This study quantifies the disadvantage in literacy skills that arises from the linguistic distance between their mother tongue and host country language, combining individual cross-country data on literacy scores with unique information on the linguistic distance between languages.

This work demonstrates the very existence of economic rents in franchising using, for the first time, the franchisees’ actual financial statements. This finding makes franchising more appealing for applicants and supports the hypothesis that rents are efficient devices to motivate franchisees.