Author Question: Franchise Termination. C. B. Management Co operated McDonald's restaurants in Cleveland, Ohio, under ... (Read 154 times)

sammy · **on:** Jun 24, 2018

Franchise Termination. C. B. Management Co operated McDonald's restaurants in Cleveland, Ohio, under a franchise agreement with McDonald's Corp The agreement required C. B. to make monthly payments of, among other things, certain percentages of the gross sales to McDonald's. If any payment was more than thirty days late, McDonald's had the right to terminate the franchise. The agreement stated, No waiver by

Question 2

Principals only duty to agents is to compensate.
a. True
b. False
Indicate whether the statement is true or false

reversalruiz · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Franchise termination
The court granted McDonald's motion to dismiss C.B.'s counterclaims. The court emphasized that C.B. failed to comply with the terms of the franchise agreement. C.B. argued in part that McDonald's previous exercises of discretion, in regards to late payments, meant that its failure to accept a late payment in the summer of 1997 was a breach of the implied covenant of good faith and fair dealing. The court disagreed. The terms of the agreement control this issue. The agreement specifically provided that a waiver of one breach by the franchisor was not to be taken as a waiver of later breaches. That McDonald's may have declined to exercise its contractual right to terminate in the past does not somehow transform that right into a discretionary decision governed by the standard of good faith and fair dealing. . . . McDonald's simply exercised privileges expressly reserved in the agreements and we may not interject the duty of good faith to rewrite the contract. The court ruled that McDonald's was entitled to immediate possession of the restaurants, as well as damages for C.B.'s post-termination use of the McDonald's trademarks.

Answer to Question 2

FALSE