• The Korean Journal of Franchise Management
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• v.2 no.2
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• pp.84-94
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• 2011

Domestic franchise industry is growing rapidly as a promising business in 21st century and also ordinary people business. Domestic franchise headquarters and franchisees have increased exponentially. However, because of tough competition in the industry, headquarters' lack o fawareness of recruiting and managing franchisees, and reckless expansion strategy for the structural problem of profit structure and lack of experts, systematic management and support system are not going well. For these reasons, the need of franchisee management system is growing up in this industry. Domestic franchise industry is focused on appearance, the volume, while absence and lowness of internal management systems are making stores shut down and conflicts proving necessity of management system. In this study, we find and study the way to compensate these problems and systematize by cooperating within surance companies to manage franchisees, and eventually to be able to set up and use new systems including franchise management system, initial services, on goin gservices, lega lservices, tax services, labor services, and financial analysis and planning services.

• The Korean Journal of Franchise Management
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• v.1 no.1
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• pp.65-85
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• 2010

The key success factors for Franchise Enterprise as a virtual company which is established based on franchise system are the competitiveness of sub-systems in franchise system such as franchisor, franchisee, vendor(supplier), and customer, and to sustain the symbiotic relationship among sub-systems. In this regard, evaluating franchise system is considered to be implemented in different contexts and methods comparing with extant evaluation system in franchise business which is more focused on the relationship between franchisor and franchisee. The flagship role of establishing franchise system is to be franchisor system, however, the symbiotic relationship among other sub-system including franchisee, vendor, and customer leads to successful Franchise Enterprise. The purpose of this study is to research existing evaluation systems for franchise business and to explore the model of evaluating franchise system, what is called, "Symbiosis Index".

• 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.4 no.2
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• pp.21-40
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• 2006

Small and middle sized Franchise system channels experience conflicts because of constant interaction between franchiser and franchisee. However, it is rarely that attempt has been made to identify causes of conflicts in distribution of franchise industry. The purpose of this study was to explore cause of conflicts from the franchisee. For the study, data were collected from the owner or the shop-manager with a contractor in franchise systems. By means of in-depth interviews with multiple informants, their statement was analyzed qualitatively. From analysis of the resulting data, the causes of conflicts were associated with two broad sets, attitudinal and structural differences between franchisers and franchisees. First, attitudinal sources of conflict were identified as perception of subordinated relationships between channel members, delayed announcement on order changes, difficulties in communication by doing irresponsible behavior, different expectations between channel members in market territory and lack of consistent-supporting. Second, structural sources of conflict involved unilateral decision on interior, payment method, unreasonable delivery issue, treat franchisee with discrimination by the sales, in controlling against free management. There are limitations on generalization due to the results based on interview, but this study will be a useful exploratory step before designing a large scale survey.

• Journal of Distribution Research
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• v.13 no.2
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• pp.1-27
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• 2008

In a power-asymmetry relationship like franchise system, a high dependent franchisee must often rely on its powerful partner. Therefore, in order to build up 'win-win' systems, therefore channel members should increase trust and commitment each other to enhance the relationship quality to sustain long-term cooperative relationships. First of all, to increase the relationship quality in franchise system, franchisor should increase franchisee's perception of the powerful franchisor's justice. The point of this research, I established basic hypotheses and comparative hypotheses to examine franchisor's behavior what franchisee expected which influences on franchisee's attitude and behavior in power - asymmetry relationship in franchise system. For the purpose of the empirical testing, managers of franchisee in the food service industry of Korea had been selected and analyzed, and major findings in this study as follow: First, the relational norm between franchisor and franchisee increased both distributive justice and procedural justice, especially relational norm had more effect on procedural justice than distributive justice. Second, distributive justice increased both economic commitment and social commitment while procedural justice just increased social commitment only but economic commitment. So, on the relational commitment, distributive justice was more important element than procedural justice. On the other hand, procedural justice had indirect effect on economic commitment through distributive and social commitment.

• Journal of the Korea Society of Computer and Information
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• v.18 no.9
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• pp.165-175
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• 2013

Though the number of food franchises has been increased these days, there has not been less success for food franchise than failure. One of the several failures is the distrust between franchisor and franchisee factors because the franchisee thought its franchisor does not make its accounts and operations transparent. In order to resolve it, the large business food franchise has used the ERP system, however, small business franchise has run a very simple information system, which is linked to POS system and consists of simple functions to insert or inquire the result of data on sales and order etc to identify the status of both franchisor and franchisee because of financial difficulties and manpower shortage. Thus, small business franchise needs the cost management between them with low cost for efficient business administration. In this study, we suggest the data reference model (DRM) which covers the cost management system and is able to be linked to any POS system. The DRM is a framework whose primary purpose is to enable information linking and reuse across the any POS-based information systems via the classification, structure, model, exchange and management of data.

• Journal of Global Scholars of Marketing Science
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• v.18 no.4
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• pp.61-118
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• 2008

The purpose of this research is to construct research framework for international franchising based on existing literature and to identify research components in the framework. Franchise can be defined as management styles that allow franchisee use various management assets of franchisor in order to make or sell product or service. It can be divided into product distribution franchise that is designed to sell products and business format franchise that is designed for running it as business whatever its form is. International franchising can be defined as a way of internationalization of franchisor to foreign country by providing its business format or package to franchisee of host country. International franchising is growing fast for last four decades but academic research on this is quite limited. Especially in Korea, research about international franchising is carried out on by case study format with single case or empirical study format with survey based on domestic franchise theory. Therefore, this paper tries to review existing literature on international franchising research, providing research framework, and then stimulating new research on this field. International franchising research components include motives and environmental factors for decision of expanding to international franchising, entrance modes and development plan for international franchising, contracts and management strategy of international franchising, and various performance measures from different perspectives. First, motives of international franchising are fee collection from franchisee. Also it provides easier way to expanding to foreign country. The other motives including increase total sales volume, occupying better strategic position, getting quality resources, and improving efficiency. Environmental factors that facilitating international franchising encompasses economic condition, trend, and legal or political factors in host and/or home countries. In addition, control power and risk management capability of franchisor plays critical role in successful franchising contract. Final decision to enter foreign country via franchising is determined by numerous factors like history, size, growth, competitiveness, management system, bonding capability, industry characteristics of franchisor. After deciding to enter into foreign country, franchisor needs to set entrance modes of international franchising. Within contractual mode, there are master franchising and area developing franchising, licensing, direct franchising, and joint venture. Theories about entrance mode selection contain concepts of efficiency, knowledge-based approach, competence-based approach, agent theory, and governance cost. The next step after entrance decision is operation strategy. Operation strategy starts with selecting a target city and a target country for franchising. In order to finding, screening targets, franchisor needs to collect information about candidates. Critical information includes brand patent, commercial laws, regulations, market conditions, country risk, and industry analysis. After selecting a target city in target country, franchisor needs to select franchisee, in other word, partner. The first important criteria for selecting partners are financial credibility and capability, possession of real estate. And cultural similarity and knowledge about franchisor and/or home country are also recognized as critical criteria. The most important element in operating strategy is legal document between franchisor and franchisee with home and host countries. Terms and conditions in legal documents give objective information about characteristics of franchising agreement for academic research. Legal documents have definitions of terminology, territory and exclusivity, agreement of term, initial fee, continuing fees, clearing currency, and rights about sub-franchising. Also, legal documents could have terms about softer elements like training program and operation manual. And harder elements like law competent court and terms of expiration. Next element in operating strategy is about product and service. Especially for business format franchising, product/service deliverable, benefit communicators, system identifiers (architectural features), and format facilitators are listed for product/service strategic elements. Another important decision on product/service is standardization vs. customization. The rationale behind standardization is cost reduction, efficiency, consistency, image congruence, brand awareness, and competitiveness on price. Also standardization enables large scale R&D and innovative change in management style. Another element in operating strategy is control management. The simple way to control franchise contract is relying on legal terms, contractual control system. There are other control systems, administrative control system and ethical control system. Contractual control system is a coercive source of power, but franchisor usually doesn't want to use legal power since it doesn't help to build up positive relationship. Instead, self-regulation is widely used. Administrative control system uses control mechanism from ordinary work relationship. Its main component is supporting activities to franchisee and communication method. For example, franchisor provides advertising, training, manual, and delivery, then franchisee follows franchisor's direction. Another component is building franchisor's brand power. The last research element is performance factor of international franchising. Performance elements can be divided into franchisor's performance and franchisee's performance. The conceptual performance measures of franchisor are simple but not easy to obtain objectively. They are profit, sale, cost, experience, and brand power. The performance measures of franchisee are mostly about benefits of host country. They contain small business development, promotion of employment, introduction of new business model, and level up technology status. There are indirect benefits, like increase of tax, refinement of corporate citizenship, regional economic clustering, and improvement of international balance. In addition to those, host country gets socio-cultural change other than economic effects. It includes demographic change, social trend, customer value change, social communication, and social globalization. Sometimes it is called as westernization or McDonaldization of society. In addition, the paper reviews on theories that have been frequently applied to international franchising research, such as agent theory, resource-based view, transaction cost theory, organizational learning theory, and international expansion theories. Resource based theory is used in strategic decision based on resources, like decision about entrance and cooperation depending on resources of franchisee and franchisor. Transaction cost theory can be applied in determination of mutual trust or satisfaction of franchising players. Agent theory tries to explain strategic decision for reducing problem caused by utilizing agent, for example research on control system in franchising agreements. Organizational Learning theory is relatively new in franchising research. It assumes organization tries to maximize performance and learning of organization. In addition, Internalization theory advocates strategic decision of direct investment for removing inefficiency of market transaction and is applied in research on terms of contract. And oligopolistic competition theory is used to explain various entry modes for international expansion. Competency theory support strategic decision of utilizing key competitive advantage. Furthermore, research methodologies including qualitative and quantitative methodologies are suggested for more rigorous international franchising research. Quantitative research needs more real data other than survey data which is usually respondent's judgment. In order to verify theory more rigorously, research based on real data is essential. However, real quantitative data is quite hard to get. The qualitative research other than single case study is also highly recommended. Since international franchising has limited number of applications, scientific research based on grounded theory and ethnography study can be used. Scientific case study is differentiated with single case study on its data collection method and analysis method. The key concept is triangulation in measurement, logical coding and comparison. Finally, it provides overall research direction for international franchising after summarizing research trend in Korea. International franchising research in Korea has two different types, one is for studying Korean franchisor going overseas and the other is for Korean franchisee of foreign franchisor. Among research on Korean franchisor, two common patterns are observed. First of all, they usually deal with success story of one franchisor. The other common pattern is that they focus on same industry and country. Therefore, international franchise research needs to extend their focus to broader subjects with scientific research methodology as well as development of new theory.

• Journal of the Korea Society of Computer and Information
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• v.10 no.6 s.38
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• pp.299-308
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• 2005

Recently, the standardization and computerization of franchise management have been necessitated from the specialization of industrial areas and the diversification of customer requirements. The existing ERP(Enterprise Resource Planning) systems are commercially used, but usually are restrictive solutions about manufactured goods and inventory management. etc. In this Paper, we propose an effective franchise management system Franchiser X1(FX1), which is a total component-based franchise management system for effectively supporting franchise management works, including the recruit of franchisees, the management of franchisees, consulting, education and A/S, bill collecting, and so on.

• Culinary science and hospitality research
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• v.15 no.2
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• pp.219-230
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• 2009

The purpose of this research was to investigate the success factors of the foodservice franchise business. This study examined relevant literatures, set up some hypotheses to solve main questionable consideration and made a corresponding empirical analysis. For the empirical analysis, a questionnaire survey was applied to ttotal 120 franchisers who have operated franchise business around Seoul. The result from the multiple regression model shows that the success of the franchise business is influenced by the operating system, the brand system, the educational system, and the franchisees' activities. As mentioned in the literature review and empirical analysis, it is found that the above mentioned four systems are equally affected by franchisers' success factors. The limits of this study include the fact that it has selected and researched around Seoul and four factors. Future research should be done from the perspective of such factors as culture, economy, region, menu, service and so on.

• 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.