The purpose of this study is to investigate the determinants long term orientation between franchisor and franchisee in foodservice franchise system. In a number of distribution channel studies, trust and commitment are main factors affecting long term relationship among channel members.
This study assessed the influence of trust and commitment in the formation of the long term orientation between franchisor and franchisee. Also this study tried to examine whether opportunism may affect the long term orientation and identify what sub-factors had an influence on the trust and commitment.
The survey was conducted from July 20th to September 20th, 2015. 350 questionnaires were distributed to the owners or store managers of the 14 selected foodservice chains in Seoul and Kyunggi-do. 298 questionnaires were used for the analysis and research model was tested by SPSS Win 18.0 and AMOS 18.0 program.
The major findings of the study are summarized as follows;
First, commitment had positive effects on the long term orientation between franchisor and franchisee.
Second, trust for franchisor had positive effects on commitment.
Third, control had positive effects on opportunistic behavior of franchisee but relational norms had negative effects on opportunism.
Fourth, relational norms, perceived support, quality of communication and satisfaction with previous exchanges had positive effects on trust. Otherwise reputation of franchisor had no effects on trust.
Fifth, transaction specific investment, perceived support and relational norms had positive effects on commitment. Otherwise quality of communication, satisfaction with previous exchanges had no effects on commitment.
The study provides considerable implications for practitioners in the field of foodservice franchise business, who are in need of long term and better relationship between franchisor and franchisee. Based upon the results of analysis, it is necessary to develop methods for increasing trust and commitment in franchise system. Also future researchers have to do bi-directional studies surveying the franchisor and franchisee's perspective and analyze what other factors affecting the formation of long term orientation.