An Empirical Study on Operation Form of Franchising Business of Food Service Franchise Enterprise

Franchising business is contributing to national economy through creation of job opportunity and effect on employment but in case of promoting franchising business without thorough prior preparation, as franchisor is highly likely to experience failure and franchisees who opened their franchising outlet (agency) under their trust in franchisor is also exposed to significant damages, countermeasures for this trend is urgently required in reality. Operation of franchisor (company)-owned outlet by franchisor has an important meaning so much as to say that franchising business is reproduction (business) of successful franchisor-owned outlet. The objective of this study is to analyze current franchising business status as follows based on a case of brands that survived without closing their business at an early stage in franchising business of food service franchise in our country. (1) Currently, in what pattern those brands are operating franchising business (2) The matter as to whether those brands possess franchisor-owned outlets (3) If they hold franchisor-owned outlets, how many outlets they possess (4) How management performance of franchisor and franchisee is represented depending on possessing status of franchisor-owned outlets. As a result of this analysis, in case of the brands that operated food service business for more than 3 years in our country, brands that did not possess franchisor-owned outlets at all reached 63.4% but brands that operated franchisor-owned outlets were represented to exert more influence over management performance of franchisor including its turn-over, operating profit, current year net profit compared with that of brands that did not operate franchisor-owned outlets and management performance of franchisee including its annual average turn-over as well. It is expected that the result of this study would be utilized as a useful data in management strategy of franchisor of food service franchise or investment strategy of