Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Window World purportedly fails to disclose kickbacks to franchisees, (Oct 19, 2015)

By Greg Hammond, J.D.

Window World, Inc.—a company engaged in the business of selling licenses and franchises for the sale and installation of vinyl replacement windows, doors, and siding—failed to make required franchise disclosures and engaged in price discrimination, according to a complaint filed in the federal district court in Omaha, Nebraska (Bendfeldt v. Window World, Inc., October 16, 2015).

Two former franchisees filed suit against Window World, claiming that the company led potential franchisees to believe that by executing a license agreement, they would be part of the Window World system and would have access to the best pricing for windows and related materials. Window World, however, designated Associated Materials, LLC as the exclusive supplier of windows to Window World franchisees. The franchisees now claim that Window World failed to disclose that its owner acquired stock ownership interest in Associated Materials; Associated Materials loaned Window World’s owner $30 million for the stock purchased; and Window World received kickbacks and rebates for every window sold. Further, the franchisees claim that Window World fraudulently induced its prospective franchisees to purchase franchises and fraudulently induced existing franchisees to execute renewal “Licensing Agreements.”

The franchisees also claim that Window World entered into an unlawful contract, combination, or conspiracy with Associated Materials to set prices and in restraint of trade. Despite representing to potential franchisees that they would receive superior pricing, franchisees allegedly paid inflated prices resulting from the arrangement between Window World and Associated Materials.

The four-count complaint brought claims for price discrimination in violation of the Robinson-Patman Act, fraud, and breach of contract. The franchisees seek damages, punitive damages, costs, and attorney fees.

The case number is 8:15-cv-00377-JFB-TDT.

Attorneys: Jonathan E. Fortman and Larry E. Welch, Jr. (Welch Law Firm, PC) for plaintiffs.

Companies: Window World, Inc.; Associated Materials, LLC

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