35-1 Sp12

BSAD 305
Chapter 35
Sole Proprietorships and Franchises


I. Sole Proprietorships

A. Advantages
No sharing of profits
Ease of organization
Self determination
Schedule C tax return for individuals

B. Disadvantages
Unlimited liability
No continuity on death
Difficult to raise capital
No separate entity

II. Franchises

A. Types
McDonalds type chain style
Ford/Chevy/Chrysler dealer-distributor
Coca Cola manufacturing arrangement

B. Federal Franchise Laws
FTC Federal Trade Commission
Disclosure statement required
Content of contract
Warning re risks
Gasoline Franchises Petroleum Marketing Practices Act
Automobile dealers Auto Dealers Franchise Act

C. Wisconsin Franchise Law
Chapter 135 Dealership Practices
Wisconsin Fair Dealership Law 1974 (WFDL)
Community of Interest concept factors
Shared financial interest
Degree of control
% of dealers revenue from dealership
Sizable investment by dealer (franchisee)
Dealer = franchisee, or grantee
Grantor = franchisor
Dealership = the dealers business
No cancellation or alteration of the dealership without good cause
35-2 Sp12

Notices of termination or change
90 days prior written notice of cancellation, termination, nonrenewal or
substantial change in competitive circumstances
Reasons specified
60 days to shape up
90 days doesnt apply if dealer is insolvent
10 days notice for nonpayment to franchisor
Repurchase of inventories at franchisors option
Franchisor violation damages plus costs and attorney fees & injunction
Temporary injunctions irreparable injury on any violation by franchisor
Booze dealerships 3 tier system
WFDL does not apply to
Motor vehicle dealers
Insurance business
Door to door marketing

III. Other Trade Regulation Laws
Chapter 132 Trademarks
Chapter 133 Trusts and Monopolies
Contracts and conspiracies in restraint of trade
Monopolizing, or attempts to monopolize
Fines = $50,000 to $100,000
Price discrimination intent of injuring or destroying competition
Secret rebates injuring a competitor or tending to destroy competition
Interlocking directorates - $100,000 in capital, surplus and undivided profits
Unionization is not a restraint of trade
Collective bargaining permitted
Illegal contracts are void
Treble damages (3X) 6 year S/L
Chapter 134 Miscellaneous Trade Regulations
Agreements to willfully injure a business or reputation are illegal
Blacklisting to prevent employment
Blacklisting to procure discharge
Blacklisting after discharge
Yellow dog contracts
Threats to intimidate a person from working
Bribery of agents
Invading right to select insurer or insurance agent by lenders or real estate agents
Misbranding of gold and silver articles
Restrictions on sale or gift of tobacco products
Antique dealer regulation
Pawn broker regulation
Unsolicited fax messages
1 page, 9 pm to 6 am only
Previous business relationship
Name of sender on the document
35-3 Sp12

Not after leave me alone message
$500 fine
Chapter 134 Uniform Trade Secrets Act
Trade secret = information, including a formula, pattern, compilation, program,
device, method, or technique used in business
Information has independent economic value from being not generally known,
and owner took reasonable effort to maintain the secrecy of the information
Misappropriation of trade secrets = theft
Injunctive relief available
Damages both actual loss and unjust enrichment
Punitive damages if violation is willful and malicious



The End