MILWAUKEE, Wisconsin — As Wisconsin’s Fair Dealership Law marks its 50th anniversary, it is vital for lawyers to stay informed on recent developments surrounding this legislation. The law, which provides protections to franchisees against unfair termination or non-renewal by franchisors, has had a significant impact on the state’s business landscape since its enactment. This article aims to delve into the key aspects lawyers should know about this historical law.
The Wisconsin Fair Dealership Law was enacted in 1971, making Wisconsin one of the first states to adopt such legislation. Its primary objective is to safeguard franchised businesses from arbitrary termination or non-renewal of their contracts by the franchisors. This law applies to agreements involving a “community of interest” between the franchisor and franchisee, typically in sectors such as retail, distribution, and dealership.
Over the years, this law has undergone notable developments that lawyers must be aware of. One significant change occurred in 2015, when the Wisconsin Supreme Court ruled that the Fair Dealership Law covers franchise modifications and terminations, even if they happen outside the state. This broad interpretation of the law has expanded its jurisdictional reach, providing further protection to franchisees.
Another important aspect of this law is the requirement for “good cause” when terminating or choosing not to renew a franchise agreement. Franchisors must demonstrate legitimate reasons, such as a franchisee’s failure to comply with reasonable business standards or a substantial breach of contract. This provision ensures a degree of fairness and prevents franchisors from exploiting their power in the relationship.
Moreover, the Wisconsin Fair Dealership Law also offers certain rights to franchisees seeking to transfer their businesses. Franchisors cannot unreasonably withhold consent to a proposed transfer, as long as the prospective transferee meets the franchisor’s reasonable standards. This provision helps in maintaining the value and marketability of the franchise business.
While the law offers protections to franchisees, it is crucial for lawyers to understand its limitations as well. The law does not prevent franchisors from terminating agreements for valid reasons, such as a franchisee’s insolvency or fraudulent activities. Therefore, lawyers should carefully analyze each case to determine if the franchisor’s actions comply with the law.
As the Wisconsin Fair Dealership Law commemorates its 50th anniversary, it continues to shape the state’s franchise landscape. Lawyers must stay informed about recent developments, such as the extended jurisdictional reach and the requirement for “good cause” in terminating agreements. By familiarizing themselves with the nuances of this law, lawyers can effectively advocate for their clients and ensure fair treatment within the franchise industry.