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McDonald’s runs two business models. Some McDonald’s restaurants are wholly-owned and operated by the parent company,...

McDonald’s runs two business models. Some McDonald’s restaurants are wholly-owned and operated by the parent company, while some McDonald’s restaurants follow a franchise model i.e. the parent company charges a franchise fee and the restaurant is then independently owned and operated by the franchise owner. Empirical evidence suggests that McDonald's restaurants that are wholly-owned by the parent company (the first type described above) charge lower prices than the prices charged by independent franchises of the company (the second type described above). How can this difference in prices charged be explained?

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Rahul Sunny answered 1 year ago
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