The Impact of Basic Psychological Needs Satisfaction on the Performance of the Franchisee

Purpose: This research is to investigate the effect of the franchisee’s basic psychological needs satisfaction on its business performance. Moreover, within the relationship between the franchisee’s basic psychological needs satisfaction and its performance, the current study examined the mediating effect of work engagement and the moderating effect of the franchisor’s support. Research design, data and methodology: 367 survey data were collected and analyzed using SPSS 22 and AMOS 22. For the assessment of goodness of fit of the models, fit indexes such as TLI, CFI, RMSEA were employed. Results: The results of the study are as follows: first, the franchisee’s basic psychological needs satisfaction is positively related to performance; second, the franchisee’s basic psychological needs satisfaction is positively related to work engagement; third, the franchisee’s work engagement is positively related to performance; fourth, it is uncovered that the franchisee’s work engagement mediates the relationship between basic psychological needs satisfaction and business performance; fifth, the moderating effect of the franchisor’s support was insignificant. Conclusion: This study would like to contribute to the field of franchise performance, by re-assessing the significance of the individual’s characteristics (of the franchisee) which has been ignored thus far. Furthermore, the limitations of the study and future research directions were discussed.