Effects of fairness on relationship quality and re-contract intention in food service franchise system: comparison between global and domestic franchise

Purpose - The purpose of this study is to examine the effects of fairness on relationship quality and re-contract intention in the foodservice franchise industry and this paper intends to delineate the implications of enhancing the mutual relationship between the franchisor and the franchisee in the future domestic foodservice franchise system. Design/methodology/approach - To prevent the lack of reliability and to pursue the internal consistency of the measurement model, this study adopted SPSS (Ver.20.0) and derived Cronbach’s alpha. Additionally, this study conducted a confirmatory factor analysis by using AMOS (Ver.20.0) program to assess the unidimensionality of measurements. Finally, structural equation modeling was used to test the hypothesized research framework. Findings - The results showed that distributive fairness and informational fairness increase the relationship quality, which franchisees perceive under the franchise system. Among the relationship quality factor, only the trust has a considerable impact on the (performance) re-contract intention. The effect of fairness on relationship quality does not show a statistically considerable difference between the two groups (global franchise vs domestic franchise). However, in terms of a global franchise, distributive fairness has a significant impact on relationship quality, whereas domestic franchise, distributive fairness directly affects performance (re-contract intention). Research limitations/implications - This study provides readers with an effect of fairness in the franchise system. Results obtained in this study are useful for understanding the fairness and relationship quality in the franchise system. Practical implications - Recently, as the foodservice franchise market is experiencing significant growth, government and franchise-related agencies are making considerable effort to improve the relationship between the franchisor and the franchisee and to offer a better system and policy concerning the protection of consumers. Government and franchise agencies should develop an adequate policy to improve the relationship between the franchisor and the franchisee by breaking away from the imprudent support. Originality/value - This study investigates whether fairness in the franchise system has a significant effect on the relationship quality and the performance (re-contract intention) and provides implication about the mutual growth between franchisor and franchisee to the potential food service franchise in Korea.