FORT SMITH, Ark.-The battle between Treadco Inc. and its longtime retreading supplier, Bandag Inc., has moved to the courthouse. Treadco, a commercial tire dealership and retreader based in Fort Smith, filed suit Oct. 27 against Bandag and five of its officers, claiming the tread rubber and retreading equipment supplier aims ``to destroy Treadco's business as a Bandag franchisee and prevent Treadco from competing in the retread tire business. . . .''
Subsequent to the filing, Treadco obtained a temporary restraining order from the Sebastian County (Ark.) Chancery Court, barring Bandag and its officers from luring away any more Treadco employees or from diverting or soliciting Treadco customers to buy from competing Bandag franchisees.
The nearly year-long confrontation has been brewing since Treadco began courting other suppliers. The company opened a Hercules-Cedco retreading plant in Las Vegas mid-year and is constructing a retreading facility in St. Louis that will use technology and tread rubber from Bridgestone/Firestone Inc.
The situation came to a head Oct. 20, when then Treadco President and COO J.J. Seiter, Ronald W. Hawks, vice president of sales, and Ronald W. Toothaker, vice president for quality control, abruptly resigned to work for Bandag in dealer development.
But Treadco also claims Bandag has been conducting other acts of vindictiveness against its largest customer: declining to renew franchise agreements for eight Treadco plants that expire next year and leaving the fate of Treadco's other 18 Bandag plants up in the air; soliciting other Treadco employees; and trying to lure away Treadco's commercial customers.
Treadco is seeking unspecified damages against Bandag, CEO Martin Carver, Vice President of Sales William Sweatman and Messrs. Seiter, Toothaker and Hawks. No trial date has been set.
Treadco claims Bandag violated the Arkansas Franchise Practices Act by refusing to deal with its franchisee in a commercially reasonable manner and in good faith, and violated Arkansas' Deceptive Trade Practices Act by depriving Treadco of the benefit of its franchise agreements and interfering in its business.
The suit alleges Treadco's three former executives violated the Arkansas Trade Secrets Act and contends Mr. Seiter violated his fiduciary duty to Treadco by transmitting Bandag's employment offer to Messrs. Toothaker and Hawks.
Bandag declined comment on the pending litigation.
Bandag offered Mr. Seiter a $1 million compensation package and induced him to recruit Messrs. Hawks and Toothaker with $200,000 signing bonuses, the suit said.
The offer also was extended to Daniel Evans, then Treadco's vice president of administration, but he declined, the documents said. Treadco has since promoted Mr. Evans to executive vice president and COO.
In a written statement to Treadco, Mr. Seiter's attorney said Mr. Seiter notified Treadco Chairman Robert Young III about Bandag's offer of employment two months before the executives resigned.
Mr. Seiter at one point offered to resign but was told by Mr. Young that was not necessary, the letter said.
It went on to say Mr. Seiter is unaware of what Treadco documents he has in his possession due to his abrupt departure. ``At the time Mr. Seiter was preparing to vacate his office, he was approached by Mr. Young at the Treadco office and told he had `15 minutes to get his belongings and get off the property or he would be arrested for trespassing.'*''
The suit also contends that in retaliation for Treadco courting other retreading suppliers, Bandag has been systematically trying to ``destroy'' Treadco's business, citing these alleged incidents:
Referring to Treadco's 18 other Bandag franchise contracts due for renewal in the next few years, Bandag's Mr. Carver told Mr. Young that Bandag would not work with Treadco as long as Treadco was producing truck retreads with non-Bandag processes.
During a Bandag sales meeting in August, William Herd, then Bandag's senior vice president of sales and marketing, donned Indian ``war paint'' and announced that Bandag had declared war against Treadco;
Thereafter, Bandag representatives and sales managers solicited Treadco customers to switch their business over to other Bandag franchisees;
Bandag attempted to hire away four Treadco retread plant managers by offering to help them finance their own Bandag franchises to compete with Treadco or to place them with competing franchisees.