Rent-A-Wreck, family owners struggle through legal disputes

In this case, the Blums used Bundy to carry out their own agenda and achieve personal pecuniary gain. Before Bundy could resell H- Quad's territories and put cash in the pockets of the Blums, the Blums needed H-Quad out of the way, said H-Quad's attorney, Miroslaw Smorodsky, in an April brief.

The suit, which settled for an undisclosed sum May 4, the same day it was set to go to trial, detailed alleged abuses spanning many months.

According to the court documents, the antagonistic behavior began in March 2000 when Bundy stopped maintaining buffer zones between competitors and allowed a Rent-A-Wreck store to open less than one mile from H-Quad's Orange Park, Fla., location.

Shortly thereafter it yanked H-Quad's Internet addresses and links from its corporate Web site, making it impossible for customers to locate certain H-Quad stores online, according to court documents.

In May of the same year, Bundy accused H-Quad of failing to pay its March fees - a claim that was followed by an audit request and a termination notice for the company's Orlando, Fla., store, the lawsuit said.

Bundy then hit H-Quad with an onslaught of audit demands, court documents said, that culminated in a 2001 lawsuit, which ultimately forced H-Quad to submit to an audit.

In the meantime, Bundy rebuffed H-Quad's efforts to renegotiate its 10-year licensing agreement set to expire in December 2002. Instead, it slammed the company with a default letter, alleging it violated its contract by using the name Aero Link Auto Rental to do business.

H-Quad argued the existence of the Aero Link name was known and encouraged by Bundy as part of its own marketing policies - using a trade name beginning with the letter A ensured a telephone directory listing ahead of the competition and helped the franchisee get business from customers who might not be inclined to do businesses with an operation with the name wreck in it.

The licensing agreement between H-Quad and Bundy subsequently expired in December 2002 and Bundy filed a second lawsuit against the Hanleys alleging the continuing operation of Aero Link breached the contract.

Calling the allegations levied by the Hanleys the typical litigation of the franchise business, Bundy's attorney, McDaniel, said Bundy never had an interest in driving the highly successful Hanley brothers out of business.

They [Bundy] had a contractual right to conduct audits, they have the right to do that and they were done on a routine basis, said McDaniel.

Very few audits resulted in termination, McDaniel added. And many of them found that franchisees owed large sums of money.

The notion that a franchisor would try to force a franchisee out of business in order to sell to another franchisee is not unheard of, said Philip F. Zeidman, a partner and franchise attorney with Piper Rudnick LLP in Washington.

A franchisee in difficulty is likely to strike back, he said. They are going to reach out for any kind of counter claim they can use.