Question

4.

Mark Keller, Inc., an authorized Jaguar franchise, contracts to sell its dealership to Hanna Autos West. Can this sale occur without the permission of Jaguar Cars? Explain.

5.

Pilot Air Freight Corp. is a franchisor that moves freight through its network of operations at airports and other sites. LJL Transportation, Inc. was a franchisee. The franchise agreement required LJL to assign all shipments to the Pilot network. The agreement also provided that “Pilot shall allow the franchisee an opportunity to cure a default within 90 days of receipt of written notice”. After 8 years as a Pilot franchisee, LJL began to divert shipments to Northeast Transportation, a competing service owned by LJL’s owners.

Can Pilot immediately terminate the franchise agreement? Explain.

6.

Carl Miller’s Chevrolet is a General Motors Corporation dealership. Miller Chevrolet entered into lending agreements, commonly known as floor plan financing, enable it to buy new vehicles from GM. At first, the dealership had its floor financing through GM, but then it switched to Chase Bank. Later Chase Bank declined to provide further financing and Miller was unable to obtain a loan from any other lender, including GM.

Can GM terminate the franchise agreement? Explain.

Answer 1

5. As per the agreement between Pilot Air Freight Corp. and LJL Transportation, Inc. “Pilot shall allow the franchisee an opportunity to cure a default within 90 days of receipt of written notice”. So in this case a default is committed by LJL Transportation which is that it started diverting shipments to Northeast Transportation. Therefore, since the agreement between both the parties is slient about the nature of defaukt committed. Based on the agreement Pilot Air Freight Corp. cannot terminate the agreement immediately as it has to give an opportunity to cure the default committed by LJL Transportation within 90 days of receipt of written notice by LJL Transportation.