The United States Court of Appeals for the Third Circuit in Maple Shade Motor Corp. v. Kia Motors Am., Inc., 2008 WL 111041 (3d Cir. Jan. 11, 2008), affirmed summary judgment in favor of an automaker on its dealer’s unlawful termination claim. The court found that the dealer’s failure to build a showroom was a material term of the dealership agreement that had been breached. The Third Circuit relied on prior case law – under the New Jersey Franchise Protection Act – that holds that a franchisor has good cause to terminate when a franchisee breaches a material term of a franchise agreement.
The Third Circuit also affirmed summary judgment in favor of the manufacturer on the dealer’s claim that the company improperly denied the transfer of the dealership. The appellate court stated that the maker properly rejected the transfer because the dealership had been terminated and, thus, had no franchise rights to transfer.