Q. As a Bangor Daily News reader, I look forward to your … column. I’ve wondered about something for a while and hoped you could clarify this topic: How does it work that some businesses with national affiliations (for example, in Bangor: Pearle Vision, Little Caesars, Quiznos) will not honor coupons or advertisements that their company nationally promotes? They say they are not a participating franchise, and do not honor special offers. It seems to me that they benefit from the national advertising and name recognition that their company offers, but at the same time also benefit from choosing not to participate in promotions.
A. Your question seems like a simple one, but as with most things legal, the subject is more complicated than you would think. It involves the intersection of franchise law (essentially, contract law), the law of business corporations and the law of consumer protection.
Franchise contracts are complex agreements in which a franchisee pays for the right (a license) to provide a product or service, frequently under the name of a nationally known brand or trademark. In addition to the right to sell the product or service, the franchise agreement often will provide other benefits to the franchisee, in-cluding advertising and promotional efforts.
A franchise is frequently, if not always, a separate entity, formed under the laws of the state in which it operates. As such, it has a legal existence separate from its owner and is free to engage and transact in business just like other corporate entities.
The local franchise, as well as the national company, are free to use the airwaves to promote their product. However, in the absence of an agreement between the two companies (national and local), the national company cannot bind the local company and the local company cannot bind the national company. They are separate. Thus in advertising, almost always, we are informed that “participation may vary” or some such other disclosure to put the public on notice that the national company is not speaking for every local franchise.
However, in certain circumstances, advertising campaigns may include representations that mislead the public. In those circumstances, there are state and federal statutes to protect against false and deceptive advertising. Under the Maine Unfair Trade Practices Act, an act or practice is deceptive if it is a material representation, omission, act or practice that is likely to mislead consumers acting reasonably under the circumstances. A material representation is one that involves information that is important to consumers and likely to affect their choice of a product. To be deceptive, it is not necessary to prove that the person or entity making the representa-tion intended to deceive.
Every case is different. It is necessary to look at the facts of each case carefully, to see if they support a claim for unfair trade practices. The statute was intentionally drafted broadly in an effort to protect consumers. It has been an effective tool in maintaining the balance between healthy commerce and consumer protection.
So, how do you know if you have a case worth pursuing? Is there a bright line test, as lawyers would say, to determine if you have a good case? The level of damages is important but it is not the only question; issues of principle (the rightness or wrongness of what happened), cost, proof, evidence, time, attorney’s fees and incon-venience all figure into the calculus. Don’t disregard a hunch. If you feel that an advertising campaign may have crossed the line, consult an attorney.
This column is a service of the Lawyer Referral and Information Service of the Maine State Bar Association. Its contents are a general response to the question and do not constitute legal advice. Questions are welcome. E-mail AAL@mainebar.org, describe your question and note you are a BDN reader.
Written questions mailed to “Ask a Lawyer,” Bangor Daily News, P.O. Box 1329, Bangor, Maine, 04402-1329 will be forwarded to the LRIS.