Ricardo Operates a Great Health Club and Would Like to Sell

question 32

Multiple Choice

Ricardo operates a great health club and would like to sell franchises.He is concerned,however,that franchisees will take steps to terminate their franchise agreements in order to compete with him after learning his successful strategies for doing business.What contract provision should Ricardo put in the franchise agreements in order to provide himself with legal protection?

• A) a covenant not to do business
• B) a covenant not to compete
• C) an arbitration agreement
• D) a quality control standard
• E) From a strict legal standpoint, there is nothing Ricardo can do to protect himself.

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available for everyone to consume without reducing the amount available for others.

Marginal Social Benefit

The additional benefit to society from the consumption of an additional unit of a good or service.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning that no one can be excluded from their use and one person's use does not reduce availability to others.

Private Benefit

The direct advantage or gain obtained by an individual or firm from their economic activities, without considering the impacts on third parties.