Opinion ID: 623754
Heading Depth: 1
Heading Rank: 7

Heading: Whether Shelton and MoBev engaged in the same community of interest

Text: In the absence of any discussion by the Missouri courts regarding the community of interest requirement, for guidance we consider interpretations of similar statutes. Looking again to interpretation of the very similar New Jersey franchise law: The community of interest signalling a franchise relationship does not imply a sharing of profits. Rather it is based on the complex of mutual and continuing advantages which induced the franchisor to reach his ultimate consumer through entities other than his own which, although legally separate, are nevertheless economically dependent upon him. Neptune, 462 A.2d at 600-01 (internal citation omitted). From Neptune and its progeny, the Third Circuit distilled the following two-part test for determining whether a community of interest exists: (1) the distributor's investments must have been substantially franchise-specific, and (2) the distributor must have been required to make these investments by the parties' agreement or the nature of the business. Cooper Distrib. Co. v. Amana Refrigeration, Inc., 63 F.3d 262, 269 (3d Cir.1995) (internal quotation and citation omitted). Courts interpreting the New Jersey statute have in turn sought guidance from the very similar Wisconsin Fair Dealership Law (WFDL), see Neptune, 462 A.2d at 599-600, under which a community of interest may exist under one of two circumstances: (1) when a large proportion of an alleged dealer's revenues are derived from the dealership, or (2) when the alleged dealer has made sizable investments (in, for example, fixed assets, inventory, advertising, training) specialized in some way to the grantor's goods or services, and hence not fully recoverable upon termination. [6] Frieburg Farm Equip., Inc. v. Van Dale, Inc., 978 F.2d 395, 399 (7th Cir.1992) (citations omitted); see Wis. Stat. § 135.02 (defining [c]ommunity of interest as a continuing financial interest between the grantor and grantee in either the operation of the dealership business or the marketing of such goods or services). Given the strong similarities between the franchise definitions in Missouri, New Jersey, and Wisconsin, we believe that the Missouri Supreme Court would determine the existence of a community of interest under a standard commensurate with those articulated by the Third Circuit in Cooper Distributing and the Seventh Circuit in Frieburg. Applying either the Cooper Distributing or Frieburg standard, no community of interest existed between the parties in the marketing of Shelton's products. MoBev's sales of Shelton's products never exceeded 1.16% of MoBev's annual sales throughout the parties' relationship, [7] MoBev did not use Shelton's name in marketing during the parties' relationship, and MoBev was not required to makeand did not makeany sizeable investments particular to Shelton. In light of these circumstances, MoBev's investments cannot reasonably be deemed substantially franchise-specific, and MoBev cannot reasonably be deemed economically dependent on Shelton or to have unequal bargaining power in the relationship. In sum, then, we conclude that Shelton and MoBev's relationship was not that of franchisor-franchisee under Missouri law.