Franchise law Essay Example | Topics and Well Written Essays - 3000 words

Franchise law - Essay Example Therefore, each of the renewal terms raised by Joe must be examined in terms of whether or not, the proposed conditions and terms constitute good faith and fair dealing grounds for refusing renewal of the expiring franchise contract. In general, Joe takes issue with the requirement to purchase meat and cheese from Hoagie Land in Philadelphia when it is more convenient for him to purchase the same from Hoagie Land in New York, the payment of what Joe considers an excessive legal fee, the payment of a renewal fee, the installation of a point of sales systems, adoption of a new sign and remodelling. The question for consideration is whether or not each of these terms and conditions can be characterized as inconsistent with the concept of fair dealing and good faith. The concept of fair dealing and good faith was considered in the case of Payne v McDonald’s Corp. In this case, the franchisor’s renewal was conditional upon the franchisee’s consent to rebuild the resta urant. The court held however, that the requirement for rebuilding was not inconsistent with the concept of good faith and fair dealing (Payne v McDonald’s Corp.). However, the facts of Joe’s case can be distinguished from the facts of Payne v McDonald’s Corp. ... The ruled in Payne that since there was no express right to renewal, the franchisor was not under a duty to renew the franchise and in deciding to do so could condition renewal on requirements that suited its business ends (Payne v McDonald’s Corp.). Some guidance is found in the case of Bresler’s 33 Flavors Franchising Corp. v Woksin. In the case, the court ruled that in order to satisfy a claim that a refusal to renew on terms and conditions that were inconsistent with the concept of fair dealing and good faith, the claimant must show that the terms and conditions were only applied to the claimant and not to any other franchisor. Specifically, when the renewal term was for remodelling, the claimant must also show that to the satisfaction of the court that remodelling would have a negative impact on profitability (Bresler’s 33 Flavors Franchising Corp. v Woksin). I would therefore advise Joe to provide as much evidence as possible demonstrating that remodelling would negatively impact profitability and that purchasing meat and cheese from Philadelphia rather than from New York would negatively impact profitability. In looking at the requirement to purchase meat from Philadelphia as opposed to New York, it is unlikely that Joe can excise this term as it appears to be applicable to all franchisees and is stated to be for quality control and for economies of scale. To begin with, it may be argued that purchasing from the Philadelphia suppliers may be more convenient for Joe since his restaurant is located in Cherry Hill, New Jersey which is nearer to Philadelphia than it is to New York. Moreover, the requirement to purchase meat and cheese from the Philadelphia supplier applies to all franchisees and does not discriminate