A Must Read for Those Exporting to Missouri – 8th Circuit Rules Law Protecting Wholesalers Not Applicable Where Requirements Not Met
In an informative opinion for anyone shipping their product to Missouri for distribution by a wholesaler, the 8th Circuit Court of Appeals has rejected a wholesaler’s attempt to avail itself of the Missouri franchise protection statutes for that second tier of the three-tier system based on the fact that the parties didn’t actually create a franchise agreement that would allow for the protections because the wholesaler didn’t get a trademark license with its distribution agreement.
Anyone wanting to avoid the protectionist statutes that would keep you from changing distributors in Missouri will want to be familiar with this opinion as a way to possibly avoid Section 407.413 of the Missouri Revised Statutes which has provisions that would, like many states, protect the wholesaler unless the amorphous “good cause” can be shown. Two important provisions of this section read as follows:
2. Notwithstanding the terms, provisions and conditions of any franchise, no supplier shall unilaterally terminate or refuse to continue or change substantially the condition of any franchise with the wholesaler unless the supplier has first established good cause for such termination, noncontinuance or change.
3. Any wholesaler may bring an action in a court of competent jurisdiction against a supplier for violation of any of the provisions of this section and may recover damages sustained by such wholesaler together with the costs of the action and reasonable attorney’s fees.