The protections conferred by the Wisconsin Fair Dealership Law extend beyond good cause. The WFDL expressly requires that a grantor issue a dealer proper notice with an opportunity to cure prior to terminating, not renewing, cancelling, or substantially changing the dealership. As discussed in our previous post, what constitutes proper notice turns, in part, on the underlying issues that motivate the grantor’s effort to change or discontinue relations with the dealer. But regardless, in most circumstances, a grantor must provide its dealer (1) written notice, (2) at least 90 days prior to the termination, (3) setting forth all the reasons for termination, and (4) providing the dealer with an opportunity to cure. See Wis. Stat. §135.04.[1] In essence, the WFDL requires that the grantor formally present its decision to take an adverse action to the dealer and give a roadmap for how the dealer may rectify the issue(s) and continue the relationship on its prior terms.

Ninety Days’ Written Notice

The first three elements are fairly straightforward but are commonly ignored or completely overlooked. In plain terms, the WFDL requires that a grantor provide 90 days’ written notice detailing the reasons for termination, nonrenewal, cancelation, or substantial changes to the dealership. See Wis. Stat. § 135.04. While most grantors provide written notice of termination, they often stumble on the length of notice and the details for termination.

When a grantor has an issue with a dealer, it commonly seeks to terminate the relationship as soon as feasibly possible. In pursuit of a quick conclusion to the parties’ relationship, the grantor will tend to rely on the contract’s notice and termination provisions (if applicable) or industry practice to determine what notice it should issue—in both instances, it would be exceedingly rare for the grantor to articulate in detail the rationale for the termination. While ordinarily either approach would be sound, the WFDL supersedes any contractual provision or industry custom dictating the terms of termination, and the WFDL provides that its more stringent requirements must be followed. Failure to comply with any of these notice requirements is an independent violation of the WFDL, allowing the dealer to pursue injunctive relief, damages, or both. See Lindevig v. Dairy Equip. Co., 150 Wis. 2d 731, 736-37, 442 N.W.2d 504 (Ct. App. 1989).

Opportunity to Cure

The dealer’s right to cure is another critical protection afforded under the WFDL. Even where the grantor has good cause and provides proper notice to terminate the relationship, the statute guarantees the dealer an opportunity to rectify its deficiencies—and thereby perpetuate the dealership—within 60 days of receiving the compliant notice. The mechanics of this cure period must be spelled out in the notice itself, and the requested cure must be reasonably achievable. A cure is illusory if the dealer does not have a legitimate chance to correct its purported deficiencies in the time and manner allotted. And here, too, a grantor’s failure to offer a legitimate opportunity to cure constitutes an independent violation of the WFDL that triggers the dealer’s remedies under the statute. See Al Bishop Agency, Inc. v. Lithonia-Div. of Nat. Serv. Indus., Inc., 474 F. Supp. 828 (E.D. Wis. 1979)

Issuing proper notice and an opportunity to cure is important for dealer and grantor alike. From the dealer’s perspective, proper notice and an opportunity to cure provide a shot at redemption and an ability to continue the parties’ relationship. By contrast, grantors must resist the natural impulse to terminate a relationship as swiftly as possible and instead must ensure that any termination notice complies with the statutory requirements. Failure to do so could foil the grantor’s plans and result in litigation that the grantor is almost certain to lose, regardless of the underlying merits of its complaints against the dealer.

[1] There are specific circumstances in which the WFDL allows shorter notice periods. These include where termination is due to the dealer’s insolvency or failure to pay amounts owed under the dealership. See Wis. Stat. § 135.04.

The post The Wisconsin Fair Dealership Law Enters Its 50th Year: Notice and Cure first appeared on Stafford Rosenbaum LLP.