Wisconsin § 135.03 - Cancellation and alteration of dealerships.

§ 135.03. Cancellation and alteration of dealerships.

No grantor, directly or through any officer, agent or employee, may terminate, cancel, fail to renew or substantially change the competitive circumstances of a dealership agreement without good cause. The burden of proving good cause is on the grantor. 135.03 History History: 1973 c. 179 ; 1977 c. 171 . 135.03 Annotation A grantor may cancel, terminate, or non-renew a dealership if the dealer refuses to accept changes that are essential, reasonable, and not discriminatory. A dealer’s failure to substantially comply with the changes constitutes good cause. Ziegler Co., Inc. v. Rexnord, 147 Wis. 2d 308 , 433 N.W.2d 8 (1988). 135.03 Annotation A drug supplier violated this section by terminating without good cause all dealership agreements with independently owned pharmacies in the state. Kealey Pharmacy & Home Care Service, Inc. v. Walgreen Co., 761 F.2d 345 (1985). 135.03 Annotation This chapter did not apply to a grantor’s action that was due to business exigencies unrelated to the dealer and was done in a nondiscriminatory manner. Remus v. Amoco Oil Co., 794 F.2d 1238 (1986). 135.03 Annotation Economic duress may serve as a basis for a claim of constructive termination of a dealership. JPM, Inc. v. John Deere, 94 F.3d 270 (1996). 135.03 Annotation A grantor’s substantial loss of money under a dealership relationship may constitute “good cause” for changes in the contract, including termination. Morley-Murphy Co. v. Zenith Electronics, Inc., 142 F.3d 373 (1998). 135.03 Annotation This chapter is applicable to nonprofit grantors. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, 646 F.3d 983 (2011). 135.03 Annotation A change in credit terms was a change in a dealer’s “competitive circumstances.” Van v. Mobil Oil Corp., 515 F. Supp. 487 (1981). 135.03 Annotation This section did not apply when a grantor withdrew in a nondiscriminatory fashion from a product market on a large geographic scale. A 90-day notice was required. St. Joseph Equipment v. Massey-Ferguson, Inc., 546 F. Supp. 1245 (1982). 135.03 Annotation Franchisees failed to meet their burden of proof that their competitive circumstances would be substantially changed by a new agreement. Bresler’s 33 Flavors Franchising Corp. v. Wokosin, 591 F. Supp. 1533 (1984). 135.03 Annotation Good cause for termination includes failure to achieve reasonable sales goals. L.O. Distributors, Inc. v. Speed Queen Co., 611 F. Supp. 1569 (1985). 135.03 Annotation Federal law preempts this chapter in petroleum franchise cases. Baker v. Amoco Oil Co., 761 F. Supp. 1386 (1991). 135.03 Annotation When parties continue their relations after the term of a dealership contract has expired, the contract has been renewed for another period of the same length. Praefke Auto Electric & Battery Co. v. Tecumseh Products, Co., 110 F. Supp. 2d 899 (2000). 135.03 Annotation Reversed on other grounds. 255 F.3d 460 (2001). 135.03 Annotation Plaintiffs could proceed under this chapter if they could adduce evidence either that defendant made a change in the competitive circumstances of their dealership agreements that had a discriminatory effect on them or that defendant’s actions were intended to eliminate them or all of its dealers from the state. It is critical that plaintiff-dealers show an intent to terminate on the part of the grantor. Although it would not be enough to show that the grantor made bad management decisions; it might be enough if the plaintiff-dealers can show that the bad decisions were a cover for an intent to slough off the dealers and take over the markets they had developed. Conrad’s Sentry, Inc. v. Supervalu, Inc., 357 F. Supp. 2d 1086 (2005). 135.03 Annotation Assignment of a second distributor in Wisconsin did not breach the agreement or cause a substantial change in the competitive circumstances of the nonexclusive dealership agreement in violation of this section. However, the defendant’s assignment of a second distributorship was a violation of s. 135.04 because it caused a substantial change in the competitive circumstances of the plaintiff’s truck blower distributorship and the defendant failed to provide the plaintiff with 90 days’ written notice. Wisconsin Compressed Air Corp. v. Gardner Denver, Inc., 571 F. Supp. 2d 992 (2008). 135.03 Annotation When an action becomes so egregious as to amount to constructive termination of the dealership this section is violated. Constructive termination of a dealership agreement can occur when the grantor takes actions that amount to an effective end to the commercially meaningful aspects of the dealership relationship, regardless of whether the formal contractual relationship between the parties continues in force. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, 700 F. Supp. 2d 1055 (2011). 135.03 Annotation Affirmed in part, reversed in part. 646 F.3d 983 (2011). 135.03 Annotation “Good cause” is not limited to the statutory definition of the term under s. 135.02 (4). A grantor’s own circumstances can constitute good cause for reasonable, essential, and nondiscriminatory changes in the way it does business with dealers. To show good cause for making a substantial change in the competitive circumstances of a dealership agreement, the grantor must demonstrate: 1) an objectively ascertainable need for change; 2) a proportionate response to that need; and (3) a nondiscriminatory action.” This chapter makes no distinction between for-profit and not-for-profit entities, and, as such, the court cannot judicially craft a lower threshold for when not-for-profit organizations wish to substantially change the competitive circumstances of a dealership agreement. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, 700 F. Supp. 2d 1055 (2011). 135.03 Annotation Affirmed in part, reversed in part. 646 F.3d 983 (2011). 135.03 Annotation Constructive Termination Under the Wisconsin Fair Dealership Law. Cross & Janssen. Wis. Law. June 1997.