Q1-You are on the board of directors of a nonprofit art
museum supported bydonations from wealthy...

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Q1-You are on the board of directors of a nonprofit art
museum supported bydonations from wealthy members of the community, and are
responsible foracquiring new works and staging exhibitions for the
public. You are clearly anagent, but who is (are) the principal(s)?
Q2-
Why might a parent company like McDonalds or Hilton
choose to franchise itslocal outlets rather than own them and staff them with
employees? In manysmaller cities all McDonald's outlets are owned by the
same franchisee. Why is (orisn't) this fact consistent with our discussion of
specific investments?

Robert · Accepted Answer

Q1- You are on the board of directors of a nonprofit art museum supported by donations from wealthy members of the community, and are responsible for acquiring new works and staging exhibitions for the public. You are clearly an agent, but who is (are) the principal(s)? 
The nonprofit organization is controlled and managed by the board of directors who have been given the immense responsibility of running the nonprofit organization. There is no agent principal relationship here. The donations that are received are kept in trust and used for works of art and exhibition. Hence the board is collectively responsible for executing the finances of the museum. Though the art works and exhibitions are done by the museum in the interest of the public, every piece of art is given in safe keeping to the museum is the property of the museum in safe keeping. The museum holds thecae pieces on behalf of the artist so the museum becomes the agent of the artist. The museum is represented by the board hence every board member becomes the agent of the artist.. Here the principle of trust creeps in and the relationship between the artist and the museum board is that of a principal and his agent.

Q1-You are on the board of directors of a nonprofit art museum supported bydonations from wealthy members of the community, and are responsible foracquiring new works and staging exhibitions for...

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