Opinion ID: 1273415
Heading Depth: 2
Heading Rank: 1

Heading: Defendant Was in Control of the Franchisor

Text: [2] At the time of the alleged offense, the defendant was neither an officer nor a director of the company. The definition of a person in control of a franchisor has not been previously considered by this court. If the statutory language is unambiguous, the court must arrive at the intention of the legislature by giving the language its ordinary and accepted meaning. The popular or reasonable import of words should be given effect, if possible. [8] [3] It is significant that the class of persons subject to the legislative proscription is not confined to the franchisor alone. Any franchisor or any person in control of the franchisor is subject to sec. 553.21 (2). The criminal penalties of sec. 553.52 (1) apply to any person who violates the chapter or any rule made under it or any order of which he had notice. It is not limited to one designated as a franchisor. It is clear that the legislature intended that the statute cover those involved with the franchise and not merely the one designated as the licensed franchisor. The Legislature's declaration of intent is found in C. 241, Laws of 1971 p. 747, which reads in part: Wisconsin franchises have suffered substantial losses where the franchisor or his representative has not provided full and complete information regarding the franchisor-franchisee relationship, the details of tile contract between the franchisor and franchisee and the prior business experience of the franchisor. (2) ... Further it is the intent of this act to prohibit the sale of franchises where such sale would lead to fraud or a likelihood that the franchisor's promise would not be fulfilled, and to protect the franchisee. (Emphasis supplied.) [4] At the preliminary hearing, the evidence was quite clear that the defendant was in fact in control of this corporation, if control is given a plain meaning.The hearing also established that the Commissioner of securities ordered the creation of an escrow account to protect the franchisee pursuant to the authority given to the Commissioner by the statute. At the time that order was issued, the defendant was the president of the franchisor and in addition, he admitted actual knowledge of that escrow order. This was established at the preliminary hearing by introduction by the defendant's former testimony at a proceeding held by the office of the Commissioner of Securities and was verified at the trial by the defendant's testimony there. Subsequently the defendant relinquished his former position in the company but continued to solicit franchises, call meetings, tell the corporate president what to do and write checks on the company checking account. His activities are of the type which are within the purview of the statute.