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

question 86

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.
-Which of the following statements is true regarding Rashi's inspections of franchisees' kitchens?

• A) Franchise law prohibits such inspections because a franchisee is seen as a separate corporation.
• B) Franchise law prohibits such inspections because a franchisee is seen as a separate partnership.
• C) Rashi had the right to do so only if she can establish the existence of customer complaints.
• D) Rashi had the right to do so only if workers' compensation claims had been filed against the franchisees involved.
• E) Rashi had the right to inspect the kitchens.

---

Definitions:

Equal Payments

A series of payments that are the same in amount, typically made at regular intervals over a specified period of time.

Focal Date

The date selected for the calculation of equivalent values.

Compounded Annually

Definition: Refers to the calculation and addition of interest to the principal sum of a loan or deposit once every year.

Debt

money that is owed or due to be paid to someone else, often as a result of borrowing funds.