SW Legal studies in Business

State Auto Franchise Regulations Apply to Existing Franchises, Not Applications for Franchises
Description Appeals court held that the New Hampshire statute prohibiting automobile makers from any acts of bad faith with respect to automobile franchisees does not apply to any person who applies for a new franchise, including an existing franchisee who sells other models of cars.
Topic Business Organization
Key Words Automobile Franchises; State Regulation; Bad Faith
C A S E   S U M M A R Y
Facts Casaccio owned and operated Rochester Lincoln-Mercury in Rochester, New Hampshire, to sell and service Lincoln and Mercury cars. Wanting to sell Fords, he applied to Ford to takeover an existing franchise, Rochester Ford, which he agreed to buy from the owner, subject to approval from Ford. His request was rejected by Ford. He was told that his franchise was not a good performer, so they would not allow him to take over another franchise. Casaccio sued Ford, contending that it violated New Hampshire's statute regulating "business practices between motor vehicle manufacturers, distributors, and dealers." The law prohibits acts of bad faith. The trial court dismissed the suit; Casaccio appealed.
Decision Affirmed. The statute protecting automobile franchisees against acts of bad faith by the manufacturers does not apply to applications to obtain a new franchise, even if the application is from an existing franchisee who sells other brands made by the same manufacturer. Hence, Casaccio had no basis for a suit against Ford.
Citation Rochester Lincoln-Mercury, Inc. v. Ford Motor Company, 248 F.3d 46 (1st Cir., 2001)

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