Dealer Alert: Separate Agreements for Models in the Same Line Make

Imagine: You are a current franchised dealer, and your original equipment manufacturer (“OEM”) announces a new model within your franchised line make.  When you contact your dealer representative for information about ordering the model, you learn that you are not eligible to order it.  Rather, you are instructed to enter into a separate dealer agreement, at which time the OEM will determine whether you are eligible to sell the new model.  This violates the New Hampshire Bill of Rights.

New Hampshire law carefully regulates the relationship between automotive, equipment, and powersports manufacturers and dealers under the Dealer Bill of Rights (R.S.A. 357-C).  Importantly, the Dealer Bill of Rights prohibits manufacturers from requiring dealers to enter into separate dealer agreements to obtain a model within the same line make.

Specifically, the Dealer Bill of Rights provides that an OEM cannot:

Fail or refuse to sell or offer to sell to all motor vehicle franchisees of a line make, all models manufactured for that line make, or require[e] a dealer to pay any extra fee, [or] execut[e] a separate franchise agreement…”

A “line make” refers to the OEM’s brand of vehicles, encompassing all models and variants offered under that brand.  The Dealer Bill of Rights defines a “line make” as motor vehicles, equipment, and/or powersports equipment that are “offered for sale, lease, or distribution under a common name, trademark, service mark or brand name of the franchisor or manufacturer of the motor vehicle.”  In other words, a line make includes all cars, trucks, SUVs, and specialty vehicles under the brand name.

Under New Hampshire law, an OEM must allow a current franchised dealer to sell all models within the franchised line make.  The OEM cannot require a dealer to enter into a separate franchise agreement for each line make, nor can it require a dealer to pay an extra fee to be eligible to sell a model within the franchised line make.  To note, there are other prohibitions under the Dealer Bill of Rights that are not discussed here, such as an OEM cannot require a dealer to purchase unreasonable advertising displays or other materials before it can sell a model within a line make.

If you find yourself in a position where your OEM refuses to sell you a model within your franchised line make, just remember: this is prohibited under New Hampshire law, so contact your legal counsel immediately.