In Order to Avoid Principal-Agent Problems, McDonald's Uses All but One

question 26

Multiple Choice

In order to avoid principal-agent problems, McDonald's uses all but one of the following franchising tactics. Which is the exception?

• A) It does not advertise for franchisees.
• B) Franchisees must put up 40 percent of the investment themselves.
• C) Franchisees must undergo a preliminary training period, followed by a 12- to 18-month training program.
• D) Franchisees must already have another fast-food restaurant franchise.
• E) Franchisees are required to work full-time daily in their restaurant.

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Definitions:

Observational Learning

A learning process through watching others, retaining the information, and later replicating the behaviors that were observed.

Models

Representations, often simplified or idealized, used to explain, predict, or simulate complex systems or behaviors.

Real-world Concerns

Issues or problems that affect individuals, communities, or societies in practical, everyday life rather than theoretical contexts.

Negative Reinforcement

A behavioral principle where the removal of an unpleasant stimulus following a behavior makes the behavior more likely to occur in the future.