Franchisors’ Relationship Marketing and Perceived
Franchisor Support on Franchisors’ Performance: A Case
of Franchise Food and Beverage in Thailand
Abstract—Nowadays, Franchise business is the contribution
of income to the economy of developing countries. Especially,
among small and medium size enterprises (SMEs) have taken
opportunities for developing a business. Hence, the big
challenge to franchise system is how to position the business and
clearly differentiate it from more competitors. This study is
undertaken to investigate the franchisees’ satisfaction, which is
a measurement of franchisors’ performance. In particular, how
franchisor can better manage their franchisees so as to ensure
sustainability of their franchisees. It is also established that the
perceived franchisor support mediates the relationship between
relationship marketing and franchisors’ performance.111 Thai
franchisors in food and beverage of Thailand, this will match to
their franchisees. 80 questionnaires were collected from
franchisees that represent a 72.07% response rate. The results
of this study have presented evidence that perceived franchisor
support (PFS) is the contribution in the franchise business
system. The mediating effect of PFS is the key structure of
franchisors’ performance to keep in touch for future success in
the franchise system.
Index Terms—Franchisors’ performance, franchisee
satisfaction, perceived franchisor support (PFS) and
relationship marketing.
I. INTRODUCTION
Franchise business is an attractive business for small and
medium enterprises (SMEs). The business format of
franchise requires the relationship between franchisors and
franchisees, as savvy entrepreneurs to take up the challenges
of self employment. In Thailand franchise business has been
initiated since 1983, it is the main contributor of income and
potential to the economy of Thailand. In the economic
environment, both franchisors and franchisee can provide a
variety of benefits to their business. This study selected the
franchisees food and beverage industry to be the sample of
the study. This industry has been highly competitive in the
franchise business. On the other hand, each year the number
of franchises is increasing but at the same time the number of
franchise closure is also increasing [1]. One of the main
reasons for the closure of the franchisee in Thailand is due to
the poor relationship between franchisor and franchisee [2].
This is similar to franchisors who are not concerned with
developing the already established franchisees [3]. Thus, the
increase in the failure rate of franchisor is due to the
dissatisfaction amongst the franchise holders. Despite
franchisee satisfaction is related to franchisee buying
behavior, there have been limited attempts to evaluate
empirically the factors which contribute to a satisfactory
franchise relationship, particularly from the perspective of
franchisees and identifies the final stage of the buying
process [4]. Therefore, franchisee satisfaction as the biggest
predictor of whether a franchisee will recommend their
franchisor to a prospective franchisee that is their level of
satisfaction with their performance [5]. Thus, this study
proposed that relationship marketing contributes positively to
franchisors’ performance. Furthermore, this study tests the
mediating effect of perceived franchisor support on the
relationship between relationship marketing and franchisors’
performance. The results show the strong relationship
between the franchisor marketing strategy variables and
franchisors’performance of which is perceived by franchisee
satisfaction. The findings are meaningful and useful to small
and medium enterprises involved in franchise businesses.
These are important and critical knowledge to the success of
franchise.
II. LITERATURE REVIEW
A. Franchisors’ Performance Perceived by Franchisee
Satisfaction
Organizations have used the performance measurement to
implement system in the cooperation management between
parties. It often includes issues related to satisfaction of
customer and stakeholder. Franchisor Performance also
refers to the satisfaction of the franchisee with the services
given by its franchisor [6]. Franchisee satisfaction is the
extent to which a franchisee is contentedwith the franchisor
as it affects his or her role in the franchise organization.
Satisfaction with the franchisor will positively affect
franchise performance [7]. Moreover, managerial
implications on franchise system show the efficiency
operation and customer satisfaction as the indicator of
franchisor’s performance [6].
The distribution of franchisee responses for the satisfaction
items associated with purchasing and operating a franchised
outlet, the measurement of franchisee satisfaction required
their appraisal of certain costs and benefits and initial and
ongoing franchisee support services provided by franchisors
[8]. Being satisfied as the behavior in franchise relationship,
franchisees’ satisfaction is contingent upon their expectations.
Thus franchisors should focus on the specific dimensions that
contribute to franchisees’ dissatisfaction and emphasize
specific dimension of continuing service to improve the
relationship both parties to fulfill the contractual duties and
responsibilities [9]. Thus, franchisors must design a proper
system of distribution of goods or services that will help the
franchisees to market their products. This will lead to
improve satisfaction of franchisees with respect to the
services provided by the franchisor [10].
B. Relationship Marketing and Franchisors’ Performance
Relationship marketing is concerned with attracting new
customers and keeping existing customers to be loyal. A key
strategy in relationship marketing is the design and
maintaining and in multi-service organizations enhancing
customer relationship around which a customer relationship
can be established [11]. The various dimensions of
relationship marketing are found to be important to business
manager to ensure customer satisfaction, and also important
for a franchise system. This includes the services provided by
the franchisor as a basis for improving the quality of
franchise relationship [12]. The relationship marketing has
important strategic implications for both the managers of the
franchising companies and the franchisee satisfaction [11],
[13]. Trust and communication are shown as important
dimensions of relationship marketing to create value between
parties [14]. Trust and communication can improve the
relationship between franchisor and franchisee toward
franchisee satisfaction and there are important antecedents
for a franchisee’s intention to remain in the franchise system
[12].
Trust is the belief that another party can rely on with
confidence to perform role responsibilities in a fiduciary
manner [15]. Trust as the expectation held by the consumer
that the service provider is dependable and can be relied on to
deliver on its promises [16]. Especially, in franchise business,
trust is a result in the franchisee’s belief in the franchisor’s
integrity which is a necessary prerequisite for contractual
norm [17], trust as an antecedent of satisfaction in marketing
channel relationship. Thus, franchisee’s satisfaction on the
franchise systems is an outcome variable that is influenced by
trust and a high level of trust is important to the success of
franchisor- franchisee relationship [7].
Communication is a formal relationship review in each
partner’s performance such as discussion of any changes in
marketplace or production condition [18]. Communication is
further complicated in franchise business as the power
balance between franchisee and franchisor is efficient. When
communication is clear and consistent, both franchisees and
consumers learn to trust the responsibility of the franchisor to
steer the system in the right direction [19]. Relationship
marketing is very important for franchise system and in
reinforcing franchisee satisfaction.
C. Perceived Franchisor Support
According to, in the marketing literature there is a focus on
customer’s perception of serviceand product that will have
an influence on long term purchasing behavior [20].
Customer perceived value in a relationship marketing need to
focus on customer’s perception to develop value in the
relationship between parties [21]. The human resource
management is often focused on satisfaction of
fellow-worker. This is similar to the franchisee is a
fellow-worker of franchisor that the franchisees always focus
on the satisfaction from their business [22]. However, in the
context of business to business relationship studies have
related perceived organizational support (POS) relationship
between two parties, especially in the sale context [23].
Perceived organizational support will lead to job satisfaction
and organizational commitment and will enhance
organization performance [24]. The findings of previous
studies, it was found that perceived organizational support
and perceived managerial support do play a mediating role
[25]. This is because perceived organizational and
managerial support measure the support by an organization
and this is similar to the measure of franchisor support
perceived by the franchisee. Perceived franchisor support
(PFS) relates to the continued services given by the
franchisor to its franchisee both in the initial stage and
throughout (ongoing) the franchise agreement. For example,
business assistance is the franchisor generally offers services
to the franchisees such as targe
Franchisors’ Relationship Marketing and Perceived
Franchisor Support on Franchisors’ Performance: A Case
of Franchise Food and Beverage in Thailand
Abstract—Nowadays, Franchise business is the contribution
of income to the economy of developing countries. Especially,
among small and medium size enterprises (SMEs) have taken
opportunities for developing a business. Hence, the big
challenge to franchise system is how to position the business and
clearly differentiate it from more competitors. This study is
undertaken to investigate the franchisees’ satisfaction, which is
a measurement of franchisors’ performance. In particular, how
franchisor can better manage their franchisees so as to ensure
sustainability of their franchisees. It is also established that the
perceived franchisor support mediates the relationship between
relationship marketing and franchisors’ performance.111 Thai
franchisors in food and beverage of Thailand, this will match to
their franchisees. 80 questionnaires were collected from
franchisees that represent a 72.07% response rate. The results
of this study have presented evidence that perceived franchisor
support (PFS) is the contribution in the franchise business
system. The mediating effect of PFS is the key structure of
franchisors’ performance to keep in touch for future success in
the franchise system.
Index Terms—Franchisors’ performance, franchisee
satisfaction, perceived franchisor support (PFS) and
relationship marketing.
I. INTRODUCTION
Franchise business is an attractive business for small and
medium enterprises (SMEs). The business format of
franchise requires the relationship between franchisors and
franchisees, as savvy entrepreneurs to take up the challenges
of self employment. In Thailand franchise business has been
initiated since 1983, it is the main contributor of income and
potential to the economy of Thailand. In the economic
environment, both franchisors and franchisee can provide a
variety of benefits to their business. This study selected the
franchisees food and beverage industry to be the sample of
the study. This industry has been highly competitive in the
franchise business. On the other hand, each year the number
of franchises is increasing but at the same time the number of
franchise closure is also increasing [1]. One of the main
reasons for the closure of the franchisee in Thailand is due to
the poor relationship between franchisor and franchisee [2].
This is similar to franchisors who are not concerned with
developing the already established franchisees [3]. Thus, the
increase in the failure rate of franchisor is due to the
dissatisfaction amongst the franchise holders. Despite
franchisee satisfaction is related to franchisee buying
behavior, there have been limited attempts to evaluate
empirically the factors which contribute to a satisfactory
franchise relationship, particularly from the perspective of
franchisees and identifies the final stage of the buying
process [4]. Therefore, franchisee satisfaction as the biggest
predictor of whether a franchisee will recommend their
franchisor to a prospective franchisee that is their level of
satisfaction with their performance [5]. Thus, this study
proposed that relationship marketing contributes positively to
franchisors’ performance. Furthermore, this study tests the
mediating effect of perceived franchisor support on the
relationship between relationship marketing and franchisors’
performance. The results show the strong relationship
between the franchisor marketing strategy variables and
franchisors’performance of which is perceived by franchisee
satisfaction. The findings are meaningful and useful to small
and medium enterprises involved in franchise businesses.
These are important and critical knowledge to the success of
franchise.
II. LITERATURE REVIEW
A. Franchisors’ Performance Perceived by Franchisee
Satisfaction
Organizations have used the performance measurement to
implement system in the cooperation management between
parties. It often includes issues related to satisfaction of
customer and stakeholder. Franchisor Performance also
refers to the satisfaction of the franchisee with the services
given by its franchisor [6]. Franchisee satisfaction is the
extent to which a franchisee is contentedwith the franchisor
as it affects his or her role in the franchise organization.
Satisfaction with the franchisor will positively affect
franchise performance [7]. Moreover, managerial
implications on franchise system show the efficiency
operation and customer satisfaction as the indicator of
franchisor’s performance [6].
The distribution of franchisee responses for the satisfaction
items associated with purchasing and operating a franchised
outlet, the measurement of franchisee satisfaction required
their appraisal of certain costs and benefits and initial and
ongoing franchisee support services provided by franchisors
[8]. Being satisfied as the behavior in franchise relationship,
franchisees’ satisfaction is contingent upon their expectations.
Thus franchisors should focus on the specific dimensions that
contribute to franchisees’ dissatisfaction and emphasize
specific dimension of continuing service to improve the
relationship both parties to fulfill the contractual duties and
responsibilities [9]. Thus, franchisors must design a proper
system of distribution of goods or services that will help the
franchisees to market their products. This will lead to
improve satisfaction of franchisees with respect to the
services provided by the franchisor [10].
B. Relationship Marketing and Franchisors’ Performance
Relationship marketing is concerned with attracting new
customers and keeping existing customers to be loyal. A key
strategy in relationship marketing is the design and
maintaining and in multi-service organizations enhancing
customer relationship around which a customer relationship
can be established [11]. The various dimensions of
relationship marketing are found to be important to business
manager to ensure customer satisfaction, and also important
for a franchise system. This includes the services provided by
the franchisor as a basis for improving the quality of
franchise relationship [12]. The relationship marketing has
important strategic implications for both the managers of the
franchising companies and the franchisee satisfaction [11],
[13]. Trust and communication are shown as important
dimensions of relationship marketing to create value between
parties [14]. Trust and communication can improve the
relationship between franchisor and franchisee toward
franchisee satisfaction and there are important antecedents
for a franchisee’s intention to remain in the franchise system
[12].
Trust is the belief that another party can rely on with
confidence to perform role responsibilities in a fiduciary
manner [15]. Trust as the expectation held by the consumer
that the service provider is dependable and can be relied on to
deliver on its promises [16]. Especially, in franchise business,
trust is a result in the franchisee’s belief in the franchisor’s
integrity which is a necessary prerequisite for contractual
norm [17], trust as an antecedent of satisfaction in marketing
channel relationship. Thus, franchisee’s satisfaction on the
franchise systems is an outcome variable that is influenced by
trust and a high level of trust is important to the success of
franchisor- franchisee relationship [7].
Communication is a formal relationship review in each
partner’s performance such as discussion of any changes in
marketplace or production condition [18]. Communication is
further complicated in franchise business as the power
balance between franchisee and franchisor is efficient. When
communication is clear and consistent, both franchisees and
consumers learn to trust the responsibility of the franchisor to
steer the system in the right direction [19]. Relationship
marketing is very important for franchise system and in
reinforcing franchisee satisfaction.
C. Perceived Franchisor Support
According to, in the marketing literature there is a focus on
customer’s perception of serviceand product that will have
an influence on long term purchasing behavior [20].
Customer perceived value in a relationship marketing need to
focus on customer’s perception to develop value in the
relationship between parties [21]. The human resource
management is often focused on satisfaction of
fellow-worker. This is similar to the franchisee is a
fellow-worker of franchisor that the franchisees always focus
on the satisfaction from their business [22]. However, in the
context of business to business relationship studies have
related perceived organizational support (POS) relationship
between two parties, especially in the sale context [23].
Perceived organizational support will lead to job satisfaction
and organizational commitment and will enhance
organization performance [24]. The findings of previous
studies, it was found that perceived organizational support
and perceived managerial support do play a mediating role
[25]. This is because perceived organizational and
managerial support measure the support by an organization
and this is similar to the measure of franchisor support
perceived by the franchisee. Perceived franchisor support
(PFS) relates to the continued services given by the
franchisor to its franchisee both in the initial stage and
throughout (ongoing) the franchise agreement. For example,
business assistance is the franchisor generally offers services
to the franchisees such as targe
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