The Impact of Franchisor and Franchisee Relationship Quality on Business Performance: A Study of Outlet Mitra Indogrosir

Trie Adi Kresna Irawan; Metta Padmalia

doi:10.33474/jimmu.v11i1.24868

Authors

Trie Adi Kresna Irawan Universitas Ciputra, Jawa Timur
Metta Padmalia Universitas Ciputra, Jawa Timur

DOI:

https://doi.org/10.33474/jimmu.v11i1.24868

Keywords:

franchisee, franchisor, Satisfaction, relationship quality, business performance

Abstract

The minimarket franchise industry in Indonesia has experienced significant growth driven by increasing public demand for accessible modern retail services. Outlet Mitra Indogrosir (OMI), which operates an active franchise model granting franchisees high operational autonomy, faces persistent challenges in partnership sustainability evidenced by the closure of 275 outlets between 2021 and 2023. This study investigates the effect of franchisor–franchisee relationship quality on business performance, with franchisee satisfaction as a mediating variable. Grounded in the Commitment–Trust Theory of Relationship Marketing (KMV Model) and supported by the Franchise Relationship Model, Agency Theory, and Customer Relationship Management theory, this study examines three dimensions of relationship quality: trust, communication, and operational support. Data were collected from 178 active OMI franchisees using a structured questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM). The results show that trust is the most dominant driver of franchisee satisfaction, followed by operational support, both of which indirectly improve business performance through franchisee satisfaction. Communication, however, does not produce a significant direct effect on satisfaction in this context a finding attributed to Indonesia's collectivist cultural values, in which relational trust and concrete operational outcomes carry greater weight than formal communication exchanges. These findings extend the KMV Model by demonstrating that the hierarchy of relationship-quality determinants is context-dependent, and offer practical guidance for franchise managers seeking to improve outlet performance and long-term partnership sustainability in high-autonomy franchise systems.

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