In Order to Lessen the Monitoring Problems and Opportunistic Behavior

question 1

Multiple Choice

In order to lessen the monitoring problems and opportunistic behavior of a franchisor and a franchisee, franchise contracts:

• A)create provisions for high liquidated damages.
• B)are complete in all respect.
• C)have similar fixed charge and royalty arrangements.
• D)include certain flexible clauses.

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Definitions:

Sarbanes-Oxley Act

A U.S. federal law enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Public Company Auditors

Are independent entities or individuals tasked with examining and verifying the accuracy of a publicly traded company's financial statements.

Audit Committees

A subcommittee of a company's board of directors responsible for overseeing financial reporting and disclosure.

Working Papers

Documents that contain the data and analysis used by accountants and auditors as part of their examinations.