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Auto dealerships have many legal needs

On Behalf of | Oct 17, 2022 | Auto Dealership Law |

From a legal standpoint, running a successful auto dealership or chain of dealerships in Orange County is complicated.

At the most basic level, dealerships are larger businesses with many employees, an expensive inventory of motor vehicles and many other assets, including acres of real estate which they own or lease.

On the other hand, the dealership might not be in a spot where it makes sense to have a full-time in-house legal team. It may make more sense instead for a dealership to consult with a trusted law firm to help them meet their many legal needs.

Auto dealerships will have many of the same needs as other businesses

Like other established businesses, auto dealerships will have some ongoing legal needs.

  • They will need to be able to navigate California’s comprehensive set of employment laws which, more so even than other states, are supposed to ensure workers receive fair treatment. For example, California has rules about the payment of commissions.
  • On a related point, many dealerships will enter employment contracts with their top executives and will want to make sure these contracts cover all of the dealership’s bases.
  • Dealers often will need to deal with real estate issues. They may need to acquire additional land or deal with zoning or other regulatory issues for example.
  • They will have other contracts as well. These can be contracts for inventory or services related to the dealership or much more complex deals involving a merger or acquisition of another dealership.
  • After a certain time, any business will face litigation. The business will need to have an effective strategy to accomplish their legal goals. Litigation can arise between a dealer and its manufacturers or motor vehicle distributors, between other dealerships or even between it and the dealership’s own employees or business investors.

The California automobile industry faces some unique legal problems as well

The automobile industry also has some unique features about it.

There are federal and state and laws which auto dealerships have to make sure to follow. The federal Used Car Rule is just one example.  Legal and regulatory compliance is an important consideration for those in the automobile industry, including dealers.

Procedurally, most dealers may know that California has a New Motor Vehicle Board. Dealers may wish to bring disputes with their manufacturers before this Board.

For example, the dealer might want to formally protest if a manufacturer announces that it will terminate its franchising agreement with the dealer.

In some cases, the dealer may also protest the relocation or establishment of a competing dealership in their local radius.



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