Terminating franchisees is a challenging decision every franchisor faces, yet its effect on franchisor performance remains unknown. We examine the effect of franchisee termination on a franchisor’s profitability (i.e., return on asset) in this study. Applying agency theory to franchisee termination, we posit that termination enables a franchisor to uphold a chain’s uniformity among stores through the dual functions of enforcement and deterrence. Weighing the benefits against the costs of termination, we predict a contemporaneous effect and a long-term effect of franchisee termination on franchisor profitability. We then contextualize the contemporaneous effect of termination. We postulate the alleviating or exacerbating influences of three conditions—new franchisee addition, customer mobility, and chain maturity—that may change the importance of benefits or costs of termination. We test our predictions with multiyear census data on franchising in South Korea. The results support our predictions except for the moderating effect of customer mobility. We discuss limitations and further research directions as well as implications of the study results.

终止加盟商是每个特许人都面临的具有挑战性的决定，但其对特许人绩效的影响仍然未知。在本研究中，我们考察了特许经营商终止对特许经营商盈利能力（即资产回报率）的影响。将代理理论应用于加盟商终止，我们假设终止使特许人能够通过执法和威慑的双重功能来维护连锁店之间的统一性。权衡终止成本与收益，我们预测特许经营商终止对特许人盈利能力的同时影响和长期影响。然后，我们将终止的同时期效果置于语境中。我们假设三个条件会减轻或加剧影响——新加盟商的增加、客户流动性、和链成熟度——这可能会改变终止收益或成本的重要性。我们用韩国特许经营的多年人口普查数据来检验我们的预测。除了客户流动性的调节作用外，结果支持我们的预测。我们讨论了局限性和进一步的研究方向以及研究结果的含义。