The United States Court of Appeals for the First Circuit held this month that neither federal law nor Massachusetts state law precluded termination of a Land Rover/Jaguar dealer in Wagner & Wagner Auto Sales, Inc. v. Land Rover North America, Inc., 2008 WL 4823138 (1st Cir. Nov. 7, 2008). In upholding the district court’s finding of “good cause” to terminate, the appeals court focused on the dealer’s failure to meet contractual deadlines for getting approval of plans for a new dealership location. In turn, the First Circuit found no evidence of “bad faith” on the part of the supplier.
In an interesting side note that could apply to almost any dealer protection law, the appeals court stated that the Massachusetts statute was designed to protect long-time, established dealerships from abrupt termination. Because the plaintiff in this case had been granted only a “temporary” dealership that it was looking to relocate into a to-be-constructed new facility, the bases for protection were not deemed to be as strong.
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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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