Dissolution of franchise relationships: Intention, behavior, and the role of uncertainty

Abstract

Academic research has paid more attention to formation and management of business relationships than to their dissolution. For example, not much is known about the extent to which dissolution intentions are predictive of actual dissolution, and whether certainty with which these intentions are held influences the likelihood of relationship dissolution. To address these questions, authors collect data in two stages from a franchise system in Korea. They specify the judgment uncertainty and magnitude parameters (JUMP) model to tease apart the magnitude and uncertainty of intention from a single measure, and a duration analysis model to study translation of intentions into behavior. Results show that not only strong intentions to dissolve a relationship are more likely to result in actual dissolution but weak intentions also are more likely to lead to dissolution if the holder is doubtful and uncertain about the relationship. Ignoring uncertainty of dissolution intentions thus can seriously downplay their risk of translating into actual dissolution.