Which of these is an important determinant of contract duration as suggested by the economic models on franchise contracts?
A)Asset ownership
B)Market power
C)Residual rights
D)Recontracting costs

Question

Quizplus · Accepted Answer

Economic models on franchise contracts suggest that recontracting costs are an important determinant of contract duration. These costs refer to the time and expenses associated with negotiating and drafting a new contract if the current one expires or is terminated. Higher recontracting costs generally lead to longer contract durations as both parties are reluctant to incur these costs frequently. Other factors like asset ownership, market power, and residual rights may also affect contract duration, but recontracting costs are considered to be a crucial factor.

Which of These Is an Important Determinant of Contract Duration