Plaintiff alleged that the relationship was a franchise
The Plaintiff, a watch retail dealer, sued Swatch following a twenty year relationship. In the complaint Plaintiff alleged that the relationship was a franchise and thereby subject to the New Jersey Franchise Practices Act, N.J.S.A. §56:10-3. Plaintiff argued that the franchise relationship was established by several writings, which included a Swatch brand policy statement, an internet brand policy, a selective distribution program, a volunteer partner plan program, and finally, a co-op commitment agreement. The Plaintiff received advertising material, such as window and counter displays. Plaintiff paid no royalties and was permitted to sell other watch brands.
Plaintiff failed to establish that a franchise relationship existed between these parties
On motion, the Court ruled that the Plaintiff failed to establish that there was a written arrangement for a license to sell Swatch products, and failed to prove that the relationship established a “community interest,” as defined by the statute. Specifically, the Court found that the Plaintiff did not wrap itself with the trade name of Swatch, and did not rely upon Swatch’s goodwill to induce sales. Therefore, no license had been granted to the Plaintiff by Swatch. As far as the community interest test, the Court ruled that Swatch asserted no control, and Plaintiff established no economic dependence on Swatch products. In fact, Plaintiff did sell other brands and gross sales of those products increased following Swatch’s cancellation of the dealership relationship. Therefore, Plaintiff failed to establish that a franchise relationship existed between these parties.
Citation: Orologio of Short Hills, Inc. and Orologio International Ltd., Inc. v. The Swatch Group (U.S.) Ltd., Inc. 2015 U.S. Dist. LEXIS 95977
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