Salkeld v. V.R. Business Brokers

548 N.E.2d 1151, 192 Ill. App. 3d 663, 139 Ill. Dec. 595, 1989 Ill. App. LEXIS 1976
CourtAppellate Court of Illinois
DecidedDecember 29, 1989
Docket2-89-0159
StatusPublished
Cited by29 cases

This text of 548 N.E.2d 1151 (Salkeld v. V.R. Business Brokers) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Salkeld v. V.R. Business Brokers, 548 N.E.2d 1151, 192 Ill. App. 3d 663, 139 Ill. Dec. 595, 1989 Ill. App. LEXIS 1976 (Ill. Ct. App. 1989).

Opinion

JUSTICE INGLIS

delivered the opinion of the court:

Plaintiff, Melvin R Salkeld, Jr., appeals from an order of the circuit court of Kane County granting the motion of defendants, V.R Business Brokers, Inc., The Buffer Zone, Inc., American Triad Corp., Innovative Concepts, Bantam Investment Group (Bantam), Joseph P.S. Licari, and Frank and Robert Contaldo. The motion sought a directed verdict on the jury counts and a finding for defendants on the nonjury counts. (A chart diagramming the corporate structure of the parties in this case can be found in Appendix A.) Defendants James T. Haley, Sharon S. Weyland, and William Skala were dismissed from the case before trial and are not parties on appeal. Plaintiff contends that the trial court erred when it determined that (1) the Franchise Disclosure Act (Franchise Act) (Ill. Rev. Stat. 1985, ch. 121xk, par. 701 et seq.) did not apply to the sublicensing agreement at issue; (2) no jury verdict could possibly stand as to plaintiff’s allegations of common-law fraud; and (3) there was no violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (Ill. Rev. Stat. 1985, ch. 121 Va, par. 261 et seq.). We affirm in part, reverse in part and remand.

On November 16, 1987, plaintiff filed a seven-count complaint in the circuit court of Kane County. Count I alleged a violation of the Franchise Act, counts II through V alleged common-law fraud, and counts VI and VII alleged a violation of the Consumer Fraud Act. The events leading to plaintiff’s complaint are summarized as follows.

In May 1986, plaintiff responded to an advertisement in the Chicago Tribune which sought persons to sell and distribute a new product, Cocktails Naturally, in a specific sales territory in Illinois. Plaintiff met with a Bantam account executive and Joseph Licari, at which details of the product and licensing agreements were discussed. .Plaintiff stated that he was also given a document titled "SALES MANUAL” (manual) at one of the meetings. The manual described the product in detail and promoted the product’s “competitive edge,” namely price, quality and convenience. The manual further stated that “[tjhere is actually no competition for Cocktails Naturally and it’s unique system.” In addition, the manual described how the company would provide “table tents, posters, drink menus, drink recipe cards and the original pumps without charge,” would train the bartenders on how to use the product, and would provide a rack to organize the flavors behind the bar.

Plaintiff was told at the meetings that the product was “selling well” and that Innovative Concepts would assist him in hiring and training persons to sell the product for him. Plaintiff also received samples of the product to take home and try out. Plaintiff stated that he was impressed with the product.

Plaintiff was also given a copy of a document titled “INNOVATIVE CONCEPTS SUB-LICENSEE PROGRAM.” This document highlighted the operating procedures of the company, including the support that each sublicensee would receive from Innovative Concepts. The document described the support as follows:

“The company assists in all area of marketing. We provide sub-licensee training, training (and hiring) of the sales staff, advertising and promotional material, sponsorship of sales contests (March ’86 contest winner receives 8 days in Hawaii), National advertising, trade shows, corporate sales and much more.
In short, we are with you every step of the way.”

The document also mentioned the absence of competition and gave projections of income based in part on the success rate of salespersons across the country.

Plaintiff also stated that he received a copy of a financial statement for Innovative Concepts, dated May 31, 1986. The statement showed sales of $110,390 for the first five months of 1986, with a net profit of $33,010.

On June 5, 1986, plaintiff and defendant Innovative Concepts, a division of defendant The Buffer Zone, Inc., entered into a sublicensing agreement (agreement). The agreement stated that Innovative Concepts had the authority to grant plaintiff the right to use certain “trademarks, including COCKTAILS NATURALLY which have been registered with the Patent Office of the United States.” The agreement provided plaintiff with a specific sales territory, and also committed Innovative Concepts to providing plaintiff with the advice and guidance necessary to run his business. Plaintiff agreed to pay $22,500 to Innovative Concepts, of which $7,500 was paid to defendant Bantam (acting as the salesbroker). The term of the agreement was 20 years.

On June 6, 1986, plaintiff gave his employer notice of his intention to resign and start his own business. In early July 1986, plaintiff began working with his new business. However, plaintiff suffered a heart attack one week after starting the business. He returned to full-time work approximately two weeks later. Plaintiff testified that he made approximately 150 to 170 sales calls during July, August and September, but managed to sell only $900 worth of Cocktails Naturally.

Plaintiff stated that he made several complaints to Licari regarding the lack of sales and support. Plaintiff stated that Licari arranged for a lx/2-hour meeting between plaintiff and a California salesman of the product. However, this was the only “support” that Licari provided to plaintiff.

Plaintiff further stated that several of the representations made to him before he signed the agreement proved to be untrue. Plaintiff testified that there was direct competition to Cocktails Naturally, namely a product from the Lani-Kai Company. Plaintiff stated that Lani-Kai sold a similar product for $50-per-case retail, while plaintiff paid $49-per-case wholesale for Cocktails Naturally. Plaintiff stated that the retail price for Cocktails Naturally was $72 per case. In addition, Licari also began to market a competing line of products himself. Plaintiff further stated that there were no sales or marketing systems to assist him in his business, and that he never received any trained personnel from Innovative Concepts. There were no national advertising campaigns, and very little promotional support. Plaintiff also requested documentation of any trademarks, trade names, or patents that were described in the agreement. However, Licari stated that “these documents don’t exist.”

On cross-examination, plaintiff testified that he also began to market a line of Fosdick turkeys in September 1986. Plaintiff stated that he devoted “part of [his] efforts” to selling the turkeys, but also continued to try to sell the Cocktails Naturally products.

Defendant Joseph Licari testified that plaintiff did not buy a Cocktails Naturally distribution company, but instead bought the right to have Licari supply him with frozen cocktail mix in the future. Licari stated:

“Mr. Salkeld [plaintiff] bought a business from me that had 17 existing accounts. What he bought from me was the right to have [the] product supplied to him in the future. He did not buy a Cocktails Naturally distribution system or a company, whatever you’d like to call it. He bought existing accounts, an existing business.”

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Bluebook (online)
548 N.E.2d 1151, 192 Ill. App. 3d 663, 139 Ill. Dec. 595, 1989 Ill. App. LEXIS 1976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salkeld-v-vr-business-brokers-illappct-1989.