Blog Banner Image

The Franchise Memorandum

Court Finds Lack of Good Cause to Terminate Under Wisconsin Law
Posted in Terminations

Issue 141 of The GPMemorandum on the April 14, 2011, reported on the dispute that developed because Compressor & Pump Repair Services (CPR) refused to sign Kaeser Compressors, Inc.’s (Kaeser) current form of dealership agreement. CPR had been Kaeser’s exclusive dealer in the territory for over 20 years, but when Kaeser requested that CPR sign its current form of dealership agreement, which provided for a non-exclusive territory, CPR refused. Kaeser sought a declaration that it had good cause to terminate the dealership agreement under the Wisconsin Fair Dealership Law (WFDL) due to CPR’s failure to sign the current form of dealership agreement.

The court now has disagreed and found that Kaeser lacked good cause to terminate. Kaeser Compressors, Inc. v. Compressor & Pump Repair Services, 2011 U.S. Dist. LEXIS 53435 (E.D. Wis. May 18, 2011). Under the WFDL, in order to show good cause for termination, Kaeser needed to demonstrate that the changes imposed under the current form of dealership agreement were both “essential and reasonable.” Kaeser argued that the same changes were imposed on all other dealers in its system, and that the changes were necessary to Kaeser’s continued growth and profitability. While the court considered Kaeser’s economic circumstances in deciding whether the changes were essential and reasonable, the court found that Kaeser could not terminate the dealership simply because it could make more money without CPR. Kaeser was a profitable business and unable to demonstrate that the changes were essential to its overall operation or profitability or to avoid substantial losses.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

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. 

To subscribe to monthly emails for The Franchise Memorandum, please click here


















Blog Authors