Incidental beneficiary to sale of dealership lacked standing under Franchise Practices Act.

Topic: Franchise Practices Act, Decided by Judge Malihi 
Docket Number: 1635899 , Decision Date: 2016-05-25 
Attachment: Click here to download the decision. 

Welborn Chevrolet, a motor vehicle dealer, challenged General Motors’ (GM’s) refusal to approve of an agreement between two other dealers.  The agreement, if finalized, would have resulted in the relocation of a Buick-GMC dealership such that it would share a location with Welborn Chevrolet’s dealership.   Welborn alleged that GM’s action violated the Franchise Practices Act (FPA), which prohibits a franchisor from arbitrarily refusing the sale of its franchisee’s dealership.  GM moved to dismiss, asserting that Welborn Chevrolet lacked standing.  Welborn Chevrolet claimed standing under the FPA, which provided that “any person who is or may be injured” by a violation of the FPA could seek redress.  In reviewing the relevant statutes in context, the Court concluded that only selling franchisees had standing to challenge the violation alleged by Welborn Chevrolet, as the legislative grant of standing extended only to franchisees injured by a franchisor’s refusal to agree to the sale of their principal assets.  Accordingly, as Welborn Chevrolet was not a party to the sale agreement, it did not have standing to challenge GM’s refusal.