covenant of good faith fair dealing

At the heart of a franchise is an agreement that sets out the essential contractual obligations governing the relationship between franchisor and the franchisee. The franchise agreement, however, cannot spell out all the obligations that a franchisor may owe the franchisee, and it has been argued that the franchisor also has an implied duty of “fair dealing” not contained explicitly in the franchise agreement. Courts usually find that the implied covenant of good faith and fair dealing cannot be used to contradict clear provisions in an agreement.

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