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4. Naanstop (a small restaurant down the street) has decided to expand business through franchising. The next step for the owner is identifying and selecting

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4. Naanstop (a small restaurant down the street) has decided to expand business through franchising. The next step for the owner is identifying and selecting the right franchisee and then making sure that they do their job. Based on our class discussions identify the two challenges that are relevant in this context (Hint: hidden information and hidden action). Also, indicate how you will resolve the two problems using recommendations from transaction cost theory and agency theory. (10 points)

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