According to a concept called ________ theory, it is more effective for the units of a growing chain to be run by franchisees than by managers, because managers are usually paid a salary and may not be as committed to the success of their individual units as franchisees, who are in effect the owners of the units they manage.

Question

Quizplus · Accepted Answer

The concept described in the question relates to agency theory, which examines how to mitigate conflicts between principals (owners) and agents (managers or franchisees) who act on their behalf. The theory suggests that franchisees, as owners of their units, have more alignment with the overall success of the chain than managers who are paid a salary.

According to a Concept Called ________ Theory, It Is More