• Journal of Information Technology Services
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• v.9 no.4
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• pp.1-18
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• 2010

Plural governance system in which firms use vertical integration and market governance simultaneously are widely used across various marketing context. Typical examples of plural governance include franchise systems, in which firms own and operate some unit themselves while licensing the operation of some of their units to franchisees. Despite many scholars have attempted to explore the structure of plural governance over decades, there are few insights into its determinants. In this study, we examine the relationship between the proportion of outlets franchised and several franchisor's characteristics based on the perspectives of transaction cost analysis, resource scarcy theory and agency theory. Using franchisor data in Korean Franchise Disclosure Document over the 2006-2009 period, we test the effect of franchisor size, system growth rate, franchise fee, initial investment, and risk sharing on the proportion of outlets franchised. Except for the effect of system growth rate, the results of a series of multiple regression analysis supported the negative effects of franchisor size, franchise fee, initial investment and risk sharing on the proportion of outlets franchised.

• The Korean Journal of Franchise Management
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• v.13 no.4
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• pp.23-37
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• 2022

Purpose: The Korean franchise market has undergone drastic growth in recent years. Followed by expansion of franchise business types, relevant legal matters have diversified. Compared to conventional economic laws that focused on resolving problems related to unfair transactions between franchisors and franchisees, more diverse labor laws have emerged recently due to governance and economic dependencies of franchise structure. However, it was found that the business environment of franchisees and working conditions of franchisee employees have not changed accordingly due to the unique structure of franchise business. Though franchisees are entrepreneurs independent from franchisors, they are still under franchising contract with the franchisors. For instance, employees of franchisees have been exposed to malpractices in regard to pay, time, and other working conditions. These malpractices may show the ineffectiveness of current labor laws. Labor management is an important issue for sustainability of franchise businesses. Negative publicity of franchises generated from violating relevant labor laws may have significant negative impact on overall image of franchised brands. However, franchisors should not hold franchisees fully responsible for legal violations in terms of labor management but strive to prevent relevant risks. Thus, the recent amendment in labor law related to increased minimum wage and reduced worktime have called for more attention to effectively implementing the law. Research design, data, and methodology: This study was conducted through a review of franchise-related laws and various institutions and policies. Results: It is further needed for all parties, including franchisors, franchisees, and franchisee employees, to take collaborative actions to improve working conditions of franchisees. Therefore, this study aims to propose appropriate and effective response plans toward recent changes in the Minimum Wage Act, while strengthening sustainability of franchisors, franchisees, and their employees. Conclusions: The proposal mainly contains plans regarding profit-related aids and profit sharing/cost reduction strategies for franchisees, as well as collective bargaining in the franchisor-franchisee relation. More detailed suggestions are included. Conclusions: This proposal may help franchisors and policymakers develop business plans and policies in improving business conditions of franchisees and working conditions of franchisee employees.

• The Korean Journal of Franchise Management
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• v.9 no.4
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• pp.45-56
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• 2018

Purpose - Consumers perceive various risks while using food service franchise stores. Food service franchise stores offer consumers not just menus, but services, physical environment, and prices, which can be perceived as risk to consumers. This means that consumer behavior in foos service franchise stores needs to be studied based on perceived risk theory. Perceived risk consists of performance risk, financial risk, social risk, psychological risk, and time risk. The purpose of this study is to investigate the effects of perceived risk on satisfaction and trust, and in turn affect loyalty. The results of this study will provide guidelines for marketers to develop strategies to reduce the perceived risk of consumers. Research design, data, methodology - In order to achieve research purposes, the authors developed several hypotheses. Data were through online survey through an online survey firm. A questionnaire survey was distributed to customers who have visited the restaurant in the past three months. The survey was conducted from March 5, 2017 to October 14, 2017. A total of 1,500 people were e-mailed and 260 were returned. A total of 245 items were used in the analysis except 15 of the questionnaire. Data was analyzed by using SPSS 21.0 and AMOS 21.0. Results - The findings of this study are as follows: First, performance risk, economic risk, and psychological risk had negative effects on satisfaction. Social and time risks did not affect on satisfaction. Performance risk and time risk had negative impact on trust. Second, economic, social, and psychological risks did not affect trust, but satisfaction had significant positive effect on trust and loyalty. Third, satisfaction had positive effect on loyalty. Conclusions - The implications of this study are as follows. First, food service franchise marketers should increase their customer loyalty by establishing a risk reduction strategy. Second, there are various risks to customers visiting the store. Therefore, marketers need to analyze the perceived risks of customers. Third, it is also necessary to eliminate the perceived risks of customers. In addition, a restaurant franchise company needs to find a reasonable way to reduce the material cost and present a reasonable menu price.

• 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.22 no.8
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• pp.78-88
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• 2016

This study conducted to find influences of selection attributes on consumer satisfaction as perceived by low-cost restaurant visiter by considering personal value. Developed survey was distributed and 428 sample who visited the low-cost franchise restaurant were employed the statistical analyze. The internal value and the external value included individual value in order to estimate the influence of the choice factor of the low-cost franchise restaurant on the quality of the product, and the choice factors were consisted of 3 variables that are quality, accessibility and service. Regression analysis was conducted to verify the relationships among the variables. As a result, the internal value (${\beta}=.236$, p<.0.01), and external value (${\beta}=.352$, p<.001) have the significant positive relationships with respect to quality. Second, the external value (${\beta}=.305$, p<.001) has the positive relationship with regard to accessibility, but the internal value has no significant relationships with level of accessibility. Third, the internal value (${\beta}=.828$, p<.001) has the significant positive relationship with regard to service, but there was no significant influences between external value and service in this study. Fourth, the internal value (${\beta}=.472$, p<.001), the external value (${\beta}=.479$, p<.001) were critical antecedents of the quality. Last, while quality (${\beta}=.858$, p<.001) has significant positive relationship with satisfaction, but it didn't show any relationships with accessibility and service.

• The Korean Journal of Franchise Management
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• v.12 no.2
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• pp.7-21
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• 2021

Purpose: One of the characteristics of service companies such as foodservice franchise is that it is easy to imitate, so many brands can imitate the menu that is popular with consumers. Therefore, foodservice franchise company should develop a brand that customers can identify from other brands in order differentiate it from its competitors. In order make the foodservice franchise company identifiable from other brands, it is possible through communication with customers. Therefore, this study proposes a new research model to analyze customer loyalty through online advertising and online word of mouth trust and immersion. Online was provided to customers through a mixture of advertisements and word of mouth, but previous studies have only considered online advertisements or online word of mouth. In addition, we want to verify the difference according to gender, which is an important variable in researching the online information processing behavior of customers. Research design, data, and methodology: The questionnaire of this study was surveyed on 20 years of age or older who have visited the restaurant franchise store within the last 3 months among the foodservice franchise companies operating SNS. During the survey period, 400 surveys were surveyed for a total of 20 days from April 1 to April 20, 2020. Result: The research results are as follows. First, in this study, the effect of online advertisement and online word of mouth on trust and immersion was studied. Second, this study verified the social influence theory in online advertising and online word of mouth. Third, the effect of online advertising and online word of mouth on loyalty according to gender was verified. Fourth, compared to existing advertisements, online advertisements are suitable for marketing by foodservice franchise companies because they can interact with consumers, modify advertisements immediately, execute extensive advertisements at low cost, segment the market, and measure advertisement effectiveness. The recent online expansion has been expanded to mobile-based, allowing foodservice franchisees to provide new communication services such as SMS (Short Message Service), multimedia messaging services, and location-based services. Fifth, a foodservice franchise company can increase brand awareness through online marketing or induce the use of offline stores. Sixth, franchisor can grow into a sustainable company only when they use resources efficiently. Conclusions: Trust is important in foodservice franchise information. This trust has a significant impact on customer commitment and loyalty.

• The Korean Journal of Health Service Management
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• v.1 no.1
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• pp.75-89
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• 2007

The start point of a franchise system such as Lotteria was in 1979. Since 1990, the franchise systems in Korea have rapidly spread over all industry types. As 'Franchise Law' was enforced in 2002, the expansion of a franchise picked up its' speed. The barbers and beauty parlors business has the same expansion trend. However, there was no study about the franchise systems in the barbers and beauty parlors business. The purpose of this study was to find the goodness of fit of the structured equation model proposed and identify the significances of relationships in the variables of justice perceptions, trust, satisfactions, business performances, switching barriers, switching cost etc. This study tries to find a solution for a good development between franchisor and franchisee in the barbers and beauty parlors business in Korea. The theoretical considerations about justice of this study is limited in reciprocal relation justice and procedure justice. And it did make simplify for trust, satisfaction, business performance, switching barrier. And switching barrier did measure as dimension of switching coot. From October 26, 2005 to October 29, this study collected 250 survey questionnaires from the franchisees located in Seoul, Busan, Daegu, Ulsan, and Keoyng-Nam. In analyses of using SPSS Windows 11.0 and LISREL 8.14, this study used 208 cases because 48 cases did not response appropriately. Tn conclusions. reciprocal justice perception and procedure justice jointly determined trust. Secondly, reciprocal justice perception significantly determined satisfaction. Procedure justice perception negatively determined satisfaction, but this relationship was not significant. Thirdly, reciprocal justice perception positively influenced business performance, and procedure justice negatively influenced business performance, but the last relationship was not significant Fourthly, trust positively significantly influenced satisfaction and business performance. Fifthly, satisfaction positively influenced business performance and true determined switching barrier positively. This study shows following: firstly, a composition concept did make structural relationship and secondly, a reciprocal relation justice of a franchisor did appear as an important variable and it gives positive influence to trust, satisfactions, business performance, switching barriers of the franchisees.

• The Korean Journal of Franchise Management
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• v.13 no.1
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• pp.19-33
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• 2022

Purpose: Based on the resource-based view and the competitive advantage theory, the study views marketing capabilities (product, pricing, delivery/inventory, and promotional support) as sources of competitive advantage (differentiation advantage and low-cost advantage) and examines their impacts on competitive advantage, which in turn, will influence non-business and business performance. Research design, data and methodology: Data were collected from 149 representatives of franchising companies in South Korea and analyzed with SmartPLS 3.3.7. Results: First, promotional support and product have a significant impact on differentiation advantage. Second, pricing and promotional support have a significant impact on low-cost advantage. Third, differentiation advantage has an influence on non-financial and financial business performance. Fourth, low-cost advantage has an impact on non-financial performance but has no significant direct impact on financial performance. Fifth, non-financial performance is related to financial performance. Finally, the result of IPMA shows that importance and performance values of exogeneous variables are different depending on firm size. Conclusions: The findings suggest that franchisors should focus on different marketing capabilities depending on their strategic focus and objectives. Finally, the findings based on an IPMA suggest that small companies perceive low-cost advantage as important, while their counterparts do not. Several theoretical and managerial implications are offered.

• The Korean Journal of Franchise Management
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• v.13 no.3
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• pp.45-55
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• 2022

Purpose: Consumers' experience of functional attributes is remembered, and the experience lowers the cost of consumers' input from their point of view and reduces uncertainty. It also plays an important role in consumers' positive emotions and responses. Accordingly, if information search costs are reduced in terms of the costs perceived by consumers about restaurants, a strategy differentiated from other companies can be established. Therefore, this study investigated the effect of functional congruence of restaurant stores on information search cost reduction, positive/negative emotions, and loyalty. Research Design, Data, and Methodology: This study investigated functional congruence, information search cost reduction, and positive/negative emotions. The structural relationship between loyalty was analyzed. To verify this, a research hypothesis was established based on previous studies and a research model was constructed. The questionnaire items were modified and used according to the current study, based on previous studies. The data were collected using the questionnaire method from 187 people who had dining out experience. Frequency analysis was performed to confirm demographic characteristics. Reliability, convergent validity, and discriminant validity of the collected data were verified. The research model was analyzed with a structural equation modeling (SmartPLS 4). Results: The findings show that functional congruence had significant positive effects on information search cost reduction and positive emotion, but no significant effect on negative emotion. Information search cost reduction had significant positive effects on positive emotion/negative emotion but did not significantly affect loyalty. Lastly, both positive and negative emotions had significant positive effects on loyalty. Conclusion: Based on transaction cost theory, this study found how functional congruence and information search cost reduction influence consumers' emotions. The functional attributes of restaurants were perceived by customers as information, thus uncertainty was decreased. Finally, appropriate management strategies and implications of functional congruence and information search cost in the restaurant were suggested.

• Culinary science and hospitality research
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• v.24 no.1
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• pp.130-139
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• 2018

The purpose of this study was to grasp the profitability of coffee franchise companies using ROIC tree, ROA and ROE. As a result, ROA was using assets efficiently, and some companies are in desperate need to improve their management based on past brand recognition, and a new paradigm management strategy is urgently required. In particular, the franchise company's current cost burden is greater than comparable firms. In ROE, the capital was operating efficiently. Since ROIC is very difficult to classify business related and operating related amounts accurately based on financial statement information, there is a limit to accurate ROIC calculation. Therefore, ROIC is estimated to be 7.6~38.29% as of 2016 based on ROIC calculation. In the case of continuous growth companies, investments are made to improve steady sales, but some companies seem to be unable to escape from past paradigm. In order to continue the growth of the company beyond the accounting profit in the future, the ROIC Tree can be used to measure the subdivided management performance and propose efficiency plan.