The Wisconsin Fair Dealership Law Enters Its 50th Year: Relationship with the Wisconsin Motor Vehicle Dealer Law

How the Wisconsin Motor Vehicle Dealer Law Relates to the Wisconsin Fair Dealership Law

A common misunderstanding is that the Wisconsin Fair Dealership Law governs (only) automobile dealerships. That belief is not entirely surprising given that automobile dealerships are the most ubiquitous, public-facing “dealership” in the country. Earlier installments of Stafford Rosenbaum’s Wisconsin Fair Dealership Law blog series demonstrate that the WFDL extends to an eclectic mix of commercial arrangements. But the WFDL does not reach motor vehicle dealerships at all; those businesses are subject to a companion statute, the Wisconsin Motor Vehicle Dealer Law (“WMVDL”), which governs the rights and obligations of parties producing, distributing, and selling motor vehicles in the state of Wisconsin.

On one hand, the WMVDL is similar to the WFDL in many ways. Both statutes were enacted to protect qualifying dealers from unfair, arbitrary, and opportunistic conduct by grantors that generally have significantly greater economic power, and both statutes contain a for-cause standard. Under the WMVDL, a grantor cannot discontinue the parties’ relationship unless it acts:

(2) with “due regard to the equities” (i.e., “treatment in enforcing an agreement that is fair and equitable” and “not discriminatory compared to similarly situated dealers”), and

(3) with “just provocation” (i.e., based upon a material breach by the dealer of a “reasonable and necessary provision of an agreement” that is “not cured within a reasonable time after written notice” of said breach).

This standard is markedly similar to the WFDL’s good-cause standard that allows discontinuation (pending compliance with the statute’s notice and opportunity-to-cure provisions) if a dealer fails to substantially comply with the grantor’s essential, reasonable, and nondiscriminatory requirements. And both statutes offer avenues for a dealer to recover attorney fees for prevailing on certain claims. Because of the similarities between the statutes, courts have often turned to the WFDL’s more developed case law when assessing a claim brought under the WMVDL’s significantly more limited body of precedent.

On the other hand, the WMVDL differs from the WFDL in a few key ways:

• First, the WFDL is a statute of general applicability, but excludes from its protection the right to sell a particular motor vehicle line; the WMVDL is solely limited to the automobile industry and parties licensed by the state to operate within that industry. For its part, the WFDL may extend complementary coverage to a motor vehicle dealer if the dealer sells products in addition to the motor vehicle line in question (e.g., parts, accessories, branded clothing, etc.).
• Next, unlike the WFDL, which can be read over a fast lunch, the WMVDL takes up roughly 28 pages of the Wisconsin statutes and details the rights and obligations of licensed parties in a variety of circumstances beyond termination, non-renewal, cancellation, and substantial changes in competitive conditions. These include governing how manufacturers locate dealerships, impose design and space requirements, handle promotions, and more.
• Further, the WMVDL is enforced administratively by the Wisconsin Department of Transportation but does allow motor vehicle dealers to pursue certain claims, including unlawful discontinuation, in court without first needing to exhaust their administrative remedies.
• Additionally, unlike the WFDL, the WMVDL allows dealers to recover treble damages if it can prove that the grantor willfully violated the statute.
• Finally, because vehicle dealers are licensed by the Wisconsin Department of Transportation, the WMVDL also allows for remedies beyond injunctive relief, recouping attorney fees, or seeking damages—a grantor that violates the WMVDL can also have its license to do business in Wisconsin suspended or revoked.

Just as the WFDL does not provide remedies for consumers, neither does the WMVDL. Both statutes only regulate business-to-business relationships in Wisconsin. But, within the narrow slice of commercial activity that it governs, the WMVDL is both extensive and powerful. A vehicle manufacturer that overlooks the WMVDL does so at its own peril.

For over 50 years, Stafford Rosenbaum’s Dealership and Franchise Law Team has been preeminent in helping grantors and dealers navigate their obligations under the WFDL and the franchise and dealership laws of other states. As a full-service law firm, we are uniquely positioned to advise, counsel, and problem-solve for grantors and dealers in both transactional and litigation matters, and we pride ourselves on our ability to find innovative solutions for the most complex relationships.

Stafford Rosenbaum LLP is a full-service law firm with two convenient office locations in Madison and Milwaukee, Wisconsin. 145 years of dedication to businesses, governments, nonprofits, and individuals has proven that effective client communication continues to be the heart of our practice.