Solution: don't enter into the franchise business, or enter with a clear contract including compensation in case the factory starts direct competition with its franchises.

But to block a factory from selling its own products unless they go through a middleman, it's absurd. Especially if the plaintiffs didn't operate a Tesla franchise.

What you describe is basically how the alcohol industry has functioned in this country since the end of prohibition. All sales are forced to go through distributors who then sell to stores who then sell to consumers. There is no purpose for this other than another level of bureaucracy, waste, and limiting of competition.

I wouldn't say it severe no purpose other than bureaucracy, waste and limiting competition.

My understanding was that the 3 tiered system came about as a method to closely monitor and control alcohol sales. For example, medicinal brandy was still legal during prohibition and much of it was diverted for recreational use. Tightly controlling manufacturers, distributors and retailers helped keep that sort of stuff under control (kinda of... not really).

I don't disagree that it serves a very limited purpose now.

You can't buy wine at the cellar door?

http://en.wikipedia.org/wiki/Three-tier_%28alcohol_distribut... "States have various exceptions to this rule, the most prevalent one being the case of a brewpub, which is simultaneously a producer and retailer, and has no requirement to sell to a distributor. Some states allow an entity to have a part in two of the tiers, letting small breweries act as their own distributor, for example. Many states permit wineries to sell bottles of wine on-site to customers."

Yeah I definitely don't agree with it - and in Tesla's case since there were no franchises it isn't even relevant. This was an obvious case of the current car companies fearing competition.

The current car franchise system sucks (which Tesla is acutely aware of) and with selling something new requires a good team to do it.

I have an example first hand when I went to check out the Volt after it first launched. I kept hearing the advertising saying its 'range' which confused me since I thought the gas generator could power the electric motor after the batteries were exhausted and you could just refill the gas. I started thinking maybe the gas generator could only extend the range or something (the internet wasn't clear since things were new).

When I went to the Chevy dealers they were worse than useless, they knew nothing about the volts they had and what they did tell me ended up being wrong. It turned out the advertised range was just terrible marketing.

That story isn't unique to the Volt. In my experience, sales people rarely know the details of the products they sell. Best Buy is a classic example when the sales people tend to read the box for answers to questions. Of course, you'd think that an expensive product, like a car, would be different, but its not. It goes to show how sales is about so much more than the product itself.