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Relationship quality in franchise systems : an empirical assessment

Evanschitzky, H. and Backhaus, C. and Woisetschläger, David and Ahlert, M. (2008) Relationship quality in franchise systems : an empirical assessment. In: Global Marketing Conference, 2008-03-20 - 2008-03-23.

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Abstract

There is a wide consensus that the quality of relationships is a key driver of relationship outcomes in a many business contexts. Theory suggests, that especially in franchise systems, good franchisee-franchisor relationships are crucial for long term business success. For instance, it can be argued that poor relationships between franchisors and franchisees will result in reduced investments and support from the franchisor. In addition, negative perceptions of overall relationship quality will also induce franchisees to reduce their efforts to improve ser-vice quality provided to the end customer which in turn endangers brand equity and economic success of the whole system. However, theoretical conceptualizations of relationship quality in a franchising context are scarce and have hardly been validated on a broad empirical basis. Therefore, the focus of this study is to (a) develop a conceptual model of relationship quality in franchise systems, and, (b) to develop a valid and reliable measure for RQ for franchise systems by empirically testing this model based on two large samples comprising a total of 3,622 franchisees from 38 different franchise systems. Preliminary results as to possible consequences of RQ are considered as well. Despite several different approaches towards the conceptualization of RQ, our literature review provides strong support for the statement that satisfaction, trust and commitment are of critical importance. Out of 46 studies, satisfaction was taken into consideration in 31, trust in 38, and commitment in 25. Thus, it is supposed that trust, satisfaction, and commitment are main dimensions of RQ and thus play an important part as antecedents to the success of a franchise system. After conceptualizing the main constructs of our study, we employed a two-study design to test our conceptual model. In study 1, we factor-analyzed the responses of 500 franchisees to a questionnaire containing 39 items. After having analyzed the data, we constructed valid and reliable measures for commitment, trust, and satisfaction. With a much larger sample (3,122), we tested the conceptual model in study 2. Concerning the core model of RQ, both trust and satisfaction significantly influence commitment. Results indicate that trust and satisfaction are significantly related to commitment to the network. Moreover, trust and satisfaction are significantly correlated as well. Therefore, we conclude that RQ consists of trust, satisfaction, and commitment. To find preliminary answers to RQ outcomes, we conducted a median split based on an aggregated score consisting of all indicators for the three related RQ constructs commitment, trust, and satisfaction, and found significant differences between franchisees with high and low RQ scores. Their attitudes towards the franchise system are generally more favorable. More so, past economic outcomes as well as anticipated future outcomes are better for the high RQ group. The contributions of our findings are at least threefold. At first, it could be shown that the widely acknowledged conceptualization of RQ also holds in a franchising context. We find out that RQ consists of three facets, namely commitment, trust, and satisfaction. Overall, our conceptual model represents the data quite well. In addition, due to our large data set, that not only considers multiple franchise systems but also multiple points in time, we have confidence that the RQ conceptualization and measures are quite representative for franchise systems. Finally, we also provide preliminary results for possible consequences of RQ such as positive attitudes towards the franchise system and more favorable economic performance.