According to a concept called ________ theory, it is more effective for the units of a growing chain to be run by franchises 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 is agency theory, which argues that there may be conflicts of interest between owners (principals) and managers (agents), as agents may prioritize their own interests over the interests of the company. However, in the case of franchising, franchisees act more like owners than managers, as they have a financial stake in the success of their individual units. Therefore, they are more likely to be motivated to work hard and make their units successful.

According to a Concept Called ________ Theory, It Is More