Service and Brand Investments of Franchising Systems

• Main Authors: Jung-Kuo Chuang, 鍾榮國
• Other Authors: Sheng-Shu Tseng
• Format: Others
• Language: zh-TW
• Published: 2002
• Online Access: http://ndltd.ncl.edu.tw/handle/87140562075752694872

碩士 === 元智大學 === 管理研究所 === 90 === Abstract For economy of scale, increasing labor participation of housewives and middle age crisis concern, franchising becomes an eminent business format for expansion in today’s business horizontal. To build competitive advantages in the value-chain, franchisers need to cooperate with their associated franchisees by improving the relationship in between. The objectives of the present study are twofold: firstly, the investigation of the input level to maximize the added value of the franchise, and secondly, how can the franchiser enhance the cooperative relationship with franchisees. To those ends, we firstly focus on the issues of the level of the input factors and the efficacy. Secondly, with economic assumptions and modeling, we construct a mathematic model to investigate the problems that may exist in a typical franchise. Through the concerning of factors of the branding by the franchiser and the service level by the franchisee and the price competition of product market, we derive the product price equilibrium and the optimal level of branding and service. The modeling results also render in several managerial implications for the franchiser to motivate their franchisees. They are: 1. The provision of on-job training may help to entice the franchisee to enlarge its service. 2. Franchiser may induce franchisee’s service level by lowing the rate of royalty. 3. If franchisers increase branding by increasing the advertising budget, consumers’ monetary utility of advertising maybe increased, as a result, the equilibrium price of product is increased. Hence, franchisees’ service level is also induced. 4. If franchiser can increase the product price, it may help to entice the franchisee to invest with higher service level (i.e., more than the equilibrium price). Finally, we utilize the model to analyze the declining of internet advertisement. The limits of the modeling are drawn at the end for further research.