[Cookie Problems] Rashi Makes Great Chocolate Chip Cookies and Sells

question 17

Multiple Choice

[Cookie Problems] Rashi makes great chocolate chip cookies and sells them in her café called Rashi's Famous Cookies. Some of her friends have expressed interest in selling her cookies. They want to use her name and identify the cookies as Rashi's Famous Cookies. Seeing a business opportunity, Rashi agrees to bake the cookies and provide them frozen to her friends who will open other cafés under her café's name. Rashi strictly controls all packaging and sales. She also frequently inspects kitchens used by the sellers, pursuant to her agreements with them. Lola, one of Rashi's friends who entered into an agreement with Rashi to open a café and sell the cookies, was not being careful and negligently put a harmful ingredient into the cookie dough resulting in a customer, Jonah, becoming ill. Jonah threatens to sue both Lola and Rashi. Rashi is so exasperated that she cancels all the franchise contracts. Although the franchise agreements provide that,as long as requirements are met, the franchise agreements will continue for a period of two years, Rashi takes the position that the cookies involve a personal service using a trade secret, and that she cannot be held liable to her franchisees for discontinuation of the franchises.
-Is Rashi correct that she was entitled to cancel all franchise agreements?

• A) No, she was not entitled to cancel any franchise agreements.
• B) No, while she was arguably justified in canceling Lola's franchise agreement, she was not justified in canceling other franchise agreements because no breach of the other franchise agreements had occurred.
• C) No, she could only cancel all franchises after a judgment was entered against her, and that had not yet occurred.
• D) Yes, because a personal service type of franchise was involved, she could cancel all the franchises at will.
• E) Yes, she can cancel the franchises but only if she can establish that her profits were less than had been expected.

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Definitions:

Business Decisions

The choices made by individuals or groups in a business context that affect the organization's strategy and operations.

Meganational Strategy

A business approach that focuses on operating and competing in several countries around the world, leveraging global efficiencies and multicultural effectiveness.

Multidomestic Strategy

A multidomestic strategy is a business approach wherein a company tailors its products, marketing, and operations to suit the specific needs and preferences of each country or market it enters, rather than standardizing them across the board.

Decentralization

The process of distributing or dispersing functions, powers, people, or things away from a central location or authority.