Red Owl's Legacy
1 Pages Posted: 30 Nov 2010
Date Written: 2003
In the early 1960s, Joseph Hoffman, a high school graduate, baker and father of seven, sought to obtain a Red Owl grocery store franchise in Wisconsin. He entered into negotiations with Red Owl Stores, Inc. after the franchisor assured him that the $18,000 he had to invest in the franchise was sufficient. Over the course of the negotiations, Red Owl encouraged Hoffman to sell his bakery, buy a small grocery store to gain experience in the grocery business, sell his grocery store three months later, and move his family to the desired location for his Red Owl franchise. The negotiations fell apart after Red Owl raised the amount of the investment required of Hoffman beyond what he could afford. Hoffman lost his bakery business and lost the franchise that he coveted. Despite the fact that Hoffman and Red Owl had yet to enter into a contract, the Supreme Court of Wisconsin in Hoffman v. Red Owl Stores, Inc. fashioned liability for Hoffman around the doctrine of promissory estoppel. That Supreme Court decision and its aftermath are Red Owl's legacy.
Keywords: contracts law, promissory estoppel, Franchise Law
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