Part3 -Lori Trustworthy and Frankie Franchisor

5.Lori Trustworthy was contacted by Frankie Franchisor.Frankie told Lori that she (Frankie) was impressed with Lori's small store and that Lori should consider buying a franchise from her (Frankie).Frankie had some splashy brochures and projections as to how much money Lori could buy if she invested in one of Frankie's franchises.

Frankie told Lori that "if you will sell your business, move to Galena, Illinois, buy a lot and obtain at least $285,000 inguaranteed financing to invest in the new franchise, then we will sit down and sign the paperwork for the new franchise!"

Lori sold her business, sold her home, moved her and her family to Galena, Illinois, purchased a lot for the franchise and obtained $285,000 in guaranteed financing.She contacted Frankie Franchisor to say she was ready to sign the paperwork!Frankie said "Oh, like, well, I'm sorry but I've changed my mind about the Galena store.Sorry!"

Lori talks to a lawyer and she (lawyer) tells her she (Lori) has no claim for breach of contract for many reasons.The lawyer says "however there IS another route we can go to pursue Frankie."

What is that "other route" and explain what it is and why it would be a good legal theory for Lori to use against Frankie.(Hint:This is an equitable remedy - not a contract at law remedy.)

Part4 -Noncompete Agreements

Yourauthors discuss covenants (another word for contracts) not to compete on Pages 297-299 of your text.These are also known as non-compete agreements orrestrictive covenants.

Iowa law states an employment related non-compete agreement is legal if (1) it is necessary to protect the financial or economic interests of the employer; (2) is reasonable in terms of time and distance and (3) does not violate public policy.Of course each of these three requirements is a question of fact (i.e., what is a reasonable time or distance to restrict a person's employment?).

6.Mary Anne is a licensed hair stylist.Seven (7) years ago sherented a chair in a salon ownedbyKut Kut Hair Salon.At the time Mary Annesigned the agreement to rent space in Kut Kut Salon, she signed a non-compete agreement that stated ifshe left Kut Kut, shewould not work as a hair stylist either as an employee or an independent contractor (or have her own salon) for a period of two years after leaving Kut Kut Hair Salon.For clarification, the non-compete agreement stated Mary Ann would not compete within a 50-mile radius of Kut Kut Hair Salon for 2 yearsAFTER leaving Kut Kut.

Upon leaving Kut Kut, Mary Anneimmediatelyopenedup her own hair salon about a 1/2 mile away from Kut Kut.Nearly all of her former customershave followed her to her new location.

Kut Kut wants to get an injunction to prohibit Mary Anne from keeping hernew hair salon open.If you were the judge, how would you rule in this case and what would be the basis of your legal reasoning?

Note:For this answer it is more important you explain how and why you reached your conclusion than the bottom line "yes" or "no" answer.These agreements are really open to interpretation and are very fact-based or situational based cases.Keep in mind that often the real issue is not whether the agreement is legally necessary or appropriate but, rather, the time and distance involved.Often judges will reform or "re-write" the terms of the time and distance to be more reasonable.