Despite another quarter of revenue growth, it appears all is not well at Bell. After settling a $200-million dollar lawsuit with its franchise dealers in 2011, the company once again finds itself in court, facing complaints from its resellers.
In a case that was originally filed at the Ontario Superior Court of Justice in Toronto on June 2013, and is now in its discovery phase, more than 30 plaintiffs, who together own 110 Bell-branded stores, are each seeking $2.5-million from the company.
According to the claim, Bell’s resellers are suggesting that the compensatory programs the company instituted in 2012 were “in breach of its franchise agreement[s]” with dealers, and that they were written to provide “sole benefit” to the company while providing “an unreasonably low rate of return” to resellers.
According to court documents, it costs approximately $500,000 to open a Bell-branded store. Moreover, dealers claim that “the viability of each Bell Mobility dealer… is fundamentally dependent on its ability to earn revenues from the commission structure set by [Bell].”
Bell states that it has considered the “interests of its independent dealers… and acted at all times in good faith” and that its compensation agreements “represent rational business decisions made by Bell Mobility for valid economic and strategic reasons, including market and industry-specific reasons, reasons of competitiveness and the business performance of the parties.”
Bell also noted in its statement that it did not make any promises “to any of the plaintiffs that related to the future profitability or success of any individual dealer.”
Bell, apart from its deal with resellers, also distributes its product through The Source, Glentel, and Best Buy locations across Canada.
[source] The Globe and Mail [/source]