The Wisconsin Fair Dealership Law Enters Its 50th Year: What Is a Dealership?

The Wisconsin Fair Dealership Law is a robust trade law that prohibits “grantors” from terminating, failing to renew, cancelling, or substantially changing “dealerships” without good cause, proper notice, and an opportunity to cure. With a few select exceptions, the WFDL applies generally, and a wide range of businesses have successfully claimed protection under the statute, including beauty product wholesalers, lawn and farm implement distributors, and even municipal golf professionals. To be considered a protected “dealership,” a business must demonstrate that there is:

• “A contract or agreement, either expressed or implied, whether oral or written, between 2 or more persons”;
• “a person…granted the right to sell or distribute goods or services, or use a trade name, trademark, service mark, logotype, advertising or other commercial symbol,”; and
• “a community of interest in the business of offering, selling or distributing goods or services at wholesale, retail, by lease, agreement or otherwise.”

Wis. Stat. § 135.02(3)(a).

Whether WFDL protection attaches to a particular relationship often hinges on a vague “community of interest” standard that the Wisconsin Supreme Court has left pliant to encompass “an extraordinarily diverse set of business relationships.” Ziegler Co. v. Rexnord, Inc., 139 Wis. 2d 593, 602, 407 N.W.2d 873 (1987). In Ziegler, the Wisconsin Supreme Court established two guideposts—“continuing financial interest” and “interdependence”—to help courts assess whether a community of interest exists. A “continuing financial interest” is the “shared financial interest in the operation of the dealership or marketing of a good or service,” whereas “interdependence” is the “degree to which the dealer and grantor cooperate, coordinate their activities and share common goals.” Id. at 604. A community of interest exists when these guideposts reveal that the purported dealer would suffer significant economic harm were the grantor to end or substantially change the relationship. Id.

To aid courts in assessing whether the guideposts are established, the Ziegler Court identified ten non-exclusive facets:

1. how long the parties have dealt with each other;
2. the extent and nature of the obligations imposed on the parties in the contract or agreement between them;
3. what percentage of time or revenue the alleged dealer devotes to the alleged grantor’s products or services;
4. what percentage of the gross proceeds or profits of the alleged dealer derives from the alleged grantor’s products or services;
5. the extent and nature of the alleged grantor’s grant of territory to the alleged dealer;
6. the extent and nature of the alleged dealer’s uses of the alleged grantor’s proprietary marks (such as trademarks or logos);
7. the extent and nature of the alleged dealer’s financial investment in inventory, facilities, and good will of the alleged dealership;
8. the personnel which the alleged dealer devotes to the alleged dealership;
9. how much the alleged dealer spends on advertising or promotional expenditures for the alleged grantor’s products or services; and
10. the extent and nature of any supplementary services provided by the alleged dealer to consumers of the alleged grantor’s products or services.

Courts commonly analyze all of the facets in assessing whether a community of interest exists. That said, no single facet is conclusive, and how much weight a particular facet deserves often turns on the relationship between the parties and the industry in which they operate. Nor is the analysis as simple as tallying whether more facets favor a community of interest or militate against one. Whether a community of interest exists is ultimately a fact-intensive inquiry that requires a comprehensive analysis of the parties’ relationship. It leaves significant discretion to courts. And, to complicate matters even further, the Wisconsin Supreme Court a few years ago made clear that courts are not obligated to consider all or any of the facets.

It is, therefore, important for parties at all levels of a distribution network to consult with experienced counsel regarding whether a protectable relationship exists. For over 50 years, Stafford Rosenbaum LLP’s Dealership and Franchise Law Team has assisted grantors and dealers navigate their obligations under the WFDL and the franchise and dealership laws of other states. As a full-service law firm, we are uniquely positioned to advise, counsel, and problem-solve for grantors and dealers in both transactional and litigation matters, and we pride ourselves on our ability to find innovative solutions for the most complex relationships.

Stafford Rosenbaum LLP is a full-service law firm with two convenient office locations in Madison and Milwaukee, Wisconsin. Over 140 years of dedication to businesses, governments, nonprofits, and individuals has proven that effective client communication continues to be the heart of our practice.