Research On The Motivations Of The Operators To Join Franchise System

"Business Franchise Management regulations" which brought into effect on May1,2007defines the franchise as follows:Business franchise is that the business enterprise which possesses a registered trademark, enterprise mark, patent and know-how resources permits other operators to use its resources in the form of the contract at the same time, the franchisees operate under the unified business model in accordance with the contract, and pay the franchise fee to the franchisor.Nowadays, more than ninety countries own the franchise systems which exist in various forms, furthermore, more and more countries will use the franchise systems to distribute products or services. Although it is later to introduce the franchise system in our country, the development of franchise system is rapid in a short period of time for more than a decade, and the market potentialities will be great. Currently, the number of franchise system of our country is most, and the speed of development is amazing. Franchise has become a very important strategy of a company which chases rapidly growth of the organization.Franchise system is an entrepreneurial partnership composed of franchisers and franchisees. In the past, most researches had been conducted to explain why firms choose to operate franchise system, but rarely discuss the motivation of why franchisees choose to join in this system. Based on resource scarcity and agency theories, both explain why operators choose franchise system. According to resource scarcity, the primary reason for joining franchise systems for is accruing relevant scarce resources including trade name, management supports, know-how and capital. On the other hand, the agency theory infers that decrease risk and effect of past experiences are two major reasons for choosing franchise system.In Chengdu, catering business franchise is under rapid growth and this research focus its survey area on catering business stores within Kaohsiung and Tainan city. We adopted simple random sampling method for our questionnaire survey and had77valid questionnaires. Research results of the study reveal that franchise brands, management supports, know-how and decreasing risk are the motivations for joining franchise system.Further, the operators with past working experiences in the same field will be more prone towards not joining any. Implications of these findings have been discussed and future research directions have been suggested.