The Burger King Corporation (BKC) would not allow franchisees to have it their way. Instead, BKC forced them to sell the double-cheeseburger (DCB) and, later, the Buck Double (the DCB minus one slice of cheese) for no more than $1.00. Franchisees alleged that, because this price was below their cost, they were losing money on every double cheeseburger they sold. The National Franchisee Association (NFA), to which 75% of BKC’s individual franchisees belonged, filed suit alleging that (1) BKC did not have the right to set maximum prices; and (2) that even if BKC had such a right, it had violated its obligation under the franchise agreement to act in good faith.

The court dismissed the first claim because the franchise agreement unambiguously permitted BKC to set whatever prices it wanted. But the court allowed the NFA to proceed with the second claim. BKC filed a motion to dismiss. 

Questions:

1. Was BKC acting in good faith when it forced franchisees to sell items below cost?

2. Were BKC’s action done in bad faith?