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Carlos Del Rey decided to open a Mexican fast-food restaurant and signed a franchise contract with a national chain called La Grande Enchilada. The contract
Carlos Del Rey decided to open a Mexican fast-food restaurant and signed a franchise contract with a national chain called La Grande Enchilada. The contract required the franchisee to strictly follow the franchisor's operating manual and stated that failure to do so would be grounds for terminating the franchise contract. The manual set forth detailed operating procedures and safety standards, and provided that a La Grande Enchilada representative would inspect the restaurant monthly to ensure compliance. Nine months after Del Rey began operating his restaurant. a spark from the grill ignited an oily towel in the kitchen. No one was injured, but by the time firefighters were able to put out the fire, the kitchen had sustained extensive damage. The cook told the fire department that the towel was \"about a foot and a half from the grill\" when it caught re. This was in compliance with the franchisor's manual that required towels be placed at least one foot from the grills. The next day. La Grande Enchilada gave Del Rey notice that the franchise would be terminated in thirty days for failure to follow the prescribed safety procedures. 1 . What type of franchise was Del Rey's La Grande Enchilada restaurant? 2. if Del Rey operates the restaurant as a sole proprietorship, who bears the loss for the damaged kitchen? Explain. 3. Assume that Del Rey files a lawsuit against La Grande Enchilada, claiming that his fran- chise was wrongfully terminated. What ls the main factor a court would consider in determining whether the franchise was wrongfully terminated? 4. Would a court he lllrely to rule that La Grande Enchilada had good cause to terminate Del Rey's franchise in this situation? Why or why not
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