Reference no: EM131660457

Question: Franchise Termination. In the automobile industry, luxury-car customers are considered the most demanding segment of the market with respect to customer service. Jaguar Cars, a division of Ford Motor Co., is the exclusive U.S. distributor of Jaguar luxury cars. Jaguar Cars distributes its products through franchised dealers. In April 1999, Dave Ostrem Imports, Inc., an authorized Jaguar dealer in Des Moines, Iowa, contracted to sell its dealership to Midwest Automotive III, LLC. A Jaguar franchise generally cannot be sold without Jaguar Cars' permission. Jaguar Cars asked Midwest Auto to submit three years of customer satisfaction index (CSI) data for all franchises with which its owners had been associated. CSI data are intended to measure how well dealers treat their customers and satisfy their customers' needs. Jaguar Cars requires above-average CSI ratings for its dealers. Most of Midwest Auto's scores fell below the national average. Jaguar Cars rejected Midwest Auto's application and sought to terminate the franchise, claiming that a transfer of the dealership would be "substantially detrimental" to the distribution of Jaguar vehicles in the community. Is Jaguar Cars' attempt to terminate this franchise reasonable? Why or why not? [Midwest Automotive III, LLC v. Iowa Department of Transportation, 646 N.W.2d 417 (Iowa 2002)]