Bell Dealers Sue Company, Claim Millions in Damages Over Lower Profits

More independent Bell dealers have joined a lawsuit against Bell Mobility, alleging the latter has unfairly reduced compensation, reports The Globe and Mail:

More than 30 plaintiffs – who together own about 110 Bell-branded stores primarily in Ontario and Quebec, acting as exclusive retailers for Bell wireless devices and services as well as home phone and Internet – are now each seeking damages of $2.5-million, plus legal costs.

Over 30 plaintiffs now seek $2.5 million each plus legal costs, alleging Bell’s dealer compensation programs established in 2012 or newer are “in breach of its franchise agreement[s]” and provide “an unreasonably low rate of return” for the “sole benefit” of Bell.

An amended statement provided by dealers reveal the cost to start “an average franchised Bell Mobility store” at $500,000, which includes ongoing fixed costs such as rent and salaries. The lawsuit claim reads “The viability of each Bell Mobility dealer … is fundamentally dependent on its ability to earn revenues from the commission structure set by [Bell].”

Bell’s statement of defence denies any wrongdoing sand says the 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.” The carrier says at no time did it guarantee or promise “to any of the plaintiffs that related to the future profitability or success of any individual dealer.”

The plaintiffs argued in a reply filing “profitability is the essence of the reason a dealer enters into a dealer agreement. Although not guaranteed by the defendant, the defendant must take into account the dealer’s reasonable expectations for profit in the context of the franchised business and investments made by the dealers in their businesses in setting compensation.”

The lawsuit is currently in its discovery phase, with both parties’ lawyers examining witnesses before the case proceeds further.

Bell’s dealers settled a previous case with the carrier that sought over $200 million in damages back in 2011. Some dealers have filed complaints against Bell, citing the company has lowered commissions and favoured other retail outlets instead. These include Best Buy, the electronics chain The Source (which Bell acquired in 2009) and its recent 50% acquisition of Glentel, which operates mobile stores under brands such as Wireless Wave, Tbooth Wireless and more.