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The Franchise Memorandum

Refusal to Approve Transfer Does Not Give Rise to Tortious Interference
Posted in Transfers

In Pasqualetti v. Kia Motors Am., 2009 WL 3245439 (N.D. Ohio Sept. 30, 2009), the court rejected Pasqualetti’s claim that Kia Motors’ refusal to approve the transfer of a dealership to him constituted tortious interference. The court stated that a tortious interference claim will not lie “where the defendant was the source of the business opportunity allegedly interfered with” and that “[a]s a matter of public policy . . . franchisors should not fear potential tort liability for simply deciding not to contract with a prospective franchisee.” Citing decisions from other jurisdictions, the court ruled that “where a sale of a franchise is subject to the approval of a franchisor pursuant to a contract between the seller and the franchisor, the franchisor cannot be characterized as an ‘outsider’ to the proposed transaction and thus is not subject to a claim of tortious interference.”

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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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