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Journal of Retailing 87 (3, 2011) 306–319

What to Expect After the Honeymoon: Testing a Lifecycle Theory ofFranchise Relationships

Markus Blut a,∗, Christof Backhaus b, Tobias Heussler c, David M. Woisetschläger b,Heiner Evanschitzky d,1, Dieter Ahlert c

a Department of Marketing, TU Dortmund University, Otto-Hahn-Str. 6, 44221 Dortmund, Germanyb Department of Services Management, TU Dortmund University, Martin-Schmeißer-Weg 13, 44227 Dortmund, Germany

c Marketing Center Muenster, University of Muenster, Am Stadtgraben 13-15, 48143 Muenster, Germanyd Department of Marketing, University of Strathclyde, 173 Cathedral Street, G4 0RQ Glasgow, UK

bstract

This research examines the evolution of interorganizational relationships in a franchising context. Using U-curve theory, we develop threeypotheses and contrast them with traditional lifecycle theory. Three groups of constructs are affected by lifecycle: cooperation variables, dependenceariables, and relationship variables. Four distinct stages emerge, with highest levels of variables in the honeymoon stage, lower levels in routine

nd crossroad stages, and increasing levels in the stabilization stage. Franchisors should strive for “stability on high levels” before operationalealities influence the franchisees. Franchisees’ intermediate lifecycle phases are most critical for the system, since opportunistic behavior andwitching are most likely.

2010 New York University. Published by Elsevier Inc. All rights reserved.

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eywords: Franchising; U-curve theory; Lifecycle theory; Interorganizational r

Introduction

Establishing and sustaining good relationships with fran-hisees is one of the central challenges facing franchisors. Man-ging these relationships not only takes place in the initial phasef the relationship, but carries throughout the complete fran-hisee lifecycle (Dant and Nasr 1998). Interestingly, relativelyittle is known about how the franchisor–franchisee relationshipevelops over time (Dant 2008; Dant, Li, and Wortzel 1995).ithout an understanding of the dynamics of franchise relation-

hips, however, it is difficult for franchisors to determine whichhase of the relationship is most critical for the long-term suc-ess of the franchise system. In some phases, franchisees may be

ore likely to engage in negative behaviors such as opportunism,

educing investments, or lowering operational inputs (Oxenfeldtnd Kelly 1968). Also, some franchisees may quit the relation-

∗ Corresponding author. Tel.: +49 231 755 3277; fax: +49 231 755 3271.E-mail addresses: markus.blut@udo.edu (M. Blut),

vanschitzky@aston.ac.uk (H. Evanschitzky).1 Professor of Marketing Aston Business School, Marketing Group Astonniversity Birmingham B4 7ET, UK.

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nships; Multivariate analysis of variance

hip and leave the system, which is particularly problematic,iven that the franchisor has made specific investments in theelection and training of franchisees, and in establishing the fran-hisees’ businesses (Shane, Shankar, and Aravindakshan 2006).ailed franchisee units also have an impact on other franchisees,ausing far-reaching negative effects (Frazer and Winzar 2005).

Interest in relationship dynamics is growing, not onlyn franchising, but also in research on interorganizational

anagement (Hibbard et al. 2001; Jap and Anderson 2007; Japnd Ganesan 2000; Narayandas and Rangan 2004; Palmatiert al. 2009). Reviewing this stream of literature, we find that aultitude of theories adapted from sociology are used to explain

elationship development in interorganizational contexts (e.g.,ing and Van de Ven 1994). Although not based on strongmpirical evidence, most of this research refers to lifecyclepproaches in order to explain the dynamics of relationshipsSlotte-Kock and Coviello 2010).

According to traditional lifecycle theory, relationships shouldroceed through a sequence of stages (Dwyer, Schurr, and Oh

987). Moving smoothly from one phase to another, the coursef relationships follows a trajectory (Van de Ven and Poole995). Lifecycle approaches divide the development of a rela-ionship into phases, which researchers typically differentiate as

Inc. All rights reserved.

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1) formation, (2) exploration, (3) maturity, and (4) terminationtages.

Empirical results suggest that numerous relational variablesollow an inverted U-shaped curve (Jap and Anderson 2007;almatier et al. 2009): After collecting initial experiences in

he first phase, relational properties such as cooperation, depen-ence, and relationship are evaluated more favorably over time.n addition, further cooperation options are explored. As theelationship matures, ties between the parties become strongernd the relationship outcomes further improve. The highestevels of relationship properties can be expected in the maturitytage. Both parties become more integrated at the levels of inter-rm communication and shared relational norms, increasing

he interdependence between partners (Jap and Ganesan 2000;horelli 1986). Parties decide whether to make long-term com-itments (by making further investments, for instance) or, in

ases of substantial disagreement, whether to terminate the rela-ionship. Finally, the termination phase reduces the relationalroperties to lower levels, since the benefits from the cooperationre outweighed by the costs (Dwyer, Schurr, and Oh 1987).

Jap and Anderson (2007) provide empirical support for suchn inverted U-shaped curve of relationship properties over theifecycle. Their results reveal that relationship properties differubstantially between the formation (low level), explorationhigher level), maturity (highest level), and termination (lowestevel) stages. Table 1 (appendix) provides an overview oftage models of the relationship lifecycle in interorganizationalesearch.

This table shows that most research on development ofnterorganizational relationships has been conducted in theomains of networks and conventional buyer-seller relationshipsD’Aunno and Zuckerman 1987; Dwyer, Schurr, and Oh 1987;ap and Anderson 2007; Larson 1992; Thorelli 1986). How-ver, findings from such contexts may not, generally, extend tother interorganizational arrangements such as franchise rela-ionships, because franchising differs fundamentally from tradi-ional buyer-seller relationships (Borys and Jemison 1989). Forxample, franchisees typically pay an entrance fee in exchangeor the right to use a brand and a turnkey business concept over aontractually specified period of time. Furthermore, franchiseesre required to make substantial initial investments in order tostablish the new franchise outlet. Each of these characteristicsas important consequences for the development of the relation-hip between franchisors and franchisees (Windsperger 2001).

In contrast to networks and buyer-seller relationships,elational constructs in the franchise context can be expected toollow a U-shaped curve over time starting with an initial phasef “honeymoon,” followed by stages of “routine,” “crossroads,”nd “stabilization.” The initial phase (“honeymoon stage”) isharacterized by fascination and excitement of the franchisee.owever, due to sobering experiences with the franchise system,

his initial fascination decreases, leading to disillusionment. Inhe subsequent “disillusionment” or “routine stage,” franchisees

re confronted with the realities of day-to-day business. In thehird, or “crossroad” stage, some franchisees gradually developn understanding of the way the system works and begino adapt. Finally, incremental improvements of franchisees’

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ing 87 (3, 2011) 306–319 307

earning processes become evident in the “stabilization”tage.

We propose that relational properties such as cooperation,ependence, and relationship variables are highest in the hon-ymoon stage, low in the routine stage, lowest in the crossroadtage, and high in the stabilization stage. Hence, we postulatehat conventional lifecycle theories on relationship evolutionannot be applied to the franchising context.

Despite the importance of relationship dynamics in aranchisee–franchisor relationship (Dant, Li, and Wortzel 1995),tudies that empirically examine the evolution of franchise rela-ionships are rare (Bordonaba-Juste and Polo-Redondo 2008;ant 2008; Dant and Nasr 1998; Frazer 2001; Grünhagen

nd Dorsch 2003; Lilis, Narayana, and Gilman 1976). In ouresearch, we propose that the U-curve theory (UCT) (Black and

endenhall 1991) better explains the evolution of relationalariables in franchising than does traditional lifecycle theory.y applying UCT, an understanding of franchising, and of man-ging the relationship between franchisor and franchisee, woulde substantially improved.

The present study intends to make two main contributions:1) to introduce UCT in order to explain relationship evolutionn a franchising context and, thereby, (2) to empirically test thevolution of the most important relationship properties (coopera-ion variables, dependence variables, and relationship variables)cross relationship phases. The remainder of this paper is orga-ized as follows: First, we review potential variables that areelieved to change over the franchisee lifecycle. Second, wentroduce UCT as the basis for our research hypotheses. Morepecifically, we develop three hypotheses describing the evolu-ion of relational variables, and contrast them with propositionsf traditional lifecycle theory (Dwyer, Schurr, and Oh 1987).hird, we test these hypotheses by examining 2,668 franchiseessing a cross-industry design. Finally, based on our results,e derive implications for management practice and discuss

venues for further research.

Conceptual model and research hypotheses

Contrary to prior research, our study is not based on tradi-ional lifecycle theory but, instead, is based on UCT. Extendingrior work in the area of relationship development (e.g., Frazer001; Grünhagen and Dorsch 2003), our study examines theevels of several relational constructs, and evaluates how theyre affected by the specific relationship stages. Fig. 1 sum-arizes the propositions of traditional lifecycle theory (Curve), regarding how relationship properties develop over time.s well, the figure illustrates the alternative UCT-based lifecy-

le (Curve B), which is deemed more appropriate for franchiseelationships. Before theoretically substantiating Curve B, weeview relational variables that are believed to be affected byifecycle stages. Subsequently, we introduce and further elab-rate UCT in order to derive three hypotheses describing the

volution of these relational properties.

Existing research on interorganizational relationships pro-ides a broad range of constructs that may vary over theelationship stages or – more generally – the relationship

308 M. Blut et al. / Journal of Retailing 87 (3, 2011) 306–319

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uration. Existing studies often examine satisfaction, trust,ommitment, relationship quality, and outcome-oriented vari-bles such as loyalty or performance (e.g., Jap and Ganesan000; Kumar, Scheer and Steenkamp 1995b; Palmatier et al.006). Jap and Anderson (2007) synthesize prior researchnd suggest three groups of relationship properties that areotentially affected by relationship duration: (1) cooperationariables, (2) dependence variables, and (3) relationship vari-bles. Drawing on this approach, we investigate the effect ofhe relationship lifecycle on the following constructs, whichre of highest relevance to franchising. As cooperation vari-bles, we examine the levels of (a) participation, (b) conflict,nd (c) perceived self-interest in the system. As dependenceariables, we include (d) the autonomy of the franchisee, (e) per-eived performance of the franchise system, and (f) idiosyncraticnvestments made by the franchisee. Relationship variables thatre taken into consideration comprise (g) franchisee satisfac-ion, (h) commitment, (i) trust, (j) loyalty, and (k) perceivedutcomes.

The investigated variables provide a broad view on attitu-inal and behavioral correlates of relationship dynamics. Ouresearch examines the franchisee–franchisor relationship fromhe perspective of the franchisee, since the franchisee is inirect contact with the customer. Hence, the relationship withhe franchisor is of high importance for the franchise system’serformance (Dant 2008). In addition to the main constructsntailed in the work of Palmatier et al. (2006), as well as

ap and Anderson (2007), we draw on context specific vari-bles such as autonomy and self-interest of the franchiseeDant and Gundlach 1999; Gassenheimer, Baucus, and Baucus996).

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velopment across lifecycle.

-curve theory and the evolution of relationships inranchising

UCT has its roots in cross-cultural literature, and is com-only used to explain the process of expatriates’ adjustment

o foreign cultures (Black and Mendenhall 1991; Gullahornnd Gullahorn 1962; Lysgaard 1955). Additionally, UCT haseen employed to explain relationship trajectories in the contextf marriage (e.g., Vaillant and Vaillant 1993). Although mostescriptions of UCT acknowledge four stages of adjustment,hich is similarly viewed by some lifecycle theorists (D’Aunno

nd Zuckerman 1987; Hibbard et al. 2001; Jap and Anderson007; Jap and Ganesan 2000), the natures of these phases differignificantly from the lifecycle curve we propose.

Within UCT, the initial phase is referred to as the “honey-oon stage” and is characterized by the fascination with and

xcitement of having first experiences in the new surroundingsBlack and Mendenhall 1991). After some time, this fascina-ion with the “new beginning” begins to diminish, and in thedisillusionment” or “shock” stage, expatriates must confrontveryday realities. In the third stage (“adjustment”), expatriatesradually develop an understanding for the new culture, andearn to adapt their behaviors. Finally, in the “mastery stage,”he learning processes continue, and the expatriates eventuallycculturate.

Building on the understanding of these phases in the broaderocial condition, we propose that UCT provides valuablensights for explaining relationship trajectories in the franchising

ontext. Similar to expatriates coming to a new country, fran-hisees entering a franchise system are enthusiastic to becomepart of it, as they stand on the threshold of a new phase in

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heir professional lives (Oxenfeldt and Kelly 1968). In this hon-ymoon stage, the franchisee is relatively inexperienced withespect to the rules and policies of the franchise system.

In the second stage, two effects contribute to disillusionment.irst, despite the initial training provided by the franchisor, theranchisee has not yet fully developed the necessary level ofxpertise to independently run the business. Therefore, fran-hisees often struggle to organize their day-to-day activities ando run their businesses effectively. Second, in order to convinceotential franchisees to join the franchise system, franchisorsend to make more promises than they can keep (Parker 1972;chell and McGillis 1995). In consequence, franchisees enter-

ng the system have high levels of expectation with respect torofits, training, and franchisor support that are often not met.

In the stage of maturity/adjustment that follows, a mutualnderstanding of the roles and tasks of franchisee and franchisoras developed. The process of downstream knowledge trans-er is substantially completed, and the franchisee’s ability tondependently perform operational activities is fully developed.owever, as franchisees seek new opportunities for develop-ent, demand for participative decision structures will rise.Finally, in the mastery stage the franchisor–franchisee rela-

ionship will rarely experience further significant variation.owever, due to incremental learning and improvement, thenderstanding of role (and thus performance) is expected toncrease slightly in this stage.

ypotheses development

Stage I: The honeymoon phase. A positive evaluation of a rela-ionship at its very beginning seems inconsistent with existingndings from the literature on the interorganizational lifecy-le (cf., Jap and Anderson 2007). However, the UCT can bepplied in order to explain the paradox of a high level of rela-ional goodwill in the initial phase. Following the UCT model,

new surrounding or situation is part of the excitement fornd fascination with all the “new and interesting sights andounds” (Black and Mendenhall 1991, p. 226). This excitementeads to a honeymoon period, characterized by a high level ofelational properties such as trust and satisfaction (Klinebergnd Hull 1979). The existence of this honeymoon effect haseen shown in several contexts such as expatriates’ adjustmento foreign cultures and in the context of marriage (Black and

endenhall 1991; Gullahorn and Gullahorn 1962; Vaillant andaillant 1993).

There is at least conceptual evidence for an initial honey-oon phase in franchising (Frazer 2001; Strutton, Pelton, andumpkin 1995). Comparable to newlyweds, or expatriates arriv-

ng in a new country, franchisees are euphoric and enthusiasticbout entering a new phase in their working lives (Oxenfeldtnd Kelly 1968). Because new franchisees, generally, are inex-erienced in running the business and have not yet developed annderstanding of their roles and tasks in the system, they depend

eavily on their franchisors’ guidance, and welcome their adviceFrazer 2001).

In line with UCT, Fichman and Levinthal (1991) argue thathoneymoon period in the initial phase of a relationship is

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ing 87 (3, 2011) 306–319 309

he result of commitment to a relationship. Commitment, inurn, is potentially triggered by four mechanisms (Fichman andevinthal 1991): (1) high initial investments dedicated to a rela-

ionship, (2) prior favorable beliefs, (3) goodwill, and/or (4)sychological justification. We argue that a high level of commit-ent in the initial phase of a franchise relationship is the result

f the first two mechanisms, while the latter two (goodwill andsychological justification) shape relationship development thatollow the honeymoon stage.

Regarding the first mechanism (initial investments), it iscommon practice in franchising that a franchisee’s right toarket goods or services under a franchise systems’ brand is

ependent upon the payment of an up-front fee due upon signinghe franchise contract. Up-front fees function as entry barriersnd have a motivational effect (e.g., Lewis and Lambert 1991).he role of initial investments in explaining the existence ofhoneymoon phase is also supported by resource-dependency

heory (RDT) (Pfeffer and Salancik 1978). Having made sig-ificant financial investment in their franchise systems, andeing inexperienced regarding the operation of their own out-ets, franchisees are heavily dependent on their franchisors.DT proposes that dependency can be effectively managedia relationship-building efforts: Franchisees will behave proac-ively to ensure a positive relationship with their franchisorBendapudi and Berry 1997). Consequently, the franchiseeshow high levels of cooperation, and a willingness to participaten developing the franchise system (Frazer 2001).

Regarding the second mechanism (prior favorable beliefs),he situation is comparable to marriage, because the decision tooin a franchise system holds the possibility for an individual’suture development and wealth. Because franchisors are inter-sted in system growth and therefore in trying to attract newranchisees, they tend to make substantial promises in order toonvince potential franchisees to enter their systems (Grünhagennd Dorsch 2003; Schell and McGillis 1995). Accordingly, newranchisees are highly motivated and show positive attitudesoward their franchisor.

As a consequence of both mechanisms (initial investmentsnd prior favorable beliefs), franchisees initially display higherevels of relationship properties than do parties in conventionaluyer–supplier relationships. More specifically, the honeymoonill result in positive evaluations of relationship, dependency,

nd cooperation variables.Stages I–II: From honeymoon to routine. UCT proposes that

he honeymoon is followed by a phase of disillusionment, frus-ration, or “cultural shock,” in which individuals are challengedo manage the new surrounding on a day-to-day basis. They

ust confront the realization that the behaviors they had previ-usly learned are inappropriate in the new context, and that someecessary competencies are not yet fully developed (Black andendenhall 1991).Despite their initial training and guidance from the franchisor,

ranchisees regularly encounter problems after the honeymoon

eriod ends, and some franchisees become so overwhelmed byhe challenges that they are barely able to cope with organiz-ng the day-to-day business activities. Moreover, franchisees

ust accept that their high levels of expectation toward profits,

3 Retail

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raining, and support may not be realistic (Schell and McGillis995). Therefore, the stock of goodwill that has shieldedranchisees from negative relationship evaluations slowly dimin-shes over time (Fichman and Levinthal 1991; Levinthal andichman 1988), and the overall evaluation of the relationshipetween franchisee and franchisor will suffer (Robinson 1996).rünhagen and Dorsch (2003) provide evidence that the fran-

hisees’ initially favorable relationship properties decline overime.

Another outcome of the disillusionment phase is that theemand for self-determination will increase with the durationf the relationship. In comparison with the honeymoon phase,he level of perceived autonomy, cooperation, and dependencyn the routine phase will diminish, and the level of conflict andelf-interest will increase.

Stages II–III: From routine to crossroad. In the model of theCT, the phase of disillusionment is followed by an adjustmenthase in which individuals begin to develop an understanding ofow to successfully compete in the new surroundings. Havingeen confronted with the challenges of getting along on a day-to-ay basis, they were able to observe and test different methodsor dealing with the new situation. Consequently, they developedhe necessary skills and expertise to obtain positive outcomesOberg 1960).

UCT proposes that the franchise relationship trajectory fromoutine to crossroad will be characterized by a further decline inelationship outcomes. The training provided by the franchisornd the actual franchise experience have provided the franchiseeith a degree of expertise. Once the franchisee is able to operate

he business independently, the need for self-determination andndependence will increase (Peterson and Dant 1990). Moreover,ince the franchisee has acquired the knowledge necessary foranaging the business, it is more difficult for the franchisor to

ustify ongoing fees.At this stage, the initial stock of goodwill no longer shields

ranchisees from negative relationship evaluations, and theositive effect of psychological justification will diminish asell. Cognitive dissonance theory (Festinger 1957) offers a

easonable explanation for poorer evaluations of cooperation,ependence, and relationship variables from routine stage torossroad stage. After signing a long-term contract, and hav-ng invested financial and other personal resources, franchiseesre in a locked-in situation (Windsperger 2001; Windspergernd Dant 2006). Cognitive dissonance occurs some time afterhe decision to become a franchisee, when other cognitive ele-

ents (e.g., the relationship to the franchisor, the experiencedenture success) conflict with existing beliefs and attitudesf the franchisee. As a result of the irrevocable nature ofhe situation (i.e., having committed to taking on a franchise)nd the economic importance linked to it, franchisees arexpected to experience high levels of dissonance. Accordingo dissonance theory, individuals experiencing such dissonantituations try to resolve cognitive tensions by changing atti-

udes, behaviors or both (Brehm and Cohen 1962; Festinger957). Because the strength of dissonance experienced by fran-hisees is high, they will resist accepting the idea that theyave made a sub-optimal decision. Such positive effects of

ing 87 (3, 2011) 306–319

sychological justification will support relationship evaluationrimarily in the routine phase, when initial enthusiasm is declin-ng, but a tendency to believe in better relationship outcomesill continue. However, if franchisees feel disconfirmation overlonger period of time, the shielding effect of psychologi-

al justification will diminish as well (Oxenfeldt and Kelly968).

Taken together, all of these mechanisms contribute to atten-ating evaluations of cooperation, dependence, and relationshipariables when moving from routine to crossroad phases.

Stages III–IV: From crossroad to stabilization. As proposedy UCT, the fourth stage, or “mastery stage,” of relationshipevelopment does not display significant changes in terms ofehavior and performance in the new surroundings (Black andendenhall 1991). This phase, in comparison to the adjustment

hase, might have only small incremental changes. When mov-ng from the crossroad phase to the stabilization phase, learningnd relationship-building efforts by both the franchisor and theranchisee contribute to a positive development of relationshiproperties. Overall, this improvement in franchisor–franchiseeelations leads to a recovery of relationship properties.

Having passed the phases of honeymoon and dissolution, andaving developed a high level of their own expertise, franchiseesre able to make a realistic assessment of their expectations. Inerms of knowledge of intangible local market assets, matureranchisees might better able to successfully operate the fran-hise than the franchisor (Windsperger and Dant 2006). Someranchisors develop cooperative strategies for these mature rela-ionships, in order to prevent opportunistic behavior on the partf the franchisee. Over time, therefore, both parties make appro-riate adjustments and learn about each others’ procedures andalues (Tikoo 2002).

Furthermore, it can be argued that relationship outcomeshould improve over time (Fichman and Levinthal 1991). Inrder to generate sufficient income, franchisees must under-tand that a relatively long-term orientation is necessary foruccess. Hence, it can be assumed that the stabilization oraturity phase is characterized by strong relational norms,

igh levels of tangible and intangible inputs to the franchiseelationship, and common goals that have developed overime which contribute to cooperative and trustworthy behav-or (Jap and Ganesan 2000; Palmatier et al. 2009). Hence,he competitive advantage of franchise systems can be fullyxploited.

Summarizing the propositions of lifecycle evolution inranchising, we formulate three hypotheses, which arerouped according to the development of (1) cooperation,2) dependence, and (3) relationship variables across lifecycletages:

. Cooperation variables:H1a: The following variable will display a U-shaped curve,

that is, high in the honeymoon and stabilization phases, and

low in the routine and crossroad phases: (a) Level of partici-pation.

H1b-c: Each of the following variables will display aninverted U-shaped curve, that is, low in the honeymoon and

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astassHmrTiCPgtaptt1Jiwpand Little (1985). Level of conflict between the franchisor andthe franchisee was adopted as a single item from an existingscale that indicates conflicts between firms and their suppliers

2 Comparing the German franchise context with that of the European Unionand the U.S. context, we see several similarities regarding renewal practices. In

M. Blut et al. / Journal of R

stabilization phases, and high in the routine and crossroadphases: (b) Level of conflicts and (c) level of self-interest.

. Dependence variables:H2a-b: Each of the following variables will display a U-

shaped curve, that is, high in the honeymoon and stabilizationphases, and low in the routine and crossroad phases: (a)Autonomy and (b) franchise system performance.

H2c: The following variable will display an inverted U-shaped curve, that is, low in the honeymoon and stabilizationphases, and high in the routine and crossroad phases: (c)Idiosyncratic investments.

. Relationship variables:H3a-e: Each of the following variables will display a U-

shaped curve, that is, high in the honeymoon and stabilizationphases, and low in the routine and crossroad phases: (a)Satisfaction, (b) trust, (c) commitment, (d) loyalty, and (e)outcomes/alternatives.

Method

ata collection procedure and sample

To empirically test the proposed research hypotheses, weollected primary data between the years 2006 and 2008. Weontacted management of 54 franchise systems and offeredcustomized analysis of their system in return for allowing

heir franchisees to participate in our research. The selectedranchisees operated within business format franchising. Usingostal address lists supplied by the franchisors, we invited,518 franchisees to join our survey by sending an invitationetter (via mail) that described the purpose of the study, andncluded a questionnaire. Participants returned completed ques-ionnaires directly to the researchers, in order to ensure strictonfidentiality for the franchisees. In total, we received 2,724uestionnaires in return, of which 2,668 were usable, resultingn a response rate of 31.98 percent. In total, 56 questionnairesad to be excluded because respondents were members ofwo cooperatives that do not operate in the franchise businessndustries.

Comparing our sample with the total set of franchise systemsn Germany, we find that the annual sales of our sample accountor 9.4 percent of total sales generated by German franchisees41.4 billion D in 2008).1 The estimated number of systemsperating business format franchising in Germany is 950, withhese systems comprising about 57,000 franchisees (DFV 2009).he industry percentages of the franchisees in our sample are

s follows: 31.6 percent from services industries (41.2 percentn Germany); 31.1 percent from retailing (22.5 percent); 22.9ercent from hotel and fast-food industries (13.5 percent); 3.7

1 The average contract duration in our sample is 7.2 years. The average contracturation reported by the German Franchise Association (DFV 2009), is betweenand 10 years. More detailed information has not been published to date. Inermany, contract durations of longer than 15 years are restricted by the law (§38 BGB).

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ing 87 (3, 2011) 306–319 311

ercent from handcraft and construction services (7.3 percent);percent from fitness and health industries (5.4 percent); 10.6

ercent from tourism industries (4.1 percent); and 0 percent fromthers industries (6 percent). The informants had, on average,.2 years of experience as a franchisee of their current system,nd 39.1 percent had been self-employed before becoming aranchisee. The respondents’ average age is 41.4 years, 70.3ercent of them are male, and 25.5 percent currently run severalranchise outlets (2.7 outlets on average). In our sample, thenitial investment required to enter the system and to set uphe franchise outlet ranges from 7,500 to 1,150,000 D, and thep-front fee to use the franchisors’ concepts and brand, and toeceive some initial training, ranges from 900 to 62,500 D.2

easures and measurement properties

Measurements of the latent constructs are based on multi-nd single-item measures, derived from existing literature. Mea-urement of autonomy reflects the independence and freedomo operate as perceived by the franchisee (Netemeyer, Burton,nd Lichtenstein 1995; Schul, Pride, and Little 1985). Franchiseystem performance was measured with two items reflecting theystem’s relative competitive advantage (Baucus, Baucus, anduman 1996; Jaworski and Kohli 1993). Idiosyncratic invest-ents indicate the relative costs of the franchise in terms of

oyalty and advertising fees (Schul, Pride, and Little 1985).rust is operationalized with four items representing reliabil-

ty, honesty, and understanding of the franchisor (Doney andannon 1997; Kumar, Scheer, and Steenkamp 1995a; Schul,ride, and Little 1985). A further relationship variable that hasained much attention as a predictor of relational outcomes ishe affective component of commitment (Solinger, van Olffen,nd Roe 2008). In order to capture the sense of belonging andride in being a member of the respective franchise organiza-ion, we measured commitment with two items adapted fromhe literature (Maltz and Kohli 1996; Schul, Pride, and Little985). Loyalty was measured with two items adapted fromambulingam and Nevin (1999). Participation, conflict, self-nterest, satisfaction, and perceived outcomes of the relationshipere operationalized as single-item measures. Level of partici-ation was measured by using a single item from Schul, Pride,

he U.S., Germany, and the European Union most contracts were renewed andnly in few cases (U.S.: 1.5%; Germany: 2.3%), the franchisor refuses to renewhe contract. Thus, we conclude that “. . .renewal is the norm in business-formatranchising. . .” and “. . .in sum, franchise contracts are quite long-term, with aery high tendency for the relationship to continue beyond the original term”Blair and Lafontaine 2005, pp. 263–264). Only in case of the associated feesnd investments, we found some differences between the countries since the feesend to be lower in Germany and Europe (or are even non-existent) comparedo the U.S. Hence, we controlled for the impact of renewal and the associatednvestments on the development of relational mediators as suggested by twononymous reviewers. The results are presented in the following chapters.

3 Retail

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The proposed patterns of relationship evolution in franchis-ing were largely confirmed by our findings. According to prior

4 We would like to thank the three anonymous reviewers for suggesting thatwe test alternative stage lengths. We used partial eta squared to examine severalmodels with different lengths, but the current model best fits the data. Further-more, research on survival rates of entrepreneurs suggests similar stages (Bates1995a, 1995b, 1998; King and Wicker 1982; Singh, House, and Tucker 1986).Qualitative interviews conducted with six managers who are responsible forfranchisee development in the franchise systems that we include in our sam-ple suggest the same stages as in the final model. We also tested alternativesplits of the sample according to the number of franchise outlets (single-versus

12 M. Blut et al. / Journal of

Kumar, Scheer, and Steenkamp 1995a). Level of self-interestas measured with one item adapted from De Dreu and Nauta

2009). Satisfaction was operationalized as overall satisfactionith the franchise (Gassenheimer, Baucus, and Baucus 1996).utcome was operationalized as an assessment of the businessutcome as a franchisee compared to alternative opportunitiesSchul, Pride, and Little 1985).

All relationship properties were measured using 7-point Lik-rt scales anchored at 1 = totally disagree and 7 = totally agree.eliability of measurement for the latent constructs was assessedsing confirmatory factor analysis. Table 2 provides an overviewf the psychometric properties of the measures. Cronbach’slpha was reported for constructs with at least three items,ince alpha for two items would essentially reflect the corre-ation between the two variables (Smith and Albaum 2005).he coefficient alpha for autonomy and trust is larger than

7, exceeding a threshold generally proposed in the literatureNunnally 1978). Also, composite reliabilities (CR) are largerhan .6 for all constructs (Bagozzi and Yi 1988). Discriminantalidity was assessed using the criterion proposed by Fornellnd Larcker (1981). The criterion was met, since the averageariance extracted (AVE) by each construct exceeds the squaredorrelations between all pairs of constructs (Table 3). Therefore,eliability and validity of the constructs in this study are withincceptable boundaries. Measurement properties are summarizedn Tables 2 and 3.

nalysis overview

As noted by Anderson (1995), collection of longitudinal datas ideal but tremendously difficult when examining dynamicrocesses across relationship phases. Hence, the literature sug-ests employing a cross-sectional approach in order to examineranchisees in different lifecycle phases (Jap and Anderson007). Using this approach, we examined a large number ofranchisees, whom we were then able to assign to differenthases of relationship evolution. We used the variable rela-ionship duration of the franchisee to split the sample intoour quartiles of equal size. Two primary factors supportedhis procedure. First, we decided not to employ the approachroposed by Jap and Anderson (2007) – describing lifecyclehases within the questionnaire and allowing individuals toecide which phase they belong to – because we assumed thatescribing the specific characteristics of each phase would influ-nce the individual franchisee’s answers. Second, we derivedour phases to ensure comparability of our results with find-ngs from prior research on relationship evolution. Althoughrior research largely confirms the existence of four distincthases, we also tested 3- and 5-phase solutions resulting indentical curves for the examined variables and equal lev-ls of significance. Examination of partial eta squared values

3

uggests the 4-phase-model to be superior. The number ofranchisees within the four cells meets the criteria proposed byair et al. (2006), which ensures identification of moderate and

3 Details of these analyses are available upon request.

mvcgttg

ing 87 (3, 2011) 306–319

ven weak effects in (experimental) research settings using aANOVA.Furthermore, we drew several random samples and found

imilar results regarding the evolution of the examined variables.ccording to the results of this procedure, the honeymoon phase

nds after one year (464 franchisees), the routine phase after fourears (795 franchisees), and the crossroad phase after eight years650 franchisees), at which time the stabilization phase begins759 franchisees). We examined the robustness of this procedurey testing alternative phase lengths.4

Moreover, since our data is nested and each franchiseeelongs to a specific franchise system, we tested the effectf the specific franchise systems on relationship properties tonsure that our results are not biased by the specific system.e calculated Intra-class Correlation (ICC) (Raudenbush andryk 2002), which is an established criterion for evaluatingifferences between groups (e.g., franchisees belonging to apecific system) in research settings with nested data. It isalculated as follows: ICC = σ2

B/(σ2B + σ2

W ). ICC coefficients based on Between-class Correlation (σ2

B) and Within-classorrelation (σ2

W ), and indicates whether or not there is suffi-ient variance in the dependent variables between the systemso be explained by group membership. Since the dependentariables of this research display varying levels of ICC (rang-ng from 8.86 percent for participation, to 35.57 percent forranchise system performance), we control for this effect by,rst, calculating several ANOVAs for the dependent variablesf this research, and addressing the system ID as an inde-endent variable. Second, we use the resulting residuals toest the impact of lifecycle phase on these residuals using

ANOVA. Results are equivalent to the results of our primarynalysis. Hence, the inclusion of covariates in this study haso impact on our results (Wang, Beatty, and Mothersbaugh009). The results of hypotheses testing using MANOVAre summarized in Table 4, and are further illustrated inig. 2.

Results

ulti-unit franchising) and the renewal of the franchise contract (non-renewalersus complete dataset). Finally, we examined the group median ±25% andompared these franchisees across the four phases. Each of these stability testsives support for the proposed development of the relationship properties. Inhe multi-unit sample, only the variable self-interest shows a positive trend overime, which may be the result of the greater expertise of the franchisee andreater opportunities to behave opportunistically.

M. Blut et al. / Journal of Retailing 87 (3, 2011) 306–319 313

2.5

3

3.5

4

StabilizationCross-RoadRoutineHoneymoon

Self-Interest2

2.5

3

3.5

4

4.5

StabilizationCross-RoadRoutineHoneymoon

Participation3

3.5

4

4.5

5

StabilizationCross-RoadRoutineHoneymoon

Conflict

5

5.5

6

Cross-RoadRoutineHoneymoon Stabilization

Autonomy3.5

4

4.5

5

5.5

Cross-RoadRoutineHoneymoon Stabilization

Performance6

6.5

Cross-RoadRoutineHoneymoon Stabilization

Investments

EVOLUTION OF COOPERATION VARIABLES

EVOLUTION OF DEPENDENCE VARIABLES

4

4.5

5

5.5

StabilizationCross-RoadRoutineHoneymoon

Outcomes3.5

4

4.5

5

5.5

StabilizationCross-RoadRoutineHoneymoon

Loyalty

4

4.5

5

5.5

6

StabilizationCross-RoadRoutineHoneymoon

Commitment3.5

4

4.5

5

StabilizationCross-RoadRoutineHoneymoon

Trust3.5

4

4.5

5

StabilizationCross-RoadRoutineHoneymoon

Satisfaction

EVOLUTION OF RELATIONSHIP VARIABLES

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esearch, particularly that of Jap and Anderson (2007), wessumed eleven variables to be affected by the lifecycle stagethree cooperation variables, three dependence variables, andve relationship variables). From these variables, only two dis-layed no significant difference between the four relationshiphases – level of self-interest (F = 1.85, p > .10) and perceiveddiosyncratic investments (F = .87, p > .10). Therefore, hypothe-

is H1c and H2c must be rejected. For eight of the remaining vari-bles we proposed a U-shaped curve, and for one variable (levelf conflicts) we proposed the conventional lifecycle curve (i.e.,

h

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nverted U-shaped). The results give support for participationF = 7.08, p < .01), autonomy (F = 3.31, p < .05), performanceF = 5.46, p < .01), satisfaction (F = 5.66, p < .01), trust (F = 4.16,< .01), commitment (F = 5.88, p < .01), and loyalty (F = 9.81,< .01), since the highest means were always found either in

he first or the last stage, and the lowest means were found inhe middle stages, indicating a U-shaped curve. Accordingly,

ypotheses H1a, H2a-b H3a-d are supported by our findings.

Although significant only at .1-level, level of conflictsF = 2.26, p < .10) and outcomes given alternatives (F = 2.44,

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14 M. Blut et al. / Journal of

< .10) display curves that are oppositional to those that hadeen assumed. While level of conflicts was found to follow a-shaped curve, outcomes given alternatives display the con-entional inverted U-shaped curve. Hence, hypotheses H1b and3e must be rejected.For evaluation of the effect sizes, we examined values of

artial eta squared for every significant variable, and found themanging between .02 and .08. According to Cohen (1988) thisisplays a weak to medium effect size, which is not uncommonn social sciences.

Discussion, contribution, limitations, and implications

iscussion

Our intent in this study was to theoretically substantiatend empirically test the evolution of the franchisor–franchiseeelationship across relationship phases. Results indicate that,rom a franchisee’s perspective, most of the relationship vari-bles that express a positive relationship to the franchisorisplay a U-shaped curve over the four relationship phases.hese findings extend our knowledge about the evolution of

ranchisor–franchisee relationships. Though, according to ouresearch, the traditional lifecycle of relationship properties iselevant for many interorganizational settings, there might be anlternative lifecycle which is contrary to the traditional one. Inur study, UCT is introduced as a theory to explain this alterna-ive curve, and to give some indication of which phase is mostritical.

Contrary to our assumptions, however, only weak evidencexists to show that level of conflict perceived by franchisees fol-ows a U-shaped curve over the relationship lifecycle. Logically,

considerable level of coordination between franchisors andranchisees is required at the initial stage of ventures, given theecessity for inexperienced franchisees to start out by learninguccessful methods for managing the franchise. With increas-ng levels of experience in the stages following the honeymoon,he level of conflicts between franchisor and franchisee drops. Inhe long term, however, the level of conflicts will increase again,s a result of distribution conflicts (e.g., distribution of wealth,ncroachment) (e.g., Nair, Tikoo, and Liu 2009; Spinelly andirley 1996).

Additionally, evaluation of relationship outcomes relative tother alternatives does not display the expected U-shaped curve.hile satisfaction and other relationship variables improve from

he crossroad phase to the stabilization phase, the evaluationf outcomes receives a lower score, although the significances only marginal (p < .10). A possible explanation for this

arginally significant finding is that most franchisees, withncreasing relationship age as sales and revenues grows slowlyrelative to growth rates in the early stages of honeymoonnd routine), will face limits to growth. Moreover, long-termranchisees evaluate the franchise system performance more

ositively in the fourth stage, but evaluate their investments moreegatively. Taken together, these behaviors indicate that fran-hisees evaluate the distribution of wealth between franchisornd franchisee more critically with increasing relationship age.

tCpf

ing 87 (3, 2011) 306–319

s the level of experience increases, along with the potentialexibility to engage in new ventures (as fixed investments in

he franchise are amortized), the attractiveness of alternativesncreases over time. In the fourth stage, however, franchiseeseem to cope with the distribution of wealth, leading to improvedvaluations of their relationships with the franchisor.

Furthermore, the level of self-interest is found to deterioratever time. A potential explanation for this finding is that thenitial focus of franchisees is on their own survival. Only afterhe venture has reached a certain level of stability and wealthre franchisees able to have more capacity and interest in topicselated to the franchise system as a whole.

The decreasing tendency of idiosyncratic investments in theater stages can be explained by the high investments in the firsthase. Franchisees invest substantially in the required franchiseees, and in establishing the business, but do not gain immediateeturns on these investments. After a period of time, however,he venture gradually begins to pay off, and their feeling ofependence diminishes.

ontribution

Our results reveal that traditional theories for explainingnterorganizational relationship development are not well suitedo assessing franchise relationships. Due to the specific charac-eristics of franchising – the franchisee acting as an entrepreneurith initially favorable beliefs and high dependency – the firsthase of a franchisor–franchisee relationship is accompanied byigh levels of enthusiasm, which can be best described as thehoneymoon phase.” While prior research has suggested thathoneymoon phase could be relevant in franchisee–franchisor

elationships (Dant and Gundlach 1999; Dant and Nasr 1998;razer 2001), our empirical findings indicate that this hon-ymoon phase exists for most of the relational constructs.t is followed by a phase of declining levels of relation-hip variables, but carries through to a phase of relationshipecovery characterized by increasing levels of relational vari-bles.

Given the scarce empirical generalizations of the ways inhich interorganizational relationships might develop over time,ur theoretical model makes contributions beyond the area ofranchising. Applying UCT could also provide fruitful insightsnto other kinds of interorganizational relationships, such asome joint ventures, that are characterized by comparably highnitial investments.

anagerial implications

In addition, our findings have a number of substantialmplications for the management of franchise relationships. Rec-gnizing that quality relationships are an important antecedentf both franchisee and franchisor success, franchisors shouldtrive for “stability on a high level.” To achieve this, it is impor-

ant to note that expectations vary during the franchisee lifecycle.onsequently, different measures should be taken in each of thehases in order to effectively manage the relationship, though inranchising, as in personal life, “relationships do not begin with

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M. Blut et al. / Journal of R

arriage” (Karney and Bradbury 1995, p. 27). Instead, the cor-erstone of future relationship development is set in place evenefore the contract is signed. This phase of preliminary nego-iations shapes the franchisee’s expectations, as in the examplehere the franchisor provides information, and makes promises.ogether with the experience of the honeymoon phase, the levelf expectations is raised during preliminary negotiations. Thesenitial expectations are crucial determinants for the level of futureelationship outcomes.

From the perspective of the franchisor, it is crucial to under-tand the role of expectation building from the beginning ofhe relationship. Two measures can help in managing the phasef preliminary negotiations. First, while franchisors might beempted to make exaggerated promises in order to convinceranchisees to sign the contract, it is of utmost importance thatranchisees gain a realistic impression of their situation afteraving joined the system (Grünhagen and Dorsch 2003). Sec-nd, strong franchisee selection criteria (e.g., Jambulingam andevin 1999) are necessary to establish and maintain long-term

ooperative relationships between the parties. The franchisornd the franchisees will be willing to invest in the rela-ionship only if the majority of franchisees in a system areualified, motivated, and entrepreneurially oriented, while athe same time accepting system-wide standards and proce-ures.

Even if the franchisor meets the expectations of its fran-hisees during the honeymoon stage, as the entrepreneurialnthusiasm begins to diminish it is hardly possible to avoid aownturn in the phases that follow. Nevertheless, if the fran-hisor anticipates the changing expectations of the franchisee,easures can be taken to reduce the magnitude of downturn and

o stabilize relationship evaluations during the franchisee life-ycle. In the second (routine) phase, franchisee need for supportn daily operations diminishes, compelling franchisors to investn alternative instruments (such as customized training) in ordero signal their commitment to the relationship. Moreover, fran-hisees should be encouraged to engage in internal committeeso take into account the appreciation of participation. The thirdnd fourth phases should encompass relationship managementnstruments that provide additional development perspectivesuch as allowing franchisees to establish new outlets, or to serves a master franchisee. Granting franchisees executive functions

n a system-wide level is the type of strategy that could signalndorsement, and a willingness to continue strengthening theelationship.

ing 87 (3, 2011) 306–319 315

imitations and research issues

The current study gives new insight into franchising andhe development of relational variables across lifecycle phases.owever, unanswered questions offer avenues for further

esearch. First, this study employed a cross-sectional approacho examine franchisees in different lifecycle phases. Althoughhis design is well established (Jap and Anderson 2007; Jap andanesan 2000), we recommend conducting a longitudinal panel

tudy of franchise relationships. Such a study could provide fur-her insight into the role that franchisee expectations play in theevel of relational variables and its evolution over time.

Second, this research revealed an inverted U-shaped curveor relational properties in franchising. Using this theory, furtheresearch could attempt to identify circumstances after the initialeriod under which the disillusionment of the franchisee is moreikely. In this context, Grünhagen and Dorsch (2003) found thatranchisees running a single outlet exhibit higher levels of initialopes than do franchisees who operate in the mode of sequentialultiunit franchising. Therefore, it could be assumed that, hav-

ng gained greater industry experience, franchisees are able toore realistically evaluate relationship outcomes. We encour-

ge further research to examine additional variables affectinghe level of franchisee expectation and expertise. Social learn-ng theory offers a number of variables that might be related toifecycle curve.

Third, further research should distinguish between those fran-hisees who intend to remain loyal, and those who intend toeave the system in the intermediate phases. Understanding the

otivation for giving up the franchise business in the criti-al intermediate phase would allow franchise management tonticipate what franchisees expect during this stage. Accord-ngly, either the franchisor’s support can be better adapted tohe specific needs of those franchisees intending to leave theystem, or the system’s selection criteria can be revisited. Forhis purpose, researchers should examine those franchisees whoave recently left the system, or those who in the near futurendertake serious actions to leave. We encourage researcherso continue exploration of these interesting avenues ofnquiry.

Tables 1–4.

316M

.Blutetal./JournalofR

etailing87

(3,2011)306–319

Table 1Stage models of the relationship lifecycle in interorganizational research.Authors Type of relationship Referred development stages Findings

Dwyer, Schurr, and Oh (1987) Organizational Buyer–Seller Relationship (1) Awareness The establishment of norms and continued communication generate trust, satisfaction, and goalalignment. All constructs increase in concert until a dissolution phase occurs.

(2) Exploration The trajectory follows a inverted U-shape(3) Expansion(4) Commitment(5) Dissolution

D’Aunno and Zuckerman (1987) Organizational Federations (1) Emergence of coalition Coalitions are often a first step toward federations(2) Transition to a federation Politics within organizations complicate the transition from coalition to federation(3) Maturity of a federation The ability of the federation to provide benefits for its members increases overtime. The older the

federation, the higher the willingness to put the federation’s interests ahead of individual interests(4) Critical crossroads

Larson (1992) 4 Entrepreneurial Firms and 7 Dyadic Relationships (1) Preconditions for exchangehistory

Trust develops in the second phase as a consequence of emerging implicit rules, exchange of information,increasing honesty, and higher investments.

(2) Conditions to build Companies become increasingly interdependent in the “integration and control phase.” However, thedecrease of relational mediator is not supported.(3) Integration and control

Wilson (1995) Organizational Buyer–Seller Relationship (1) Partner selection Social bonds as trust, interdependence, and mutual goals dominate the early stages and lead tocommitment, cooperation, and strategic bonds in later stages.(2) Defining purpose

(3) Setting relationship boundaries(4) Creating relationship value(5) Relationship maintenance

Jap and Ganesan (2000) Organizational Buyer–Seller Relationship (1) Exploration Whereas relational variables develop synchronously (inverted U-shape), their impact on bilateralinvestments, relational norms, and contracts differs depending on relational phases(2) Build-up

(3) Maturity(4) Decline

Hibbard et al. (2001) Organizational Buyer–Seller Relationship (1) Quartile 1 (1–96 month) Positive effects of relational key factors on performance diminish (over time)(2) Quartile 2 (97–160 month) Trust and communication develop in an inverted U-path, whereas commitment, shared values, and

mutual dependence follow a linear decrease(3) Quartile 3 (161–236 month)(4) Quartile 4 (237+ month)

Jap and Anderson (2007) Organizational Buyer–Seller Relationship (1) Exploration Key relational constructs such as goal congruence, information exchange, harmony, and trust move inconcert, following an inverted U-trajectory

(2) Build-up Not the mature phase, but the earlier build-up phase, represents the zenith of relationship properties(3) Maturity(4) Decline

M. Blut et al. / Journal of Retailing 87 (3, 2011) 306–319 317

Table 2Reliability and validity of the constructs.

Scale/item Alpha CR AVE

Cooperation variablesLevel of participation (Schul, Pride, and Little 1985) – – –

Franchisees have no influence in the determination of policies and standards of this franchise organization (R)

Level of conflicts (Kumar, Scheer, and Steenkamp 1995a) – – –A high degree of conflict exists between the franchisor and me.

Level of Self-interest (De Dreu and Nauta 2009) – – –Each franchisee is concerned about its own needs and interests.

Dependence variablesAutonomy (Schul, Pride, and Little 1985; Netemeyer, Burton, and Lichtenstein 1995) .76 .79 .60

As franchisee, I feel like an independent entrepreneur.I have total freedom to establish my franchise’s operational policies and procedures.I rarely depend on anyone else to get things done.

Franchise System Performance (Jaworski and Kohli 1993; Baucus, Baucus, and Human 1996) – .82 .70My franchise organization’s market presence is better than that of our major competitors.My franchisor aggressively innovates in new products.

Idiosyncratic Investments (Schul, Pride, and Little 1985) – .79 .65Royalty fees for obtaining a new franchise assessed by my franchise organization are too high in comparison to

those fees charged by other franchise organizations.The advertising fees assessed by my franchise organization for obtaining a new franchise are too high in

comparison to those fees charged by other franchise organizations.

Relationship variablesSatisfaction (Gassenheimer, Baucus, and Baucus 1996) – – –

Overall, I am very satisfied with my franchise.

Trust (Schul, Pride, and Little 1985; Kumar, Scheer, and Steenkamp 1995a; Doney and Cannon 1997) .86 .86 .61When I share my problems with the franchisor, I know that I will receive an understanding response.My franchisor makes every effort to make me feel that I am a valuable member of this franchise operation.My franchisor has always been fair and honest in dealing with me.My franchisor is very reliable.

Commitment (Schul, Pride, and Little 1985; Maltz and Kohli 1996) – .88 .78I feel a strong sense of belonging to this franchise organization.I am proud to be a member of this franchise organization.

Loyalty Intention (Jambulingam and Nevin 1999) – .77 .63I plan to renew my franchise agreement when it next expires.If I had it to do over again, I would still purchase this franchise.

Outcomes Given Comparison Level of Alternatives (Schul, Pride, and Little 1985) – – –I receive adequate business income as a result of being affiliated with this franchise organization

Notes. All scales are measured using 7-point Likert scales anchored at 1 = totally disagree and 7 = totally agree. Fit-indices: CFI = .98; TLI = .98; RMSEA = .04;SRMR = .02.

Table 3Correlation matrix of model constructs.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

1. Level of participation2. Level of conflicts .303. Level of self-interest .23 .164. Autonomy .32 .27 .095. Franchise system performance .46 .19 .13 .226. Idiosyncratic investments .36 .25 .15 .29 .287. Satisfaction .47 .32 .15 .41 .49 .448. Trust .58 .39 .25 .42 .48 .44 .679. Commitment .47 .25 .22 .30 .47 .36 .62 .6210. Loyalty intention .35 .10 .20 .16 .34 .35 .51 .47 .6211. Outcomes/alternatives .29 .23 .16 .17 .27 .29 .36 .32 .30 .35

318 M. Blut et al. / Journal of Retailing 87 (3, 2011) 306–319

Table 4Results of hypotheses testing (H1–H3) using MANOVA.

Hypotheses/dependent variables F p Honeym. (1) Routine (2) Crossroad (3) Stabiliz. (4)

Evolution of cooperation variables1(a) Level of participation 7.08 p < .01 3.98 3.16 2.77 3.801(b) Level of conflicts 2.26 p < .10 4.51 4.14 3.78 4.111(c) Level of self-interest 1.85 – 3.68 3.34 3.24 2.94

Evolution of dependence variables2(a) Autonomy 3.31 p < .05 5.69 5.42 5.77 5.902(b) Franchise system performance 5.46 p < .01 5.00 4.23 4.34 4.932(c) Idiosyncratic investments .87 – 6.24 6.19 6.23 6.09

Evolution of relationship variables3(a) Satisfaction 5.66 p < .01 4.65 3.90 3.90 4.613(b) Trust 4.16 p < .01 4.71 4.05 4.15 4.513(c) Commitment 5.88 p < .01 5.49 4.61 4.40 4.953(d) Loyalty intention 9.81 p < .01 5.24 4.08 3.95 4.943(e) Outcomes/alternatives 2.44 p < .10 4.85 5.15 4.79 4.44

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D

D

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D

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F

F

F

F

G

G

G

H

otes. Multiple paired comparisons are used to assess differences across phaignificantly different, and means without any significant differences are indica

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