It’s Business, And It’s Personal

Business disputes over auto dealer franchises are common

On Behalf of | Oct 31, 2014 | Business Contracts & Disputes |

North Carolina and all other states see a good deal of litigation between the big auto makers and their retail dealers across the country. The problem has been exacerbated and particularly critical in the recent years with the economic downturn suffered by the auto makers in Detroit and even worldwide. General Motors has been involved in a great deal of business disputes and resulting litigation with its dealers.

In many cases, the reduction of retail auto franchises nationally led to suits by shunned local dealers against GM. In other cases, GM has at times filed suits to rectify its claims against local dealers for a variety of management and financial reasons. Almost always, these suits involve mutual claims of breach of contract, and sometimes they also contain accusations of fraud.

In a recent case between GM and a retail dealer in Iowa, the auto maker alleged that the Chevrolet dealer fraudulently reported dozens or even hundreds of retail sales to GM that were actually sales of used cars. The suit involves a complex history between the two parties that includes an attempt by GM to wind down the Chevrolet dealership after GM’s 2009 Chapter 11 bankruptcy filing. The elongated legal maneuvering resulted in the dealership getting its franchise restored through a binding arbitration procedure.

Thereafter, GM brought the current suit, claiming breach of the new agreement by the dealer. The long legal drama was recently put to an apparent rest by the announcement of a settlement by the parties. The details were kept secret and it’s not yet known whether the dealership will remain with GM.

Business disputes like the foregoing are not unusual for car makers and local dealers throughout the country, including in North Carolina. Often these matters end up in the state or federal courts for resolution. Business litigation law firms play an integral role in these matters, including in the process of negotiating mutually agreeable resolutions.

Source:, “Lujack’s, GM settle business lawsuit : Business“, Doug Schorrp, Oct. 22, 2014