Reference no: EM133363232

Assignment:

GoodBurger, Inc., is a company that operates fast-food restaurants in the United States. It has about 500 outlets. Two hundred of those are owned by Goodburger itself; the other 300 are franchised restaurants that are actually owned by local business people. Leona owns a GoodBurger franchise in a middle-class suburb. To get the franchise, she paid GoodBurger a "franchise fee" of $75,000, and makes annual payments to GoodBurger amounting to 3 percent of sales. She is responsible for all costs relating to building, operating, and managing the restaurant, including rent, wages, utilities, and taxes. The restaurant design plans are drawn up by GoodBurger's architectural team, and Leona is required to follow those plans. The plans specify all of the public signage at the restaurant, including the large sign with the famous black-gold-teal GoodBurger logo. Customers cannot tell the difference between company-owned and franchised stores.

GoodBurger stores-whether company-owned or franchised-must all be strictly operated under terms of the 500-page "Operations Manual," which is informally known as "the GoodBurger Bible." As with company-owned stores, all of Leona's employees are required to wear uniforms with the GoodBurger logo and may wear no other identification. The Operations Manual specifies in detail the job of each category of employee, the correct way to make each of the company's 100-plus menu items (e.g., exactly how many pickle chips should be placed on each of thee company's ten signature burgers), and such details as how and how often restrooms must be cleaned. Failure to follow these guidelines may result in a loss of Leona's the franchise. Under the franchise agreement, GoodBurger is responsible for providing bookkeeping and accounting services to Leona, and is responsible for designing, managing, and placing all national and regional advertising.

Leona has some discretion in the operation of the store. She is responsible for deciding which (and how many) employees to hire, so long as she meets the "minimum staffing" guidelines in the Operations Manual. The store must be open from 6:30 a.m. to 11:00 p.m., but Leona can set longer hours if she chooses. She is required to set prices at the levels specified by GoodBurger, but may vary those prices in special cases with approval of the GoodBurger regional office. When GoodBurger offers regional or national promotions, she can elect whether to opt out of the promotion. She is also authorized to advertise locally, provided her ads are approved by the regional office.

Is Leona an agent of GoodBurger? Explain.