Appeals court rules for Girl Scouts council (UPDATE)

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SHEBOYGAN, Wis. (AP) — A southeastern Wisconsin Girl Scouts council carries the same rights as a franchise and can therefore resist the national organization’s plans to merge and reduce the number of individual councils across the country, an appeals court has ruled.

The 7th U.S. Circuit Court of Appeals ruled Tuesday that the Girl Scouts of Manitou Council, which has cookie sales topping $1 million annually, is akin to a franchisee and that the national group’s plan to reduce the number of councils from more than 300 to 112 would violate Wisconsin’s Fair Dealership Law. The law is meant to prevent franchisers from taking, without good cause, the goodwill built up by a franchisee relying on an exclusive territory.

“From a commercial standpoint, the Girl Scouts are not readily distinguishable from Dunkin’ Donuts,” the three-judge appeals panel wrote.

The Sheboygan Press reports that the panel pointed out that the national group initially said the realignment plan, which was instituted in 2006, was meant to improve economies of scale but later said it was intended to promote racial and ethnic diversity of the Girl Scouts.

“This ground for overriding the fair-dealership law cannot be taken seriously in the absence of any evidence of a connection between realignment of the councils and promotion of diversity,” the panel wrote. “If it wants Manitou to recruit minority girls more vigorously, it can order Manitou to do so.”

The Sheboygan-based council that serves Ozaukee, Washington, Calumet, Dodge, Fond du Lac, Manitowoc and Sheboygan counties would have been split three ways under the Girl Scouts of the USA plan. It sued to stop the realignment in 2008.

Girl Scouts of the USA said in a statement that it respected the court’s decision, but noted that “we continue to believe that a high capacity council model is the best approach for creating a more consistent and stronger program for our girls.” Spokeswoman Michelle Tomkins said she couldn’t immediately comment Wednesday about whether the organization planned further legal action.

Manitou Council CEO Denise Schemenauer told the Milwaukee Journal Sentinel that the organization has been operating normally under an injunction that prohibited the merger pending the appeal.

“We’ve been providing Girl Scouting here for 55 years, and we do a very good job,” she said. “We continue to enjoy a good working relationship with GSUSA and our neighboring councils and anticipate that this will continue.”

The council was the only one to challenge the reduction though a handful of other councils were awaiting the case’s outcome.

Information from: Milwaukee Journal Sentinel, http://www.jsonline.com