Hybrid organizational forms such as franchise systems join two or more independent parties under a contract. The ability of each party to achieve its goals depends upon the relative bargaining power in the relationship established by the contract. Using transaction cost economics and Porter's...

An agency relationship exists whenever one party (the principal) delegates authority to another (the agent). Because agents are assumed to be self-interested and to possess goals that diverge from the principal's goals, the principal must expend resources (called agency costs) to insure that...