MGB Printing and Design Ltd v Kall Kwik UK Ltd

“Kall Kwik Property Department”:

“The property department provides advice to Kall Kwik Centre owners on property matters relating to their particular Kall Kwik Centre. For new centre owners, they provide advice, or introduce suppliers who can provide assistance, on the various elements of a re-sale including:

Shopfitting

Lease Transfer

Property Condition and Repair

Centre Owner’s on-going liabilities……………

Bibby’s evidence was that the briefing document that was presented to him was a distillation of the knowledge that Kall Kwik had acquired over many years in assisting new franchisees to take over existing franchise businesses. He said it was made clear to him both in the briefing document and by John Anderson and Caroline Joyce that they would advise him of the costs and that he would be responsible for paying them. The first version of the cash forecasts prepared by the Defendant was dated 13 June, 2007 and was emailed to Bibby. Although he was accustomed to dealing with financial forecast and spreadsheets and indeed was qualified as a chartered accountant, he had never owned a small business before and had no experience in the printing sector. He says that he relied on the Defendant’s knowledge and understanding as to what costs including initial expenditure would be needed to support the business he was taking on. The course of events is set out above, but was essentially as follows: on the first draft of the cash flow there was a provision of £10,000 for shopfitting. Although he had not at that stage visited the premises in Stockport, he assumed that as franchisor the Defendant would have regularly viewed or inspected the Centre when in attendance providing support or advice to the franchisee. He did visit the premises on the 26 June, 2007 and concluded the premises had not been fully maintained or refitted for a considerable period of time. In the days following, he had a number of discussions with Anderson and Joyce regarding the cash flow figures and in particular the refurbishment of the centre. He concluded that £10,000 was an inadequate provision and insufficient to meet the Defendant’s shop fitting standards. Anderson assured him he says that the average refit was between £10,000 and £20,000 and accordingly Bibby says that it was agreed between them that a revised refitting cost of £15,000 would be put into the cash flow. Again, Bibby assumed that he could rely on that figure Anderson having advised him that it was more than adequate. Anderson recalls discussion relating to £10,000 figure but says that as far as he was concerned Bibby was aware that the figure in the cash flow forecast related only to the re-branding in the front of house of the premises. He provided reassurance to Bibby that the average cost for re-branding the front of house was between £10,000 and £20,000 although in fact the average costs were lower than that. There is a clear divide between the Claimant and the Defendant as to what the shopfitting figure in the cash flow forecast was intended to cover. The Claimant says that it was refitting, refurbishment, shop fitting to comply with the minimum standards specified by the Defendant whereas the Defendant says that the figure related only to the re-branding of the front of house of the premises.

Bibby’s evidence was that during the negotiations in July and August, 2007 it became clear that completion of the re-sale and re-launch of the centre would take place around Christmas, but it was agreed that the refurbishment would be delayed until early 2008. Bibby commissioned a full structural survey as recommended by the briefing document. That survey indicated that the buildings were in a state of disrepair and would need approximately £20,500 including VAT to improve the external appearance of the building and to undertake basic repairs that met statutory obligations. That was clearly separate from the refitting of the shop itself. In September, 2007 Mr Bibby persuaded the vendor to reduce the price on the basis of the work that would have to be done. Further negotiations resulted in a significant reduction in the purchase price sought to £160,000. Completion of sale and purchase was on 21 December, 2007 and early in 2008 Bibby downloaded a copy of a document entitled “ Kall Kwik Centre Shopfit Scheme” from the Defendant’s web site. That specified a defined reception area to the front of the Centre using the optimum floor space for the purpose, space within the reception area for the display of point of purchase material, a dedicated design area apparent to visitors but adequately screened to provide privacy to the designers, a dedicated meeting room or area which was apparent to visitors to the centre but would provide adequate privacy during consultations, and adequate storage facilities to allow a clean efficient and tidy appearance to be maintained; finally, complete screening of print production areas from public view. Bibby assumed that the shopfitting budget prepared by Kall Kwik reflected those expectations as they were detailed in the guidelines. On 9 April, 2008 he met Rod Bennett the Defendant’s preferred supplier to go through the specifications for refurbishment based on the elements set out in the Kall Kwik Shopfit Scheme. It was Bennett’s view and was agreed that given the limited space within the premises, some equipment would have to be relocated upstairs to free up sufficient space for the creation of a dedicated meeting area on the ground floor. The equipment concerned was a large format printer, a plan printer, a numbering machine and a folding machine. Relocating that equipment gave rise to a number of issues in that there were no heating facilities, inadequate lighting, no networking facilities and inadequate power supplies upstairs. That had a significant impact on the budget for refurbishment and in the result, the estimate excluding upgrading the IT and telephone system to accommodate the changes was for the sum of £45,000. Bibby said he was horrified at that figure, three times the amount agreed in the cash flow and four and a half times the amount in the estimate in the initial cash flow forecast. He said that he felt extremely let down and disappointed in that he was committed to spending more money on refurbishment which he could ill afford. At about that time he discovered in conversation that the Defendant did not have a property department as set out in the briefing document and it appeared that nobody had visited this centre from the Defendant to undertake a survey to establish the cost of refurbishing the centre to the standard set out in the shopfit scheme. He also concluded that the estimate provided by Anderson in the cash flow forecasts was based on average costs and not on the specific assessment of the requirements for Stockport. When he asked Anderson by e mail on 18 April, 2008 if he had consulted anyone in the property department at Kall Kwik, the request was originally ignored but when pressed he admitted that he had visited Stockport to discuss the vendors exit plan and he also stated that the £15,000 estimate was based on a ground floor refit only and not ground and first floor. Bibby suggests that Anderson had not taken account of Kall Kwik’s own guidelines laying out space for meeting areas to determine whether a refit could be carried out satisfactorily using the ground floor only. He says he felt badly let down by the Defendant on this issue and that had he known about the actual scope and likely cost of the refit he would have negotiated a further price reduction from the vendor or withdrawn from the purchase. Given that the vendor wanted to retire and that he was the only interested buyer as far as he was aware, he was confident that a further reduction would have been agreed. On 21 April, 2008 there was a meeting to discuss some of the issues and problems that had arisen. He said that at that meeting it was accepted on the behalf of the Defendant they did not have a property department and that a full assessment of the refurbishment requirement for Stockport could not have taken place. At a later meeting Bibby said that Dewsbury the Defendant’s managing director had said that Anderson was the head of the property department although Bibby points out that in the literature he is described as the head of franchise sales.

Anderson, head of franchise sales at the time, had some recollection of talking to Bibby about the £10,000 figure. He identified what in his view was within the process of re-branding, indicating that it was confined to front windows, front door and the inside front area of the premises with the counter, branding on the walls, something to block off the rear area of the premises, either a stand alone divider or a wall. He says that he provided reassurance to Bibby that the average cost for re-branding front of house was £10,000. He agreed however, that there could be a range of cost depending on the size of the premises and other factors. He says that Bibby did not tell him that he wanted to increase the forecast because he wanted to undertake substantial refurbishment of the premises. When referred to the Centre Shopfit scheme document he pointed out that it would not have become available to Bibby until he became a franchisee (which Bibby accepts) but he also said that the minimum requirements in that document and what he referred to as minimum standards were the same. That he subsequently said was not right but he was unable to refer to any document setting out what he described as minimum standards. Bibby said that he asked Anderson whether £15,000 would meet their specification and Anderson assured him that it would. As for Bennett’s estimate, that involved the moving of equipment upstairs so that a meeting space and a design area could be incorporated downstairs and for which there was otherwise not sufficient room. Bibby’s evidence was that what they proposed to do had to comply with the shop fit scheme. Bennett was asked for alternatives because of the amount of the quote, but could not find any practical alternative. He did produce a reduced estimate in the region of £30,000 which he achieved by revising the budget figures for the first floor to allow only for the minimum required. Although there were meetings to attempt to resolve the matter, they failed and in the result none of the work had been done.

With regard to the briefing document first of all, although the Claimant concedes that it was not intended to have legal effect in the sense of giving rise directly to rights and obligations between the parties, it is clearly on its face a document intended for those who are contemplating embarking on a significant business venture and it sets out information likely to be of significance to such people and on the basis of which they would be expected to act.

Also relied on by the Defendant in relation to the cash flow document is a purported no warranty clause in these words “Important Notice. The information contained in this document has been prepared from information supplied by the centre owner. Kall Kwik Printing (UK) does not in the absence of fraud by it, accept responsibility for the contents of this document and gives no warranty, whether express or implied, in relation to it. Recipients of this document should carry out their own verification of its contents.” The Claimant submits that reliance on this clause is misconceived in that it is not the cash flow per se that is relied on, but the discussions that took place about the cost of the shopfit and were accepted by Anderson as his advice in his role as head of the property department, as the briefing document contemplated. Further, it is submitted that the notice is directed to third parties who are provided with the document and who may rely on it rather than to the Claimant as a party to the creation of the document and who would then present it to third parties. It is also clear that the information as to the cost of work to be done was not prepared from information supplied by the centre owner. It was in the first place Anderson’s estimate of cost.

The Defendant also relies on clause 19 of the franchise agreement as excluding liability. It is in the following terms:

“19.1

In this clause 19 the expression “pre-contractual statements” includes written or oral pre-contractual statements or agreements, financial statements, profit projections representations warranties inducements or promises whether or not made innocently or made negligently

19.2

The franchisee’s waiver contained in this clause 19 shall be irrevocable and unconditional but it is expressly provided that such waiver shall not exclude any liability of the franchisor for pre-contractual statements made by it fraudulently.

19.3

The franchisee acknowledges that it has been told that if there are any pre-contractual statements which it considers have been made to it which have induced it to enter into this Agreement it is obliged to submit particulars thereof to the franchisor so that any misconceptions or misunderstandings can be resolved after which an agreed form of pre-contractual statements on which the franchisee has relied may be annexed to and form part of this agreement. The franchisee having been given the opportunity to provide to the franchisor particulars of such pre-contractual statements which he considers have been made it which has so induced it to enter into this Agreement shall be deemed not to have relied upon any pre-contractual statements made or given or purportedly made or given by the franchisor unless such a written statement is annexed hereto. The Agreement together with the Deed of Option and any other document entered into between the parties pursuant to this Agreement therefore contains the entire Agreement between the parties and accordingly no pre-contractual statements shall add to or vary this Agreement or be of any force or effect and unless such pre-contractual statements are either contained in this Agreement or in an annexure franchisee waives any right it may have to sue for damages and / or rescind this Agreement.”

There are further provisions as to waiver.

The Claimant submits that clause 19 does not have the effect of excluding liability in the situation which obtained in this case. The claim made has nothing to do with entry into the franchise agreement, and it is not a claim for misrepresentation. It relates to negligence causing loss in connection with the sale agreement. It is submitted that as a standard exclusion clause it should be construed strictly against the offeror in this case the Defendant. There is no basis it is suggested for extending the scope of the exclusion beyond the words used to the relationship between the Claimant and the Defendant outside the Franchise Agreement. As to the submission that the Defendant owed no duty of care to an organisation that did not exist at the time the cash flow figures were agreed in that the Claimant was incorporated only on 7 September 2007, the Defendant acknowledges Bibby’s intention to conduct the business through a corporate vehicle, but asserts that it was Bibby’s right to change his mind and conduct his business through a partnership or as a sole trader. In my judgement that submission is unrealistic. At all times the Defendant knew and contemplated that a company would be incorporated and the franchise acquired by the company. In advising and dealing with Bibby the Defendant always knew and contemplated that the company ultimately created to pursue the transaction would have the benefit of the knowledge and advice it had given to Bibby in person. Accordingly the fact that the incorporation took place after the advice was given but before the ultimate reliance on the advice with loss being suffered does not prevent a duty of care arising in relation to the ultimate vehicle.

A duty of care arises between Claimant and Defendant where:

In the circumstances it is submitted the Defendant assumed responsibility for advising the Claimant having encouraged the Claimant to accept and rely on its advice and at its own election having created a situation where the Defendant was the Claimant’s only source of such advice. Accordingly there was a close and proximate relationship and one that included the Defendant in the role of adviser. As expressly acknowledged by the Defendant the advice was relevant to and would have impacted on the negotiation of the purchase price for the franchise and accordingly it was foreseeable that negligent advice could cause damage. Given the Defendant’s role in creating the situation and its explicit statements as to what it expected it is fair just and reasonable that the Defendant should owe a duty of care to the Claimant.

As to the issue of breach, the Claimant relies on the following in addition to the evidence of Bibby:

In those circumstances the Claimant invites the conclusion that the Defendant’s minimum requirements for front of house shopfitting, re-branding and installation of the latest corporate image are as per level 1 in the shop fit scheme document, that compliance with that scheme at Stockport necessarily involved the moving of equipment to the first floor and therefore work to the first floor; and that the costs of complying with the Defendant’s minimum requirements at Stockport were in excess of £30,000. The Claimant was advised first that £10,000 would be an adequate budget for the shopfit and later that £15,000 was certainly sufficient. Although the Defendant was in a position to evaluate the cost by reference to its own minimum standards and having regard to the state of the premises at Stockport the advice given was without reference to or consideration of either and accordingly was negligent.

In my judgment the Claimant’s submissions on this aspect of the claim are well founded and for the reasons stated I conclude that the Defendant did owe the Claimant a duty of care, that the advice given to the Claimant was negligent and in breach of that duty of care. Accordingly the Claimant succeeds on liability on the premises claim.

On 12 October, 2007 the Claimant entered into an agreement with the vendor, Mr Kazmierski the owner of the vendor, and the Defendant for the purchase of the vendor’s business including an assignment of the vendor’s lease of the premises for £160,000. (“the sale agreement”). Secondly the Claimant entered into a franchise agreement with the Defendant for the grant of a franchise for ten years for a payment of £20,000. Clause 13.2 of the sale agreement provided as follows:

“Kall Kwik is only a party to this agreement to receive the benefits expressly set out in this agreement. Kall Kwik does not give any warranties or make any representations nor are there to be implied any warranties, representations, terms, covenants or conditions affecting or on the part of Kall Kwik”

Paragraph 14.1 of the sale agreement provided as follows:

“14.1

The vendor will conduct the business diligently and in the ordinary course and pursuant to the franchise agreement and the vendor shall not enter into any capital commitment between the date hereof and the completion date without the prior written approval of the purchaser.

14.2

The vendor agrees to use its best endeavours to introduce the purchaser to the customers identified in the fourth schedule in such a manner as to maintain the customers’ relationship with the business and shall comply with any further reasonable requests by the purchaser to maintain the value of the relationship with existing customers.”

The Claimant relies on the following terms of the franchise agreement:

“Franchisor’s Initial Obligations

to assist the franchisee in opening for business the franchisor will (in addition to training to be provided pursuant to the provisions in that respect herein after contained) provide to or make available to the franchisee the following services and /or goods…

5.2

Consultation and advice with regard to alteration refurbishment renovation or other work necessary for the conversion of the said premises into a Kall Kwik business.

5.3

The provision of the standard shopfitting guidelines for the Kall Kwik business.

5.4

The provision of a project manager whose work scope is detailed in the standard shopfitting guidelines. Provided however that if this agreement is entered into by the franchisee in connection with the purchase of the Kall Kwik centre from a former franchisee the franchisee shall be responsible for the payment of the project management fees….

5.6

Consultation (including consultation with the designated officers and general management of the franchisor) and advice with a view to enabling the franchisee to commence the said business including advice and consultation with regard to the purchase of materials the selection training and supervision of staff accounting bookkeeping advertising and the day to day operation of the said business.

5.7

Advice on the stocking requirements and any merchandising which in the franchisor’s opinion is advisable for the said business prior to its opening.

5.8

Advice on the initial marketing and promotion related to the opening of the said business.

5.9

Arrange at the franchisee’s expense for the supply of the initial equipment fixtures and fittings provided by the franchisor in its then current standard equipment package (“The Equipment Package”)

FRANCHISOR CONTINUING OBLIGATIONS

The franchisor shall at all times during the subsistence of this agreement ….

6.3

provide the franchisee from time to time with advice know-how and guidance in such areas as management finance marketing and methods of operation to be employed in or about the system.

6.4

provide the franchisee with a continuing service which subject to the provision by the franchisee to the franchisor of such information as the franchisor may require will enable the franchisor to monitor the performance of the said business and to offer guidance to assist in the achievement and maintenance by the franchisee of standards of operation service and product.”

Clause 19 provides as follows:

“ENTIRE AGREEMENT; FAILURE TO EXERCISE RIGHTS NOT TO BE A WAIVER

19.1

In this clause 19 the expression “Pre-Contractual Statements” includes written or oral pre contractual statements or agreements, financial statements, profit projections representations warranties inducements or promises whether or not made innocently or negligently.

19.2

The franchisee’s waiver contained in this clause 19 shall be irrevocable and unconditional but it is expressly provided that such waiver shall not exclude any liability of the franchisor for pre-contractual statements made by it fraudulently.

19.3

the franchisee acknowledges that it has been told that if there are any pre-contractual statements which it considers to have been made to it which have induced it to enter into this agreement it is obliged to submit particulars thereof to the franchisor so that any misconceptions or misunderstandings can be resolved after which an agreed form of pre-contractual statements on which the franchisee has relied may be annexed to and form part of this agreement. The franchisee having been given the opportunity to provide to the franchisor particulars of such pre-contractual statements which it considers to have been made to it which has so induced it to enter into this agreement shall be deemed not to have relied upon such pre-contractual statements made or given or purportedly made or given by the franchisor unless such a written statement is annexed hereto………….”

The Claimant’s case is that it was an implied term of the franchise agreement in order to give it business efficacy that in providing advice and services to the Claimant the Defendant would exercise reasonable skill and care.

In October, 2007 the scheme operated by the Defendant included a programme for the launch for the franchise of a franchisee.

On 4 November, 2007 the Claimant entered into an agreement with the Defendant called the marketing launch plan agreement. That consisted of:

It is in essence the Claimant ’s case that it was required to use a system known as Marlin which was supplied by the Defendant as part of its standard equipment package on the basis that the Defendant would train the franchisee and its staff to use it. There was also a web based marketing system called Destination Delivery and an academy support team was to be provided by the Defendant to the Claimant to work with the Claimant providing advice and assistance to ensure a successful launch and the achieving of business objectives, including the creation and implementation of an academy support plan.

The following breaches are relied upon by the Claimant :

As a result of the breaches of the franchise agreement and the marketing launch plan agreement it is the Claimant s case that:

In June 2007 Bibby met Kazmierski and asked him about his data base and marketing. Much of that Kazmierski kept in his head according to him or in his business cards folder. However Kazmierski did have client related data available in his Sage accounting package and Bibby having worked with Sage previously assumed that it would be possible to transfer data from Sage onto Marlin. Bibby discussed his concerns with Anderson after talking to Kazmierski and Anderson assured him that the data would be transferred onto Marlin prior to the launch of the business. Bibby made it clear at the time that he would not proceed with the purchase if he was left without historical data. On 1 November 2007 Bibby attended the Defendant’s offices to go to a planning meeting to discuss the launch of the resale centre in Stockport. Anderson was present at the meeting and confirmed that work on Marlin was being progressed; he mentioned no problem with it. However when Bibby met Russell Codd the Defendant’s Academy Support executive for the first time they discussed Marlin and Marketing Walkabout, Codd mentioned that he did not think it was possible to put the relevant data onto Marlin but said that he would look into it. Anderson’s response was similar, namely that Maddocks, the Defendant’s IT director would look into it. During his training week Bibby raised the matter again this time with Ivall and was told it was being dealt with. At that time it was his expectation that the walkabout data to be collected in November and December and the existing client data would be entered onto Marlin as soon as possible. When a personal computer was delivered to the Stockport centre before Christmas by the IT installer recommended by the Defendant so that Marlin could be installed on it Bibby still took it that the customer data history taken from the Sage account data would be imported onto Marlin. However, by 2 January 2008 when the centre reopened it was discovered that Marlin had not been installed and it took 8 working days for the installation of the software. Bibby had reservations about the effectiveness of Marlin and in particular was of the view that its functionality was limited to lithographic printing without job costing or pricing functionality for design, large format printing, direct mail, digital and variable data printing, which represented a direction in which the business was hoping to move. His main complaint remained that the historical customer data had not been installed, despite assurances from the Defendant’s senior management that it was being dealt with. On 16 January 2008 Bibby emailed Codd to inform him that he would not be using Marlin for accounting purposes expressing the view that it was not fit for purpose. However, he agreed that he would use it for lithographic job costing and raising sales invoices so that the franchise fee calculations could be put on the system and again requested that the historical customer information be imported on to the system. Subsequently the Defendant refused to import the historical data saying that it would have to be done manually, not electronically, and this would take far too long and neither had they agreed to do it. As to the contact data, the picture that emerges is that Bibby was led to believe on a number of occasions that the contact data would be installed. There was equally no reason why it should not have been, but it is equally clear that it was not so installed. As to the marketing launch plan agreement of 1 November, an agreement which has as part of it the graphical plans at 3.717 and 3.718, Ivall accepted that that document explicitly provided for the Defendant to provide the spreadsheet, ask the vendor for its “top 200” and install the contact data from both sources onto Marlin, Ivall also accepted that the Claimant could only install contact data as individual manual entries and only the Defendant could arrange for the uploading of electronic data into Marlin. Joyce admitted those matters in her evidence, whilst acknowledging she was not qualified on IT systems. Relevant also to this aspect of the matter is the fact that the Defendant requested and obtained the vendor’s contact data, worked it into a form in which it could be loaded onto Marlin and synchronized with Destination Delivery, but equally it was the fact that it never was uploaded and there appears to be no reason even suggested for that not happening, save for confusion and Bibby’s reservations about Marlin neither of which in my judgement has any relevance to this issue.

The Defendant submits that albeit that it was accepted that it was agreed to install Marlin insofar as it was possible, there was in fact no contractual basis which imposed any requirement on the Defendant so to do, and even the briefing document mentioned Marlin only in the context of installing it providing training and supporting it. The Claimant relies on Bibby’s evidence the effect of which was that the Defendant would provide him with the marketing launch plan, subject to his undertaking the walkabout, that he was told that the contact data would be installed as well as given assurances about the historic data, and upon the graphic plan which constituted part of the marketing launch plan explicitly provided, as Ivall accepted , for the Defendant to provide the spreadsheet, ask the vendor for its “Top 200” and install the contact data from both on to Marlin and Destination Delivery. The evidence also establishes in my judgment that the Defendant did ask for and obtain the vendor’s contact data, get it into a form in which it could be uploaded on to Marlin, uploaded it on to a Marlin scheme and arranged for synchronisation with Destination Delivery. There was in my judgment a contractual obligation on the Defendant arising out of the marketing launch plan agreement to complete the installation on Marlin for the Claimant’s benefit of the vendor’s customer data supplied to the Defendant including the data relating to the vendor’s top 200 clients. The Defendant was in breach in failing to complete the installation on Marlin and Destination Delivery of that data. Accordingly in my judgement the Claimant succeeds on this aspect of the claim.

ACADEMY SUPPORT

In my judgment the above evidence establishes breach of Clause 6 (3) of the franchise agreement that the Defendant would provide the Claimant from time to time with advice, know how and guidance in such areas as management finance marketing and methods of operation to be employed in or about the Kall Kwik business. Such advice, know how or guidance in respect of which there was the obligation to exercise reasonable skill and care, was either deficient or entirely lacking in the respects set out.

THE MARKETING LAUNCH PLAN AGREEM,ENT

Bibby’s evidence was that he was unaware of any press release by the Defendant distributed to the trade and local press to announce the change of ownership. It is accepted by the Defendant that there was no press release, but Ivall’s evidence was that that was because no refitting or refurbishment had taken place.. That was not in my judgment reason for delaying the press release and was in consequence a breach of the agreement.

As to the establishing of a web site and email address on the Defendant’s system from the first day of opening, Bibby’s evidence was that the web site was launched with no details about the change of ownership and additionally the email address was incorrect and not changed until he discovered that fact in July 2009 when a prospective customer who had sent an email had followed it up by phone. In addition, the briefing document had indicated that the web site would contain an e-commerce option for valued clients, and again Bibby’s evidence was that it did not and does not.

As to the sustained mailing, Bibby undertook the marketing walkabout in and around Stockport in late November and early December 2007 collecting 157 prospect contact details. Although the target was 200 he was told by Gloss and Codd that 157 was fine to work with because a lot of the initial marketing effort was focussed on existing clients and making sure they stayed with the business. When however the Claimant opened for business on 2^nd January 2008 because of the difficulties about Marlin they were unable to send out the first month’s marketing material using the Destination Delivery online tool because that interfaced with Marlin and the physical transmission or delivery of the marketing material was carried out by the Defendant not the sale centre. What the Centre did was to activate the automated delivery through options on Destination Delivery. Thus the Defendant was not able to send out via Destination Delivery the full number of new owners arrival cards to the top 200 customers due to the delays in setting up Marlin and because the customer data was not available on Marlin. New owner’s arrival cards were sent out to only 69 customers in early February, those being customers who had done business with the centre in January 2008, and had had their details inserted into Marlin as the work came in. Bibby and his wife spent the next following 2 to 3 months seeking to put customer data on to Marlin which they could only do on a piecemeal basis. From February to August 2008 confirmatory emails were received that their data had been processed and that awareness cards and the D2D magazines where being sent out to existing clients. However on 21 August 2008 in conversation with Sheri White in the Defendant’s marketing department, Bibby discovered that the Defendant contrary to earlier assertions had not in fact sent out any of the awareness cards or D2D magazines during the whole of that year to date. In the later exchange of emails, when Bibby requested details of what had actually been sent out, Ivall confirmed that nothing other than 1 awareness card to clients had been issued for the whole of 2008. Delays and failures in relation to the awareness cards and D2D magazines are accepted by Caroline Joyce though she contends that the likely impact on the Claimant’s business was minimal.

Provision was also made for personalised mailings by the Defendant to clients 21 to 50, that is the bottom 30 of the top 50 clients or potential clients, but the position on the evidence is unclear and insufficient to establish this aspect of the claim. Similarly, the allegation set out in paragraph 14g of the re-amended particulars of claim relates to mailings of the Defendant’s “Winning Kombination” announcement cards during the first year of the franchisee’s business. That was an element which did feature in the briefing document but Bibby’s evidence was that it was absent from the Marketing Launch Plan contract. The evidence is insufficient in my judgment to establish any breach in relation to this matter.

As to telemarketing on the evidence the position was very unsatisfactory. A company called Broadley Speaking was appointed by the Defendant as preferred supplier for telemarketing. Bibby’s evidence was that he expected them to be up to the job and have a track record of success. The commitment was that for 9 months Broadley Speaking were committed to making 12 hours of calls on the Centre’s behalf and as suggested by the destination delivery material guaranteeing four appointments. Russell Codd advised that those appointments should only be with customers who had clearly advised the telemarketer of a specific need that could be fulfilled by the centre. In January 2008 Broadley Speaking reported making 6 appointments from 9 hours of calls. 2 of those appointments were requests for information, one did not turn up and with one that was followed up he was not expecting to see Bibby. The remaining 2 did not have any immediate requirements. Bibby complained to Adrian Gloss expressing his dissatisfaction. In February, Broadley Speaking reported making a further 6 appointments but they were equally unsatisfactory, one of them failing to turn up, another had a request for information, another was a client of another Kall Kwik centre. One was a commercial printer and direct competitor, and the last one was not expecting to see Bibby on the day of appointment and had no requirements. Bibby spoke both to Gloss and to Codd to seek their assistance in improving the performance of the telemarketing company, Gloss spoke to Broadley Speaking in February but there was no improvement. In March 2008 a further 6 appointments were reported only 2 of which turned out to be appointments that met the Kall Kwik criteria. In April Bibby wrote twice to Laurence Knott regarding an appointment made by the prospecting company where the person had not turned up and of another occasion when a prospect had cancelled a meeting , not having sought one and having only asked for some information. He also contacted both Adrian Gloss and Russell Codd to seek their assistance in approving the performance of the telemarketing company but in June 2008 no calls were made at all. In July August and September the company did not deliver the number of hours required nor the number of appointments averaging only 3 per month and the quality of the meetings continued to be poor given that few of them had any specific design or print requirement. From October 2008 Bibby was told that the Claimant would have to pay for the continued use of Broadley Speaking’s services but as the results for October and November were as bad as before the agreement was terminated. Ivall’s evidence was that Broadley Speaking had changed the person making the calls on behalf of the Defendant when complaints were made but that had not improved the quality of the appointments. In the result the relationship with Broadley Speaking ended when there was a switch to a company called Fluent from 1 June 2008, but contrary to Dewsbury’s letter of 26 June 2008, the Claimant was not transferred to Fluent nor was the telemarketing spend extended for an additional 6 months. The Defendant concedes that the position was On the evidence, in my judgement the telemarketing follow up was seriously deficient and effectively so acknowledged by the Defendant in the company change that took place in June 2008.

The requirement for monitoring and evaluation of the marketing activity of the Claimant by the Defendant appears to relate to quarterly meetings with the first such meeting taking place in May 2008. The Defendant accepts that such operational review is part of the MLP contract and that it did not happen, though the further submission is made that would not be directly causative of lost business. The allegation in paragraph 14 i of the Particulars of Claim is in my judgement made out, having regard to the concession made by the Defendant.

As to the matters set out in paragraph 14j, relating to the use of brochures and CD Rom business cards, again no breach is established on the evidence. Ivall’s evidence was that in accordance with the graphic plan, brochures and referral packs were provided.

It follows from the above that in breach of the marketing launch plan agreement the Defendant failed to provide materials or services referred to in paragraph 42 a),b),c),d),e),h) and i) above.

Accordingly on liability under both heads of claim there will be judgment for the Claimant, with issues of causation and quantum of damage to be tried separately as ordered.