PUBLISHED
OPINION
COURT OF
APPEALS
DECISION
DATED AND FILED
November
24, 1999
Marilyn L. Graves
Clerk, Court of Appeals
of
Wisconsin
NOTICE
This opinion is subject to further editing. If published, the official version will
appear in the bound volume of the Official Reports.
A party may file with
the Supreme Court a petition to review an adverse decision by the Court of Appeals. See
§ 808.10 and Rule 809.62, Stats.
No. 98-2043
STATE OF
WISCONSIN IN COURT OF APPEALS
DISTRICT
II
Kinship Inspection
Service, Inc.,
Raymond
Kindschy and Patricia Kindschy,
Plaintiffs-Respondents-
Cross-Appellants,
v.
Roy Newcomer and Scott
Newcomer,
Defendants-Appellants-
Cross-Respondents.
APPEAL and CROSS-APPEAL from a judgment and orders of the circuit court for
Ozaukee County: WALTER J. SWIETLIK, Judge. Affirmed in part; reversed in part
and cause remanded.
Before Nettesheim, Anderson and Snyder, JJ.
¶1. SNYDER, J. Roy Newcomer and Scott Newcomer (the Newcomers)
appeal from a judgment voiding a purchase agreement to sell their home inspection business
to Raymond Kindschy and Patricia Kindschy (the Kindschys), d/b/a Kinship Inspection
Service, Inc., and dismissing their breach of contract claim against the Kindschys. The
Newcomers contend that there was insufficient evidence to sustain the jury's verdict, that the
jury's verdict was perverse and that the Kindschys engaged in "trial by ambush."
We reject these arguments.
¶2. The more significant issue raised by this case is in the Kindschys'
cross-appeal in which they argue that the trial court improperly dismissed their claims under
ch. 553, Stats., 1993-94, the Wisconsin Franchise Investment Law (WFIL). Based on the
evidence the Kindschys presented at trial, we conclude that there was sufficient evidence to
establish a WFIL violation because the Newcomers had failed to include in their Uniform
Franchise Offering Circular (UFOC) documents containing projected earnings and historical
financial data for the Newcomers' business and franchise. We therefore reverse this portion
of the judgment and remand for a new trial on this issue.
BACKGROUND
¶3. In October 1995, the Kindschys purchased from the Newcomers a
"Newcomer's of America Property Inspection Services, Inc." franchise (the
franchise) for the greater Milwaukee area. In a separate transaction, the Kindschys
purchased the assets of the Newcomers' home inspection business called "Newcomer's
Home Inspection Service, Inc." (the business). The Kindschys paid $50,000 in cash
for the franchise and executed an Asset Transfer Agreement and a note for $200,000 for the
Newcomers' business assets.
¶4. Prior to the sale of the franchise and business, Scott Newcomer presented
Ray Kindschy a copy of the UFOC, which had been submitted to the Wisconsin
Commissioner of Securities upon registration of the franchise and contained information
about the Newcomers' franchise.1
Ray Kindschy was also given sales, financial and accounting data, and a projection of future
sales and finances for the Newcomers' business.
¶5. In May 1997, the Kindschys filed suit against the Newcomers alleging (1) a
violation of WFIL, (2) fraud and misrepresentation, and (3) breach of contract. The
Kindschys claimed that the Newcomers misrepresented past and projected sales and financing
data. They also asserted that the Newcomers failed to provide them with a customer list that
was promised under the Asset Transfer Agreement. The Newcomers counterclaimed,
alleging that the Kindschys breached their promise to pay the $200,000 note which had an
unpaid balance of $195,509.49.
¶6. On April 7, 1998, a jury trial was commenced. At the close of the
Kindschys' case-in-chief, the Newcomers moved to dismiss all of the Kindschys' claims on
the basis that there was no evidence to sustain a finding in their favor. The court ruled that
the Kindschys had failed to prove a violation of ch. 553, Stats., but denied the motion as to
the common law fraud and misrepresentation claim. Upon the Kindschys' request, the court
dismissed their breach of contract claim.
¶7. At the trial's conclusion, the jury was presented five special verdict
questions.
Question No. 1: Did Scott Newcomer make an untrue
representation of fact to Ray Kindschy based on his own knowledge or in circumstances in
which he necessarily ought to have known the facts?
ANSWER: (Yes or No)
Question No. 2: If you answered "Yes" to Question No. 1, then
answer this question: Did the plaintiff, Ray Kindschy, believe such representation to be true
and justifiably rely on it to his pecuniary damage?
ANSWER: (Yes or No)
Question No. 3: If you answered "Yes" to both Question No. 1 and
Question No. 2, then answer this question: What sum of money, if any, will fairly and
reasonably compensate Ray Kindschy for his damages?
ANSWER: $
Question No. 4: Have the plaintiffs breached their contract with the defendants
with respect to payments due under the Asset Purchase Agreement?
ANSWER: (Yes or No)
Question No. 5: If you answered "Yes" to Question No. 4, then
answer the following question: What sum of money will fairly and adequately compensate
the defendants as a result of the plaintiffs' breach of contract?
ANSWER: $195,508.00 (Answered on stipulation by the
Court)
After initially deliberating, the jury submitted the
following question to the court:
The questions ask for a dollar amount. We want to cancel
[the] note going forward (from 1996 forward). We do not want [the] Kindschy's to pay
additional or the Newcomer's to return the money. How do we word our answer?
The court advised the jury that it should review the
evidence and the jury instructions that it had been given, and that it should not concern itself
with the final outcome of the lawsuit. The jury then returned a verdict finding that Scott
Newcomer had made a misrepresentation and that the Kindschys had relied on it to their
pecuniary damage, but that the Kindschys were entitled to no damages.2 The jury also found that the Kindschys had not
breached their contract with the Newcomers.
¶8. The Newcomers filed postverdict motions requesting that the court change
the jury's answers on its special verdict questions regarding Scott Newcomer's liability for
misrepresentation and grant the Newcomers a new trial on their breach of contract claim.
The court denied the Newcomers' motion and they now appeal.
DISCUSSION
A. Newcomers' Appeal
1. Sufficiency of the Evidence
¶9. The Newcomers claim that there was insufficient evidence to support the
jury's conclusion that Scott Newcomer made a misrepresentation. In reviewing the jury's
verdict, we note that an appellate court's review of a jury's verdict is "severely
circumscribed." Staehler v. Beuthin, 206 Wis.2d 610, 617, 557
N.W.2d 487, 489 (Ct. App. 1996). We consider "whether there is any credible
evidence in the record on which the jury could have based its decision. The evidence is
viewed in the light most favorable to sustain the verdict; we do not look for credible
evidence to sustain a verdict the jury could, but did not, reach." Lundin v.
Shimanski, 124 Wis.2d 175, 184, 368 N.W.2d 676, 681 (1985) (quoted source
omitted). We indulge in every presumption in support of the verdict and note that this is
even more true when the verdict has the trial court's approval. See Anderson v.
Alfa-Laval Agri, Inc., 209 Wis.2d 337, 352, 564 N.W.2d 788, 795 (Ct. App.
1997). We further add that the credibility of witnesses and the assignment of weight
afforded to witness testimony are left to the province of the jury. See
Staehler, 206 Wis.2d at 617-18, 557 N.W.2d at 490.
¶10. The Kindschys' misrepresentation claim was presented to the jury as a
claim of strict responsibility misrepresentation. The elements of this claim are (1) a
representation of fact, (2) that is untrue, (3) based either on personal knowledge or under
circumstances where the defendant necessarily ought to have known the truth or untruth of
the statement, (4) the defendant's economic interest in the transaction, and (5) the plaintiff's
belief in the representation. See D'Huyvetter v. A.O. Smith Harvestore,
164 Wis.2d 306, 336, 475 N.W.2d 587, 598 (Ct. App. 1991); Wis J I-Civil 2402. These
elements were set forth under special verdict Questions No.1and No.2.
¶11. The Newcomers contend that the Kindschys' misrepresentation claim fails
because no credible evidence was presented to establish that Scott Newcomer made an untrue
representation of fact or that the Kindschys relied upon any such statement to their pecuniary
damage. We will address each contention in turn.
¶12. The Kindschys' misrepresentation claim was based upon two exhibits
depicting past and projected revenues, expenses and income for the Newcomers' business.
Exhibit one, entitled "Historical Financial Data for Newcomer's Home Inspection
Services, Inc - Milwaukee Area and Projections for 1995," was presented to the
Kindschys before their October 1995 purchase. It provided financial data from 1992 to 1994
and projected earnings for 1995. Exhibit three, entitled "Newcomer's Home Inspection
Service, Milwaukee - 1994 Actual," was presented to an earlier prospective purchaser,
Mike Skauge, before the Kindschys negotiated their purchase. It gave the financial data for
the Newcomers' business in 1994.
¶13. At trial, Ray Kindschy pointed out differences in the income and expenses
represented in exhibits one and three for 1994. Specifically, Kindschy testified that the
number of inspections shown in exhibit one was 1525 while the number in exhibit three was
1484; the average inspection price in exhibit one was $225 while the average price in exhibit
three was $250; and the payroll for exhibit one was $145,327 and $166,950 for exhibit three.
Kindschy concluded that "[w]hen you have two totally different sets of numbers that
are marked actual for 1994, they can't both be right."
¶14. Skauge testified that exhibit three was inaccurate because it contained a
$250 average price per inspection for 1994 when his experience was $215 or $225 per
inspection. He also stated that 1484 inspections for 1994 was not reasonable based on his
experience. Skauge testified that when he was considering purchasing the Newcomers'
business, he worked through the numbers in exhibit three and came to the conclusion that
they were incorrect. He therefore decided not to purchase the Newcomers' business.
¶15. During the postverdict hearing, the court reviewed the jury's findings. It
concluded that "[i]t's clear ... that the jury found that a misrepresentation of fact was
made by the defendant, Scott Newcomer, to the plaintiffs and that the plaintiffs relied on that
representation."
¶16. The Newcomers contend that Kindschy's and Skauge's testimony was
insufficient to carry the Kindschys' burden of showing a misrepresentation. The Newcomers
argue that because the Kindschys did not see exhibit three until after their purchase of the
business, they could not have relied upon it in deciding to purchase the business. The
Newcomers therefore conclude that the exhibit cannot support the jury's verdict.
¶17. We agree with the Newcomers that any alleged misinformation in exhibit
three cannot be the source of a misrepresentation claim because the exhibit was not shown to
the Kindschys until after their purchase of the business. However, we see no reason why
exhibit three cannot provide evidence of misrepresentation in exhibit one. Indeed, we are
satisfied that the Kindschys presented credible evidence to show that misrepresentations had
been made. Although the Kindschys offered no evidence directly refuting exhibit one's
figures, we believe that the jury could rely upon inconsistencies between exhibits one and
three to conclude that the Newcomers had provided misinformation in exhibit one. One
reasonable inference a jury could make from the inconsistent information is that the
Newcomers had altered the data given to the Kindschys in order to make their business
appear more profitable than it was. We therefore conclude that when viewed in the light
most favorable to sustain the verdict, there was sufficient evidence to sustain the jury's
determination.
¶18. The Newcomers next assert that there was no credible evidence to establish
that the Kindschys relied upon a misrepresentation to their pecuniary loss. They point out
that while the jury answered "yes" to special verdict Question No.2 that Ray
Kindschy relied upon Scott Newcomer's misrepresentation to his "pecuniary
damage," the jury also found $0 in damages. The Newcomers conclude that because
the Kindschys were not damaged, no reasonable jury could have concluded that the
Kindschys relied upon any misrepresentations to their pecuniary loss. We are not persuaded
by the Newcomers' argument.
¶19. Prior to filing suit against the Newcomers, the Kindschys had paid $50,000
in cash for the Newcomers' franchise, $4492 of the $200,000 loan and $14,853 in royalties
and franchise fees. The result of the jury's verdict was the cancellation of the Kindschys'
note which had a balance of $195,508. Therefore, although the jury did not find any
monetary damages under special verdict Question No.3, it did intend for the Kindschys to
avoid the remaining $195,508 in debt. As the jury expressed to the court, "[w]e want
to cancel [the] note going forward (from 1996 forward). We do not want [the] Kindschy's to
pay additional or the Newcomer's to return the money." We are persuaded that a
pecuniary damage was found in the amount of the balance of the Kindschys' note.
2. Perverse Verdict
¶20. The Newcomers request a new trial on the breach of contract issue because
the jury purportedly disregarded the court's instruction to answer the special verdict
questions without regard to the outcome of the lawsuit. The Newcomers contend that in
finding that the Kindschys had not breached their contract with the Newcomers, the jury's
verdict was perverse. We disagree.
¶21. A jury's verdict must be affirmed if there is any credible evidence to
support it. See Staehler, 206 Wis.2d at 617, 557 N.W.2d at 489. This is
more true when the verdict has the trial court's approval because the court is in a
"better position to determine whether perversity permeated the verdict."
Redepenning v. Dore, 56 Wis.2d 129, 134, 201 N.W.2d 580, 583 (1972).
Further, a verdict is perverse when the record evinces the jury's refusal to follow the trial
court's instructions on a point of law, or the verdict reflects highly emotional, inflammatory
or immaterial considerations by the jury or its unfair prejudgment of the case. See id.
¶22. Here, the trial court reviewed the jury's answer to special verdict Question
No.4 regarding breach of contract. At the postverdict hearing, the court stated that the jury
clearly found a misrepresentation of fact and that the Kindschys had relied upon it. The
court noted that the jury was read WisJI-Civil 3068, entitled "Voidable Contracts:
Duress, Fraud, Misrepresentation," which provides, "There must be full and free
consent by the parties to the terms of a contract. If consent of a party is gained through
duress, fraud, or misrepresentation, that party may either avoid or ratify the contract."
The court then explained:
I believe that when the jury read that instruction and
considered that instruction that they came to the conclusion that the Kindschys could avoid
the contract in view of the misrepresentations of fact which they already found in questions
one and two and therefore found that there was no breach, because under the instructions
given to them they could avoid the contract if there was a misrepresentation made.
¶23. We agree with the trial court. The jury was
presented with evidence of the Newcomers' misrepresentation. It was later read an
instruction stating that a party may avoid a contract that was entered into through
misrepresentation. Pursuant to this instruction, the jury was in a position to find the parties'
contract voidable based upon the Newcomers' conduct. If the contract was voidable then the
Kindschys could not have been liable for breach of contract. Additionally, the jury was
presented evidence that the Newcomers had failed to provide the Kindschys with a significant
business asset-the customer list-as part of the Asset Transfer Agreement.3 The Kindschys argued at trial that by not
receiving the customer list, the Newcomers had failed to perform the contract. We are
satisfied that there was credible evidence presented to establish that the Kindschys did not
breach the contract.
¶24. In addition, the record does not indicate that the jury refused to follow the
court's instruction. When the jury asked the court how it should phrase its answer to the
special verdict, the court responded that it should review the evidence and the jury
instructions, and that it should not concern itself with the final outcome of the lawsuit. The
jury then returned a verdict finding no breach of contract. The Newcomers claim that this
verdict runs contrary to the court's instruction. We fail to see how. The jury answered each
of the special verdict questions as it was instructed. The Newcomers contend that the jury's
question to the court demonstrated that it found that the Kindschys had breached the contract.
We disagree. The jury's intention to cancel the note from 1996 forward and to relieve the
Kindschys from having to "pay additional" and the Newcomers from having to
return the money is wholly consistent with a finding of misrepresentation and failure to
perform on the Newcomers' part and therefore is consistent with a finding of no breach of
contract by the Kindschys. Thus, we reject the Newcomers' argument.
3. "Trial by Ambush"
¶25. The Newcomers further complain that they are entitled to a new trial
because the court erred in allowing the Kindschys to engage in "trial by ambush"
by withholding the "data" they intended to use to support their misrepresentation
claim. The Newcomers assert that the Kindschys' refusal to provide specific information
regarding the misrepresentations prevented the Newcomers from preparing a meaningful
defense. We are convinced that the trial court appropriately exercised its discretion in
denying the Newcomers' motion to dismiss.
¶26. Wisconsin courts have discretion to sanction parties for their refusal to
comply with court orders and for failure to prosecute an action. See Johnson v. Allis
Chalmers Corp., 162 Wis.2d 261, 273-74, 470 N.W.2d 859, 863 (1991). A
trial court's decision to dismiss an action is discretionary and will not be disturbed unless the
party claiming to be aggrieved by the decision establishes that the trial court has misused its
discretion. See id. at 273, 470 N.W.2d at 863. A discretionary decision
will be sustained if the court has examined the relevant facts, applied a proper standard of
law, and, using a demonstrated rational process, reached a conclusion that a reasonable judge
could reach. See Loy v. Bunderson, 107 Wis.2d 400, 414-15, 320
N.W.2d 175, 184 (1982). The issue is not whether an appellate court as an original matter
would have dismissed the action; it is whether the trial court exceeded its discretion in doing
so. See Johnson, 162 Wis.2d at 273, 470 N.W.2d at 863.
¶27. The Newcomers first assert that the Kindschys' complaint mentioned
"data" without specifically defining the term and that the complaint only
referenced "sales, financial and accounting data for at least three years of Existing
Business operations, and a projection for future years of Existing Business operation."
The Newcomers next state that the Kindschys' discovery responses simply declared that the
Newcomers provided false information during meetings and phone conversations in August
and September 1995, that the data at issue "is contained on projections of earnings
potential provided by the Newcomers during August and September 1995," that the
data "will be produced," and that the data refers to "[h]istoric data for the
business and future projections." The Newcomers further point out that the Kindschys'
supplemental interrogatory responses merely provided that "[t]he data [was] contained
on projections or earnings potential provided by the Newcomers during August and
September 1995" and that the data would be produced. The Newcomers state that it
was not until the hearing on their motion to dismiss held on April 2, 1998, five days before
trial, that they learned what data the Kindschys were relying upon. The Kindschys informed
the Newcomers that "everything we intend to introduce at trial with regards to the data,
was marked as exhibits at Scott Newcomer's [deposition]."
¶28. The trial court denied the Newcomers' motion to dismiss, finding that the
information the Newcomers requested "could have been discovered through oral
depositions, certainly, during the pendency of this matter and during the time that you were
involved with it." We agree. The Newcomers had the exhibits the Kindschys were
relying upon since at least November 1997, the time of Scott Newcomer's deposition. In
addition, the Newcomers had sufficient time, five days, prior to trial to prepare a defense to
the Kindschys' misrepresentation claim once the Kindschys confirmed which documents
constituted their data. While we recognize that the Kindschys were less than forthcoming in
responding to the Newcomers' requests, we are not persuaded that the Newcomers were
prejudiced by this delay. Moreover, we find unconvincing the Newcomers' assertion that
they were "ambushed" and that they had insufficient time to address the
Kindschys' data. We conclude that the trial court did not misuse its discretion in denying the
Newcomers' motion.
B. Kindschys' Cross-Appeal
¶29. The Kindschys argue that the trial court erroneously dismissed their ch.
553, Stats., claim at the close of their case-in-chief.4 They claim that WFIL was violated when the
Newcomers showed them historical financial data and projected franchise earnings that
should have been contained in their Uniform Franchise Offering Circular (UFOC),
see § 553.41(1), Stats., and because the Newcomers made
misrepresentations of financial data which was not provided in the UFOC, see
§ 553.41(3). We agree.
¶30. A motion to dismiss at the end of the plaintiff's case should only be granted
if the evidence, viewed in the light most favorable to the plaintiff, is clearly insufficient to
sustain a verdict in the plaintiff's favor. See Gries v. First Wis. Nat'l
Bank, 82 Wis.2d 774, 777, 264 N.W.2d 254, 256 (1978). If the jury could
disagree on the facts or on inferences to be drawn from the facts, the motion must be denied
and the case submitted to the jury. See id. In reviewing the trial court's
decision to grant a motion to dismiss, this court views the evidence in the light most
favorable to the appellant. See Olfe v. Gordon, 93 Wis.2d 173, 185, 286
N.W.2d 573, 579 (1980). However, we will not reverse the trial court's decision unless it
was clearly wrong. See id. at 185-86, 286 N.W.2d at 579.
¶31. The purpose of WFIL is
to provide each prospective franchisee with the information
necessary to make an intelligent decision regarding franchises being offered. Further, it is
the intent of this act to prohibit the sale of franchises where such sale would lead to fraud or
a likelihood that the franchisor's promises would not be fulfilled.
Section 1(2), ch. 241, Laws of 1971; see Godfrey
v. Schroeckenthaler, 177 Wis.2d 1, 5, 501 N.W.2d 812, 813 (Ct. App. 1993).
To this end, the law requires franchisors to be registered. See § 553.21,
Stats. Section 553.26, Stats., lists numerous items that a registration application must
contain, including "[a] copy of any statement of estimated or projected franchisee
earnings prepared for presentation to prospective franchisees or subfranchisors, or other
persons, together with a statement setting forth the data upon which such estimation or
projection is based." Section 553.26(16). In addition, § 553.27(8), Stats., states
that "[t]he registration statement shall consist of a circular containing those items
required by s. 553.26 to be disclosed to investors together with other documents which the
commissioner by rule prescribes." In order to sell a franchise, a franchisor must
provide a prospective franchisee with a copy of the franchisor's UFOC. See
§ 553.27(4).
¶32. Fraudulent practices of a franchisor are prohibited by § 553.41,
Stats. Section 553.41(1) addresses false or misleading statements made to the commissioner
of securities.
No person may make or cause to be made, in any
document filed with the commissioner or in any proceeding under this chapter, any statement
which is, at the time and in the light of the circumstances under which it is made, false or
misleading in any material respect or, in connection with any statement required to be made
under s. 553.31 (1), omit to state a material fact necessary in order to make the statement
made, in the light of the circumstances under which they are made, not misleading.
Id. If a person violates subsec. (1),
the franchisee may bring an action for rescission. See § 553.51(1), Stats.
Section 553.41(3) concerns false or misleading statements, not included under subsec. (1),
that are presented to prospective buyers of a franchise.
No person may offer, purchase or sell a franchise in this
state by means of any written or oral communication not included in sub. (1) which includes
an untrue statement of a material fact or omits to state a material fact necessary in order to
make the statements made, in the light of the circumstances under which they were made,
not misleading.
Section 553.41(3). If a franchisor violates subsec. (3),
the franchisee may bring a claim for damages. See § 553.51(2).
¶33. At trial, the Kindschys' evidence of misrepresentation included exhibit one,
setting forth the financial information from 1992 to 1994 and projected earnings for the
Newcomers' business for 1995, and exhibit three, documenting the Newcomers' financial
data for 1994. The Kindschys also introduced exhibit two, entitled "Five Year Cash
Flow Projection For Milwaukee Franchise," which, like exhibit one, was presented to
the Kindschys prior to their purchase of the Newcomers' franchise and business. Scott
Newcomer testified that neither exhibit one nor two was included in the Newcomers'
UFOC.
¶34. At the close of the Kindschys' case, the Newcomers argued that the
Kindschys had offered no evidence dealing with "the registration of the franchis[or] in
regard to the franchise registration statement"; that there was no violation of §
553.21, Stats., concerning registration; that the Kindschys never revealed any false,
misleading or incomplete statement in the UFOC contrary to §553.41(1), Stats.; and
that the Kindschys were unable to show that any statements made by the Newcomers were
false, misleading or incomplete contrary to § 553.41(3). The court agreed with the
Newcomers, finding that the Kindschys had failed to prove a violation of ch. 553, Stats.,
because no evidence was submitted addressing the application for registration under
§§ 553.21 and 553.26, Stats. The court also determined that the Kindschys had
failed to show any material false, misleading or incomplete statements in the Newcomers'
UFOC or in any communication separate from the UFOC. The court added that
"[e]xhibits 1 and 2 dealt with the sale of the assets of Newcomer's Home Inspection
Service, Inc., and were not concerned with the sale of the franchise."
¶35. We conclude that the trial court incorrectly applied WFIL. As a
franchisor, the Newcomers were required to submit a registration application containing,
among other things, any statement of projected franchisee earnings and a
statement describing the data upon which the projections were based. See
§553.26(16), Stats. In addition, pursuant to § 553.26(16), the
Newcomers' registration statement was to include their UFOC, which, in turn, was to
contain all the items listed under § 553.26, including any statements of projected
franchisee earnings and supporting data. Furthermore, the Newcomers were to provide the
Kindschys a copy of their UFOC. Ultimately, any statement of historical or projected
financial information that the Newcomers intended to present to a prospective franchisee had
to be included in their UFOC and therefore submitted to the Wisconsin Commissioner of
Securities.
¶36. Here, exhibit one provided a projection of future earnings for the
Newcomers' business for 1995 and set forth financial data for 1992 to 1994. In addition,
exhibit two was marked "Five Year Cash Flow Projection For Milwaukee
Franchise" and, without doubt, was a statement of estimated franchisee earnings.
Contrary to the court's finding, exhibits one and two pertained to the assets of both the
Newcomers' business and the franchise. We are convinced that the documents qualify as
projected franchisee earnings information and supporting data under § 553.26(16),
Stats. As such, this information should have been included in the Newcomers' UFOC.
Because it was not, the Kindschys have a valid claim under § 553.41(1) and (3), Stats.
We conclude that the trial court erred in dismissing the ch. 553, Stats., action and thus
reverse this portion of the judgment and remand for a new trial on the Kindschys'
claim.
¶37. Costs are denied to all parties.
By the Court.-Judgment and orders affirmed in part; reversed in part and
cause remanded.
Recommended for publication in the official reports.
1 The UFOC is not included in the record.
2 Although no damages were found, the result of the jury's misrepresentation finding was the
cancellation of the Kindschys' note.
3 According to the Asset Transfer Agreement, the customer list was valued at
$100,000.
4 Because the Kindschys' purchase of the Newcomers' franchise occurred in 1995, all
references to ch. 553, Stats., will be to the 1993-94 statutes. See Sterling Vision
DKM, Inc. v. Gordon, 976 F. Supp. 1194, 1197-98 (E.D. Wis. 1997).
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