This story appears in the
March 1999 issue of
Entrepreneur.
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Contracts are a tricky business: One poorly written phrase can a
lawsuit make. Just ask the claimants of Mermaid Marketing Inc.
v. Esberg Corp.
In early 1998, Steve L. Smith, whose corporate entity, Esberg
Corp., owned three Mermaid carwash franchises in Minnesota, wanted
to buy a nonfranchised car wash in Bloomington, Minnesota. Madison,
Wisconsin-based Mermaid denied consent, claiming proprietary trade
secrets would be at risk. Smith fought Mermaid's refusal,
citing his franchise agreement, which allows franchisees to operate
nonfranchised car washes with consent, which Mermaid can't
"unreasonably withhold."
After much litigation, an appellate court found the case would
be better settled in a trial court. A trial date is expected to be
set later this year.
"Many lawsuits turn on the specific language of the
franchise agreement," says Barry M. Heller, a partner with the
Washington, DC, franchise law firm Rudnick, Wolfe, Epstien &
Zeidman. It's crucial to examine, question and understand every
word of the franchise agreement to avoid misunderstandings.
Contact Source
Rudnick, Wolfe, Epstien, & Zeidman, (202) 712-7243, barry.heller@rudnickwolfe.com