What type of franchise was Del Rey’s La Grande Enchilada restaurant?
Del Rey’s La Grande Enchilada restaurant was a business format franchise. This is the kind of franchise whereby the business persons uses the brand name of the franchisor. Del Rey was required to use the business system and model embraced by La Grande Enchilada. It was mandatory for Del Rey to embrace the procedures and stipulations provided by the parent restaurant.
The business owner adopted similar recruitment methods, safety precautions, and business practices. The franchisor’s representatives inspected Del Rey’s restaurant every month to ensure it complied with the major provisions and practices. By so doing, Del Rey’s franchise would be able to record positive results.
If Del Rey operates the restaurant as a sole proprietorship, who bears the loss for the damaged kitchen? Explain.
The presented case study shows clearly that Del Rey operates his business as a sole proprietorship. That being the case, it becomes quite clear that Del Rey is the one who should bear the loss for the damaged kitchen. Sole proprietorship franchises are usually guided by specific legal frameworks.
For instance, the control of every sole franchise business is something that lies directly in the hands of the businessperson who has contracted the model. This means that the individual will control aspects such as legal responsibilities and business objectives. The franchise-agreement only presents the business model that has the potential to deliver positive results. Del Rey will, therefore, be responsible for the loss of the kitchen.
Assume that Del Rey files a lawsuit against La Grande Enchilada, claiming that his franchise was wrongfully terminated. What is the main factor that a court would consider in determining whether the franchise was wrongfully terminated?
The presented case indicates that Del Rey’s franchise would terminate in a month for failing to follow the prescribed safety precautions and procedures. The case shows clearly that Del Rey can file a lawsuit against La Grande Enchilada for wrongful termination. During the proceedings, the court would consider the facts behind the targeted matter. Before arriving at a fair judgment, the court should examine the source of the fire and the franchise’s adherence to La Grande Enchilada’s operating model.
According to the operating manual, the workers should ensure towels are placed at least one foot from grills. The case shows that the oiled towel was placed two feet from the grill at the time it caught fire. This fact indicates that the franchise followed the company’s practices and requirements. After the incident, La Grande Enchilada chose to terminate the franchise because of Del Rey’s non-adherence to the operating manual. With these facts in place, it becomes quite clear that the court would agree that the franchise was wrongfully terminated. The court will have to consider each and every business procedure adopted by the franchise. The next move would be to consider the business’ adherence to the operating model provided by La Grande Enchilada.
Would a court be likely to rule that La Grande Enchilada had good cause to terminate Del Rey’s Franchise in this situation? Why or why not?
After examining the facts provided above, it becomes quite clear that the court would most likely rule that La Grande Enchilada had no god cause to terminate the franchise. The main issue targeted in the case arises from the kitchen fire. The fire was recorded despite the fact that the towel was placed two feet from the grill. This discussion explains why the court would argue that La Grande Enchilada’s decision to terminate Del Ray’s franchise was erroneous.
The court can advise the restaurant to revise its operating manual in order to prevent similar fire outbreaks in the future. The court can force La Grande Enchilada to compensate Del Ray for wrongful termination. These decisions are possible because Del Rey’s franchise followed the regulations and procedures stipulated by La Grande Enchilada.