Mercedes-Benz Issuing Framework Agreements to Smaller Dealership Groups

It appears that Mercedes-Benz may be issuing new framework agreements to dealer organizations which have not previously been asked to agree to framework terms. These agreements have historically been issued only to publicly-traded and large privately held dealership groups with a significant number of Mercedes-Benz dealerships. Moreover, these agreements are being issued without the dealer group requesting to purchase a new Mercedes-Benz dealership, which is what has traditionally triggered such a requirement from Mercedes-Benz.

Whether or not in the midst of a purchase transaction, dealers asked to execute a new framework agreement should be cautious. State motor vehicle franchise laws prohibit manufacturers from turning down a buy-sell proposal based upon an unreasonable requirement. Some state motor vehicle franchise laws restrict a transaction denial to specific financial and business experience reasons. Once signed, these framework agreements are likely enforceable. These agreements can severely restrict a dealer group’s ability to buy and sell a Mercedes-Benz franchise and contain potentially onerous performance and facility requirements which would otherwise be prohibited by state motor vehicle franchise laws.