When Mercedes-Benz scuttled Jona-than Sobel’s $30 million deal to buy a New Jersey dealership last year by exercising its right of first refusal, Sobel sued. And he got a lot more cautious about where he’d buy more dealerships to add to his stores in New York.
Sobel declined to discuss specifics of his lawsuit. But in general “right of first refusal has a chilling effect on the buy-sell market,” he told Automotive News. “Why would I spend the time and the effort to structure a complex transaction only to find out a manufacturer is going to use their right of first refusal to cherry pick my best deals?”
Sobel is one of many dealers caught up in the increasing use of right of first refusal by manufacturers in buy-sell transactions. Franchise agreements have long given most automakers the right to refuse the original buyer on a dealership transaction and assign the sale, with no changes to the terms, to a dealer of its choosing.