Question
Barn-Chestnut, Inc. (BCI), entered into a franchise agreement with Grocers Development Corp. (GDC) for a Convenient Food Mart for as long as [BCI] ... shall
Barn-Chestnut, Inc. (BCI), entered into a franchise agreement with Grocers Development Corp. (GDC) for a Convenient Food Mart "for as long as [BCI] ... shall have a good and valid lease" to the property. GDC sold its interest in the franchise and the property to CFM Development Corp. When the lease was about to expire, CFM offered to enter into a new lease and franchise agreement with BCI at a significantly higher price. BCI declined. When CFM refused to make another deal, BCI filed a suit against CFM in a West Virginia state court on the ground that CFM had to offer BCI a lease because the franchise was contingent on a lease. The court did not agree. BCI then argued that the implied obligation of good faith required CFM to offer to renew the lease. Essentially, the question on appeal was whether the franchisor had an obligation to renew the franchise even though there was no clause in the contract requiring that the lease/franchise be renewed. Was BCI correct in contending that the franchisor did have such an obligation? Explain.
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