This path-analytic study examined the relationships among channel members’ perceptions of dimensions representing channel leader behavior, channel conflict and satisfaction. In doing so, the path-goal theory of leadership is tested in a franchise channel of distribution. The results indicate that both the consideration and the initiating structure dimensions of leader behavior significantly influence franchisees’ satisfaction with the franchise arrangement. As defined in the theory, these relationships were found to be mediated by the existing level of conflict being experienced by franchisees. Causal linkages are also found between intrachannel conflict and satisfaction. Specific recommendations are provided to franchisors and other channel leaders.