What is better, the carrot, the stick or both?
The business world runs on agreements. As long as everyone fulfills his or her end of the bargain, things tend to run smoothly. But the question of the most effective way to enforce or regulate these agreements remains. Adam B. Badawi, JD, PhD, associate professor of law at Washington University in St. Louis, looks at this question in the context of franchises. After examining a large number of franchise agreements, Badawi found that despite sometimes allowing contract damage awards against franchisees, the more effective method of enforcing these agreements is often through informal, non-legal rewards system.