• Journal of the Korea Academia-Industrial cooperation Society
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• v.13 no.1
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• pp.178-184
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• 2012

This research is an empirical research that surveys the influence factors of franchisee's compliance and precedence, which have a direct effect on the success of franchisor, from the view of relation exchange theory. The results herein show that the trust of franchisees towards franchisor has a complete mediating effect between conflict and compliance. This means that in a franchise system, it is important to build trust in order to successfully manage franchisees. Trust built between franchisor and the franchisee has a dominating effect based on relationship even on domains not specified on the contract. Also, it is very important in that it decreases frequently occurring conflicts caused by disagreement of interests and unfair relationship of power, and effectuates compliance of franchisees. Such result is a meaningful theoretical and practical contribution in that it has for the first time domestically investigated the mechanism of relationship leading from conflict and trust to compliance of franchisees by methods of theoretical discussion and empirical analysis.

• 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 Distribution Research
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• v.1 no.2
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• pp.85-114
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• 1996

The franchise system has become more widely adopted by Korean distribution industries than before as foreign direct investment is liberalized in these industries. However, a number of problems has arisen between franchisers and franchisees recently. In this regard, the objective of this study is to identify problems arisen between franchisers and franchisees of convenience store operation. More specifically, this paper investigates how credibility between two parties is affected by the internal political structures, including bureaucratic structure and relational norms, and impact strategies of franchisers. The results of this study can be summarized as follows : Under rapidly changing channel environment, credibility between franchisers and franchisees tend to be characterized as the bureaucratic structure rather than relational norms. This result suggests that franchisees are more likely to recognize the power of franchisers in Korean convenience stores. This paper also shows that the adoption of coercive impact strategies decreases credibility and vice versa. The results of this paper suggest following implications. In order to have mutually beneficial relationship franchisers and franchisees have to share benefits and costs incurred by their convenience store operation, and to raise their ability to revise contract terms to accommodate changes in external environments. It is also important for the development of convenience store operation to construct more efficient relationship between franchisers and franchisees by adopting supportive norms rather than opportunistic ones.

• Culinary science and hospitality research
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• v.19 no.1
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• pp.57-69
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• 2013

This study analyzed the effects of the relational norm factor of food service franchising on the intention to remain, in view of the importance of relational norms, as antecedent variables, to franchisees' perceived fairness to enhance the competitiveness by formation of long-term relationship between interested parties to food service franchising, the franchiser and the franchisee. According to a questionnaire survey, more than 100 franchisees that recorded three business years in Seoul, Incheon and Gyeonggi area were selected for convenience sampling. Then, among them, 515 effective samples were analyzed. For statistical data, detailed types of analysis were performed by using AMOS 17.0, such as factor analysis, exploratory factor analysis, confirmatory analysis and frequency analysis. The purpose of this study was to examine the relationship between the franchiser and the franchisee by arranging relational norm factors for the relationship to be suitable for the current situation of Korea, instead of Western-style theory-based relationship marketing, and by understanding a connection between perceived fairness and management achievement-related variables, and to make a conceptual framework for building a positive relationship between the franchiser and the franchise in future food service franchising industry. Moreover, it aimed to increase franchisee satisfaction and results including re-contract according to perceived positive relationship value on the franchiser and to make contribution to find and show the proper direction for development of the Korean-style food service franchising system.

• Journal of Applied Tourism Food and Beverage Management and Research
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• v.14 no.2
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• pp.95-119
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• 2003

Case Study about the management of bakery menu through a menu analysis: This study checked the sales of bakeries this researcher has operated for 4 weeks before evaluating the menu with Kasavana & Smith Analysis, changing the position of the menu on the theoretical base of space composition and then checking the sales for 4 weeks again and analyzing in the same way. The study compared the two groups by using the menu analysis. The menu used in the analysis included 31 items produced in the stores and 29 items turned out from the headquarters. The results of the menu evaluation through Kasavana & Smith Analysis are as follows: (i) before changing the position of the menu 22 Stars, 20 Puzzles, 15 Plowhorses, 13 Dogs (ii) after changing the position 18 Stars, 24 Puzzles, 12 Plowhorses, 6 Dogs During the study, it was inconvenient that many things not thought about before were discovered. The limitations of the study are as below: a) when the displayed items were sold out, they couldn't be supplied continuously. The items from the headquarters were supplied as many as the ordered volume. As the stores prepared materials only for the day, they only produced bakeries as many as the dairy target. So it is difficult for them to keep extra bakery. b) it is natural that a new item make the sales of the existing items cut down. During the study, there appeared a new item, which influenced on the sales. c) as the store this researcher manages is smaller than the others, it was difficult to change all the position of the menu. With only 18 items changing their positions, there couldn't obtain more accurate data. d) because of the franchise contract, there fixed the prices of supply and sale. Therefore the price of Plowhorse couldn't be changed. However on the base of this study, it can search more specific ways to efficiently manage the bakery business in the future.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.15 no.5
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• pp.261-276
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• 2020

This study seeks to find an effective support plan through the success factors recognized in the early stages of startup and those recognized after success by grasping the success factors of successful small business entrepreneurs at each stage from the pre-start stage to the growth stage. To this end, a qualitative study through interviews was conducted with successful convenience store franchisees to derive success factors from the start-up preparation stage to the early stage and growth stage. The success factors of starting a small business were studied in consideration of the characteristics of franchise convenience store startups using the ERI model and the ERIS model applied in the study on the performance of startups. The success factors were studied using the multisite service firm life cycle of Sasser et al.(1978) reflecting the results. As a result of the study, the key factors of successful franchisees were the selection of the location of the first store, the selection of strategic additional stores, and the successful renewal of the contract. Depending on the characteristics of the founder, the enterprising franchisees took an active attitude in selecting strategic locations for additional stores and defending the commercial district, while the relatively conservative franchisees showed an active attitude toward store operation and renewal from a management perspective. In particular, the entrepreneur's mind is important in the preparation stage, and the importance of the entrepreneur's management strategy was discovered in the entire business cycle. Based on the results of this study, this study specifically sought out a start-up plan to effectively apply it to the future growth stage.

• Journal of Distribution Science
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• v.13 no.6
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• pp.79-86
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• 2015

Purpose - The cosmetics industry is a traditional high value-added industry in terms of the domestic demand, small batch production systems, exclusive competition, and raw materials highly dependent on overseas countries as well as an oligopolistic market structure. However, new foreign brands and growing consumer awareness of inexpensive products, has triggered a shift. In line with changing lifestyles and the polarization of consumption, the industry faces a new market structure. Among its key characteristics is the cosmetics industry's numerous distribution channels (i.e., department stores, door-to-door sales, online shopping malls, brand shops, and discount stores). Therefore, the study of its distribution channels is essential. Research design, data, and methodology - The study analyzed channel distribution power divided into coercive and non-coercive power. The factors of coercive power included: unilateral request of an increase in commissions, interference in sales by taking advantage of a superior status, unilateral buck-passing at the time of a problem, unilateral request to stop sales activities, and a unilateral business contract; the factors of non-coercive power included favorable payment conditions, offers of various kinds of information, policy on commission reduction, pride in market entrance, and promotion support. In addition, the mediating variable "interdependence" was applied to the execution of department store (or mart) power and their shop conflicts and satisfaction to examine direct and indirect influential power. The methodology was a survey of managers of cosmetics shops in department stores (or marts). The questionnaire, based on a five-point Likert scale, included questions about basic personal information, execution of power, interdependence, conflict, and satisfaction. The study distributed 198 questionnaires and collected 131. Ten questionnaires with missing or hard to analyze data were excluded. Thus, 121 copies were analyzed. Results - According to the analysis, the execution of coercive power by department stores (or marts) did not affect interdependence, but the execution of non-coercive power did. Interdependence did not influence conflict, but did affect satisfaction. Additionally, the analysis revealed direct influential power: the execution of coercive power positively affected conflict and negatively influenced satisfaction; the execution of non-coercive power positively affected satisfaction. Conclusions - To offer suggestions for distribution business relations in the cosmetics industry, this study investigated how the execution of power by department stores (or marts) affected their shops. More specifically, it examined how much the execution of both coercive power and non-coercive power influenced conflict and satisfaction, and analyzed the mediating role of interdependence. In line with previous study results in various areas, coercive power was shown to be the source of conflict, leading to a decrease in satisfaction, whereas non-coercive power significantly positively influenced satisfaction. Moreover, non-coercive power increased interdependence, which led to greater satisfaction. As a result, interdependence had a mediating effect on non-coercive power and satisfaction. Based on the results, department stores (or marts) should look for improvements plans that increase interdependence. Such plans could alleviate conflict with the shops, increasing their satisfaction.

• The Journal of Fisheries Business Administration
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• v.34 no.2
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• pp.91-107
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• 2003

Distribution of fish products from Tongyoung Marine ranching can be classified by three routes such as street-stall, live fish transportation vehicles, and wholesale markets neighboring unloading ports. These methods of distribution, however, have been restricted by limited distribution right, difficulties to differentiate fish prices from other surfaces, simple marketing channels. The ratio of cultured live fish circulated in market is increasing while naturally caught live fish is decreasing and the fresh fish shows a little of increasing rate. Consumers purchasing routes mainly depend on the live fish transportation merchants. For fresh fish traditional market plays an important role in trade. Convenience for consumers and quality of products are main factors in making decision of purchases. Bargaining power, however, belongs to the live fish transportation merchants. The demand of special markets for live fish was very strong, and the convenience and quality are relatively important required factors. Catch from Tongyoung Marine ranching has very good reputation as the possibility of being a good brand. Expecting possibility of quality differentiation was higher than price differentiation specially. The possible conclusion of a contract of a supply was suspicious however. Preliminary quality evaluation revealed that the catch is better than the cultured but worse than naturally grown fish. A merchandising is to be in a better position in the formation of prices by giving $\ulcorner$brand image$\lrcorner$ to potential consumers. The target markets are retail stores such as restaurants for raw fish and final consumers. The staple markets are retail stores. Possible items of products are live fish, fresh fish for cook, and fresh fish for raw fish. It is necessary for the catch to be informed as new functional products that have been improved in safety and quality, since the product positioning is similar but not well known to consumers. To secure a brand it is required to register a trademark, eco-label product design or packing, use real name in tranction, introduce recall system, and put label. Price higher than naturally grown live fish should be targeted. Establishing broad distribution channel, wholesale market, franchise are required. To secure enough catch and control shipment of products facilities of containing live fish are necessary. Instead of dealing with live fish only, it would be better to. sell fresh fish and live fish simultaneous. Strategically promotion focuses on advertisement of Marin ranching at first and then focuses on the catch from the marine ranching.