• Journal of Distribution Science
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• v.15 no.2
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• pp.91-100
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• 2017

Purpose - Domestic franchise market has been grown steadily, reaching 50 trillion won in sales and 3,360 franchise headquarters in 2014. A franchise system is an effective business system for the franchisees to lower the failure rate due to the fact that the inexperienced entrepreneurs are supported by their headquarters through the franchisee contract. However, there are also conflicts between franchiser and franchisee behind the quantitative growth of domestic franchise industry. Therefore, it is very important to structure the causes of conflicts and to examine the effect of factors on the relationship commitment and performances. Research design, data, and methodology - In this study, the author divides the composite incompatibility between the franchise and the franchisee into goal incongruity, domain dissensus, and perceptual differences, and examines each dimension to the relationship with commitment and performances. To verify the proposed research model and test hypotheses, the author selected 200 franchise responses in food and beverage industry. The data were analyzed using SPSS 18.0 and AMOS structural equation modeling program. Results - The empirical findings provide goal incongruity and perceptual differences have a negative effect on the affective commitment, but not the calculative commitment. In addition, affective commitment and calculative commitment are found to have a positive effect on re-contractual intention and extended brand shop running intention, respectively. Affective commitment have a stronger effect on re-contractual intention than calculative commitment. Conclusions - First of all, the fact that goal incongruity and perceptual differences negatively affect the affective commitment, but it does not affect the calculative commitment. It means the relationship commitment in distribution channel are multi-dimensional concept that may be attributed to emotional or affective dimensions but may exist in terms of necessity or power-dependence. Second, the level of relationship commitment such as affective and calculative commitment to franchise headquarters positively affects the re-contractual intention and franchiser's extend brand shop running intention suggest that franchiser should encourage and support existing franchisee's commitment. Third, the fact that affective commitment has a greater effect on relationship performance than calculative commitment means to induce franchisee's affective commitment and to prevent the inconsistency between goals and perceptual differences.

• Culinary science and hospitality research
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• v.11 no.4 s.27
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• pp.118-133
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• 2005

In the management activities of head office in supporting franchisees in domestic food-service enterprises, the raw material supply plays a positive role to support franchisees' operation activity and it comes into conflict with them at the same time. In this paper, I have tried to find out the relationship between raw material supplying and the satisfaction of the franchisees by experimental research in order to research the route of head office's raw material supplying. To sum up the results, it was found out there is no meaningful relationship between the raw material supplying and the franchisees satisfaction (intention to renew the agreement), It indicates it would be more effective for the franchisees to buy the raw materials from the suppliers developed by the franchisees except some key materials in order to reduce the conflicts with the franchisees.

• 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.

• Journal of Distribution Science
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• v.12 no.12
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• pp.19-26
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• 2014

Purpose - This paper aims to test the effects of Korean food service franchisors' and franchisees' TSI (Transaction Specific Investment) on dependence and trust toward the franchisor and re-contract intention. The study examines the effects of both franchisors' and franchisees' TSI on dependence and trust, as compared with Ganesan (1994). Research design, data, and methodology - Data were collected from 495 Korean food service franchisees and analyzed with structural equation modeling using path analysis through SPSS 18.0 and AMOS 18.0. Results - 1) The franchisor's TSI has positive effects on the franchisee's dependence and trust toward the franchisor. 2) The franchisee's TSI has a positive effect on the franchisee's dependence toward the franchisor. 3) The franchisee's dependence and trust have positive effects on commitment. 4) The franchisee's dependence, trust, and commitment have a positive effect on re-contract intention. Conclusions - The franchisor's and franchisee's TSI affect the franchisee's dependence and trust toward the franchisor. The franchisee's dependence and trust influence commitment and re-contract intention. This has managerial implications for franchisors striving to raise franchisees' re-contract intention.

• Journal of Distribution Science
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• v.13 no.4
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• pp.65-76
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• 2015

Purpose - This article aims to present and test a model regarding franchisors' supporting activities that may positively influence franchisees' attitude toward the franchising headquarter and their own business performance. Moreover, the authors examine the moderating effect of competitive intensity between franchisee attitude and business performance. Most previous research focused on behavioral performance measurements such as satisfaction, trust, and commitment. There are few empirical studies that focus on financial performance data because it is difficult to determine a relational mechanism between behavioral and financial performance. Moreover, financial data is confidential and difficult to collect in many cases. However, this study measures financial performance (e.g., sales revenue per square meter) differently than most previous research, which is mostly focused on the behavioral performance measurements. Research design, data, and methodology - To test our hypotheses, we selected 137 franchisee managers who are running chains of one of the foremost bakery franchise brands in South Korea. This study carefully investigated the reliability, content validity, convergent validity, and discriminant validity of the proposed instrument by analyzing the data obtained from the samples. The data was analyzed using the AMOS structural equation modeling program. Results - The results indicated that: non-financial support activities (e.g., information exchange and communication) had a positive impact on the franchisee attitude toward the franchising headquarter. The franchisee attitude in turn had a positive effect on the headquarters' business performance. Furthermore, competitive intensity could enhance the relationship between franchisee attitude toward franchising headquarter and business performance in a local franchise market. However, financial support activities (e.g., rewards and promotional support) and training had no relationship with either franchisee attitude or business performance. Conclusions - This study provides some practical implications to franchisors in terms of franchise operation and store opening strategies. With respect to the franchise operation strategy, franchisors need to focus on non-financial rather than financial support. Most franchisees consider the necessity of financial support activities and not their sufficiency because these activities are specified in their franchise contract. In addition, it is important for franchisees to maintain a positive attitude for the franchise headquarters. The franchisees with a positive attitude for the franchisor can show a high degree of solidarity for various support activities, and it consequently determines franchisees' sales performance. In terms of franchise store opening strategy, this study suggests an additional criterion that can be considered in determining the location of direct and non-direct management stores (e.g., franchisees' stores). In this research, franchise stores located within high level of competitive intensity are shown to have a high relationship between franchisee attitudes of franchisor support activities and business performance compared to the franchisees located within low competitive intensity level. This result shows that opening non-direct franchise stores is more effective than direct stores in higher competitive market situations. Research contribution, implications, and further research directions are discussed at the end of the paper.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.14 no.4
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• pp.143-160
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• 2019

The domestic pharmacy market has undergone a lot of changes starting from the division of medicine. Along with the division of medicine, patients who had previously visited the pharmacy were moved to a hospital or clinic. As the pharmacy became more dependent on the illness and the clinic, the pharmacy began various activities to search for ways other than prescription drugs. At this time, the importance of distribution was emphasized around the time, and as the need to strengthen the competitiveness of pharmacies increased, they rapidly grew into the franchise market. Pharmacy franchise companies continue to lecture on academic management to strengthen the expertise of pharmacists' functions in line with the pharmacy market, which is different from ordinary franchise, in addition to private brand products for pharmacies, diversifying pharmacy handling items, And strengthening its market competitiveness. but research to support it are insufficient. As a research to help this, we analyzed factors affecting the intention of re-contracting and recommendation intention that affect the maintenance and expansion size of the drugstore franchise market. As a result showed the intention of re-contracting and the intention of recommending are affected by positive influence in brand trust. In addition, Brand Promise, Employee authenticity, Originality, Product excellence, Brand reputation, Brand identification, Educational Satisfaction were found to affect brand trust.

• The Korean Journal of Franchise Management
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• v.3 no.1
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• pp.92-110
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• 2012

Due to the social problems including recent economic crisis and unemployment rate increase, the demand of business foundation market has been increased and, in the meantime, on the basis of the business foundation support policy of the government including youth foundation support policy and Small & Medium Business Administration foundation planning, business foundation market has been showing steady growth trend. With this enlargement of foundation market, as the accompanied increase of franchise market is expected, it is considered that the importance of more realistic and concrete research about franchise market be larger than before. This study considered brand image, main office support, foundation cost, information search activity as the advanced variable of effect on brand selection and established the cause of effect on brand selection by improving the existing advanced research, and its result is as follows. First, according to foundation business kind, age, sex, yes or no of marriage, there is some difference III the thought about brand image and foundation possibility. Second, Second, the most important factor of franchise contract intention is economical specificity. It is difficult to consider brand image, franchise support and information search activity as the property having a big effect on preliminary founder, and it was shown that the cost for franchise management(Consistency with initial foundation cost and self-capital, promotion cost, management fund, facility/equipment reinvestment, etc.) is an important property. Specially, it was shown that consistency with initial foundation cost and self-capital is the most important factor for preliminary founder.

• The Korean Journal of Franchise Management
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• v.12 no.2
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• pp.35-49
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• 2021

Purpose: The major objective of this study is to develop a model for the impact of franchisors' Gapjil (verbal·nonverbal Gapjil, abusing bargaining position, refusing transaction, false or exaggerated information, restrictive practices, unfair damage compensation) on franchisee's recontract intention. We also examine the mediating role of economic satisfaction and social satisfaction in the relationship between franchisors' Gapjil and franchisee's contract intention. Research design, data, and methodology: Data were collected from franchisee owners located nationwide in Korea. Out of 256 questionaires distributed, a total of 256 questionnaires were returned. After excluding 10 invalid respondent questionnaires, we coded and analyzed 246 valid questionnaires (effective response rate of 96.09%) using frequency, confirmatory factor analysis, correlations analysis, and structural equation modeling with SPSS 22.O and SmartPLS 3.0. Results: The findings of this study are summarized as follows: First, among the Gapjil of the franchisors, restrictive practices and unfair damage compensation had negative effects on economic and social satisfaction, but verbal and nonverbal Gapjil for economic and social satisfaction was not significant. Second, abusing bargaining positions and false or exaggerated information had negative effects on social satisfaction, but for economic satisfaction, found to be insignificant. Third, economic and social satisfaction had positive effects on the franchisee's recontract intention to the franchisor. Conclusion: The following implications of this study are as follows. First, the construct of Gapjil that occurs between the franchisors and the franchisees was first presented, and the franchisors' Gapjil is divided into interpersonal Gapjil and structural Gapjil. Second, the Gapjil of the franchisors can be an important predictor variable in maintaining and developing a long-term relationship between the franchisors and the franchisees. Third, solving conflict due to the Gapjil problem between franchisors and franchisees can be an important factor for franchisors and franchisees to co-survive and thrive in Korean franchise system. Fourth, this study suggest that managing the Gapjil of the franchisors was a important antecedent factor in maintaining long-term relationship between the franchisors and the franchisees. Therefore, this study will help franchisors formulate effective symbiotic marketing strategies to satisfy relationships with franchisees and consequently enhance long-term orientation.

• The Korean Journal of Franchise Management
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• v.12 no.1
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• pp.35-44
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• 2021

Purpose: This study examines the opportunism moderating effect by the startup experience in the relationship between franchisor and franchisees. In the case of a franchise system that has a continuous relational exchange transaction, relationship management is a very important activity because the relationship management between franchisor and franchisees improves the quality of the relationship. Nevertheless, there is insufficient of research on opportunism, which is a negative factor in managing the relationship between franchisor and franchisees in continuous relationship. Research design, data and methodology: This study, we explore the cause of opportunism based on transaction cost theory through prior research and establish a research model based by goal incongruity, uncertainty, information asymmetry, transaction specific assets, the relevance to determinant of opportunism and the startup experienced which is a moderating variable. To verify several hypotheses, the data were collected from 300 out of 1,760 domestic franchisees and analyzed using multiple regression analysis with SPSS program. Results: The findings are as follows. Goal incongruity did not affect opportunism. Opportunism increased as uncertainty increased, and as information asymmetry increased, opportunism increased. An opportunism decreased as transaction specific assets increased. Moreover, the findings show that startup experience only plays a moderating role in the relationship between information asymmetry and opportunism. Therefore, 4 out of 8 hypotheses were supported. Conclusions: The findings show that uncertainty, information asymmetry, and transaction specific assets are the determinants of opportunism. In addition, the results of the analysis of the moderating role of startup experience show that the less entrepreneurial experience, the greater the influence of information asymmetry on opportunism. Our findings mean that maintaining a successful relationship between franchisors and franchisees is possible when franchisors provide knowledge sharing, goal sharing, environmental sharing, and management information sharing to franchisees. In addition, the findings of this study shows that the contract content and management should be changed according to the entrepreneurial experience. In other words, the franchisors must share and integrate the accumulated franchisees' and franchisors' experience with the franchisees to create a synergy that can lead to successful bilateral relationship maintenance, which in turn reduces opportunism.

• Journal of Distribution Research
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• v.15 no.5
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• pp.217-235
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• 2010

In franchise industry, territorial restraint is a system that imposes exclusive right to franchisers in a certain business area. To the franchisers, this system guarantees monopoly profits in a local market and exclusive rights during the contract periods. In such a way, franchisee generates a big revenue at once on the basis of franchiser's initial investment such as interior cost and franchise fee, it must have supervised franchiser's moral hazard for the territorial restraint agreement. Rather than territorial restraint can be a system to give exclusive right to franchiser's so that they neglect their own sales and too much rely on headquarter's brand and marketing activities without their own efforts. This paper assesses the implication of territorial restraint by examining the effect on brand extension, degree of contract termination. Drawing on research in transaction cost agreement and opportunism, the authors suggest that franchisee is highly likely to launch similar brand which is not effected on previous contract when territorial restraint is set out in the contract system. Moreover, the authors find that the degree of contract termination will be high in the existence of territorial restraint due to the franchisee's opportunism. The results imply that territorial restraint induces franchisee's opportunistic strategy more aggressively so that the possibility of brand extension or new brand launching will be increased. At the same time, franchisee is aggressively seeking for the reason for contract termination due to the pursuit of its profit maximization. Based on some empirical findings, this paper concludes with policy implications and some necessary fields of future studies desirable.