× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
10
p
4
h
4
c
4
d
3
3
c
3
t
3
u
3
A
3
B
3
j
3
Home Q & A Board Other Fields Homework Help Business Economics
New Topic  
pirex pirex
wrote...
Posts: 634
Rep: 13 1
6 years ago
Explain why a firm may hire managers to operate outlets near the firm's headquarters, but may sell franchise rights for the outlets located greater distances from the headquarters. (With a franchise, the firm sells a brand name and a method of doing business to someone who then owns and operates the outlet.)
Textbook 
Microeconomics

Microeconomics


Edition: 6th
Author:
Read 85 times
1 Reply
And if you call, I will answer
And if you fall, I'll pick you up
And if you court this disaster
I'll point you home

Related Topics

Replies
wrote...
#1
6 years ago
To avoid moral hazard problems, the firm must monitor the managers of the outlets. The firm can cost-effectively monitor operations near the headquarters. However, the cost of monitoring rises the farther away the outlet is located. Thus, the firm may earn more profit by franchising the outlets located far from the headquarters instead of trying to monitor them.
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1050 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 208
  
 338
  
 283
Your Opinion
How often do you eat-out per week?
Votes: 81
Previous poll results: Which industry do you think artificial intelligence (AI) will impact the most?