Double moral hazard and franchising: A dual case study approach

The issue of double moral hazard has been neglected in the Management literature while one-sided moral hazard has only been implicitly recognized by many Agency theorists. This paper introduces the notion of double-sided moral hazard and empirically studies a typical setting for such a problem-franchising systems. Using a dual case study approach of the restaurant chains Chick-Fil-A and Schlotsky's Deli, I offer both an introduction of the concept as well as potential prescriptive measures to avoid double moral hazard especially within franchising chains.