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Franchise contracts typically contain three forms of payment from franchisee to franchisor in Korean restaurant franchise: the initial franchise fee, the ongoing royalty payment, and deposit money. This paper has explored the franchise fee structure and franchisee’s perception on franchisor’s support. Results indicated that the initial franchise fee was significantly positively associated with the franchisee’s perception on start-up services signifcantly. Also royalty and the franchisee’s perception on ongoing services had a positive relationship. Therefore, strategic franchise fee structure should be developed to improve the competitiveness of restaurant franchise. Implications for franchisor and franchisee were discussed.


Franchise contracts typically contain three forms of payment from franchisee to franchisor in Korean restaurant franchise: the initial franchise fee, the ongoing royalty payment, and deposit money. This paper has explored the franchise fee structure and franchisee’s perception on franchisor’s support. Results indicated that the initial franchise fee was significantly positively associated with the franchisee’s perception on start-up services signifcantly. Also royalty and the franchisee’s perception on ongoing services had a positive relationship. Therefore, strategic franchise fee structure should be developed to improve the competitiveness of restaurant franchise. Implications for franchisor and franchisee were discussed.