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Bus Law-Old Prelim II Outline 2

Bus Law-Old Prelim II Outline 2 - Dan Opisso Prelim 2...

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Dan Opisso Prelim 2 outline I. Franchising A. Background 1. What is a Franchise? Is there a Franchise agreement? (don’t just assume no agreement if no trademark involved) Franchise Relations Act (a) Franchise means a contract or agreement between two or more persons either expressed or implied, oral or written in which (1) A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor and (2) The operation of the franchisee’s business pursuant to such plan or system in substantially associated with the franchisor’s trademark , service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate and (3) The franchisee is required to pay, directly or indirectly a franchise fee of $100 or more. Marketing plan : Plan relating to some aspect of the conduct of a party to a contract in conducting business including but not limited to: a. specification of price, or special pricing systems or discount plans b. use of particular sales or display equipment or merchandising devices c. use of specific sales techniques d. use of advertising or promotional materials or cooperation in efforts *Mere licensing of a trade name does not necessarily create an agency relationship (Beck v. Murray) Standard Franchise relationship does not present a fiduciary relationship (Kienel v. Lanier) 2. Types of Franchises a. Restaurant Franchises – McDonald’s b. Distributor Franchises – Auto Dealership c. Processing Plant Franchise – beer (Guiness) 3. Disclosure: (litigation history, credit history, how was it paid for) - Uniform Federal Offering Circular (UFOC) o Financial statements o Lists addresses, # of franchisee agreements o Rights and obligations o Fees and costs o Litigation *Dialist violated UFCO nondisclosure –Blankenship gets $ - if issue of, “was there a franchise in first place”- going to want to look at list of other franchisees, description of franchise fees, a financial statement of franchisor, litigation history (Dialist case) 4 . Franchise agreements a. no need for written agreement ( Blankenship )
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Dan Opisso Prelim 2 outline b. implied covenant of good faith and fair dealing ( Creek case ) i.e no prohibition of Sheraton coming in, but court found violation of implied covenant i. Implied Covenant of Good Faith and Fair Dealing 1. Requires parties to contract to deal honestly and in good faith in the performance and enforcement of their agreements. ( Fortune v National Cash Register) 2. To refrain from impairing the other party’s right to receive the fruits of the contract. 3. The covenant however may not be used to rewrite or override the express terms of the contract 4. An implied obligation of good faith exists by operation of law in every contract (Camp Creek v. Sheraton) While there was no explicit prohibition of Sheraton opening a competing hotel, franchise
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Bus Law-Old Prelim II Outline 2 - Dan Opisso Prelim 2...

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