Chocolate Chips.Molly makes great chocolate chip cookies and sells them.She calls them "Molly's Famous Chocolate Chips." Some of her friends are interested in selling her cookies.They want to use her name and identify the cookies as "Molly's Famous Chocolate Chips." Molly says,however,that she does not have enough time to bake any more cookies.She agrees,for a price,to allow her friends to use her recipe and her name.Suzette,one of Molly's friends who was selling the cookies,was not being sufficiently careful and negligently put a harmful ingredient into the cookie dough resulting in a customer,Fred,becoming ill.Fred threatens to sue both Suzette and Molly.Molly is so exasperated that she cancels all the franchise contracts on the basis of aggravation although the franchise agreements provided that so long as requirements were met,the franchise agreements were good for a period of two years,Molly took the position that the cookies involved a personal service and that she could not be held liable for discontinuation.Will Molly likely be held liable to Fred?
A)Yes,but only if Suzette has officially filed for bankruptcy protection.
B)Yes,but only if Suzette is insolvent.
C)Yes,because the cookies had her name on them.
D)No,because she was a franchisor.
E)It is unclear and depends on whether she exercised too much authority in the day-to-day affairs of Suzette's business.

Question

Quizplus · Accepted Answer

Although the franchisor has the legal authority to ensure that the franchisee maintains the quality of goods and services associated with the franchise,the franchisor must be cautious.If the franchisor exercises too much authority in the day-to-day affairs of the business,the franchisor could be held liable for the torts of the franchisee's employees.