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