ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 36
SOLE PROPRIETORSHIPS AND FRANCHISES
36-1A. Franchise termination
(Chapter 36—Pages 712–715)
Yes. The trial court jury returned a verdict for Blackwell, but the district court set the verdict aside and
Blackwell appealed the case. The U.S. Court of Appeals for the Fifth Circuit, however, reversed the
36-2A. Good faith in franchising relationships
(Chapter 36—Pages 712–715)
The Lareses prevailed. Although the district court ruled that the contract gave the franchisor an
B-154 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 36
36-3A. Franchise termination
(Chapter 36—Pages 712–715)
The trial court entered a judgment in favor of AB & B, and Banfi appealed. The appellate court held that
Banfi did not demonstrate bad faith in terminating the distributorship but that Banfi did show a lack of
just cause. In examining the issue of bad faith, the court noted that the state Alcoholic Beverages
36-4A. Franchise termination
(Chapter 36—Pages 712–715)
The court denied the Huangs’ application for a preliminary injunction on the ground that the evidence
did not indicate that Holiday Inns had acted in an “arbitrary and capricious manner” in terminating the
franchise. The court held that, on the contrary, Holiday Inns’ decision to terminate was based on good
36-5A. Franchise termination
(Chapter 36—Pages 712–715)
The board issued an order finding, among other things, that Lone Star did not maintain a current
inventory, its sales did not meet goals agreed to between the parties, and Lone Star disparaged
36-6A. Franchise termination
(Chapter 36—Pages 712–715)
The court explained that “[g]ood cause exists for terminating the franchise where a franchisee fails to
substantially comply with the franchise agreement.” The court pointed out that “the evidence
36-7A. Good faith in franchise relations
(Chapter 36—Pages 712–715)
B-156 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 36
The Supreme Court of Appeals of West Virginia held, among other things, that an offer to renew the
lease or franchise was not required by the implied obligation of good faith, fair dealing, and commercial
36-8A. The franchise contract
(Chapter 36—Page 711)
The New Jersey state trial court dismissed the suit, a state appellate court affirmed the dismissal, but on
Entre’s appeal, the New Jersey Supreme Court reversed. The state supreme court extended the state
36-9A. Franchise termination
(Chapter 36—Pages 712–715)
The court granted McDonald’s motion to dismiss C.B.’s counterclaims. The court emphasized that C.B.
failed to comply with the terms of the franchise agreement. C.B. argued in part that McDonald’s
36-10A. Franchise termination
(Chapter 36—Pages 712–715)
A jury found in favor of A/C on its breach of contract claims and awarded A/C $40,000 damages on the
“Tulsa breach of contract” (but also awarded Lennox $233,236 on its counterclaim for A/C’s outstanding