Business Law Case

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Commercial Law |

Final exam |

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Plaintiff: Sodmaster Inc.

Defendant: Strauss

Legal Issues:

Did Sodmaster Inc. negligently misrepresent themselves with unrealistic future financial projections?

Does Strauss owe Sodmaster Inc. the remaining part of the franchise fee, and franchise royalties?

Is Strauss in breach of his franchise contract by opening his own lawn care business in the same area that his franchise operated?

Arguments:

1.) Did Sodmaster Inc. negligently misrepresent themselves with unrealistic future financial projections?

The financial projections booklet that was provided to Strauss showed accurate and actual experiences of Sodmaster franchisees. The fact about whether or not one franchise or ten franchisees had sales of $800,000 or more was not discussed, and could have been if brought up by Strauss. Sodmaster provided Strauss with vast amounts of information regarding their business, to which Strauss was welcome to ask any questions he had pertaining to any area of Sodmaster’s business. The fact that Strauss’ franchise didn’t attain the $800,000 plus operating revenue that other franchises had achieved was in no way due to a negligent misrepresentation of unrealistic future financial projections.

Citing: The Law and Business Administration in Canada, Twelfth Edition, Page 404

Quote from Country Style Food Services Inc. v. Hotoyan: “to say that franchising is a risky business is, if anything, an understatement.”

Citing: Arthur Wishart Act (Franchise Disclosure), 2000

A person is not liable in an action under this section for misrepresentation if the person proves that the franchisee acquired the franchise with knowledge of the misrepresentation or of the material change, as the case may be. 2000, c. 3, s. 7 (4).

2.) Does Strauss owe Sodmaster Inc. the remaining part of the franchise fee, and franchise royalties?

Of course Strauss still owes Sodmaster the other part of the franchise fee he was required to pay...