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The Franchise Memorandum

Posts from December 2013 - Issue 175.

A federal court in Wisconsin recently denied a dealer’s motion for summary judgment under the Wisconsin Fair Dealership Law (“WFDL”), due to a genuine fact dispute regarding the existence of a community of interest between the parties. In Wholesale Partners, LLC v. Masterbrand Cabinets, Inc., Bus. Franchise Guide ¶ 15,136 (CCH) (E.D. Wis. Oct. 4, 2013), a newly formed cabinetry retailer orally agreed to take over the dealership of an insolvent former dealer of manufacturer Masterbrand. At the same time, Wholesale Partners also agreed to take on the former dealer’s debt to ...

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Posted in Terminations

In Machine Maintenance, Inc. v. Generac Power Systems, Inc., 2013 U.S. Dist. LEXIS 14275 (E.D. Mo. Oct. 8 2013), a federal court in Missouri denied cross motions for summary judgment in a dealer termination dispute. The plaintiff, which did business as Luby Equipment, Inc., was a former nonexclusive seller and servicer of generators manufactured by Generac Power Systems. Generac terminated Luby’s Buy/Sell Agreement and Service Agreement at an in-person meeting in December 2011. Although the termination letter that followed the meeting did not specify the reason for ...

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Posted in Contracts

A Pennsylvania federal court has granted a manufacturer’s motion to dismiss a complaint for breach of distribution agreement. In Assalone v. S-L Distribution Co., Inc., 2013 U.S. Dist. LEXIS 149625 (M.D. Pa. Oct. 17, 2013), Assalone sued S-L, the manufacturer of Snyder’s snack foods, claiming that it breached the exclusivity provisions of the parties’ distributorship agreements by distributing another line of snack foods in Assalone’s territories. In 1999, Assalone entered into separate agreements with a food manufacturer and distributor of Snyder’s products ...

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Posted in Contracts

The United States District Court for the Eastern District of Wisconsin has determined that a manufacturer was contractually required to pay a commission to one of its distributors in connection with the sale of its industrial hoist equipment. Marine Travelift, Inc. v. Marine Lift Sys., Inc., 2013 U.S. Dist. LEXIS 144435 (E.D. Wis. Sept. 30, 2013). The parties had entered into a distributorship agreement that granted the distributor, Marine Lift Systems, a nonexclusive right to purchase equipment from the manufacturer, Marine Travelift, and then resell it to customers at ...

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A federal court in Illinois has granted in part and denied in part a manufacturer’s motion to dismiss claims brought under the Illinois Franchise Disclosure Act of 1987 (“IFDA”) and the California Franchise Relations Act (“CFRA”) arising from the termination of a distribution agreement. H.C. Duke & Son, LLC v. Prism Mktg. Grp., 2013 U.S. Dist. LEXIS 140254 (C.D. Ill., Sept. 30, 2013). H.C. Duke & Son and Prism Marketing Group were parties to an agreement in which Prism distributed Duke’s line of soft-serve ice cream machinery and related equipment. Duke terminated the ...

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In Nature’s Plus Nordic A/S v. Natural Organics, Inc., 2013 U.S. Dist. LEXIS 159157 (E.D.N.Y. Nov. 6, 2013), the United States District Court for the Eastern District of New York found that the local advertising requirement in a distributorship agreement did not constitute a “franchise fee” under the New York Franchise Sales Act (“NYSA”). In the case, Natural Organics, Inc. terminated a distributorship agreement when the distributor, Nature’s Plus, failed to meet the agreement’s minimum local advertising requirement and minimum gross sales requirement ...

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The Ohio Supreme Court recently affirmed an appellate court’s decision finding that the Ohio Alcoholic Beverages Franchise Act clearly permits a successor manufacturer to appoint its own distributors, provided that the successor manufacturer gives the existing distributor notice and compensation. Esber Beverage Co. v. Labatt USA Operating, Slip Op. 2013-Ohio-4544 (Ohio Oct. 17, 2013). Esber Beverage Company had been a distributor of Labatt brands for many years. The Labatt brands were acquired by Labatt USA Operating in March 2009 and Labatt notified Esber that it intended ...

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Posted in Contracts

The United States District Court for the Western District of Pennsylvania dismissed with prejudice a beer distributor’s amended complaint alleging violations of a distributorship agreement between the parties. Frank B. Fuhrer Wholesale Co. v. MillerCoors LLC, 2013 U.S. Dist. LEXIS 155253 (W.D. Pa. Oct. 30, 2013). Under the agreement, Frank B. Fuhrer Wholesale Co. was granted exclusive distribution rights for certain Coors products in a nine-county area including metropolitan Pittsburgh. The agreement allowed MillerCoors to add products to the list of those for which the ...

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In James River Cos. v. BB Buggies, Inc., No. 4:13-cv-00004 (W.D. Va. Sep. 6, 2013), the United States District Court for the Western District of Virginia denied summary judgment for BB Buggies on a dealer’s claim for failure to repurchase inventory pursuant to the Virginia Equipment Dealers Protection Act (“VEDPA”), but granted summary judgment to BB Buggies’ parent company. The parties’ relationship began in 2006 when James River entered into an oral dealer agreement with Bad Boy Enterprises, LLC and purchased several buggies. In October 2010, Bad Boy sold its assets to ...

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After remanding to the federal district court for the Northern District of Illinois, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s denial of a preliminary injunction motion under the Petroleum Marketing Practices Act (“PMPA”), finding that the franchisee’s multiple insufficient funds transactions constituted “failures” under the PMPA, thus justifying termination of the relationship. Joseph v. Sasafrasnet, LLC, 2013 U.S. App. LEXIS 22395 (7th Cir. Nov. 4, 2013). In November 2010, Sasafrasnet, an authorized British ...

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Posted in Terminations

The Supreme Court of Appeals of West Virginia recently affirmed the termination of an alcohol distribution agreement based on the distributor’s repeated failure to timely pay for goods delivered by the supplier. N. Cent. Distribs., Inc. v. Moats, 2013 W. Va. LEXIS 1236 (W. Va. Nov. 8, 2013). Attempts by the supplier, Labatt, to withdraw payment from the distributor, NCDI, through electronic funds transfer failed for four consecutive months due to insufficient funds in the distributor’s account. Accordingly, Labatt notified NCDI that it had breached the parties’ ...

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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