Reference no: EM131473406

Question: Weaver operated two Burger King restaurants under two separate franchise agreements. Restaurant 1 was located in Great Falls, Montana, and Weaver leased the facility from Burger King. Restaurant 2 was also located in Great Falls, but Weaver owned the facility. Both franchise agreements required Weaver to make monthly royalty payments and advertising contributions to Burger King Corp. and provided that Florida law would control in the event of a dispute. The agreement for Restaurant 1 contained no provisions regarding geographic scope, but the agreement for Restaurant 2 stipulated that "this franchise is for the specified location only and does not in any way grant or imply any area, market, or territorial rights proprietary to FRANCHISEE."

Neither agreement contained any limitations on the locations of future Burger King restaurants. In 1989, another Burger King franchise opened in Great Falls. Weaver was upset by the competition, felt that Burger King had breached its obligations under the franchise agreements, and stopped making rent, royalty, and advertising payments, though he continued to use Burger King's marks and system. Burger King sued for breach of contract. Weaver counterclaimed, arguing that Burger King had breached the implied covenant of good faith and fair dealing, which, under Florida law, is part of every contract. Florida law does not recognize actions for breach of an implied covenant of good faith and fair dealing when:

(a) the party breaching the implied covenant has performed all of the express contractual provisions in good faith and

(b) the implied duty that was breached would vary the express terms of the contract. Which party should prevail here, and why?