Abstract

Purpose: As franchise brands have recently increased in the same industry and formal contracts have been standardized, the difference in support, reputation, and sales performance of franchisor has narrowed. As a result, it has become easier for franchisees to switch to other franchise brands in the same industry, and the influence of the unique assets or trust level arising from the relationship between franchise headquarters and franchisees on the intention to renew contracts has also decreased compared to the past. Accordingly, this study examined the factors affecting the franchisee’s willingness to renew the contract in the relationship between the franchisee and the franchisor, from the individual characteristics of the franchisee. Research design, data, and methodology: This study was conducted by selecting the food service industry, which has a variety of franchise brands in the same industry and has low entry barriers and high risk. The characteristic of the franchisee was divided into promotion focus and prevention focus, and the effect of this individual characteristics on relationship commitment and the effect of relationship commitment on contract renewal intention and multi-store operation intention were examined. We postulated that the promotion focus has a positive impact on affective commitment (H1), has a positive impact on calculative commitment (H2), the prevention focus has a negative impact on affective commitment (H3), has a negative impact on calculative commitment (H4). And we postulated that the affective commitment has a positive impact on renewal and multi-store operation intention (H5, H6), the calculative commitment has a negative impact on renewal and multi-store operation intention (H7, H8). Results and Conclusions: To verify the research model and hypothesis, we first run a CFA to test the validity and reliability of the proposed model. Overall, the verification results show that the measurement model exhibits acceptable fit of the Model (χ2=242.1, df=155, Q=1.56, RMR=0.04, RMSEA=0.06, GFI=0.86, TLI=0.90, CFI=0.92). It is confirmed that all measurement items are representative of the unit of study, with average variance extracted values and composite reliability values exceeding the acceptable levels of 0.5 and 0.7 respectively. To verify the proposed research model and hypothesis, the author utilized the structural equation model. Most of the model fit indices were accepted as a result of the analysis (χ2=254.90, df=161, Q=1.58, RMR=0.05, RMSEA=0.06, GFI=0.86, TLI=0.90, CFI=0.91). All of hypotheses were supported and are shown in the table below. Table 1 Results of hypotheses test Hypothesis (direction) St. Estimate S.E. C.R. Results H1(+) Promotion focus → Affective commitment 1.12** 0.26 4.36 Supported H2(+) Promotion focus → Calculative commitment 0.81** 0.21 3.84 Supported H3(–) Prevention focus → Affective commitment –0.15* 0.06 –2.39 Supported H4(–) Prevention focus → Calculative commitment –0.35** 0.14 –4.31 Supported H5(+) Affective commitment → Renewal intention 0.72** 0.15 4.97 Supported H6(+) Affective commitment → Multi-store operation intention 0.83** 0.24 3.39 Supported H7(–) Calculative commitment → Renewal intention –0.05 0.07 –0.79 Not supported H8(–) Calculative commitment → Multi-store operation intention –0.16 0.19 –0.83 Not supported Model fit: χ2=254.90, df=161, Q=1.58, RMR=0.05, RMSEA=0.06, GFI=0.86, TLI=0.90, CFI=0.91. Overall, this study introduces the individual characteristics of the franchisee that have not been adequately explained by previous studies, and suggested practical and academic implications through this empirical research results.

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