Question

WHAT IF THE FACTS WERE DIFFERENT? Assume that McDonald's had a pattern of accepting late payments and there was no agreement, "that acceptance would not constitute a waiver of any subsequent breach". 1. Could C.B. Management, Inc., prevail on its claim? 2. C.B. Management, Inc. would be more likely to prevail if it could show that McDonald's terminated the franchise.

Answer 1

Answer:

1. Could C.B. Management, Inc., prevail on its claim?

• probably it could since it was a common practice for McDonald's

2. C.B. Management, Inc. would be more likely to prevail if it could show that McDonald's terminated the franchise.

• arbitrarily, since it accepted other late payments from other franchisees.

Explanation:

In the original question, C.B. Management had a franchise contract with McDonald's but it continuously paid their franchise fees late. At the beginning McDonld's accepted the late fees but then it decided it wouldn't accept them anymore. Since late fees represented a breach of the franchise contract, McDonald's decided to terminate its contract with C.B. Management. In the first scenario, McDonald's was entitled to terminate the contract due to C.B. Management's continuous breaches.

What changes here, is that McDonald's generally accepts late payments from other franchisees and there acceptance of prior late fees meant that the original contract clause was invalid.