The person C signed a franchise agreement with company L, a fast food chain. The agreement binds C to follow the rules given in L’s operating manual. In case of non- compliance with L’s operating manual the contract will stand terminated. After nine months, fire broke out in the restaurant of C, due to which the kitchen was severely damaged. There was no mistake on the part of C but L notified that the franchise would terminate within 30 days due to non-compliance of safety procedures. To find: The loss bearer in case of sole proprietorship.

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Wiener Haus #82 has been underperforming for a few years. The franchisee (owner of Haus #82) is frustrated and files a claim against the franchisor for breach. The franchisee claims that the agreement he signed contained a statement at the start of the agreement detailing that the business model the franchisor developed was "proven effective and profitable." On these facts, does the franchisee have a winning breach of contract claim against the franchisor? O No, the contract formed was a voidable contract. Thus, the franchisor is void of responsibility if the business model does not produce profit for the franchisee. O Yes, the franchisee relied on these statements when deciding to contract and thus the franchisor should be responsible when the business model fails to work for the franchisee. O No, courts have generally held that the type of language relied upon by the franchisee is "prefatory" and does not create a duty on the part of the franchisor. O Yes, the money paid to the…

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Chapter 16, Problem 2RE

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Case summary:The person C signed a franchise agreement with company L, a fast food chain. The agreement binds C to follow the rules given in L’s operating manual. In case of non- compliance with L’s operating manual the contract will stand terminated. After nine months, fire broke out in the restaurant of C, due to which the kitchen was severely damaged. There was no mistake on the part of C but L notified that the franchise would terminate within 30 days due to non-compliance of safety procedures.

To find: The loss bearer in case of sole proprietorship.

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