Question with Sample Answer—Control of a Franchise. National Foods, Inc., sells franchises to its fast-food restaurants, known as Chicky-D’s. Under the franchise agreement, franchisees agree to hire and train employees strictly according to Chicky-D’s standards, and Chicky-D’s regional supervisors must approve all new hires and policies, though this is routinely done. Chicky-D’s reserves the right to terminate a franchise for violating the franchisor’s rules. After several incidents of racist comments and conduct by Tim, a recently hired assistant manager at a Chicky-D’s, Sharon, a counterperson at the restaurant, resigns. Sharon files a suit against National. National files a motion for summary judgment, arguing that it is not liable for harassment by franchise employees. Will the court grant National’s motion? Why or why not? (See page 693.)

—For a sample answer to Question 26–2, go to Appendix G at the end of this text.