Calgary Honda Dealer Sues Honda Over Terminated Dealer Agreement

A Honda dealership in Calgary, Alberta, Canada has sued Honda Canada Inc., claiming the OEM terminated its dealership agreement over a disagreement about the impact of its Powerhouse concept.

The Powerhouse concept uses one-stop brand dealerships to sell multiple Honda product lines — cars, motorcycles, lawnmowers and other products.

Blackfoot Motorcycle Ltd., began selling Honda motorcycles and other equipment in 1970, is suing Honda in the Alberta Court of Queen's Bench for $1.5-million, according to the Globe and Mail newspaper.

Blackfoot claims in court papers that the relationship started to sour in 2006, when Honda began trying to push excess inventory onto the dealer in a program Blackfoot believed would mean cost the dealer $100,000. In the negotiations, Blackfoot learned Honda planned to put its other products into car dealerships — “Powerhouses.”

A Honda VP and liaison to the dealer told Blackfoot the dealer agreement would be renewed if it agreed to take on the excess inventory. Blackfoot believes Honda had no intention of renewing the agreement even before it agreed to take on the excess inventory July 13, 2006, according to the newspaper. Five days later, Blackfoot said, it got a letter dated July 14 terminating the dealer agreement as of Dec. 31, 2007.

Honda’s return filing says the case should be dismissed.

"Honda denies that Honda's strategy included treating Blackfoot any differently than any other Honda dealers," the auto company says.