Because domestic paint is distributed through an obsolescent and inefficiently operated distribution channel, consumers have declining awareness regarding the overall paint industry. Also, increasing environmental regulation and the lack of consumer knowledge are negatively affecting the industry, fundamentally because regular individual operators rather than manufacturers are responsible for paint distribution. To counter these problems and to provide better customer service, I suggest that paint distribution companies should consider using franchise systems to expand and modernize the distribution industry. In franchise systems, franchisees contract with the franchise headquarters for the rights to sell or distribute products or services. Franchise systems offer the advantages of specialization. Although headquarters and franchisees operate independently, franchise systems cause consumers to perceive the product or service as having one image. Under franchised paint distribution systems, expert franchise groups would determine price, delivery time, and stock quality, while non-expert groups could focus on store comforts, employee expertise regarding products, and brand perceptions. I undertake this study to determine whether stores under paint distribution franchise systems will see enhanced customer satisfaction and increased sales in comparison with non-franchised stores. I expect to find that franchise systems will bring standardization, make store management more efficient, and improve the performance of franchise stores. Specifically, 1) franchisors and franchisees are indeed autonomous, with independent profits and business focus; 2) although managers operate independently, consumers perceive homogeneity in the system, for positive effects on their buying behaviors; 3) by expanding regional sales, franchisors decrease regional uncertainties about product characteristics; 4) small business owners may face burdens in becoming franchisees, but they will have reduced business risks as a result of the support they get regarding training in brand, information, and technology.

• Kyutae Kim(Changwon National University)