Chapter 135

CHAPTER 135

DEALERSHIP PRACTICES

135.01   Short title.

135.02   Definitions.

135.025   Purposes; rules of construction; variation by contract.

135.03   Cancellation and alteration of dealerships.

135.04   Notice of termination or change in dealership.

135.045   Repurchase of inventories.

135.05   Application to arbitration agreements.

135.06   Action for damages and injunctive relief.

135.065   Temporary injunctions.

135.066   Intoxicating liquor dealerships.

135.07   Nonapplicability.

135.01 135.01 Short title. This chapter may be cited as the “Wisconsin Fair Dealership Law.”

135.01 History History: 1973 c. 179; 2021 a. 238 s. 45.

135.01 Annotation This chapter was enacted for the protection of the interests of the dealer whose economic livelihood may be imperiled by the dealership grantor, whatever its size. Rossow Oil Co. v. Heiman, 72 Wis. 2d 696, 242 N.W.2d 176 (1976).

135.01 Annotation This chapter covers only agreements entered into after April 5, 1974. Wipperfurth v. U-Haul Co. of Western Wis., Inc., 101 Wis. 2d 586, 304 N.W.2d 767 (1981).

135.01 Annotation This chapter is constitutional; it may be applied to out-of-state dealers when provided by contract. C.A. Marine Sup. Co. v. Brunswick Corp., 557 F.2d 1163. See also Boatland, Inc. v. Brunswick Corp. 558 F.2d 818.

135.01 Annotation When a dealer did not comply with all the terms of acceptance of a dealership agreement, no contract was formed and this chapter did not apply. Century Hardware Corp. v. Acme United Corp., 467 F. Supp. 350 (1979).

135.01 Annotation Dealing with the Dealers: Scope of the Wisconsin Fair Dealership Law. Axe. WBB Aug. 1981.

135.01 Annotation The Fair Dealership Law: Good cause for review. Riteris & Robertson. WBB Mar. 1986.

135.01 Annotation Changing Business Strategy Under the Wisconsin Fair Dealership Law. Laufer. Wis. Law. Mar. 1991.

135.01 Annotation Avoiding the Accidental Franchise. Modell & Fittante. Wis. Law. May 2003.

135.01 Annotation Determining “Community of Interest” under the WFDL. Wright. Wis. Law. Dec. 2004.

135.01 Annotation Understanding the Wisconsin Fair Dealership Law in Tough Economic Times. Wright. Wis. Law. Nov. 2009.

135.02 135.02 Definitions. In this chapter:

135.02(1) (1) “Community of interest” means a continuing financial interest between the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services.

135.02(2) (2) “Dealer” means a person who is a grantee of a dealership situated in this state.

135.02(3) (3) “Dealership” means any of the following:

135.02(3)(a) (a) A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons, by which a person is granted the right to sell or distribute goods or services, or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol, in which there is a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease, agreement or otherwise.

135.02(3)(b) (b) A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons by which a wholesaler, as defined in s. 125.02 (21), is granted the right to sell or distribute intoxicating liquor or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol related to intoxicating liquor. This paragraph does not apply to dealerships described in s. 135.066 (5) (a) and (b).

135.02(4) (4) “Good cause” means:

135.02(4)(a) (a) Failure by a dealer to comply substantially with essential and reasonable requirements imposed upon the dealer by the grantor, or sought to be imposed by the grantor, which requirements are not discriminatory as compared with requirements imposed on other similarly situated dealers either by their terms or in the manner of their enforcement; or

135.02(4)(b) (b) Bad faith by the dealer in carrying out the terms of the dealership.

135.02(5) (5) “Grantor” means a person who grants a dealership.

135.02(6) (6) “Person” means a natural person, partnership, joint venture, corporation or other entity.

135.02 History History: 1973 c. 179; 1977 c. 171; 1983 a. 189; 1993 a. 482; 1999 a. 9.

135.02 Annotation A cartage agreement between an air freight company and a trucking company did not create a “dealership” under this chapter. Kania v. Airborne Freight Corp., 99 Wis. 2d 746, 300 N.W.2d 63 (1981).

135.02 Annotation A manufacturer’s representative was not a “dealership.” Foerster, Inc. v. Atlas Metal Parts Co., 105 Wis. 2d 17, 313 N.W.2d 60 (1981).

135.02 Annotation This chapter applies exclusively to dealerships that do business within the geographic confines of the state. Swan Sales Corp. v. Jos. Schlitz Brewing Co., 126 Wis. 2d 16, 374 N.W.2d 640 (Ct. App. 1985).

135.02 Annotation Two guideposts for determining the existence of a “community of interest” under sub. (3) are: 1) a shared financial interest in the operation of the dealership or the marketing of a good or service; and 2) the degree of cooperation, coordination of activities, and sharing of common goals in the parties’ relationship. Ziegler Co., Inc. v. Rexnord, Inc., 139 Wis. 2d 593, 407 N.W.2d 873 (1987).

135.02 Annotation A substantial investment distinguishes a dealership from a typical vendee-vendor relationship; establishing a loss of future profits is not sufficient. Gunderjohn v. Loewen-America, Inc., 179 Wis. 2d 201, 507 N.W.2d 115 (Ct. App. 1993).

135.02 Annotation Contracts between an HMO and chiropractors for the provision of chiropractic services to HMO members did not did not establish the chiropractors as dealerships under this chapter. Bakke Chiropractic Clinic v. Physicians Plus Insurance, 215 Wis. 2d 605, 573 N.W.2d 542 (Ct. App.1997), 97-1169.

135.02 Annotation A dealership is a contract or agreement establishing a particular sort of commercial relationship that encompasses an extraordinary diverse set of business relationships not limited to the traditional franchise. The focus of the analysis must be on whether the business relationship can be said to be situated in the state after examining a broad set of factors outlined by the court. Baldewein Co. v. Tri-Clover, Inc., 2000 WI 20, 233 Wis. 2d 57, 606 N.W.2d 145, 99-0541. See also Baldewein Co. v. Tri-Clover, Inc., 183 F. Supp. 2d 1116 (2002).

135.02 Annotation Assuming without deciding that the size of the local economy relative to the cost of the putative dealer’s inventory of the grantor’s products is a relevant factor in determining the existence of a community of interest, that factor did not demonstrate the existence of a community of interest in this case. Moe v. Benelli U.S.A. Corp., 2007 WI App 254, 306 Wis. 2d 812, 743 N.W.2d 691, 06-1512.

135.02 Annotation Under sub. (2), a “dealer” is defined in this chapter to mean “a person who is a grantee of a dealership situated in this state.” Sub. (3) defines “dealership” in part as “contract or agreement . . . between 2 or more persons, by which a person is granted the right to sell or distribute goods or services . . . .” Sub. (6) defines “person” as “a natural person, partnership, joint venture, corporation or other entity” and a city is a municipal corporation. Under s. 990.01 (26), “person” includes all partnerships, associations, and bodies politic and corporate. The general term “corporation” presumptively should be read to include more specific types of corporations. Under the facts of this case, the relationships between the defendant city and the golf pro plaintiffs who operated its golf courses constituted “dealerships” under sub. (3). Benson v. City of Madison, 2017 WI 65, 376 Wis. 2d 35, 897 N.W.2d 16, 15-2366.

135.02 Annotation A wine grantor-dealer relationship is not included within the definition of a dealership in sub. (3) (b). Section 135.066 (2) provides the operative definition of intoxicating liquor for purposes of this chapter, and that definition explicitly excludes wine. Winebow, Inc. v. Capitol-Husting Co., Inc., 2018 WI 60, 381 Wis. 2d 732, 914 N.W.2d 631, 17-1595.

135.02 Annotation When an otherwise protected party transfers a protected interest to a third party, a “community of interest” is destroyed and the party removed from WFDL protection. Lakefield Telephone Co. v. Northern Telecom, Inc., 970 F.2d 392 (1992).

135.02 Annotation A community of interest exists when a large proportion of a dealer’s revenues are derived from the dealership, or when the alleged dealer has made sizable investments specialized in the grantor’s goods or services. Frieburg Farm Equip. v. Van Dale, Inc. 978 F.2d 395 (1992).

135.02 Annotation There is no “community of interest” in the sale of services not yet in existence when the availability of the services is dependent on the happening of an uncertain condition. Simos v. Embassy Suites, Inc., 983 F.2d 1404 (1993).

135.02 Annotation This chapter does not protect a manufacturer’s representative that lacks the unqualified authorization to sell or the authority to commit the manufacturer to a sale. Sales & Marketing Assoc., Inc. v. Huffy Corp., 57 F.3d 602 (1995).

135.02 Annotation If a grantor is losing substantial money under the dealership relationship, it may constitute “good cause” for changes in the contract, including termination. Morley-Murphy Co. v. Zenith Electronics, Inc., 142 F.3d 373 (1998).

135.02 Annotation This chapter specifies who may take advantage of its protections through the terms “dealer” and “dealership” and obviates the need to resort to conflict of laws principles. Investment in the state without in-state sales does not bring a party within the coverage of the chapter. Generac Corp. v. Caterpillar, Inc., 172 F.3d 971 (1999).

135.02 Annotation A manufacturer’s right of approval of its distributors’ subdistributors did not create a contractual relationship between the manufacturer and the subdistributor subject to this chapter. Praefke Auto Electric & Battery Co. v. Tecumseh Products Co., 255 F.3d 460 (2001).

135.02 Annotation The WFDL expresses no concern for the mission or other motivation underlying the sales in question; it asks only whether sales occur. Nor does the statute draw any distinction between for-profit and not-for-profit entities. The stated concern is with fair business relations, and it is beyond dispute that nonprofit corporations can be substantial businesses. It matters not whether the purported dealer would be called a “dealer” in everyday conversation; what matters is only how the statute defines the term. Girl Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, Inc., 549 F.3d 1079 (2008).

135.02 Annotation Affirmed in part, reversed in part. 646 F.3d 983 (2011).

135.02 Annotation For an entity to qualify as a dealership through the use of commercial symbols, more is required than the mere right to use a commercial symbol. Instead, a dealership must either put those symbols to such use that the public associates the dealer with the trademark or prominently display the logo as an implicit guarantee of quality. Such use by a dealership ties its fortunes to the reputation of the grantor, giving the grantor superior bargaining power that the grantor might use to exploit the dealer. Sufficiently substantial use of a grantor’s corporate symbol typically requires a purported dealer to make a substantial investment in the trademark. PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc., 941 F.3d 325 (2019).

135.02 Annotation The distinction between a dealer and a manufacturer’s representative is discussed. Al Bishop Agency, Inc. v. Lithonia-Division of National Services, Inc., 474 F. Supp. 828 (1979).

135.02 Annotation The employment relationship in question was not a “dealership.” O’Leary v. Sterling Extruder Corp., 533 F. Supp. 1205 (1982).

135.02 Annotation The plaintiff was not a “dealer” since money advanced to the company for fixtures and inventory was refundable. Moore v. Tandy Corp. Radio Shack Div., 631 F. Supp. 1037 (1986).

135.02 Annotation It is improper to determine whether under sub. (3) a “community of interest” exists by examining the effect termination has on a division of the plaintiff. United States v. Davis, 756 F. Supp. 1162 (1990).

135.02 Annotation The plaintiff’s investment in “goodwill” was not sufficient to afford it protection under this chapter. Team Electronics v. Apple Computer, 773 F. Supp. 153 (1991).

135.02 Annotation The “situated in this state” requirement under sub. (2) is satisfied as long as the dealership conducts business in Wisconsin. CSS-Wisconsin Office v. Houston Satellite Systems, 779 F. Supp. 979 (1991).

135.02 Annotation There is no “community of interest” under sub. (3) when there is an utter absence of “shared goals” or “cooperative coordinated efforts” between the parties. Cajan of Wisconsin v. Winston Furniture Co., 817 F. Supp 778 (1993).

135.02 Annotation Even if a person is granted a right to sell a product, the person is not a dealer unless that person actually sells the product. Smith v. Rainsoft, 848 F. Supp. 1413 (1994).

135.02 Annotation Under sub. (3), de minimus use of a trade name or mark is insufficient: there must be substantial investment in it. Satellite Receivers v. Household Bank, 922 F. Supp. 174 (1996).

135.02 Annotation A clause providing that the party who had drafted the contract and dictated all of its provisions was not a party to the contract was void, and that party was a grantor of a dealership. Praefke Auto Electric & Battery Co. v. Tecumseh Products, Co., 110 F. Supp. 2d 899 (2000).

135.02 Annotation Nothing in the text or legislative history of this chapter suggests that the legislature intended to preclude co-ops from being dealers. Sub. (2) defines a dealer as “a person who is a grantee of a dealership.” Sub. (6) defines a person as a “corporation or other entity.” Under s. 185.02, a co-op is “an association incorporated” in the state. Thus a co-op is a corporation or other entity within sub. (6) and subject to this chapter. Builder’s World, Inc. v. Marvin Lumber & Cedar, Inc., 482 F. Supp. 2d 1065 (2007).

135.02 Annotation In determining whether a plaintiff has a right to sell under the WFDL, the most important factor is the dealer’s ability to transfer the product itself, or title to the product, or commit the grantor to a transaction at the moment of the agreement to sell. A manufacturer’s representative, defined as an independent contractor who solicits orders for a manufacturer’s product from potential customers and is paid a commission on resulting sales, is a position consistently excluded from the WFDL. Northland Sales, Inc. v. Maax Corp., 556 F. Supp. 2d 928 (2008). See also PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc., 941 F.3d 325 (2019).

135.02 Annotation In search of a dealership definition: The teachings of Bush and Ziegler. Carter & Kendall. WBB Apr. 1988.

135.02 Annotation The Wisconsin Fair Dealership Law’s Territorial Imperative. Keeler. Wis. Law. Aug. 1999.

135.025 135.025 Purposes; rules of construction; variation by contract.

135.025(1) (1) This chapter shall be liberally construed and applied to promote its underlying remedial purposes and policies.

135.025(2) (2) The underlying purposes and policies of this chapter are:

135.025(2)(a) (a) To promote the compelling interest of the public in fair business relations between dealers and grantors, and in the continuation of dealerships on a fair basis;

135.025(2)(b) (b) To protect dealers against unfair treatment by grantors, who inherently have superior economic power and superior bargaining power in the negotiation of dealerships;

135.025(2)(c) (c) To provide dealers with rights and remedies in addition to those existing by contract or common law;

135.025(2)(d) (d) To govern all dealerships, including any renewals or amendments, to the full extent consistent with the constitutions of this state and the United States.

135.025(3) (3) The effect of this chapter may not be varied by contract or agreement. Any contract or agreement purporting to do so is void and unenforceable to that extent only.

135.025 History History: 1977 c. 171.

135.025 Annotation The choice of law clause in a dealership agreement was unenforceable. Bush v. National School Studios, 139 Wis. 2d 635, 407 N.W.2d 883 (1987).

135.025 Annotation Federal law required the enforcement of an arbitration clause even though that clause did not provide the relief guaranteed by this chapter, contrary to this section and s. 135.05. Madison Beauty Supply v. Helene Curtis, 167 Wis. 2d 237, 481 N.W.2d 644 (Ct. App. 1992).

135.025 Annotation A forum-selection clause in a dealership agreement was not freely bargained for and was rendered ineffective under sub. (2) (b). Cutter v. Scott & Fetzer Co., 510 F. Supp. 905 (1981).

135.025 Annotation The relinquishment of territory and the signing of a guaranty agreement were changes insufficient to bring a relationship under this law. Rochester v. Royal Appliance Mfg. Co., 569 F. Supp. 736 (1983).

135.03 135.03 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.