Overview
Parte A: Write about the following post, you can us the questions below as reference and i also attached chapter 30
Carlos Del Rey decided to open a fast-food Mexican restaurant and signed a franchise contract with a national chain called La Grande Enchilada. Under the franchise agreement, Del Rey purchased the building, and La Grande Enchilada supplied the equipment. The contract required the franchisee to strictly follow the franchisor’s operating manual and stated that failure to do so would be grounds for terminating the franchise contract. The manual set forth detailed operating procedures and safety standards, and provided that a La Grande Enchilada representative would inspect the restaurant monthly to ensure compliance.
Nine months after Del Rey began operating his restaurant, a spark from the grill ignited an oily towel in the kitchen. No one was injured, but by the time firefighters put out the fire, the kitchen had sustained extensive damage. The cook told the fire department that the towel was “about two feet from the grill” when it caught fire, which was in compliance with the franchisor’s manual that required towels to be at least one foot from the grills. Nevertheless, the next day La Grande Enchilada notified Del Rey that his franchise would terminate in thirty days for failure to follow the prescribed safety procedures. Using the information presented in the chapter, answer the following questions.
- What type of franchise was Del Rey’s La Grande Enchilada restaurant?
- If Del Rey operates the restaurant as a sole proprietorship, who bears the loss for the damaged kitchen? Explain.
- Assume that Del Rey files a lawsuit against La Grande Enchilada, claiming that his franchise was wrongfully terminated. What is the main factor a court would consider in determining whether the franchise was wrongfully terminated?
- Would a court be likely to rule that La Grande Enchilada had good cause to terminate Del Rey’s franchise in this situation? Why or why not?
Debate This: All franchisors should be required by law to provide a comprehensive estimate of the profitability of a prospective franchise based on the experiences of their existing franchisees
Part B: i need you to write your opinion about the following post that someone from my clase wrote about this same topic
I agree with the statement “All franchisors should be required by law to provide a comprehensive estimate of the profitability of a prospective franchise based on the experiences of their existing franchisees”.
Franchisors are required under FTC Franchise Rule to disclose certain material information to prospective franchises as part of the pre-sale process. Some of the material information may involve the history of the franchisor including bankruptcy or litigation, franchisor’s business experience, fees related to the operation of the franchise, products the franchisor requires the franchisee to use, financing information, exit strategies, dispute resolution, and financial performance among others. However, franchisors are not required by federal or state law to disclose financial information such as projections of revenue, gross income, net income, or profits with prospective franchises. In my opinion, these projections can be used as a powerful sales tool, and they should always be included in the sales process. Sharing financial performance information allows for prospective franchises to make a more educated and reasoned decision to purchase. The single act of sharing profitability information can be interpreted as an act of transparency. This could increase the prospective franchises’ trust in the business and attract new investors.