The Franchisor, Garden Delicious Inc, Has 73 Franchised Outlets Across

question 17

Multiple Choice

The franchisor, Garden Delicious Inc, has 73 franchised outlets across Canada using the theme "healthy eating". Its Surrey, B. C. franchisee, Tom Cain, has been adding bagels to the regular "authorised" menu. Garden Delicious Inc. has asked Tom on several occasions to stop, but he has refused saying that the contract does not specifically prohibit adding items to the menu. Legally speaking, will the franchisor be able to stop this practice?

• A) No, since this practice will set a healthy precedent among the other franchisees.
• B) No, since Tom is an independent businessman, he can manage his business as he sees fit- within the law.
• C) Yes, since this practice will decrease the profits for all franchisees.
• D) Yes, because there is an implied term that the franchisee is to protect the goodwill and trademarks and trade secrets of the franchisor.
• E) Yes, since the franchisor has the money and legal clout to force compliance.

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Definitions:

Capital Structure

The blend of types of financing a company uses, including debt, equity, and other securities, to fund its operations and growth.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest in the company.

Net Working Capital

Networking capital represents a financial indicator that assesses the capacity of a business to settle its short-term debts using its short-term assets.

Capital Spending

Monies invested by an enterprise in obtaining or upgrading real assets, including estates, manufacturing facilities, or equipment.