L. Michael Hankes  |  ATTORNEY AT LAW
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Oops! We Did It Again!

Veteran Meineke Dealers may recall the article we wrote in January, 2004 about the Meineke Dealer in Brick, New Jersey whose Meineke FTA was breached in 2002 when Meineke placed a new Meineke center less than 3 miles from his existing Brick, New Jersey center. In that situation, Meineke had not only incorrectly measured the distance between the proposed center in Tom’s River, New Jersey and the existing Brick, New Jersey center, but Meineke also had failed to honor the 50,000 motor vehicle protection found in Section 2.3 of the Meineke FTA. No Notice of the Right of First Refusal was given by Meineke to the existing Brick, New Jersey Meineke Dealer and he was forced to seek legal counsel.1

In that 2002 dispute, resolution focused primarily on Meineke’s failure to give Notice of the Right of First Refusal required under Section 2.3 of the Meineke FTA. Meineke withdrew its attempt to place another Meineke center in Tom’s River, New Jersey and bought out the lease that had already been executed for the premises. As part of the ultimate resolution of the 2002 breaches, the Brick, New Jersey Meineke Dealer entered into an Addendum which increased the radius for his protected territory to 3.5 miles and increased the protected radius for the Right of First Refusal to 4.5 miles. More significantly, the addendum froze the number of vehicles that could be included as part of the 50,000 car protection as of the date of the Addendum.

The Dealer was required to maintain minimal royalty and advertising levels, which he did. Almost ten years after the 2002 dispute arose, Meineke again breached the Brick, New Jersey Dealer’s Meineke FTA. In August, 2012, the Brick, New Jersey Meineke Dealer learned that Meineke had sold a Meineke license to a former Chevrolet Dealership whose existing facilities were located 4.2 miles away. Although the Brick, New Jersey Dealer’s Addendum required a Notice of the Right of First Refusal, Meineke once again failed to give that Notice.

When the Brick, New Jersey Dealer protested, he was told by Meineke that it had assessed the impact at 8.6% and that 8.6% was not a big deal. The Meineke Dealer did his own analysis of the potential impact and disputed Meineke’s position, finding that the impact would be 22%. However, as the Brick, New Jersey Dealer’s gross sales were at the $1.5 million dollar mark annually, the Dealer pointed out that an 8.6% impact would amount to at least $120,000 per year for many years, a rather big deal for the Dealer.

After the Brick, New Jersey Dealer pursued resolution of the issues through legal counsel, Meineke withdrew the license it had sold to the former Chevrolet Dealership. This failure on Meineke’s part to honor the Brick, New Jersey Meineke Dealer’s Meineke FTA not only raised the Right of First Refusal and the 50,000 motor vehicle protection as issues, but it added a new twist by trying to award a license to a competing business already established in an existing location. Meineke thereby vitiated the Meineke Dealer’s right to select his own location as part of the exercise of the Right of First Refusal.

Given Meineke’s announced plan to try to double the size of the Meineke chain in the next five years, we will examine these encroachment issues more closely.

  1. The undersigned represented the Brick, New Jersey Dealer in both the 2002 and 2012 disputes with Meineke.

This article is intended for informational purposes only and is not to be relied upon as legal advice, as individual facts and circumstances may vary.