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Brenkman v. Belmont Marketing

OPINION FILED AUGUST 29, 1980.

GUY L. BRENKMAN, PLAINTIFF AND COUNTERDEFENDANT-APPELLEE,

v.

BELMONT MARKETING, INC., ET AL., DEFENDANTS. — (BELMONT MARKETING, INC., DEFENDANT-COUNTERPLAINTIFF AND THIRD-PARTY PLAINTIFF-APPELLANT,

v.

AMERICAN BUYERS CLUB, INC., ET AL., THIRD-PARTY DEFENDANTS.)



APPEAL from the Circuit Court of Peoria County; the Hon. STEPHEN J. COVEY, Judge, presiding.

MR. JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:

In a complaint filed in the Circuit Court of Peoria County, the plaintiff, Guy L. Brenkman, sought recovery pursuant to the Franchise Disclosure Act (Ill. Rev. Stat. 1977, ch. 121 1/2, par. 701 et seq.). After a hearing on plaintiff's motion for summary judgment as to count I of the complaint, and after reviewing affidavits and documents filed in support of and in opposition to the motion, the trial judge entered judgment in the sum of $15,000 for the plaintiff and against the defendants, Belmont Marketing, Inc., David D. Prince, Frederick K. Prince, and Gregory Gordon. Further, the trial judge rescinded the agreement which is the subject of plaintiff's suit, dismissed with prejudice Belmont Marketing's counterpetition, and awarded attorney fees to be paid by the defendants to plaintiff. This appeal ensued.

The events leading to plaintiff's complaint are traced to July 1978, when plaintiff first discussed with Frederick K. Prince the right to "manage" the American Buyers Club in west-central Illinois. The "manager" of a buyer's club sells memberships in the club to the public. With the payment of a membership fee comes the entitlement to purchase household furnishings, appliances and other consumer goods at bargain prices.

Frederick Prince referred plaintiff to Belmont Marketing and its agents, David D. Prince and Gregory Gordon. After discussions with all these parties, plaintiff and Belmont Marketing executed an agreement dated August 9, 1978, wherein Belmont Marketing assigned to plaintiff all of Belmont's interest in a "Management Agreement" between it and American Buyers Club, Inc. That "Management Agreement," which was also dated August 9, 1978, granted the exclusive right to sell American Buyers Club memberships in a four-county area in accordance with the general policy manual issued by American Buyers Club, Inc. The same "Management Agreement" obligated the "manager" to accept and fill members' orders for merchandise and to pay an "override" fee to American Buyers Club, Inc., for each membership sold. As consideration for the assignment of its rights and obligations under the "Management Agreement," Belmont Marketing was to receive $45,000 from the plaintiff. At the time suit was filed $15,000 of that total amount had actually been paid.

Later in 1978 plaintiff first was advised that the assignment from Belmont might come within the purview of the Franchise Disclosure Act. In accordance with the Act, and after apparently having reconsidered his entry into the Buyers Club business, plaintiff gave the statutory notice of his intent to rescind the assignment agreement. (Ill. Rev. Stat. 1977, ch. 121 1/2, par. 721(2)(b).) When Belmont Marketing failed to voluntarily rescind the assignment and return plaintiff's $15,000 consideration, this suit was filed.

It is plaintiff's contention in count I of his complaint that the "Management Agreement" constitutes a franchise within the statutory definition (Ill. Rev. Stat. 1977, ch. 121 1/2, par. 703(1)), that David D. Prince, Frederick K. Prince and Gregory Gordon negotiated for and on behalf of Belmont Marketing to assign that agreement to plaintiff, and that the assignment was in violation of the required disclosure provisions of the Act (Ill. Rev. Stat. 1977, ch. 121 1/2, par. 704(2)). Plaintiff sought a return of his consideration, an award of $3,000 in damages, plus reasonable attorney fees.

In their joint answer, the four defendants deny that the "Management Agreement" is a franchise as contemplated by the Illinois statute. Additionally, by way of counterclaim, defendant Belmont Marketing alleges numerous violations of the assignment agreement for which it requests enforcement against the plaintiff of the agreement's liquidated damage clause.

• 1 As we noted at the outset, the trial judge found no genuine issue as to any material fact in count I of plaintiff's complaint. Therefore, the court below ordered rescission of the assignment agreement and awarded judgment to plaintiff for $15,000 and attorney fees in the sum of $3,000. Defendant's counterclaim was dismissed by the same order. Only defendant Belmont Marketing appeals, but the status of the three individual defendants requires some comment. On December 26, 1979, a notice of appeal was filed in which Belmont Marketing was the only named appellant. The appellant's brief on appeal sought review on behalf of the individual defendants as well as on behalf of Belmont Marketing. Subsequent to the filing of that brief, a motion for leave to file an amended notice of appeal was offered here. Our order of May 14, 1980, denied that motion as required by the prevailing interpretation of Supreme Court Rule 303. (See, e.g., Block v. Blue Shield Plan of Illinois Medical Service, Inc. (1974), 24 Ill. App.3d 751, 320 N.E.2d 576.) After the expiration of the initial 30-day period for filing notice of appeal, and the additional 30-day safety-valve period allowed by Supreme Court Rule 303(e) (Ill. Rev. Stat. 1977, ch. 110A, par. 303(e)), the appellate court is without jurisdiction to permit further amendments of the notice of appeal. (Block v. Blue Shield Plan of Illinois Medical Service, Inc.) Taken with this case was a motion by plaintiff seeking to strike portions of defendant's brief. In light of our determination that only Belmont Marketing is properly an appellant here, we grant plaintiff's motion to strike as it relates to those portions of defendant's brief seeking review of the judgments against the three individual defendants.

On appeal Belmont Marketing urges us to hold that the Franchise Disclosure Act cannot, as a matter of summary judgment, be said to apply to these facts. It is argued that the affidavits submitted by defendant raise an issue as to whether a franchiser/franchisee relationship was intended by the parties. We note that the definition of franchise is explicitly set forth in the Act:

"(1) `Franchise' means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:

(a) a franchisee is granted the right to engage in the business of offering, selling, or distributing goods or services, under a marketing plan or system prescribed or suggested in substantial part by a franchisor; and

(b) the operation of the franchisee's business pursuant to such plan or system is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate; and

(c) the person granted the right to engage in such business is required to pay, directly or indirectly, a franchise fee of $100.00 or more;

Provided that this Act shall not apply to any franchised business which is operated by the franchisee on the premises of the franchisor or subfranchisor as long as such franchised business is incidental to the business conducted by the franchisor or subfranchisor at such premises, including, without limitation, ...


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