Laidlaw's Harley-Davidson wins termination protest, but there are conditions

Publish Date: 
Jun 25, 2012
By Holly J. Wagner

SACRAMENTO, Calif. - A longtime Harley-Davidson dealer in California has prevailed in thwarting the OEM's attempt to terminate its franchise.

An administrative law judge in California ruled in favor of a petition from Laidlaw's Harley-Davidson in Baldwin Park to counter actions by Harley-Davidson to terminate the franchise. But certain conditions are involved.

The Motor Co. on April 14, 2011, notified Laidlaw's of its intent to terminate its dealer agreement within 60 days, alleging that the dealer had violated terms of its “non-retail sales policy” (NRSP). Laidlaw’s challenged the termination, claiming the NRSP is separate from the dealer agreement and that less severe penalties should be imposed before the OEM resorts to termination.

The administrative law judge for the California New Motor Vehicle Board, which regulates dealership matters in the state, ruled that Laidlaw’s should keep its franchise but that it needs to conduct training and compliance audits on Harley-Davidson policies and submit those audits to The Motor Co. for the next three years. The dealer’s existing agreement runs to 2014.

“The ‘injured party’ is Harley-Davidson Co. Harley-Davidson Co. has received and continues to receive the vast majority of the benefits of the contract with Laidlaw’s over a period of 54 years, namely that of selling and servicing motorcycles, and promoting the Harley-Davidson lifestyle,” reads a summary of the proposed decision. “As to whether Harley-Davidson Co. ‘will be deprived of the benefit’ in the future, it is most likely that Laidlaw’s will continue to be a successful dealer and it would be inconceivable that the personnel at Laidlaw’s would engage in such conduct again.”

Neither side’s attorneys so far had returned calls from Dealernews seeking clarifications, comments and information about a possible appeal.

Harley-Davidson's termination letter alleged the dealership violated its agreement by selling motorcycles to resellers, selling across state lines and selling to overseas buyers and to rental operations -- all “non-retail sales.”