Three Harris Beach Murtha Attorneys recently penned an article in Massachusetts Auto Dealer Magazine about a court decision in Texas that could have wide-ranging implications.

The court halted the proposed termination of a Texas Subaru dealership based on the manufacturer not showing “good cause” for the termination. The manufacturer had attempted to terminate the dealership for not meeting sales quotas, among other reasons.

The dealership protested to the Texas Department of Motor Vehicles Board, which found the manufacturer did not meet the state’s good cause standards. The courts concluded the same and added that the dealership closing would harm those in the area who need warranty, recall and repair services.

Attorneys Thomas S. Vangel, James F. Radke and Lindsey M. McComber, members of Harris Beach Murtha’s Automotive and Vehicle Dealerships Industry Team, wrote:

“Like the Texas Court of Appeals, courts in Massachusetts are likely to show strong concern if the dealer can demonstrate that the public will be harmed by the loss of a local dealer to perform warranty or other recall work.

The recent decision out of Texas provides another dealer-friendly precedent that can be used in defending franchise termination cases. Dealers across the country have rightly complained for years that sales metrics such as MSR are self-serving statistics that do not adequately represent their efforts to meet their sales obligations.

Every termination decision provides an opportunity for dealers and their counsel to assess how the various “good cause” factors resonate with the administrative boards and Courts that decide termination cases and help create a road map for dealers who find themselves in the unfortunate position of defending a termination case.”

Read the full article for more details.