Distributors fight final bill, firm threatens suit over 'untruths' from plastics

The section dedicated to the dispute, called "Tupperwars," was meant to educate people about the risks of franchising, said Canadian Alliance of Franchise Operators president Les Stewart.

Edmonton Journal
September 28, 2004

Distributors fight final bill, firm threatens suit over 'untruths' from plastics

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OTTAWA - Distributing Tupperware turned out not to be such a party for Julie and Ken Hanna.

Four years ago, the Kinburn, Ont., couple thought distributing Tupperware's plastic products and helping salespeople organize the company's famous social gatherings would make a solid business.

Now, they are embroiled in a legal battle with a firm they say misrepresented the earnings potential of the business.

They are not alone in legal disputes with Tupperware. Four other former Canadian distributors are being sued by Tupperware Canada Inc., a unit of the Orlando company founded by inventor Earl Tupper in 1946.

The former distributors and two colleagues, calling themselves the Group of Seven, have banded together and posted their stories on the website of the Canadian Alliance of Franchise Operators, www.cafo.net.

The legal disputes come as Tupperware Corp., which has about a million salespeople who distribute its brand in over 100 countries, struggles to overcome declining profits, faltering North American sales and a heavy debt load.

Tupperware Canada claims the Hannas owe $436,638 in debt on goodwill and goods sold and delivered. It alleges they breached agreements signed when they bought the distributorship.

The Hannas counter that the company overstated the sales and profits of the business, the individual salaries they could earn, and the number of sales consultants and managers they would supervise.

"What they told us would happen did not come to fruition," said Julie Hanna. "We did what Tupperware told us to do. We followed their plan."

They are seeking $850,000 in damages from Tupperware. None of the allegations have been proven in court.

The company is seeking repayment of the goodwill debts the Hanna's took on when they bought the distributorships.

But the Hannas argue the debt is owed by the corporation they established, not them. They also believe Tupperware functions like a franchise and therefore should be subject to Ontario's Arthur Wishart Act, which requires that franchises disclose all "material facts" related to becoming a franchisee.

Since Tupperware did not provide such disclosure, the distributorship agreement is void and the company should compensate the Hannas for their losses, they argue.

Tupperware claims it is not a franchise under the act.

In a statement, the company said it is open to an "amicable resolution" to the lawsuits.

"Tupperware Canada Inc. regrets that despite efforts made over several months, it was unable to reach an accommodation with the former distributors regarding their outstanding debts," it said.

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Meanwhile, Tupperware has threatened legal action against the Canadian Alliance of Franchise Operators unless it removes all references to the Tupperware trademark from its website, as well as a number of "untrue, disparaging and defamatory" statements against the firm.

The section dedicated to the dispute, called "Tupperwars," was meant to educate people about the risks of franchising, said Canadian Alliance of Franchise Operators president Les Stewart.

Nevertheless, he said he is consulting a libel lawyer about the site's content.

Illustration:
• Photo: Journal Files / Tupperware distributors challenge the validity of the plastic promise.


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