Automakers argue that right of first refusal, which is generally written into franchise agreements, gives them more flexibility in managing their dealership networks. It particularly helps them diversify the array of dealers representing their brands, according to a statement from the Alliance for Automotive Innovation, which represents major automakers.
“State franchise laws make it difficult to end a franchise contract with a dealer, so the manufacturer wants to know the dealer representing its brand and serving its community is a good one,” the alliance’s statement said.
Some dealers and minority dealer associations favor right of first refusal as a tool to help even the playing field for minority operators, who can have a tougher time getting their business started.
