Several months ago, your company decided to purchase a franchise from Eureka restaurants to operate a fast-food restaurant.This really isn't your company's specialty, and Eureka did not disclose the risks involved in this type of business.The franchise agreement was silent about whether the company would have exclusive rights to operate in the area where the company's restaurant was located and under what circumstances the franchise could be terminated.When Eureka found a better-financed franchisee for your company's location, it abruptly terminated the company's franchise.

The company is considering whether to sue Eureka, due to the substantial loss of what had been paid for the franchise, the investment, and the loss of potential income.The company feels that given that it was new to the franchise, more should have been disclosed and that it was reasonable to assume that a franchise could not be terminated simply because a better-financed franchise was available.You've threatened to sue, but Eureka argued that the company should have known how franchises operate before investing in one and that it could have negotiated for protective devices in the franchise agreement.

The board needs to decide whether it should sue.The CEO must prepare a preliminary assessment of the following questions for the board to discuss this week to decide what course of action to take:

1) Identify the recommended course of action (i.e., whether it should sue and what it should do for future franchise agreements)

2) Outline the issues,

3) Explain your rationale (i.e., apply any applicable rules to the fact given)

4) Describe any conflicting views and why they have been rejected.