Session #4 (Homework) Chapter 11 Page 348 Preparation Questions 1-3
1. What grounds might QLFC have for filing a lawsuit against Huston?
The lawsuit can be based on the new conflict of interest that now exits with Huston. Huston is now not only the exclusive supplier; he is also a franchiser and owns 80% of Super Lube. The interests of Huston as an oil salesman are not necessarily in line with the organization and the franchisees as a whole. Huston also holds the financing for much of Quick Lube Franchise Corporation. All of the conflict is enough grounds for filing a lawsuit. Additionally, Huston can be accused of anti –trust acts for controlling the monopoly of exclusive supplier rights and breach of contract.
2. Why do you think Huston has asked for a meeting with Herget?
The reason Huston has asked for a meeting with Herget is obvious. Huston wants to negotiate and settle the differences. He is afraid that Herget has too much influence over all the franchisees. This could cause disharmony between the franchiser and the franchisee. I think Huston also wants to explain his position to Herget. I am sure in Huston’s mind; he saved the company with the bailout. The bottom line is Huston will try to negotiate rather than lose too much.
3. What advice would you give Herget as he considers Huston’s request for a meeting with QLCF?
Herget should do his homework and be prepared to have demands he can present to Huston. If Huston wants to meet, it means he is open to negotiate. If one major problem is Huston’s monopoly on selling oil, Herget should insist that they have the right to buy from other oil suppliers. This should give the buyer’s more leverage to guarantee a fair price of oil. Herget should propose that they stop paying the 7% royalty fee. This is especially if they are to continue to exclusively purchase oil from him. Herget should consider a neutral negotiator or arbitrator be present to help with negotiations and perhaps meet at a neutral...