Franchises

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CHAPTER 16

• Franchises

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Franchising
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Franchise Law

• Some states have statutes (e.g. franchise
  disclosure laws)
• If no statutes have been adopted by the state,
  the courts apply general common law principles,
  such as those associated with contract law,
  agency and employment law.

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The Franchise Agreement
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FRANCHISEE AGENT OR INDEPENDENT CONTRACTOR?

• The following factors may indicate an agency
  relationship (thus making the franchisor liable
  for some actions of franchisee)
• 1. Terms of the agreement
• 2. Franchisor has high degree of control
• 3. 3rd person would reasonably believe agency
  exists
• 4. Franchisor derives a great benefit from
  franchisees activities (the greater the benefit
  the more likely an agency will be found)

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Franchisee

• Discussion cases Is franchisor (such as
  McDonalds) liable for safety of or actions of
  its franchisees employees?
• This may turn on whether the franchisee is an
  independent contractor, i.e., this may turn on
  how much control the franchisor has over
  franchisee.
• .

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Termination of Franchise

• Arkansas Franchise Practices Act
• See Dr. Pepper case
• See Miller Brewing case