Reference no: EM133312232

Assignment:

Facts: In order to establish that a business is a "franchise" qualifying for protection under the Illinois Franchise Disclosure Act, the business must demonstrate that it paid a franchise fee either directly or indirectly to the "franchisor" to enter the business. To -Am Equipment Company believed it had paid an implied fee in excess of $500 to enter the forklift business as a dealer for Mitsubishi- Caterpillar Forklift of America (MCFA) by paying $1,658 for service manuals, which MCFA had commanded it to posses. MCFA denied that it had change To- Am a franchise fee and asserted that it is not obligated to To-Am under the state Franchise Disclosure Act.

Decision: Judgement for To-Am. A required purchase at a price exceeding the item's value is an indirect franchise fee. A franchisor of rabbits' feet would be indifferent between receiving a franchise ''fee'' of $1,000 and a price of $1 for a rabbit's foot, which was the franchisor's cost, or a "price" of $1,0001 for a rabbits's foot it cost $1 for the franchisor supply. The evidence supported the jury's finding that To-Am paid a fee in excess of $500 for the right to enter the business and is therefore protected under the Franchise Disclosure Act. [To-Am Equipment Co. v Mitsubishi- Caterpillar Forklift of America, 953 F Supp 987 (ND I11 1997)]

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