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Court Watch

By Rupert Barkoff and Kitt Shipe
June 28, 2006

Master Franchisor's Claim For Wrongful Termination Under the Wisconsin Fair Dealership Law Fails

The U.S. District Court for the Western District of Wisconsin held that a sandwich shop master franchisor, Brown Dog, Inc. ('Brown Dog'), failed to substantially comply with its agreement to meet its development quotas for opening new franchises despite being only one or two franchises behind in any given quarter. Therefore, the Quizno's Franchise Company's ('Quizno's') termination of the parties' agreement was lawful under the Wisconsin Fair Dealership Law (the 'WFDL'). Brown Dog, Inc., et al. v. The Quizno's Franchise Company LLC, BFG '13,229 (Dec. 27, 2005).

By way of background, the court noted that in 1992 Quizno's only had about 40 restaurants open, but at the time of the trial, Quizno's had about 4000 restaurants open worldwide. Although it had many underperforming master franchisors from 1994 to 2002, Quizno's made no concerted effort to force its master franchisors to meet their development quotas. But the explosive growth of the restaurant chain during the 1990s, coupled with a change in management in 2002, resulted in a policy change that favored enforcement of the development quotas.

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