Domino's Pizza sold two franchises to experienced Domino's managers. The agreement stated that the franchisees agreed to

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Domino's Pizza sold two franchises to experienced Domino's managers. The agreement stated that the franchisees agreed to "operate the Store in full compliance with all applicable laws, ordinances, and regulations." If not, Domino's had the right to terminate if problems were not corrected within 30 days. Later, the franchisees' books were a mess, reports were not filed on time, and they failed to pay city, state, or federal payroll, income, and sales taxes. After six months of failure to correct the problems, Domino's gave 30 days' termination notice. The franchisees put the stores up for sale. When prospective buyers asked Domino's about the history of the stores, Domino's told the truth, which led to the sale price falling below what would have been offered if Domino's had not said anything and let the franchisees sell on their own. The franchisees sued Domino's; a jury awarded the franchisees over $2 million damages. Did this decision stand? [Bennett Enterprises v. Domino's Pizza, 45 F.3d 493, D.C. Cir. (1995)]

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The Legal Environment of Business

ISBN: 978-0538473996

11th Edition

Authors: Roger E Meiners, Al H. Ringleb, Frances L. Edwards

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