The first purpose of this article is to analyze the business development of the convenience store business in Japan since the oil shock. The second is to argue the reason Japanese convenience store enterprises selected the franchise system.
The conclusions of this article can be summarized as follows :
The basic factor that enabled quick growth of the convenience store business from the 1970s to the 1990s was the favorable business environment, particularly the diffusion of a rapid consumption pattern. In order to win business opportunities, convenience store enterprises (e.g., Seven-Eleven Japan Co.) selected not a regular chain system but a franchise system, because of shortage of human and financial resources.
The franchise system of convenience store enterprises was also beneficial to traditional small-size retailers. It is more profitable for many small retailers (e.g., liquor stores) to transform themselves into franchisee shops in convenience store chains. Simply put, the franchise system was adopted because of the mutual benefits for convenience store enterprises as franchisers and traditional small-size retailers as franchisees.
Moreover, this article points out the importance of incentive design, which was built into the franchise system of convenience stores business in Japan. This is why the franchise system expanded after convenience stores enterprises solved the problem of shortage of resources.