Sears Imported Autos Inc. is suing BMW of North America, accusing the automaker of failing to pay the Minnetonka dealer almost $670,00 under a program that Sears says violated their franchise agreement, which ended last May.
In a suit filed Friday in U.S. District Court in Minneapolis, Sears claims that BMW made unreasonable demands of its dealers, including frequent and substantial renovations.
A spokesman for BMW in Woodcliff, N.J. declined to comment on the suit Monday.
Until last May, Sears had sold Mercedes-Benz and BMW vehicles at its dealership on Wayzata Boulevard. The suit says BMW used its "added value" program to insist that Sears either extensively redevelop its dealership, open a second location that would sell only BMW cars, or sell its franchise. Otherwise, BMW said, it could withhold rebates that Sears was entitled to for dealing BMWs.
Sears said in its suit that its Wayzata Boulevard property, where it had sold both luxury vehicle brands for decades, "was more than adequate."
Even so, Sears claims that it tried to comply with BMW's requirements. A plan to redevelop the existing dealership didn't work out because of zoning restrictions. Another deal to buy a nearby site and build a new BMW facility was canceled because of financing problems.
Early in 2007, Sears found a former Lincoln-Mercury dealership in Plymouth it could buy or lease. According to the suit, BMW said it would hold in escrow the rebates owed to Sears until it approved the new location. BMW approved the new site, but late in 2007, Sears got an offer to sell the BMW franchise. The suit said BMW approved the sale to the Pohlad Group and the deal closed last May.
The new owners are still selling BMWs at the Wayzata Boulevard property but plan to move the business to another site about one mile away, according to a Pohlad Group spokeswoman. Sears continues to sell Mercedes-Benz vehicles at the Wayzata Boulevard site.
The suit says BMW acknowledged that the franchise sale entitled Sears to the payments held in escrow. While BMW has paid some, Sears said it still is owed payments for part of 2007 and part of May 2008.
Susan Feyder • 612-673-1723