A Red Owl is a convenience store. Hoffman, who operated a bakery, and Red Owl Stores, Inc., were negotiating the granting of a Red Owl franchise to Hoffman.
The negotiations began in 1960 and conclude in 1962 without the parties ever having reached agreement on the terms for granting the franchise, which Red Owl Stores finally refused to grant Hoffman.
During the negotiations, Red Owl Stores had repeated assured Hoffman that he would be granted a Red Owl franchise, and had suggested a number of preparatory steps for Hoffman to take prior to obtaining the franchise.
Hoffman took all the suggested steps. These included: buying a small grocery store to gain experience; selling the profitable store to prepare to open a Red Owl store; selling his bakery business; and, raising significant money for the initial capital investment.
Hoffman sustained significant financial losses as a result of taking the preparatory steps. The question is whether he is entitled to compensation from Red Owl Stores.