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The Franchise Memorandum

Court Finds No Just Cause for Termination in Ohio Absent Breach of Distributorship Agreement
Posted in Terminations

In September, an Ohio federal court granted the motion for preliminary injunction brought by a group of alcohol beverage distributors, enjoining their supplier from enforcing the terminations of their distributorships. The case is Tri-County Whole Distrib., Inc. v. The Wine Group, Inc., 2010 U.S. Dist. LEXIS 92598 (D. Ohio Sep. 2, 2010). In granting the motion, the court held that the supplier did not demonstrate that it had “just cause” to terminate the distributorships under the Ohio Alcoholic Beverages Franchise Act because the distributors had not breached their agreements. Rather, the supplier simply wanted to move distribution of its wine products in Ohio to a single statewide distributor. The court found that, although the Franchise Act does not define “just cause,” it does provide that just cause does not include the unilateral decision to alter a franchise for reasons unrelated to a breach, and that a rational business purpose is not enough to permit termination.

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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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