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The Franchise Memorandum

Posts from December 2012 - Issue 162.
Posted in Transfers

A federal court in Maryland recently denied a truck manufacturer’s motion to dismiss its dealer’s counterclaims in an action regarding the unauthorized transfer of a dealership. In Paccar Inc. d/b/a Peterbilt Motors Company v. Elliot Wilson Capitol Trucks LLC, 2012 U.S. Dist. LEXIS 166962 (D. Md. Nov. 21, 2012), Peterbilt filed suit alleging that Elliot Wilson had materially breached its dealer agreement by selling rights to the dealership without prior approval. Elliot Wilson responded by filing counterclaims alleging that Peterbilt was aware of the potential sale and ...

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A federal district court in Minnesota has approved a manufacturer’s decision to file suit in its home jurisdiction to resolve a dispute with a distributor in Hearth & Home Technologies, Inc. v. J&M Distributing, Inc., 2012 U.S. Dist. LEXIS 170405 (D. Minn. Nov. 30, 2012). J&M, a distributor of fireplaces and other hearth products, in 2011 and 2012 had sent a series of letters to Hearth & Home Technologies (HHT) alleging that HHT gave favorable pricing to other distributors in violation of federal antitrust laws, and that HHT violated the parties’ distributorship agreement by ...

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Posted in Terminations

The United States District Court for the Northern District of California recently denied a manufacturer’s motion for summary judgment on a distributor’s claim for a violation of the New Jersey Franchise Practices Act (NJFPA). Oracle America, Inc. v. Innovative Technology Distributors LLC, 2012 Bus. Franchise Guide (CCH) ¶ 14,924 (N.D. Cal. Sept. 18, 2012). As a “value added” distributor of Sun Microsystems (Sun) technology products, Innovative Technology Distributors (ITD) sold Sun’s products in conjunction with support and customization services. When Sun was ...

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Posted in Contracts

In Andy Mohr Truck Center, Inc. v. Volvo Trucks North America, 2012 U.S. Dist. LEXIS 145057 (S.D. Ind. Oct. 9, 2012), the United States District Court for the Southern District of Indiana denied Volvo’s motion to dismiss a dealer’s breach of contract claims. According to plaintiff Mohr, Volvo represented that it would grant him a Mack Trucks franchise in a separate transaction if he first entered into an agreement to operate a Volvo Trucks dealership. Mohr accepted his appointment as a Volvo Trucks dealer based on the understanding that he could later combine that franchise with a ...

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Last month, another state appellate court in New York affirmed summary judgment in favor of two franchised Audi dealers who challenged as discriminatory Audi of America’s incentive programs designed to encourage dealers to purchase more Audi vehicles returned by customers at the expiration of their leases (so-called “lease-returns”). Audi of Smithtown, Inc. v. Volkswagen of America, Inc., d/b/a Audi of America, Inc., 2012 N.Y. App. Div. LEXIS 7586 (N.Y. App. Div. Nov. 14, 2012). The “CPO Purchase Bonus” was a payment by Audi to dealers. Existing dealers qualified for ...

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Posted in Contracts

A New York appellate court has rejected a statute of frauds defense to a claim for breach of oral exclusive distribution agreements. Last Time Beverage Corp. v. F & V Distribution Co., LLC, 2012 N.Y. App. Div. LEXIS 6092 (N.Y. App. Div. Sept. 12, 2012). This case began when two separate groups of soft drink distributors sued their common supplier for several breaches of the distribution agreement between one group of distributors (Last Time Beverage) and the original franchisor. The distributors alleged that the supplier had changed their distribution rights without additional ...

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Posted in Fiduciary Duty

In another dealership case involving Audi brand automobiles, the Appellate Division of the Supreme Court of New York overturned a decision by a lower court and granted Audi of America, Inc. summary judgment on the plaintiffs’ fiduciary duty claims. Legend Autorama, Ltd. v. Audi of America, Inc., 2012 N.Y. App. Div. LEXIS 7602 (N.Y. App. Div. Nov. 14, 2012). Audi and the plaintiffs, who were franchised Audi dealers, were parties to dealer agreements. After entering into the dealer agreements with the plaintiffs, Audi entered into another dealer agreement with a separate party that ...

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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