The Franchise Memorandum

The United States District Court for the Eastern District of Missouri recently granted a manufacturer’s motion to dismiss several counts of a complaint relating to the termination of a John Deere dealership. In Heisel v. John Deere Const. & Forestry Co., 2008 WL 53232 (E.D. Mo. Jan. 2, 2008), the court found that John Deere’s termination of a long-standing dealership following the death of its principal did not, as a matter of law, violate the Missouri Farm Equipment Act or the Missouri Construction Equipment Act. Both of these statutes prohibit dealership terminations unless there is “good cause” for the termination. However, “good cause” is defined under both statutes to include “withdrawal from the dealership of an individual proprietor.” The court found that the term “withdrawal” includes the death of the proprietor.

The court also dismissed the plaintiff’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The dealership agreement in question required the company to continue a relationship with the heirs of the dealer’s principal only if the company believed the heirs “to be capable of carrying out the obligations thereunder,” which the company apparently did not believe.