Law101 – Legal Environment of Business
Full Case Study Question:
J.C., Inc., had a franchise agreement with McDonaldàCorporation to operate McDonaldàrestaurants in
Lancaster, Ohio. The agreement required J.C. to make monthly payments to McDonaldàof certain
percentages of the gross sales. If any payment was more than 30 days late, McDonaldàhad the right to
terminate the franchise. The agreement also stated that even if McDonaldàaccepted a late payment, that
would not ïnstitute a waiver of any subsequent breach.
cDonaldàsometimes accepted J.C.àlate
payments, but when J.C. defaulted on the payments in July 2010, McDonaldàgave notice of 30 days to
comply or surrender possession of the restaurants. J.C. missed the deadline. McDonaldàdemanded that
J.C. vacate the restaurants, but J.C. refused. McDonaldàfiles a lawsuit alleging that J.C. had violated the
franchise agreement. J.C claimed that McDonaldàhad breached the implied covenant of good faith and
fair dealing. Which party should prevail and why?
With this information, you should now be able to complete the case study as required.

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