This paper examines the determinants of wages and fringe benefits in the fast
food industry- The focus of the paper is on exploring differences between
company-owned and franchised restaurants because agency problems are likely to
affect the management and operation of company-owned restaurants- Empirical
analysis of two data sets finds that total labor compensation for
non-management employees is slightly greater at company-owned outlets than
franchisee-owned outlets, all else held constant. Furthermore, workers’ wages
grow more rapidly over time at company-owned restaurants than franchisee-owned
restaurants- In addition, the results suggest that wage differentials for
race, sex and marital status are small in the fast food industry relative to
other industries.