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Research Article

The Effect of Operational Structure and Relationship Characteristics on Trust and Commitment in Franchise Systems

Cho, Gyuho1 · Jeon, Dalyeong2

1 Korea Self-Employment Promotion Institute, 2 Chungbuk National University

Published: January 2003 · Vol. 32 No. 5 · pp. 1265-1289
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Abstract

The fast-food franchise systems have been recently experiencing fierce competition in Korea. The primary objectives of this study are twofold. The one is to identify major operational factors to enhance relational norm and interdependence between franchisor and franchisee. The other is to investigate the impact of relationship characteristics on trust and commitment in the franchise systems. The ten hypotheses were verified by a structural equation model. The empirical results were as follows. First, operational characteristics such as the level of food materials supplied by the franchisor, the strictness of franchisee selection, and education & training significantly affected relationship characteristics. Specifically they had a direct influence on relational norm but indirectly related to interdependence via relational norm. Second, contrary to the expectation, cost efficiency of the franchise operation was not identified as a significant factor. This could be due to the fact that franchisee would utilize the franchise systems as a way of temporary venture opening. In terms of relationship quality between franchisor and franchisee, interdependence was significantly influenced by relational norm which impacts on trust. Finally, commitment is significantly related to trust which was influenced by relational norm and interdependence. The data were collected from 276 franchisees which are members of 78 franchisors in the fast-food chain systems.
Keywords: Operational CharacteristicsRelationship QualitiesThe Franchise Systems