Complaint Review: INTERLAKE CHEMICALS - GIMLI Manitoba

Key facts

In November 2015, the distributor, Robert Diduck, entered into an agreement with a business calling itself Narol Professional Services Ltd. to distribute a product called Sure Step, manufactured by Interlake Chemicals. David Simpson, identified by Interlake as a “master distributor” signed the agreement on behalf of Narol.

Mr. Diduck later discovered that Narol was not a limited company, but was instead a partnership. David Simpson and his wife were the sole partners.

Mr. Diduck paid $24,750 to enter into the distributor agreement. He received an exclusive sales territory, and was required to attend training sessions.

Further, the agreement required Mr. Diduck to supply and apply the product in accordance with Narol’s directors, but there was no evidence that Narol ever issued any directives.

The business relationship was not successful. In January 2017, Mr. Diduck filed a statement of claim against Simpson, Narol, and Interlake, alleging breaches of the agreement and negligent misrepresentation. He claimed that Mr. Simpson and Interlake misrepresented the distributorship program in their assertions about potential profit, sales, and income; and that the agreement should be rescinded for misrepresentation regarding the legal status of Narol.

In May 2017, Mr. Diduck amended his statement of claim, claiming that he was a franchisee and that Mr. Simpson and Interlake failed to provide him with a franchise disclosure document as required under section 5 of The Franchises Act. In July 2017, he delivered notices of rescission to Interlake, Narol, and Mr. Simpson

Mr. Diduck sought summary judgment on disclosure document issue. Interlake also sought summary judgment, on the basis that any representations were merely sales talk and projections, and could not found a claim for negligent misrepresentation.

The evidence did not show that the distributor agreement was a franchise agreement

The motion judge held that Mr. Diduck had not established a prima facie case that the distributor agreement was a franchise agreement.

The first required element of a ‘franchise’ under section 1(1) of Manitoba’s The Franchises Act is that the franchisee is required to make a payment or continuing payments to the franchisor or franchisor’s associate.

The court held that this element was met in this case because Mr. Diduck was required to make payments to the purported franchisor or franchisor’s associate. The distributor agreement required him to pay $24,750 to Narol. To renew the deal annually, the agreement required Mr. Diduck to either purchase $2,400 worth of Sure Step product in a year, or made a payment of $2,400.

The second required element has two alternative components:

Either:

– (I) The franchisor (a) grants a right to sell or distribute goods and services that are associated with the franchisor’s or franchisor’s associate’s marks, and (b) the franchisor or franchisor’s associate exerts significant control or offers significant assistance to the franchisee under a business plan.

Or:

– (II) the franchisor or franchisor’s associate (a) grants distribution rights to sell or distribute goods and services supplied by the franchisor or a designated supplier, and (b) provides location assistance by either securing retail outlets or customer accounts, or by securing locations for product sales displays.

The court held that the evidence did not show that Interlake, Narol, or Simpson exercised significant control over, or offered significant assistance to, Mr. Diduck, under the first alternative definition of ‘franchise’. Nor did it show that they offered location assistance, under the second alternative definition.

Mr. Diduck argued that Interlake, Narol, and Simpson provided significant assistance to him, particularly marketing strategies and training. Interlake’s Manual provided information about the product, how to apply it, answers to common questions, suggestions for acquiring business, and sales strategies.

The court held that providing information and advice did not amount to significant assistance under The Franchises Act.  It also held that The Franchises Act requires the purported franchisor to provide the assistance “under a business plan”. Here there was no business plan.

Mr. Diduck also argued that Interlake, Narol, and Simpson provided location assistance by granting him an exclusive territory. The motion judge held that this did not amount to location assistance, within the statutory definition of “franchise”. The Franchises Act requires location assistance to include “securing retail outlets or customer accounts”, or “securing locations for vending machines or product sales displays”, none of which applied.

I would suggest that George from Monroe Georgia give his name or web address on a blog somewhere so that future victims of this company can speak directly with him.  It will give more credibility to his charges, otherwise its just another way for these guys to try and rebut his claims and call him a liar like the other guys.  He also might find a job somewhere if hes really looking and his house is really in forclosure.

This is in response to Klarman's false remarks. First of all, our references that he spoke to are doing extremely well with our product, and yes, we do sponsor a race car driver. We get a tremendous amount of exposure from the sponsorship program the benefits all of our distributors. The race car driver is also a distributor first, and race car driver second and he has been a distributor with us for a couple of years now. As for the other person you spoke to, yes he did train you which is a positive thing. Many of our distributors become our trainers, and the reason for that is they are doing very well and are great with people. They don't work for us, they are distributors that also perform some training. What is wrong with that. We have treated thousands of bathtubs and never has anyone been ill from using the product. Furthermore, if the chemical gets on your hands, it does not burn nor does it turn your hands blue! There is no way this happened. In all applications for the bathtubs, you simply wear rubber gloves and even if chemical did get on ones hands, you wash it away. But there would never be any skin dying or skin peeling off. We wish the best for you, but your comments are untrue. This product is the best product on the planet and when you make the presentations to customers they love it and buy it. We provide safety to thousands of people around the world, but you do have to work the business.