Did you know that Sears is a franchisor? I didn't before today, when I read about a lawsuit by Sears franchisees, who feel wronged in the wake of Kmart's takeover of Sears. You see, these little Sears stores (all located in rural areas and about one-fourth the size of urban Sears stores) are being forced to compete with Kmart stores that stock the same products, like Craftsman tools. The Sears franchisees negotiated exclusive territories, which they claim are being infringed.
These sorts of claims -- called "encroachment" claims -- are common among franchisors and franchisees. I would like to read the provision in the Sears Dealer Agreements, which I assume places some limits on Sears beyond the establishment of additional Sears-branded stores. In this case, Sears did not encroach by establishing new stores, but by distributing Sears products through Kmart stores, something that may not have been contemplated at the time of the agreement.
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