State Franchise Laws
posted by Gerard Magliocca
Today I’m fielding last-minute questions from students about the exam, so I’ll be brief. On Monday, GM proposed its 438th restructuring plan. One sticking point is that GM has far too many dealerships given its future production (brands are being eliminated) and as compared to its competitors. The problem with cutting those excess dealerships, though, is that state franchise statutes make it very difficult for firms to close some dealerships rather than others within a state and gives dealers a cause of action for damages if they are closed wrongfully.
My question is this: Are these laws vulnerable to a Dormant Commerce Clause challenge? It seems like a plausible argument can be made that they place a substantial burden on interstate commerce, but I am unaware of any case law on the issue. I’d be interested to hear your thoughts.