linking relationship quality and service quality in franchise systems:

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Linking Relationship Quality and Service Quality inFranchise Systems:Rajiv P. Dant a , Zhang G. Li b & Lawrence H. Wortzel ca Assistant Professor of Marketing, School of Management of Boston Universityb Assistant Professor of Marketing, University of San Franciscoc Professor of Marketing, School of Management of Boston UniversityVersion of record first published: 18 Oct 2008.

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Linking Relationship Qualityand Service Quality in Franchise Systems:

Model and Measurement

Rajiv P. DantZhan G. Li

Lawrence H. Wortzel

SUMMARY. This paper seeks to accomplish three related goals. In thefirst part, we develop the premise that delivered service quality at afranchise outlet will be a function of the quality of relationship betweenfranchisors and their franchisees. Next, we review the literature toarrive at a comprehensive definition for ‘‘quality of relationship’’ in afranchise context. Finally, we examine the empirical literature base toevaluate the operational measures that have been employed to tap thisconstruct. Specific recommendations about how the quality of franchi-sor-franchisee relationships should be measured are offered.

INTRODUCTION

There is widespread agreement among both practitioners andacademicians that service quality is critical to the success of retail

Rajiv P. Dant is Assistant Professor of Marketing, and Lawrence H. Wortzel isProfessor of Marketing at the School of Management of Boston University. ZhanG. Li is Assistant Professor of Marketing at the University of San Francisco.

The authors thank Gary L. Frazier, John R. Nevin, and Thomas G. Noordewierfor their helpful comments and suggestions on a previous version of the manu-script.

[Haworth co-indexing entry note]: ‘‘Linking Relationship Quality and Service Quality in FranchiseSystems: Model and Measurement.’’ Dant, Rajiv P., Zhan G. Li, and Lawrence H. Wortzel. Co-publishedsimultaneously in the Journal of Marketing Channels (The Haworth Press, Inc.) Vol. 4, No. 1/2, 1995,pp. 103-124; and: Franchising: Contemporary Issues and Research (ed: Patrick J. Kaufmann, and Rajiv P.Dant) The Haworth Press, Inc., 1995, pp. 103-124. Multiple copies of this article/chapter may be purchasedfrom The Haworth Document Delivery Center [1-800-3-HAWORTH; 9:00 a.m. - 5:00 p.m. (EST)].

E 1995 by The Haworth Press, Inc. All rights reserved. 103Dow

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FRANCHISING: CONTEMPORARY ISSUES AND RESEARCH104

organizations. Quality service can boost customer loyalty and at-tract new customers. Firms can use it to differentiate themselvesfrom their competitors. And it is posited to result in cost savings andlarger market shares. All these benefits mean profits for retail orga-nizations. Moreover, since quality service is considered a key com-ponent of customer retention, a large variety of businesses (e.g.,merchandise retailers, hotels, banks, car rental agencies, food serv-ers) regularly pass out questionnaires to obtain customer feedbackon the services they provide. Researchers too have been active ininvestigating service quality. Zeithaml, Parasuraman and Berry, forexample, have been working for several years on developingSERVQUAL, an instrument that measures consumers’ perceptionsof service quality (cf. Parasuraman, Berry and Zeithaml 1991; Para-suraman, Zeithaml and Berry 1985, 1986; Zeithaml, Berry andParasuraman 1987).

The purpose of measuring consumers’ perceptions of the servicethey receive is, of course, to provide management with data andinsights that will form the basis for (1) developing and institutingservice standards/benchmarks, and (2) monitoring employee per-formance and the effectiveness of service improvement programs.There is a growing realization that while elements like technologyand physical service facilities are important, customer contact per-sonnel are the key to delivering quality service to customers be-cause ‘‘in most cases, quality occurs during service delivery, usu-ally in an interaction between customer and contact personnel’’(Zeithaml, Berry and Parasuraman 1987, p. 1).

Tactically, the assumption is that regular monitoring of the cus-tomer contact personnel via customer feedback coupled with incen-tives will motivate them into delivering quality service. Theories ofwork motivation support this relatively straightforward link: em-ployees are expected to engage in certain actions if they know thatthey will be measured and rewarded for those actions (cf. Andersonand Chambers 1985). But providing incentives is far from thewhole answer to ensuring service quality, even where such directlinks exist. Rafaeli (1989) reports on several studies that showpositive relationships between customer contact personnel’s per-ceptions of the organization they work for and the quality of servicethey provide. These studies point to a long held tenet among theD

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Dant, Li, and Wortzel 105

most effective managers of service organizations: your employeeswill treat your customers the way you treat them.

RELATIONSHIP QUALITY AND SERVICE QUALITY:CONCEPTUAL LINKS

Translated to the franchising context, this tenet suggests a pro-vocative working hypothesis: the quality of franchisee-providedservice will be influenced by the quality of the franchisee-franchisorrelationship. If true, its implications are critical for franchise sys-tems because of the significant role service quality plays in a fran-chise setting, i.e., in addition to the reasons cited earlier, franchisorsrely on quality service to curb the free-rider problems, and to boostthe value of both individual franchised units and their franchisesystems as a whole.

But, is this linkage a reasonable expectation? After all, won’t thefranchisees hurt themselves too if they let their service qualitydeteriorate? Maybe so, but several arguments support the hypothe-sis that relationship quality influences the rendered service qualitywithin a franchise setting:

S Poor relations with franchisees will reduce franchisors’ mo-tivational investment in those franchisees. In extreme situa-tions, a franchisor may conclude that salvaging relations withsuch franchisees would be impossible or detrimental to thesystem as a whole. Such a belief will likely affect a franchi-sor’s enthusiasm as well as the quality of franchisor-providedassistances and services to these franchisees. These deficien-cies, in turn, will directly impair the quality of service the fran-chisees are able to provide to customers.

S Poor relations will also affect franchisees’ perceptions. Per-ceived difficulties in dealing with franchisors may lead themto expect only marginal payoffs in the future from their fran-chises. They may even conclude that relations with the currentfranchisors are no longer salvageable and think in terms of dis-solving those relationships. Both conditions will drastically re-duce franchisees’ motivational investment in their currentfranchises. Most likely, a siege mentality will set in, promptingD

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franchisees to maximize opportunistically their immediateprofits without regard to any long-term implications for them-selves or the system. And the first manifestations of this mind-set are likely to be deviations from operating guidelines andresultant poor service quality.

S Things will likely get worse when franchisees’ customer con-tact personnel notice the change in their employers’ attitudes.They too will begin to ignore the operating guidelines and de-livered service quality will suffer even more. A variety of rea-sons may trigger such imitative behavior in the customer con-tact personnel.

Foremost, a socialization effect can be expected. Socializa-tion theories (cf. Bandura 1969) suggest that the process bywhich individuals learn to operate within a social context(here, the workplace environment), primarily consists of imi-tating the relevant role models. In franchise settings, franchi-sees and supervisory personnel serve as the logical role mod-els because of the power, competence, socioeconomic status,prestige, and expertise they are perceived to wield.

The informality of franchise establishments--which meansthat franchisees’ feelings towards the franchisors will becomequickly known--also facilitates such imitation behavior.

Employees may also conclude that their franchise unit isheaded for failure as a result of the franchisee-franchisor ten-sions and/or the worsening business conditions. A climate ofuncertainty, irritation, and anxiety over jobs may set in andfurther adversely affect the quality of service they provide tocustomers.

On the positive side, when franchisor-franchisee relations aregood, franchisees as well as their employees can be expected towillingly provide quality customer service. For example, Rosen-bluth Inc. which recorded a 7500% revenue growth (from $20million to $1.5 billion) in 15 years while maintaining profitabilityrates above industry standards, recently attributed the secret of itssuccess to putting their employees--not their customers--first. Ex-plaining the miracle, Rosenbluth and Peters (1992, p. 24) write:D

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The principle behind it is straightforward. It’s our people whoprovide service to our clients. The highest achievable level ofservice comes from the heart. So, the company that reaches itspeople’s hearts will provide the very best service. It’s thenicest thing we could possibly do for our clients. They havecome to learn that by being second, they come out ahead.

The normative implications for franchisors, the natural channelcaptains of their franchises, are equally straightforward. First, sincefranchisees are true intermediaries--in that they stand between fran-chisors and their customers--motivating franchisees has alwaysbeen a priority of franchisors. Our hypothesis suggests that this goalcan be best met by cultivating good franchisee-franchisor relation-ships. Secondly, since delivered service quality ultimately dependson the customer contact personnel of the franchisees, franchisecontracts usually stipulate strict provisions and guidelines for train-ing such personnel and standardizing their behavior. Our hypothesisagain suggests that a good franchisee-franchisor relationship whichprovides a positive social-learning environment for the customercontact personnel may be critical to the fulfillment of this goal aswell. In sum, despite the provisions of contractually-mandated stan-dards, franchisors interested in improving customer service woulddo well to review the quality of their relationship with franchisees.

But herein we run into a serious gap in the literature. Partly dueto definitional problems, an instrument that allows us to compre-hensively gauge the quality of franchisor-franchisee relationshipshas yet to be identified. A comprehensive measure of relationshipquality is desirable for three main reasons:

S The nature of this evaluative construct and the fact that it hasnot yet been comprehensively measured requires it. Once wehave some data on its internal nomological network, parsimo-nious empirical measures can be subsequently derived.

S The charge of Sibley and Michie (1982)--that specific facets ofthe franchisee-franchisor relationship like cooperation, satis-faction, and conflict resolution have been studied, but re-searchers have yet to develop a measure for ‘‘total relation-ship’’ within a franchise context--is a valid one. In fact, ourD

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comprehensive measure could well be the total relationshipmeasure Sibley and Michie were seeking.

S Franchising has been recently attracting a lot of public policyattention at the federal level (cf. House Committee on SmallBusiness 1992). At the heart of the matter are the issues ofquality of franchisee-franchisor relationships, and whetherfranchisors and franchisees have opposite evaluations of thesame relationships. A missing piece in all this controversy isthe lack of a comprehensive instrument that taps relationshipquality!

The remainder of this paper, then, focuses on two related objec-tives. First, we discuss the definitional problems of measuring themulti-dimensional notion of relationship quality, offer a compre-hensive definition for the construct, and critically evaluate the ap-proaches proposed in the literature for tapping this construct. Se-cond, we examine the extant empirical literature and appraise theoperational measures employed in the past to tap this construct. Weconclude with specific normative recommendations for measuringthe quality of franchisor-franchisee relationships.

QUALITY: DEFINITIONAL ISSUES

Quality itself is an elusive construct. It often means differentthings to different people. For example, a typical user may judge thequality of a watch based on its brand and style, while manufacturingengineers may evaluate the same watch for its conformance to a setof technical specifications. That even tangible products are ap-praised from such distinct viewpoints hints at the complexity anddiversity of perspectives one is likely to find in the evaluation ofnontangibles like relationship quality.

Approaches to Quality Judgment

A useful taxonomy for understanding quality was provided byGarvin (1984) who identified five approaches to judging quality:

S Transcendent Approach defines quality as ‘‘innate excellence’’that people can recognize only through experience. Being expe-D

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riential and subjective, this approach has been criticized for of-fering little practical guidance.

S Product-Based Approach considers quality to be a function ofthe number and quantity of attributes that make up the product.

S Manufacturer-Based Approach judges quality by matching aproduct’s observed attributes with its stated specifications.

S Value-Based Approach equates quality with value and ‘‘af-fordable excellence.’’

S User-Based Approach posits that quality lies in the eyes of thebeholder. Since consumers differ in expectations, different in-dividuals evaluating the same object or event differently isconsidered normal--especially if the attributes of the object orevent being evaluated are not objectively measurable.

Quality’s Multiattribute Character

All five approaches concur that quality judgments entail evaluat-ing attributes of the object or event being appraised. Transcendentand Value-Based approaches imply that quality judgments maypossibly be single-attribute inferences. However, this argumentonly holds if quality is being judged in some global, either/or man-ner (say, whether or not a relationship has value). But even thisseemingly either/or appraisal is really a composite inference requir-ing considerable ‘‘behind-the-scenes’’ multiattribute cognitive pro-cessing. In fact, we can safely conclude that accurate quality judg-ments based on a single attribute would be very rare.

Subjective versus Objective Quality Judgment

The five approaches fundamentally disagree on whether qualityjudgments are based on objective or subjective measures. Product-Based and Manufacturer-Based approaches clearly support objec-tive measures while the remaining three argue for a subjective mea-surement strategy. Theoretically, both types of measures arepossible within a franchising context. For instance, judgmentsabout the quality of a franchisee-franchisor relationship may bebased on certain financial ratios. Perceptual judgments, on the otherhand, would be good examples of subjective measures.D

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Objective measures, however, can tap only a subset of attributespeople use to infer quality. Historically, the objective perspectivehas worked well under the production and product concept philoso-phies--which were subsequently discredited for essentially ignoringcustomers and promoting marketing myopia, respectively (cf. Kot-ler 1991, pp. 12-15). Methodologically, objective approach meansthat the phenomenon (quality of relationship) will be grossly under-determined by its measures and the construct’s domain will beunder-sampled raising serious challenges to the validity of suchmeasures (cf. Churchill 1991, pp. 499-501). Conceptually too, ob-jective measures offer no insights that cannot be gleaned from theirsubjective counterparts.

But the reverse is not always true. For instance, objective mea-sures of franchisor trust may be difficult to conceptualize or obtain.The objective measurement approach may still work for some sim-ple products; but when extended to services, the subjective perspec-tive seems to be routinely adopted (cf. Parasuraman, Zeithaml, andBerry 1985; 1986). This preference is partly explained by the innateversatility of subjective measures. And this versatility, in turn,means that all facets of a franchise relationship can be evaluatedusing the subjective approach.

Franchisee versus Franchisor Judgments of Quality

The natural asymmetries of power and dependence in franchisessuggest that the two partners may have distinct perceptions abouttheir relationship. Whose views, then, should be used to describethis relationship? The answer, of course, will depend on the goals. Ifa franchisor is evaluating whether or not a franchisee contract mer-its renewal, only the franchisor’s opinions matter. However, sinceour concern is with the franchisee-provided customer service,which is linked to how the relationship is rated, only the franchi-see’s view is informative. In fact, since the franchisee is an interme-diary as well as a customer of the franchisor, only a user-basedapproach fits the context. Parasuraman, Zeithaml, and Berry(1985), too, offer several arguments for employing user-based, sub-jective approach to measuring a phenomenon like service qualitybecause of the significance of perceptual and expectation-basedattributions to such an inference. As presented elsewhere, theirD

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arguments transfer easily to the task of measuring franchisor-fran-chisee relationship quality (Dant, Li and Wortzel 1993, p. 8). Inconclusion, given the aim of predicting delivered service qualityand based on the above review, we define franchisor-franchiseerelationship quality to be the franchisee’s comprehensive, subjectiveevaluation of the salient dimensions of his/her relationship with thefranchisor. In the next section, we elaborate on what these salientdimensions may be.

DIMENSIONS OF RELATIONSHIP QUALITY

A key lesson of Garvin’s review is that the dimensions chosen tomeasure quality depend on (1) the approach adopted, as well as on(2) the unique characteristics of the object or event itself. We begintherefore by examining the approaches that have been employed tostudy franchise relations in the past.

Contractual, Behavioral/Processual, or Relational Approach

Three key approaches to studying franchise relationships--con-tractual, behavioral/processual, and relational--quickly become evi-dent from the empirical literature stream in this field. The contrac-tual approach considers the franchising contract as the logicalstarting point for understanding the franchisor-franchisee relations.Mayo, Robicheaux and Ferrell (1990) provide an exemplar of thisapproach. They examined the content, clarity, and fairness of fran-chising contracts, and related them to franchisees’ satisfaction, ex-pectations and future intentions.

However, reacting to the impracticality of inclusive contracts andthe constraints of bounded human rationality, Macneil’s (1980)Relational Exchange Theory proposes an alternative inductiveframework for analyzing contractual relationships. Macneil arguesthat a set of common ‘‘contracting norms’’ are present in all con-tractual relationships where ‘‘norms’’ refer to at least partiallyshared behavioral expectations between exchange partners. In-tended to govern aspects not covered by contracts, norms are said tooriginate in social customs, habits, past exchange experiences, andother internalizations. Boyle et al. (1992), Dant and Schul (1992),D

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Robicheaux, Sterling and Ferguson (1992), who have studied linksbetween norms and variables like influence strategies and conflictresolution methods, exemplify probes into franchise relationshipvariables in Macneil’s tradition.

Finally, the behavioral/processual approach focuses on the inter-actions and processes among franchise partners, and the impact ofthe latter on franchising relationships. Since a majority of channelresearchers have adopted this perspective, the questions exploredusing this tradition closely parallel the mainstream of channel re-search. Empirical examples of behavioral franchise research in-clude Frazier and Summers (1986), Guiltnan, Rejab and Rodgers(1980), Hunt and Nevin (1974), John (1984), Lusch (1976), Schul,Little and Pride (1985), and Sibley and Michie (1982).

There are significant differences in these three traditions. Thefirst concerns their distinct ontologies: their primary focus is oncontracts, emergent norms, and behavioral interactions/processes,respectively. Distinct methodological prescriptions are also implicitin these traditions: content analysis of contracts, chronicling emer-gent exchange etiquette, and obtaining evidence on a variety ofbehavioral outcomes and processes, respectively. They also differ intheir level of abstraction and dynamics. If we view the contractualapproach as static, the behavioral/processual approach is dynamicin that it recognizes in a central manner the web of antecedents andconsequents surrounding focal events. If the relational approachtaps the general tone or the more ‘‘macro’’ aspects of a relationship(e.g., the extent to which power is not expected to be used inconflict resolution), the behavioral/process approach is more ‘‘mi-cro’’ in its orientation in that it emphasizes individual events (e.g.,the types of episodic conflicts resolved by certain conflict resolu-tion methods). Given the above, it is hardly surprising that distinctdimensions for studying franchise relationships have been identi-fied by these camps.

Dimensions Suggested Under Each Approach

Under the Contractual Approach: Mayo, Robicheaux, Ferrell(1990), the only empirical work under this tradition, have isolatedfour key indicators said to have an impact on relationship quality:(1) awareness/knowledge of contracts, (2) clarity/ambiguity of con-D

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tracts, (3) fairness of contracts, and (4) coverage adequacy of con-tracts. These dimensions are certainly intuitively appealing al-though a verdict on how inclusive they are must await futureresearch under this tradition.

Under the Behavioral/Processual Approach: To identify dimen-sions based on this tradition, both franchising and the larger channelresearch streams were searched. However, as franchises differ fromother forms of channels along a variety of characteristics (Stern andEl-Ansary 1992), transferability considerations guided the literaturesearch. We used the Framework of Interorganizational ExchangeBehavior proposed by Frazier (1983) to frame and organize theliterature review. Frazier posits exchange relationships as compris-ing of the three processes of initiation (factors related to searchactivities for exchange partners), implementation (activities relatedto routine exchange processes), and review (processes related toevaluating exchange partners).

Our review isolated six key dimensions with the potential ofsignificantly influencing franchisee-franchisor relationship quality.These were (1) cooperation, (2) the extent and nature of informationexchange, (3) processes of conflict resolution, (4) the extent ofparticipative decision-making, (5) usage of influence strategies, and(6) the extent of franchisor perceived competence (cf. Andersonand Narus 1990; Butaney and Wortzel 1990; Dant and Monroe1987; Dwyer and Oh 1988; Frazier and Summers 1986; Mohr andNevin 1990; Schul, Pride and Little 1985).

Under the Relational Approach: A number of marketing scholarshave employed emergent contracting norms to categorize exchangerelationships. Kaufmann and Dant (1992), who operationalized andtested the psychometric properties of Macneil’s seven major con-tracting norms in a non-franchise setting, found six norms to berobust in terms of unidimensionality, reliability, and validity. Thesewere (1) relational focus, (2) solidarity, (3) restraint, (4) role integ-rity, (5) flexibility, and (6) mutuality. Their measures of the seventhnorm--conflict resolution--failed to pass the psychometric hurdlesalthough its conceptual content was pertinent for tapping relation-ship quality. (See Dant, Li and Wortzel 1993 for additional detailsof the relationalism literature.)

To summarize, the three approaches have collectively offered anDow

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impressive battery of seventeen dimensions for tapping the domainof relationship quality. A comparative audit of these dimensionsrevealed three areas of concern with respect to certain dimensions:(1) redundancy of content, (2) weak applicability to the franchisesetting, and (3) the need for re-operationalization within a franchisesetting. The next section addresses these concerns. However, giventhe goal of comprehensively operationalizing relationship quality,the tasks of dimension reduction and modification are approachedwith utmost care.

DIMENSION REDUCTION AND MODIFICATION

Dimension Overlap Issue

The foregoing literature review suggested two instances of over-lap. The first concerns the pair of the ‘‘fairness’’ dimension ofcontractual approach and the norm of ‘‘mutuality’’ of relationalapproach. We recommend retaining the norm of mutuality anddiscarding fairness for four reasons:

S Fairness has been used by just one study (i.e., Mayo, Robi-cheaux, Ferrell 1990) whereas the norm of mutuality seems toenjoy a more broad-based acceptance (e.g., Boyle, Dwyer, Ro-bicheaux and Simpson 1992; Dant and Schul 1992; Kaufmannand Dant 1992; Kaufmann and Stern 1988).

S The internal nomological network of mutuality (i.e., how it re-lates to other norms) is well known. For instance, mutualityhas been used with just flexibility and solidarity norms (Boyle,Dwyer, Robicheaux and Simpson 1992), with just solidarityand role integrity norm (Dant and Schul 1992; Kaufmann andStern 1988; Paswan, Dant and Lumpkin 1993), and with theremaining norms (Kaufmann and Dant 1992) to measure rela-tionalism. In sum, mutuality appears to be used as a ‘‘core’’norm for tapping relational content.

S Its external nomological net (i.e., how mutuality relates toother constructs) is also better understood. Empirical studieshave linked mutuality with influence strategies, retained stressand hostility, conflict resolution method choice, complaint be-D

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havior, and organizational structure (cf. Boyle, Dwyer, Robi-cheaux and Simpson 1992; Kaufmann and Stern 1988; Dantand Schul 1992; Paswan, Dant and Lumpkin 1993). Mutuality,then, is a widely used measure.

S But perhaps most importantly, the conceptual content of ‘‘per-ceived fairness of the contract’’ is included within the mea-sures of mutuality (Kaufmann and Dant 1992). Hence, drop-ping fairness as a dimension does not reduce the inclusivecoverage of the domain of relationship quality.

The second case of overlap concerns the ‘‘norm of conflict reso-lution’’ proposed under the relational approach and the ‘‘process ofconflict resolution’’ isolated from the behavioral/processual re-search stream. Though the two labels are nearly identical, theirconstitutive meanings are somewhat different. The ‘‘process of con-flict resolution’’ focuses on ‘‘the behaviors and actions initiated bychannel leaders in their attempt to resolve conflict’’ (Dant andSchul 1992, p. 39). March and Simon’s (1958) taxonomy of keyconflict resolution processes seems to have attracted the most atten-tion under this tradition (cf. Butaney and Wortzel 1990).

On the other hand, relational exchange theory’s ‘‘norm of con-flict resolution’’ primarily probes the formality and the externalityaspects of the conflict resolution processes used. The more discreteexchange relationships are expected to encounter more formal andexternal dispute settlement methods, and vice versa. However, therelational approach is not antithetical to the behavioral approach inthat the March and Simon taxonomy can also be classified using theformality and externality properties.

We support using the behavioral/processual dimension ratherthan the relational norm of conflict resolution in franchising con-texts because of two chief reasons:

S March and Simon’s taxonomy provides a finer classificationof the dispute handling mechanisms likely to occur in fran-chising. Even though conflict is pervasive in franchise chan-nels, due to interdependencies and longer term focus, there is anatural bias in franchises to resolve disputes informally and in-ternally rather than externally.D

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S As previously noted, the empirical links between the norm ofconflict resolution and other relational norms are not yet wellestablished (Kaufmann and Dant 1992).

Dimension Applicability Issue

The dimensions contributed by the contractual and behavioral/processual approaches are derived from research directly related tofranchise channels. Therefore, their applicability to the franchisecontext is not problematic. Such direct transference, though, is notpossible for all the dimensions suggested by relational exchangetheory. Since Macneil’s norms are used to discriminate among ahost of exchange relationships (from discrete to relational, frommarket to corporate channels; cf. Williamson 1985), this has theeffect of making some norms less relevant to particularized situa-tions. Specifically, we argue that solidarity and role integrity normswill not be pertinent to franchises.

The norm of solidarity refers to the process by which an ongoingexchange relationship is created and sustained. This implies thepresence of sentiments of long-term orientation and trust. Role in-tegrity captures the notion of complex roles enacted by partiesengaged in ongoing exchanges to bring about stability and predict-ability to the relationship. Importantly, this also implies obligationsof roles extending beyond the business relationship (Kaufmann andDant 1992).

Given these definitions, Dant and Schul (1992) have argued thatusing solidarity and role integrity norms to capture relationshipquality in a franchise setting may be artifactual. They essentiallyquestion whether these two norms will show any reasonable vari-ance in franchise settings because franchises, being long-term,cooperative ventures involving frequent interactions, definitionallyimply these norms. In effect, in affirming ‘‘solidarity’’ and ‘‘roleintegrity,’’ franchisees may be merely echoing the realities of theirfranchise context and not reporting on any relational sentiments(pp. 49-50).

We found support for these claims in the investigations of Boyleet al. (1992), Dant and Schul (1992), and Robicheaux, Sterling andFerguson (1992) carried out within a franchise setting. Their datarevealed that all scale items tapping solidarity and role integrity hadD

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means in the positive range. In addition, compared to the suggestedbenchmarks (cf. Churchill 1991, p. 588), the scales recorded consis-tently low variances (see Dant, Li and Wortzel 1993 for details ofthe empirical review).

Dimension Operationalization Issue

Unlike solidarity and role integrity which were generally af-firmed, Dant and Schul found these same franchisees denying thenorm of mutuality as a characteristic of their relationship with fran-chisors. Boyle et al. (1992), however, found the franchisees affirm-ing the norm of mutuality. It is our contention that these anomalousresults spring from operationalization differences.

Mutuality implies the requirement of a positive incentive to ex-change for both parties, and under relational exchange, parties ex-pect generalized reciprocity resulting from their ongoing relation-ship (Macneil 1980; Kaufmann and Dant 1992). Under discretegovernance, however, parties seek positive payoffs from each indi-vidual transaction and monitor each transaction as if it were thelast, and thus, the only event capable of delivering the desiredoutcomes. Researchers have operationally interpreted these con-ceptual arguments in at least two ways.

Dant and Schul (1992) used the operationalization of Kaufmannand Stern (1988) which focuses on parties’ monitoring activitiesrelated to individual transactions. Here, a refutation of such moni-toring is interpreted as a positive vote for mutuality. The operation-alization of Boyle et al. (1992), on the other hand, stresses thereciprocal nature of benefits and burdens associated with relationalexchanges. The latter, then, is a more ‘‘positive’’ measure of mutu-ality. Moreover, in a franchise setting, where franchisors monitoringfranchisees is endemic and often contractually mandated, the for-mer operationalization would be artifactual. In effect, here the fran-chisees would be affirming a structural fact as franchisees ratherthan reporting on any relationship quality attribute (cf. Dant andSchul 1992). In sum, the norm of mutuality should be retained fortapping the quality of franchise relationships but should be opera-tionalized in terms of equity, fairness, and evenness followingBoyle et al. (1992).D

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CONCLUSIONS

We began by underscoring the growing realization that deliveredservice quality is indeed a critical concern for any business. Weargued that this concern is especially relevant within franchisingbecause of the unique advantages of ensuring quality service tofranchise systems. We also argued that delivered service quality islikely to be a direct function of the franchisee-franchisor relation-ship quality. Figure 1 summarizes our theoretical contentions. Buthere a gap in the literature was encountered: the absence of mea-sures that could comprehensively tap the franchisee-franchisorrelationship quality.

Towards the goals of developing such an instrument, we con-ducted an extensive search of the literature on the meaning of qual-ity both in a general sense and in the context of relationship quality.This review helped to focus on (1) Garvin’s taxonomies of qualitydimensions and approaches to quality measurement, and (2) thethree distinct but complementary streams of research broadly deal-ing with relationship quality, namely, the contractual, behavioral/processual, and relational literatures. The review also allowed us todevelop an inclusive definition for franchisor-franchisee relation-ship quality.

Altogether, we isolated seventeen potential dimensions for mea-suring franchisor-franchisee relationship quality from the litera-ture. However, based on heuristics like avoiding redundancy andkeeping in mind the uniqueness of a franchise context, we elimi-nated four of these dimensions. In the particular case of dimensionsspecified by relational exchange theory, structural artifacts of afranchise setting made the norms of role integrity and solidarityessentially irrelevant. The thirteen retained dimensions and theirmeanings are presented in Table 1.

Where do we go from here? Clearly the next step should be theempirical verification of the conceptual arguments offered in thispaper. In particular, two investigations are needed: (1) the thirteendimensions should be checked for their interrelationships (theoreti-cally, they are posited to be positively correlated and mutuallyreinforcing), and (2) the linkages between these thirteen dimensionsand delivered service quality should be subjected to empirical scru-D

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QualityofFranchisor-FranchiseeRelation-ship

DeliveredServiceQuality

SERVQUALor SimilarMeasures

FourRelationalMeasures

SixBehavioralMeasures

ThreeContractualMeasures

Model

Measurement

FIGURE 1. Model Linking Relationship Quality to Service Quality

QualityofFranchisor-FranchiseeRelation-ship

DeliveredServiceQuality

SERVQUALor SimilarMeasures

FourRelationalMeasures

SixBehavioralMeasures

ThreeContractualMeasures

Model

Measurement

FIGURE 1. Model Linking Relationship Quality to Service Quality

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TABLE 1. Final Measures for Franchisor-Franchisee Relationship Quality

1. Awareness of Contract Extent to which the parties are aware of the contents of the franchise(Mayo, Robicheaux & Ferrell 1990) agreement

2. Clarity of Contract Extent to which the contents of the franchise agreement are(Mayo, Robicheaux & Ferrell 1990) unambiguously presented

3. Coverage of Contract Extent to which the franchise agreement is inclusive in its coverage(Mayo, Robicheaux & Ferrell 1990) of salient aspects of franchise operation

4. Relational Focus Extent to which the exchange relationship is seen as more important(Macneil 1980) than individual transactions

5. Mutuality Extent to which the parties equitably share in the gains and expenses(Macneil 1980) related to the franchise operation

6. Flexibility Extent to which the relationship is capable of adjusting to contingencies(Macneil 1980) and environmental changes

Dimensions andPrimary Sources

Meaning

TABLE 1. Final Measures for Franchisor-Franchisee Relationship Quality

1. Awareness of Contract Extent to which the parties are aware of the contents of the franchise(Mayo, Robicheaux & Ferrell 1990) agreement

2. Clarity of Contract Extent to which the contents of the franchise agreement are(Mayo, Robicheaux & Ferrell 1990) unambiguously presented

3. Coverage of Contract Extent to which the franchise agreement is inclusive in its coverage(Mayo, Robicheaux & Ferrell 1990) of salient aspects of franchise operation

4. Relational Focus Extent to which the exchange relationship is seen as more important(Macneil 1980) than individual transactions

5. Mutuality Extent to which the parties equitably share in the gains and expenses(Macneil 1980) related to the franchise operation

6. Flexibility Extent to which the relationship is capable of adjusting to contingencies(Macneil 1980) and environmental changes

Dimensions andPrimary Sources

Meaning

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7. Restraint Extent to which the parties are capable of exercising voluntary(Macneil 1980) checks on the use of power

8. Cooperation Extent to which the parties take coordinated actions to attain mutually(Sibley & Michie 1982) desirable goals

9. Use of Influence Strategies Usage of direct versus indirect influence strategies by the parties(Frazier & Summers 1986) on each other

10. Information Exchange Frequency, direction, content, and the degree of formality involved in(Mohr & Nevin 1990) sharing of information

11. Participative Decision-Making Extent to which franchisee’s inputs are sought in idea-generation,(Dwyer & Oh 1988) goal-setting, and decision-making

12. Conflict Resolution Process Usage of high risk versus low risk conflict resolution processes(Dant & Schul 1992) by the parties with each other

13. Initiating Competence Extent to perceived competence associated with directing the(Schul, Little & Pride 1985) activities of the franchise operation

7. Restraint Extent to which the parties are capable of exercising voluntary(Macneil 1980) checks on the use of power

8. Cooperation Extent to which the parties take coordinated actions to attain mutually(Sibley & Michie 1982) desirable goals

9. Use of Influence Strategies Usage of direct versus indirect influence strategies by the parties(Frazier & Summers 1986) on each other

10. Information Exchange Frequency, direction, content, and the degree of formality involved in(Mohr & Nevin 1990) sharing of information

11. Participative Decision-Making Extent to which franchisee’s inputs are sought in idea-generation,(Dwyer & Oh 1988) goal-setting, and decision-making

12. Conflict Resolution Process Usage of high risk versus low risk conflict resolution processes(Dant & Schul 1992) by the parties with each other

13. Initiating Competence Extent to perceived competence associated with directing the(Schul, Little & Pride 1985) activities of the franchise operation

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tiny. The relationship is hypothesized to be positive with a signifi-cant magnitude of effect.

Both theoretical and empirical extensions are also possible. Asthe bandwagon towards TQM continues and gathers steam, it wouldmake sense to enlarge the nomological network around the corepresented by our model (Figure 1). Based on the most likely mana-gerial concerns, some of these early candidates would be constructslike performance and personality variables that may have an impacton the model as exogenous variables, correlates, or moderator vari-ables.

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linking relationship quality and service quality in franchise systems:

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