HEADLIGHTS ON THE LAW BEN JORDAN GENERAL COUNSEL & DIRECTOR OF GOVERNMENTAL RELATIONS, GADA It seems a new front has emerged in the ongoing battle over the franchise dealer system in the United States. In July, Scout Motors petitioned the U.S. Department of Justice, through its Task Force on Anticompetitive Regulations, to eliminate all dealership franchise laws in the country. If you think the author is joking about that, the following is a snapshot from Scout’s public comment: As background, Scout Motors is a subsidiary of Volkswagen that seeks to sell its vehicles without franchise dealerships. That’s right: Not only does Scout not plan on using its existing Volkswagen dealers; it does not plan to use dealers at all. Unfortunately, recent comments by Roger Alford, principal deputy assistant attorney general in the Antitrust Division of the DOJ, indicate some in the department may be sympathetic to Scout’s position. But that is not the end of the story. Fuel was added to this fire when the Alliance of Auto Innovators, the trade association that represents manufacturers with dealers, also submitted comments critical of franchise laws — specifically provisions related to warranty reimbursement and restrictions on opening new sales points. Taken together, those comments have been characterized as a “declaration of war” against dealers by the nation’s manufacturers (the Alliance has since distanced itself from those comments by declaring: “We support the dealership franchise model. Period. Full stop.”). For GADA and Georgia dealers, this latest eruption in the battle between dealer versus factory sales comes as no surprise. Companies like Rivian and Lucid have tried repeatedly, and unsuccessfully, to convince lawmakers to change Georgia law to allow them to sell without dealers. When their legislative efforts failed, Lucid sued the state of Georgia and argued that our franchise law’s prohibition against direct sales was unconstitutional. Their argument was soundly rejected by the Superior Court of Fulton County, but Lucid appealed that decision, and the case will be heard The Battle Continues Franchise Law Challenges and Victories
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