Hoffman v. Red Owl Stores, Inc.

Facts

In 1959 Plaintiff, the owner/operator of a bakery contacted Defendant with the idea of establishing a Red Owl franchise in his city, Wautoma. In anticipation of an agreement with Defendant, Plaintiff bought a small grocery store in Wautoma and operated it so that he could learn the grocery business. After Defendant saw that Plaintiff was profiting, it suggested that he would have to move, because their stores were located in larger cities. Plaintiff, at that time, sold his bakery, and the Wautoma store, moved his family to Cilton and put a down-payment on a lot for the Red Owl store. Throughout the course of dealing, Plaintiff made it clear to Defendant that he could not afford more than an $18,000.00 capital investment. While Plaintiff was initially assured this would be adequate, before the closing of negotiations, Defendant told Plaintiff he would have to come up with $26,000.00, in order for the deal to go through. Plaintiff involved his father-in-law in the investment process (who offered capital in the amount of $13,000), and wanted to make him a partner in the store. At that point, Defendant asked Plaintiff to have his father-in-law disavow his investment as an “absolute gift” and relinquish his rights in the store. Plaintiff did not agree to this arrangement and filed suit. At the trial level, the court awarded Plaintiff his moving and rental expenses and reasonable compensation for the sale of the bakery and Wautoma store fixtures and inventory. The court granted a new trial on the issue of the store fixtures and inventory, and both parties appealed.