Question

1. has asked you to determine whether it is possible for a franchisor to have a degree of control over its franchisees consistent with a master-servant relationship without a master-servant relationship arising as a matter of law.    

What considerations should McDonald’s take into account in forging franchise agreements that ensure uniformity of content and customer experiences without triggering a master-servant relationship between McDonald’s and its franchisees?

2. Should corporate governance law seek to create incentives for shareholder participation or recognize the limitations of shareholder participation and primarily rely on substantive restrictions on management and corporate boards? Please make your argument with reference to specific examples from throughout the course.       

Answer 1

1. Franchise is the agreement where the company gives the exclusive rights to sell the products to other entity. It helps the original company to gain in the new market. The agreement binds the franchises to sell only those products which has beeen communicated by the franchisor. The franchisor shold ensure that the franchises are following the terms of agreements. They are selling the products which has been given the permission and in a way described by the original firm. The orginal firm should be looking to the activities of the franchises closely and may provide training. So, these are some of the ways in which the original firm can have some control over the franchises and make sure customer experiences are met.

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