The Franchise Memorandum

A federal court in Georgia denied a manufacturer’s motion for summary judgment related to its withholding of consent to a proposed transfer of a car dealer location. Savannah Motorcars, LLC v. Volkswagen Grp. Of Am., Inc., 2022 WL 866342 (S.D. Ga. Mar. 22, 2022). Volkswagen refused to approve the proposed sale of a Savannah dealership, citing missing documentation and information, as well as insufficient time for review. The dealership sued, and Volkswagen moved for summary judgment on the basis that it reasonably withheld its consent under the dealership agreement and applicable law.

The court denied the motion. First, it held that there were questions of fact as to whether Volkswagen was provided with sufficient information and time to evaluate the proposed transfer. Second, it rejected Volkswagen’s attempt to invoke its right to first refusal to justify its rejection, as Volkswagen’s right of first refusal does not render a proposed transferee unfit or unqualified. Finally, the court held that there were questions of fact as to whether the proposed transferee met Volkswagen’s financial requirements.

*Brandon Mickelsen is a Law Clerk for Lathrop GPM who contributed to the writing of this post.