Midwest Energy, Inc.v. Orion Food Systems, Inc.

14 S.W.3d 154 (2000)

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Nature of the Case

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Facts

P operates a chain of service station convenience stores. D developed recipes and equipment for several fast food systems for which it issues franchises to local outlets. Ries (D) was the district sales manager for D in the area in which P has facilities. P undertook the construction of a substantial building designed for the operation of a service station and convenience store and estimated to cost $800,000. P inquired into the possibility of a franchise for some of D's product lines. Ries (D) visited D and delivered to her an offering circular required by the Federal Trade Commission accompanied by a specimen franchise agreement in which the blank spaces were not filled in. The circular contained a caution about taking any further action until D had been notified in writing that its application had been approved. Ries (D) advised that he had to check with other D franchisees in the area to determine whether they had any contractual protection from nearby competition. He checked particularly with Rhodes Oil, which had Orion franchises at several nearby locations. On a second visit Ries (D) advised P that Rhodes and other franchisees interposed no obstacle and that 'we can go forward with the franchise.' P had already filled out and delivered a franchise application. P's building contractor was present and discussed the proposed construction with Ries (D) and P. D provided drawings and specifications setting forth its requirements for the area in which its franchised products would be prepared and dispensed. Ries (D) was in touch with both the general contractor and the electrician. Ries (D) pointed out the need to enlarge the convenience store area to 800 square feet to meet D's special requirements. The final store layout and design were provided by D to P on July 2, 1996. On September 30, 1996, P executed the franchise agreement and mailed it to D. Rhodes found out about the project and protested. D withdrew the offer and P was informed. P sued D for (I) Breach of contract, (II) Promissory estoppel, and (III) Fraud and deceit against Ries (D) for willfully misstating the extent of his authority. The trial court granted summary judgment to Ds and P appealed.