FRANCHISE LAWS THAT ARE SPECIFIC TO THE AUTOMOBILE INDUSTRY

Certain traditional product franchise or dealer relationships, like those in the automobile industry, are the subject of special federal or state regulations. Automobile retail distribution through the use of franchise or dealer agreements has expanded greatly in the last fifty years, leading to many conflicts and tensions between franchisors, manufacturers, or suppliers and franchisees or dealers. In the past, the law vastly favored auto franchisors, manufacturers, and suppliers in these disputes. In fact, their bargaining strength was so disproportionate to franchisees and dealers that the franchisee or dealer was often left without any remedy in court upon wrongful termination or nonrenewal.

Because franchisors, manufactures and dealers were perceived as abusing this power in the termination or nonrenewal of automobile dealer franchises, the Automobile Dealer Suits Against Manufacturers Act was enacted, and specifically addresses the rights of franchisors and dealers in this industry. Essentially, the regulation sets forth “good cause” termination or nonrenewal requirements to end franchise relationships. The Act provides that a car dealer may recover damages if its franchisor, manufacturer or supplier fails to act in “good faith” in complying with the term of their agreement.

In addition to this federal law, almost every state now has its own laws governing franchise relationships in the auto industry. Generally, these state laws tend to be more franchisee and dealer friendly than the federal law. States’ auto dealership laws normally bar franchisors, manufacturers and suppliers from retailing cars through means other than franchise or dealer agreements. In other words, state franchise laws generally prohibit franchisors, manufacturers and suppliers from selling their cars through outlets other than licensed dealerships. States’ auto dealership laws also constrain the circumstances under which a franchise relationship can be terminated, cancelled or transferred.

Further, similar to the federal law, all states prohibit termination or non-renewal of a franchise or dealer agreement absent “good cause” to do so. In addition, although state laws may vary considerably, many also protect against “encroachment,” whereby a car manufacturer opens another dealership in the same market area as one of its established franchised dealers. Many state laws also make it illegal for manufacturers to price discriminate among franchisees or dealers. Stated another way, some state laws make it illegal for franchisors, manufacturers and suppliers to offer a lower price to a franchisee or dealer without offering the same to all franchisees or dealers in the state or geographic area.

THE SUCCESS OF THE GOLDSTEIN LAW FIRM IN REPRESENTING DEALERS AND FRANCHISEES IN THE AUTOMOBILE INDUSTRY

Jeff Goldstein and the Goldstein Law firm know the complicated schema behind the franchise laws that are specific to the auto-industry, and have represented only dealers and franchisees for over thirty years. Jeff Goldstein and Goldstein Law are not limited to any particular state in its representation. In fact, Attorney Goldstein the other franchise lawyers at Goldstein Law have advocated within the federal, as well as many states,’ legal framework to achieve outstanding results on behalf of their franchisee and dealer clients. In this ever-changing area of law, an experienced franchise lawyer can make all the difference; whether your auto franchise or dealership is at risk of encroachment, termination, non-renewal or discrimination, Jeff Goldstein and his associations have the knowledge and experience to protect you and your business.

WHAT TO DO IF YOU SUSPECT YOUR AUTO FRANCHISE OR DEALERSHIP IS AT RISK BECAUSE OF YOUR FRANCHISOR, MANUFACTURER, OR SUPPLIERS’ CONDUCT

As with many areas of franchise law in general, timing is crucial for automobile franchisees or dealers in successfully defending against wrongful termination, encroachment, or discrimination by their franchisee, manufacturer or supplier. To effectively protect your auto franchise or dealership, you should call auto franchise attorney Jeff Goldstein at the Goldstein Law Firm at 202-293-3947 as soon as you suspect your business is threatened by termination, encroachment, or discrimination. Don’t let your franchisor, manufacturer, or suppliers’ unfair conduct destroy your personal and business finances.

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Goldstein Law Firm, PLLC

1629 K St. NW, Suite 300,
Washington, DC 20006

Phone: 202-293-3947
Fax: 202-315-2514

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