Pa. Law Affords Franchise Protection to Auto, Truck Dealers

Today’s automotive industry is viewed by many as a seamless network of entities that manufacture, distribute and sell the new vehicles on display in dealership lots throughout the country. In fact, the network consists of multiple layers that begin with a domestic or foreign entity that manufactures new vehicles. These manufacturers either distribute the vehicles themselves or sell the vehicles to distributors, who in turn wholesale the vehicles to the dealers that sell the vehicles to consumers across the United States.

Since it is unlawful for new vehicle manufacturers or distributors to sell directly to the consuming public in Pennsylvania and most other states, there exists a large, independently owned dealer network that sells and services new vehicles on a retail level. Each dealer’s ability to sell and service a particular line-make of vehicles, display the respective manufacturer’s trademarks and engage in business as an authorized dealer is based upon a written dealer agreement with the manufacturer or its distributor.