fifth, overall satisfaction had a significantly positive effect on long-term orientation. Sixth, long-term orientation and overall satisfaction had a significantly positive effect on recontracting intention. Finally, transaction specific assets and environmental uncertainty had a significantly positive effect on relationship learning. At the end of this paper, limitations, further research directions, and implications are suggested.

• Journal of Distribution Research
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• v.16 no.1
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• pp.1-27
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• 2011

I. Introduction: This study is to examine the structural relationships among exogenous variable (preliminary and post-support, franchisee's perceived business possibility, communication, moral hazard), the mediated variables(satisfaction, perceived risk, trust) and dependent variable(recontracting intention) in the food service franchise industry context. More specifically, this study has considered some realistic characteristics factors influencing satisfaction, perceived risk and trust between franchisors and franchisees and their further recontracting intention from the perspective of a practical approach. In this study, 437 data has been collected and used for the SPSS and AMOS analysis. The data were analyzed with structural equation modeling. Since the result of the overall model analysis demonstrated a good fit, we could further analyze our data. II. Research Model: This study is to examine the structural relationships among preliminary and post-support by franchisor, franchisee's perceived business possibility, and communication, moral hazard, has on effect on franchisee's satisfaction, perceived risk, trust and recontracting intention in the food service franchise industry context. Hypotheses are as following (Stern & EL-Ansary 1988; Oliver, 1997;Kee & Knox, 1970; Moorman, Deshpande & Zaltman, 1993; Perron, 1998; Zaheer, McEvily, Perrone, 1998). III. Result and Implication: We examined franchisee who have food service stores for samples of this study. The data were analyzed with structural equation modeling using path analysis. The result of the overall model analysis appeared as following: ${\chi}^2$ = 61.578 (d.f.=9, p<0.01), CFI =.990, GFI =.973, AGFI =.863, RMR =.019, RMSEA= .116, NFI = .988, TLI = .959. The findings can be summarized as follows: First, preliminary and post support of franchisor, perceived business possibility and communication positively influence to franchisee's satisfaction. Second, moral hazard of franchisor has negatively influence to franchisee's satisfaction and positively influence to perceived risk. Third, franchisee's satisfaction and trust has positively influence to recontracting intention. Fourth, franchisee's perceived risk has negatively influence to trust and recontracting intention. We can concluded that franchisor's preliminary and post support of franchisor, perceived business possibility and communication may be considered as the important factors influence to franchisee's satisfaction. Moral hazard has become a focused issue in franchise industry. Finally, the managerial implication has been stated as followings: First, in the process of building a systematic industry support franchise system and developing a creative business model, franchisee's stable profitability should be considered as the first important factor. The franchisee's trust to franchise may become a dominant factor that influence the business expansion of franchisor. Second, franchisor should communication with their franchisees and deal with the realistic difficulties faced by them with an effort. Third, the franchisor should achieve a synergy effect by utilizing the win-win strategy. The moral hazard strategy that achieving the profit through franchisee's damage will not be inadvisable to franchisor. Then the long-term oriented development and profitability can be maintained. To do so, the franchise industry may break away from the traditional business structure to improve management transparency and competitiveness on investment and organizational changing management. The conflict between franchisor and franchisee also can be reduced and big success can be achieved in the franchise industry.