Factors affecting international franchising from a franchisee's perspective (Korea)

"The objective of this study is two fold: (1) determine the factors affecting a franchisee's selection between an international vis-à-vis a domestic franchising operation, and (2) determine the factors affecting the resulting success of the franchisee. The research in this area has primarily focused on the benefits to the franchisor in rapidly expanding its international market position through leveraging its brand name and business processes, and utilizing the capital and local management of its franchisees. It is the unique purpose of this research study to explore international franchising from the point of view of franchisee and to relate the widely accepted choice and success criteria in the current franchising literature to the franchisees' choice of international franchising and their success in franchising. The study is conducted in South Korea and focuses on the food service industry franchises including hamburger, chicken, pizza, lunch box, and ice cream operations. This industry was selected because it offers a large selection of domestic and international franchising operations in Korea. An empirical study was conducted, relying on a personally administered questionnaire to gather the data. Total number of contacts made with potential respondents was 750. The 750 contacts led to 166 respondents accepting the interview, which resulted in an effective response rate of 22.1 percent. There were two underlying assumptions of my research. The first was that international franchising was best viewed using a multidimensional framework. This was supported by the results, in which both franchisee and franchisor factors (as well as the interaction of these two dimensions) contributed toward an explanation of both the decision as to which type of franchise a franchisee chooses, as well as the resulting success of the franchise. The second assumption guiding my research was that a more robust explanation of choice and success could be obtained using a multi-theoretic approach in constructing the dimensions. This was also supported, as the resource based view, agency theory, cultural distance theory and entrepreneurship theory contributed to the findings. Overall, through the approach of utilizing the multiple dimensions and multiple theories, the research provided stronger results than previous research using singular dimensions and theories (Hunt 1973; Shane 1996; Lafontaine and Shaw 1998; Jambulingam and Nevin 1999) by explaining over 55% of the variance regarding choice, and 27% of the variance for success. Additionally, this research yielded much needed insight into the process of international franchising, both in terms of what characteristics are important for franchisees to possess and what franchisees and franchisors should consider when making a franchising choice. The study results can contribute to building up the holistic theory for the franchising business by adding new findings from the franchisee's point of view to the existing theories that exist mainly from the franchisor's point of view. As a result, the results become a turning point to convert the attention from studies of the franchisor's point of view to studies that augment the franchisor factors with those from the franchisee's point of view."