International Law

Who is a Franchisor - Part II

Manufacturer’s Rep Was Not a Wisconsin “Dealer”...: "

Manufacturer’s Rep Was Not a Wisconsin ‘Dealer’

This posting was written by Peter Reap, Editor of CCH Business Franchise Guide.Correspondent. Several days ago, I posted about sellers of business opportunities who claimed that they were not franchises, because they didn't collect royalties.

We analyzed their advertising under the FTC Rule, a US Federal Rule, and concluded that the mere absence of royalties did not make these opportunities non franchises.

However, there are also a number of state regulations which also come into to play.

Over at the Trade Regulation blog, there is a nice analysis of the application of the Wisconsin Fair Dealership Law, which demonstrates when a distributor is not a franchise.

A representative for a manufacturer of bathtub products was not a ‘dealer’ within the meaning of the Wisconsin Fair Dealership Law because the representative could not establish that it was granted the right to sell or distribute the manufacturer’s products or the right to use the manufacturer’s commercial symbols to the extent anticipated by the Fair Dealership Law.

The federal district court in Milwaukee granted the manufacturer summary judgment on the representative’s claim that its relationship was terminated without ‘good cause’ in violation of the Fair Dealership Law.

The representative commenced a relationship with the manufacturer's predecessor in 1988 and operated as the representative for that company in an exclusive territory pursuant to an oral agreement, the court noted.

The predecessor was purchased by the manufacturer in 2002 and entered into a written contract continuing its representation for the defendant manufacturer.

Representation Agreement

The contract limited the representative's use of the manufacturer's trademarks and specified that the representative would solicit and receive orders from plumbing wholesalers in the region and obtain commissions on products sold and distributed by the manufacturer.

The March 31 decision is Northland Sales, Inc. v. Maax Corp.,CCH Business Franchise Guide ¶1

(Via Trade Regulation Talk.)

The entire analysis is worthwhile to read.

Full post as published by Misleading Advertising Law on June 02, 2008 (boomark / email).