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Spotlight on McDonald’s—Franchise Termination. J.C., Inc., had a franchise agreement with McDonald’s Corp. to operate McDonald’s restaurants...

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General Management

Spotlight on McDonald’s—Franchise Termination. J.C.,Inc., had a franchise agreement with McDonald’s Corp. to operateMcDonald’s restaurants in Lancaster, Ohio. The agreement requiredJ.C. to make monthly payments of certain percentages of gross salesto McDonald’s. If any payment was more than thirty days late,McDonald’s had the right to terminate the franchise. The agreementalso stated that even if McDonald’s accepted a late payment, thatwould not “constitute a waiver of any subsequent breach.” From timeto time, McDonald’s accepted J.C.’s late payments, but when J.C.defaulted on one particular payment, McDonald’s gave notice ofthirty days to comply or surrender possession of the restaurants.J.C. missed the deadline. McDonald’s demanded that J.C. vacate therestaurants, but J.C. refused. McDonald’s alleged that J.C. hadviolated the franchise agreement. J.C. claimed that McDonald’s hadbreached the implied covenant of good faith and fair dealing. Whichparty should prevail, and why?

Answer & Explanation Solved by verified expert
4.1 Ratings (690 Votes)
A Franchise is an established business that has a working business model and is generating a profit This owner of this business then wants to grow but is unable or unwilling to manage another physical location or manage someone they hire to do so for them Instead they offer to sell the rights to the new locations to a Franchisee These agreements are more than a little complex usually but usually they will go something like this 1 The Franchisee will be granted the right to sell the franchise products and goods in exchange for a set amount of money    See Answer
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