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Unformatted text preview: evict a franchisee without giving cause or paying any compensation.
According to Susan Kezios, president of the American Franchise Association, the contracts offered by fast food chains often require a
franchisee to waive his or her legal right to file complaints under state law; to buy only from approved suppliers, regardless of the price; to sell the restaurant only to a buyer approved by the chain; and to accept termination of the contract, for any cause, at the discretion of the
chain. When a contract is terminated, the franchisee can lose his or her entire investment. Franchisees are sometimes afraid to criticize their
chains in public, fearing reprisals such as the denial of additional restaurants, the refusal to renew a franchise contract at the end of its
twenty-year term, or the immediate termination of an existing contract. Ralston-Purina once terminated the contracts of 642 Jack in the Box
franchisees, giving them just thirty days to move out. A group of McDonald’s franchisees, unhappy with the chain’s encroachment on their
territories, has formed an organization called Consortium Members, Inc. The group issues statements through...
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This note was uploaded on 02/25/2014 for the course MGMT 120 taught by Professor Litt during the Spring '08 term at UCLA.
- Spring '08