Problem
Show that the joint profits of a franchisor and franchisee are maximized if their contract specifies that the franchisee pays royalties as a percentage of profit rather than a percent of sales. Because the franchisee pays a percentage of sales in most franchise agreements, do you conclude that existing agreements are inefficient?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.