The Effect of Franchisors’ Gapjil on Economic Satisfaction, Social Satisfaction, and Recontract Intention

Purpose: The major objective of this study is to develop a model for the impact of franchisors’ Gapjil (verbal∙nonverbal Gapjil, abusing bargaining position, refusing transaction, false or exaggerated information, restrictive practices, unfair damage compensation) on franchisee’s recontract intention. We also examine the mediating role of economic satisfaction and social satisfaction in the relationship between franchisors’ Gapjil and franchisee’s contract intention. Research design, data, and methodology: Data were collected from franchisee owners located nationwide in Korea. Out of 256 questionaires distributed, a total of 256 questionnaires were returned. After excluding 10 invalid respondent questionnaires, we coded and analyzed 246 valid questionnaires (effective response rate of 96.09%) using frequency, confirmatory factor analysis, correlations analysis, and structural equation modeling with SPSS 22.O and SmartPLS 3.0. Results: The findings of this study are summarized as follows: First, among the Gapjil of the franchisors, restrictive practices and unfair damage compensation had negative effects on economic and social satisfaction, but verbal and nonverbal Gapjil for economic and social satisfaction was not significant. Second, abusing bargaining positions and false or exaggerated information had negative effects on social satisfaction, but for economic satisfaction, found to be insignificant. Third, economic and social satisfaction had positive effects on the franchisee’s recontract intention to the franchisor. Conclusion: The following implications of this study are as follows. First, the construct of Gapjil that occurs between the franchisors and the franchisees was first presented, and the franchisors’ Gapjil is divided into interpersonal Gapjil and structural Gapjil. Second, the Gapjil of the franchisors can be an important predictor variable in maintaining and developing a long-term relationship between the franchisors and the franchisees. Third, solving conflict due to the Gapjil problem between franchisors and franchisees can be an important factor for franchisors and franchisees to co-survive and thrive in Korean franchise system. Fourth, this study suggest that managing the Gapjil of the franchisors was a important antecedent factor in maintaining long-term relationship between the franchisors and the franchisees. Therefore, this study will help franchisors formulate effective symbiotic marketing strategies to satisfy relationships with franchisees and consequently enhance long-term orientation.