• Culinary science and hospitality research
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• v.15 no.4
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• pp.331-344
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• 2009

As per the results verified in this study for the effect, which is given to the intent for contract according to the franchisor's capacity and support factors per the founder's characteristics. Firstly, as for analysis of the effect given by the conditions of the founder to the capacity of the franchisor, the experience and the founder's self-confidence are attentively affected in the history of the franchisor among the capacity of the franchisor, and the experience and the specialized knowledge done in the number of the franchises, and the experienced, specialized knowledge and self-confidence of the founder done in the brand and the self-confidence of the founder done in the capacity of the franchisor. Secondly, as for the hypothesis, which the founder's conditions is the support of the franchisor, the experience, specialized knowledge and the founder's self-confidence attentively affected in the support for advertisement, and the capital and experience done in the educational support, and the capital and specialized knowledge and the founder's self-confidence done in the business manual and the founder's self-confidence done in the package. Thirdly, as for the effect given by the capacity of the franchisor to the intent for contract, the number of the franchises possessed the franchisor and brand are affected to the capacity of the franchisor, and fourthly, as for the hypothesis, which the support of the franchisor affects the intent for contract, the educational support, business manual and package purchase are attentively affected. Therefore, through this study, it can be known that the characteristics of the founder and the capacity and support of the franchisor are mutually related to the intent for contract.

• The Korean Journal of Franchise Management
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• v.10 no.2
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• pp.19-32
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• 2019

Purpose - This paper aims to investigate the mediating effects of relationship fairness factors between franchisor's support services and performance(re-contract intention) in food service franchise. More specifically, fairness was measured into distributive, procedure, interaction, and information, franchisor's support service was divided into pre-start support services (initial support services) and post-start support services (continued support services), and performance (re-contract intent) was measured using 3 items such as re-contract, contract extension, and recommendation. Research design, data, and methodology - The population for the survey is the head of franchises in the metropolitan area (Seoul/Gyeonggi), which operates a restaurant franchise, and samples included a wide range of overseas/domestic brands and regions. The survey was conducted from August 1 to September 30, 2018 through the survey agency. The survey was conducted together with a telephone interview and a direct visit by the investigator. A total of 205 questionnaires were collected and retrieved, 4 questionaires containing missing information were excluded and 201 responses were used for analysis. Results - The results shows that franchisor's initial support services have significant positive effects on procedural, interpersonal, and informational relationship fairness, and continuous support services have significant positive effects on distributive, procedural, interpersonal, and informational relationship fairness. This study also shows that informational and procedural fairness have significant positive effects on performance(re-contract intention). Finally, continuous services a significant positive effect on performance(re-contract intention). Conclusions - The results show that franchisor make a manual, and should improve fairness through regular investigation whether support services was executed as promised in the manual after franchisee operation. In addition, information fairness and procedural fairness have been shown to increase performance(re-contract intention). These results mean that the franchisor's headquarters should provide product and service support for the merchant in accordance with the manual and management policy to reduce asymmetry in information and improve procedural fairness to enhance performance(re-contract intention).

• Journal of Distribution Research
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• v.15 no.3
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• pp.1-34
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• 2010

Introduction The purpose of this research is to develop overall model which involves the effect of ongoing support services by franchisor on franchisee's relationship quality(trust, satisfaction, and commitment) and business performance(financial and non-financial performance), and to investigate the relationships among trust, satisfaction, commitment, financial and non-financial performance. This study also suggests franchise business or franchise system should be based on long-term orientation between franchisor and franchisee rather than short-term orientation, or transactional relationship, and proposes the most effective way of providing on-going support services by franchisor with franchisee thru symbiotic relationship among franchisor and franchisee Research Model and Hypothesis The research model as Figure 1 shows the variables on-going support services which affect the relationship quality between franchisor and franchisee such as trust, satisfaction, and commitment, and also analyze the effects of relationship quality on business performance including financial and non-financial performance We established 12 hypotheses to test as follows; Relationship between on-going support services and trust H1: On-going support services factors (product category & price, logistics service, promotion, information providing & problem solving capability, supervisor's support, and education & training support) have positive effect on franchisee's trust. Relationship between on-going support services and satisfaction H2: On-going support services factors (product category & price, logistics service, promotion, information providing & problem solving capability, supervisor's support, and education & training support) have positive effect on franchisee's satisfaction. Relationship between on-going support services and commitment H3: On-going support services factors (product category & price, logistics service, promotion, information providing & problem solving capability, supervisor's support, and education & training support) have positive effect on franchisee's commitment. Relationship among relationship quality: trust, satisfaction, and commitment H4: Franchisee's trust has positive effect on franchisee's satisfaction. H5: Franchisee's trust has positive effect on franchisee's commitment. H6: Franchisee's satisfaction has positive effect on franchisee's commitment. Relationship between relationship quality and business performance H7: Franchisee's trust has positive effect on franchisee's financial performance. H8: Franchisee's trust has positive effect on franchisee's non-financial performance. H9: Franchisee's satisfaction has positive effect on franchisee's financial performance. H10: Franchisee's satisfaction has positive effect on franchisee's non-financial performance. H11: Franchisee's commitment has positive effect on franchisee's financial performance. H12: Franchisee's commitment has positive effect on franchisee's non-financial performance. Method The on-going support services were defined as an organized system of continuous supporting services by franchisor for the purpose of satisfying the expectation of franchisee based on long-term orientation and classified into six constructs such as product category & price, logistics service, promotion, providing information & problem solving capability, supervisor's support, and education & training support. The six constructs were measured agreement using a 7-point Likert-type scale (1 = strongly disagree to 7 = strongly agree)as follows. The product category & price was measured by four items: menu variety, price of food material provided by franchisor, and support for developing new menu. The logistics service was measured by six items: distribution system of franchisor, return policy for provided food materials, timeliness, inventory control level of franchisor, accuracy of order, and flexibility of emergency order. The promotion was measured by five items: differentiated promotion activities, brand image of franchisor, promotion effect such as customer increase, long-term plan of promotion, and micro-marketing concept in promotion. The providing information & problem solving capability was measured by information providing of new products, information of competitors, information of cost reduction, and efforts for solving problems in franchisee's operations. The supervisor's support was measured by supervisor operations, frequency of visiting franchisee, support by data analysis, processing the suggestions by franchisee, diagnosis and solutions for the franchisee's operations, and support for increasing sales in franchisee. Finally, the of education & training support was measured by recipe training by specialist, service training for store people, systemized training program, and tax & human resources support services. Analysis and results The data were analyzed using Amos. Figure 2 and Table 1 present the result of the structural equation model. Implications The results of this research are as follows: Firstly, the factors of product category, information providing and problem solving capacity influence only franchisee's satisfaction and commitment. Secondly, logistic services and supervising factors influence only trust and satisfaction. Thirdly, continuing education and training factors influence only franchisee's trust and commitment. Fourthly, sales promotion factor influences all the relationship quality representing trust, satisfaction, and commitment. Fifthly, regarding relationship among relationship quality, trust positively influences satisfaction, however, does not directly influence commitment, but satisfaction positively affects commitment. Therefore, satisfaction plays a mediating role between trust and commitment. Sixthly, trust positively influence only financial performance, and satisfaction and commitment influence positively both financial and non-financial performance.

• Journal of Arbitration Studies
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• v.30 no.4
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• pp.139-161
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• 2020

In this study, the factors affecting opportunism that causes conflict in the franchise system between franchisor and franchisee were analyzed based on the transaction cost theory and power-dependency theory. Hypothesis 1 states that franchisor support will negatively affect opportunism. Hypothesis 2 expresses that franchisee transaction-specific investment on the relationship with the franchisor will positively affect opportunism. Hypothesis 3 asserts that franchisee dependency on the franchisor will positively affect opportunism. All of these were supported. However, Hypothesis 4, maintaining that franchisee competitive intensity will positively affect opportunism, was not supported. The theoretical and practical implications of this study are as follows. This study has identified the antecedents of franchisor opportunism that causes conflict in the franchise system by comprehensively applying the transaction cost theory and power-dependency theory. This study can also identify what a company should manage specifically to lower opportunism by identifying the antecedents of franchisor opportunism in the franchise system. The limitations of this study and the directions for future studies are as follows. First, not all of the antecedents of franchisor opportunism in the franchise system have been extensively investigated from the transaction cost theory's and power-dependency theory's viewpoint. In the future, it is necessary to identify additional factors. Second, the study was conducted only from the franchisee's perspective. In future studies, more accurate research results can be obtained by simultaneously examining the franchisee's point of view and the franchisor's point of view.

• Journal of Distribution Science
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• v.12 no.12
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• pp.119-130
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• 2014

Purpose - Franchise industries are significant both socially and economically. However, with increasing interest, there are manifold problems. It is necessary to seek measures for mature operation constantly despite unprepared franchisors, negative perceptions of the media and society toward franchise, and rapid changes in business start-up trends and propensity to consume that make business start-ups difficult. The paper aims to explain the effects of relational commitment and performance on the franchisor's management characteristics and justice in the food service franchise system. Research design, data, and methodology - This is an exploratory survey examining franchising in Korea. Based on a literature synthesis, we extract five constructs: managerial characteristics, support, fairness, trust, and satisfaction. We hypothesize that these factors influence the trust, satisfaction, and performance of franchisees. To examine these hypotheses empirically, we conducted a survey on the database of the Franchising Council of Korea. The study employs data from May to September 2014. In total, 135 completed questionnaires were received, of which 128 were usable. The data was analyzed with SPSS/PC 22.0. First, to test unidimensionality and nomological validity of the measures of each construct, we employed a scale refinement procedure. The result of a reliability test with Cronbach's α and factor analysis warranted unidimensionality of the measures for each construct. In addition, nomological validity of the measures was warranted from the result of the correlation and regression analysis. By analyzing the data, we can confirm most hypotheses. Results - Frist, franchisor characteristics have a positive effect on trust and satisfaction. Second, franchisor fairness has an effect on trust and satisfaction. Third, franchisor support has an effect on satisfaction. Further, the franchisee trust has an effect on satisfaction. Fourth, the satisfaction of a franchisee with a franchisor affects the performance of a franchisee. Finally, there is a possibility that not only franchisee performance but also increasing the credibility and improving the image of the franchisor through communication between franchisor and franchisee can improve franchisees' performance and satisfaction by motivating the franchisee for sustainable growth. Franchisers should endeavor for franchisees to obtain stable revenue with continuous and practical support. They should recognize that they can expand their business by supporting their franchisees. Franchisors should not only instantly respond to franchisees' troubles with interactive communications but also raise the ability of supervisors for better support. Franchisors should share their visions and goals with their franchisees and provide systematic and continuous support based on trust and clear company management. Franchisees should understand franchisors' position as well as participate in establishing the basic franchise system. Contributions - The paper contributes to understanding franchising in Korea. It offers insights and assistance to franchisors hoping to start franchises. This paper explores measurement issues related to franchisee performance by estimating its determinant factors (managerial characteristics, support, fairness, trust, and satisfaction). This study provides franchisors and practitioners planning to extend their franchising business with some practical knowledge.

• 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.

• Journal of Distribution Science
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• v.19 no.1
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• pp.17-26
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• 2021

Purpose: This research is to investigate the effect of the franchisee's basic psychological needs satisfaction on its business performance. Moreover, within the relationship between the franchisee's basic psychological needs satisfaction and its performance, the current study examined the mediating effect of work engagement and the moderating effect of the franchisor's support. Research design, data and methodology: 367 survey data were collected and analyzed using SPSS 22 and AMOS 22. For the assessment of goodness of fit of the models, fit indexes such as TLI, CFI, RMSEA were employed. Results: The results of the study are as follows: first, the franchisee's basic psychological needs satisfaction is positively related to performance; second, the franchisee's basic psychological needs satisfaction is positively related to work engagement; third, the franchisee's work engagement is positively related to performance; fourth, it is uncovered that the franchisee's work engagement mediates the relationship between basic psychological needs satisfaction and business performance; fifth, the moderating effect of the franchisor's support was insignificant. Conclusion: This study would like to contribute to the field of franchise performance, by re-assessing the significance of the individual's characteristics (of the franchisee) which has been ignored thus far. Furthermore, the limitations of the study and future research directions were discussed.

• Journal of Distribution Science
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• v.12 no.8
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• pp.43-54
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• 2014

Purpose - This study was based on a theoretical consideration of the structural relationship between the support and control of the franchisor and the satisfaction and strategic response (voice, loyalty, exit, neglect) of the franchisee. First, based on the preceding research, this study systematically organized the type of support and control of the franchisor. Second, the study examined the effects of a franchisor's support and control on the expectancy disconfirmation between affiliated franchisees' expectations before a franchise agreement and performance after operating an affiliated store. Third, the study looked into the effects of expectancy disconfirmation relating to a franchisor's support and control on an affiliated franchisees' general satisfaction. Fourth, this study examined the influence of the general satisfaction of a franchisee on affiliated franchisees' response strategies. Research design, data, and methodology - In this study, the population comprised the nation's franchisors, and the sample comprised franchisees conducting business in Seoul and Gyeonggi-do. A self-administered questionnaire was used; the author and examiner explained the study's parameters to the interviewees in advance, to lessen the rate of rejection of the answers and to maintain reliability. The author distributed 350 copies of the questionnaire and collected 327 copies (93.4%). The author removed 54 copies of the sample, as these copies belonged to franchisees that were not registered by the Fair Trade Commission and/or were thought to have either defects or inadequate answers. The author selected an effective sample of 273 copies to enter data and to do the statistical analysis. Results - Both a reliability analysis and a confirmatory factor analysis were performed to measure reliability and validity, and a structural equation model was used to conduct the hypothesis test and investigate the models. The hypothesis was tested (Table 5). The models had a suitable fit, for instance, χ² = 447.663(df = 212, p = .000), χ²/df = 2.112, GFI = .881, AGFI = .858, RMR = .083, RMSEA = .067, NFI = .932, and CFI = .961. The hypothesis test results were as follows. Hypothesis 1 was accepted (C.R. = -2.339, p = .019). Hypothesis 2 was accepted (C.R. = 15.213, p = .000). Hypothesis 3 was accepted (C.R. = -2.631, p = .006). Hypothesis 4 was accepted (C.R. = 16.271, p = .000). Hypothesis 5 was accepted (C.R. = 2.391, p = .017). Hypothesis 6 was accepted (C.R. = 5.777, p = .000). Hypothesis 7 was accepted (C.R. = 17.153, p = .000). Hypothesis 8 was accepted (C.R. = 24.746, p = .000). Hypothesis 9 was accepted (C.R. = -10.150, p = .000). Hypothesis 10 was accepted (C.R. = -12.124, p = .000). Conclusions - The research results showed that expectations for a franchisor's support and control had a significant influence on expectation disconfirmation in a negative way, whereas the performance of support and control were found to have a significant influence on expectation disconfirmation in a positive way. In addition, the expectation disconfirmation of support and control was found to have a significant influence on satisfaction of franchisees in a positive way. Generally, regarding the research on control, control is found to have a negative influence on the satisfaction of franchisees, but this study proves that control is found to affect it in a positive way through conformity.

• Journal of Global Scholars of Marketing Science
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• v.18 no.2
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• pp.65-88
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• 2008

Since the implementation of economic reforms in 1978, the Chinese economy grows rapidly at an average annul growth rate of 9% over the post two decades. Franchising has been widely recognized as an important source of entrepreneurial activity. Trust is important in that it facilitates relational exchanges by permits partners to transcend short-run inequities or risks to concentrate on long-term profits or gains. In the relationship between the franchisors and franchisees, trust has been described as an important source of competitive advantage. However, little research has been done on the factors affecting trust in Chinese franchisor-franchisee relationships. The purpose of this study is to investigate what factors affect the trust in the franchise system in China, and to provide guidelines and insights to franchisors which enter Chinese market. In this study, according to Morgan and Hunt (1994), trust is defined as the extending when one party has confidence in an exchange partner's reliability and integrity. We offered a conceptual model of the empirical study. The model shows that the factors affecting the trust include franchisor's supports, communication, satisfaction with previous outcome and conflict. We also suggested the franchisor's supports and communication like to enhance the franchisee's satisfaction with previous outcome, and the franchisor's supports, communication and he franchisee's satisfaction with previous outcome tend to decrease conflict. Before the formal study, a pretest involving exploratory interviews with owners from three franchisees was conducted to make sure the questionnaire was relevant and clear to the respondents. The data were collected using trained interviewers to carry out personal interviews with the aid of an unidentified, muti-page, structured questionnaire. The respondents comprised of owners, managers, and owner managers of franchisee-owned food service franchises located in Beijing, China. Even though a total of 256 potential franchises were initially contacted, the finally usable sample consisted of 125 respondents. As expected, the sampling method was successful in soliciting respondents with waried personal and firm characteristics. Self-administrated questionnaires were used for all measures. And established scales were used to measure the latent constructs in this study. The measures tapped the franchisees' perceptions of the relationship with the referent franchisor. Five-point Likert-type scales ranging from "strongly disagree" (=1) to "strongly agree" (=7) were used throughout the constructs (trust, eight items; support, five items; communication, four items; satisfaction, six items; conflict, three items). The reliability measurements traditionally employed, such as the Cronbach's alpha, were used. All the reliabilities were greater than.80. The proposed measurement model was estimated using SPSS 12.0 and AMOS 5.0 analysis package. We conducted A series of exploratory factor analyses and confirmatory factor analyses to assess the convergent validity, discriminant validity, and reliability. The results indicate reasonable overall fits between the model and the observed data. The overall fit of measurement model were $X^2$= 159.699, p=0.004, d.f. = 116, GFI =.879, NFI =.898, CFI =.969, IFI =.970, TLI =.959, RMR =.058. The results demonstrated that the data reasonably fitted the model. We also examined construct reliability and reliability and average variance extracted (AVE). The construct reliability of each construct was greater than.80 and the AVE of each construct was greater than.50. According to the analysis of Structure Equation Modeling (SEM), the results of path model indicated an adequate fit of the model: $X^2$= 142.126, p = 0.044, d.f. = 115, GFI =.892, NFI =.909, CFI =.981, IFI =.981, TLI =.974, RMR =.057. As hypothesized, the results showed that it is strategically important to establish trust in a franchise system, and the franchisor's supports, communication and satisfaction with previous outcome tend to reinforce franchisee's trust. The results also showed trust seems to decrease as the experience of conflict episodes increases. And we also noticed that franchisor's supports and communication tend to enhance the franchisee's satisfaction with previous outcome, and communication tend to decrease conflict. If the trust between the franchisor and franchisee can be established in a franchise system, franchising offers many benefits and reduces many costs. To manage a mutual trust of relationship with their franchisees, franchisor's should provide support effectively to their franchisees. Effective assistant services have direct effect on franchisees' satisfaction with previous outcome and trust in franchisor. Especially, franchise sales process, orientation, and training in the start-up period are key elements for success of the franchise system. Franchisor's support is an accumulated separate satisfaction evaluation with different kind of service provided by the franchisor. And providing support definitely can improve the trustworthy image of the franchisor. In the franchise system, conflicts of interests and exertions of different power sources are very common. The experience of conflict episodes seems to negatively relate to trust. Therefore, it is important to reduce the negative side of the relationship conflicts. Communication actually plays a broader role in reducing conflict and establish mutual trust in franchisor-franchisee relationship. And effective communication between franchisors and franchisees can improve franchisees' satisfaction toward the franchise system. As the diversification of Chinese markets, both franchisors and franchisees must keep the relevant, timely, and reliable communication. And it is very important to improve the quality of communication. Satisfaction with precious outcomes seems to positively relate to trust. Franchisors and franchisees that are highly satisfied with the previous outcomes that flow from their relationship will perceive their partner as advancing their goal achievement. Therefore, it is necessary for both franchisor and their franchisees to make the welfare of partner with effort. Little literature has focused on what factors affect the trust between franchisors and their franchisees in China. This study developed the hypotheses regarding the factors affecting trust in the transaction relationship. The results of data analysis supported the hypotheses strongly. There are certain limitations in this study. First, we may point out that some other factors missed in this study could be significantly important. Second, the context of this study, food service industry, limits its potential generalizability for all franchise systems. More studies in different categories of franchise system are needed to broaden its generalizability. Third, the model was tested empirically in a sample in Beijing, more empirical tests of the proposed model in other Chinese areas are needed. Finally, the analysis in this study was solely based on the perception of franchisees and the opinions of franchisors were not included.

• 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.