BREACH OF GOOD FAITH IN PERFORMANCE OF THE FRANCHISE CONTRACT: PUNITIVE DAMAGES AND DAMAGES FOR INTANGIBLES

Abstract

This paper explores case law concerning breach of good faith in the franchise contract. Given the relational nature of the franchise contract, the good faith term forbids the franchisor from exploiting the franchisee’s classic vulnerability. The paper also illustrates why the franchisor is more susceptible to an award of punitive damages. It concludes by making the novel argument that franchisees should be permitted to recover damages for mental distress and other intangibles resulting from breach of the good faith term.