Mini is not in the best shape in North America these days. Despite the quality vehicles, prices are high and Americans have been gravitating towards crossovers. Mini only offers one, the Countryman. On top of that, new small car sales have been declining in the US, which is obviously bad news for Mini. Its parent company, BMW, is fully aware of the problem making the decision to allow Mini dealers, who are also BMW dealers, to either downsize or move operations to their BMW stores.

According to a new report from Automotive News, however, BMW's handling of Mini has become the source of frustration and even a lawsuit. The previous chairman of the Mini dealer council, David Peterson, has sued BMW of North America alleging that the automaker breached its dealership agreement by failing to promote and develop the Mini brand.

Peterson's Mini dealership in Louisville, Kentucky is one of five dealerships in the US that closed recently due to slow sales and low profitability. Peterson believes BMW simply didn't do enough to properly promote Mini and its vehicle lineup and, in addition, is only providing assistance to some Mini dealers, specifically those who opted to join with the BMW dealers. He alleges "unfair discrimination by BMW," arguing that its plans place more onerous requirements on Mini dealers wishing to integrate with non-BMW stores compared with those joining BMW stores."

Peterson doesn't own a BMW store, but rather a Mercedes-Benz franchise, therefore he had no opportunity to salvage his Mini business. His lawsuit states that "Peterson Motorcars is left with a dealership that is not financially viable and an unusable single purpose facility in which he has invested millions of dollars." He's seeking monetary and punitive damage, along with costs and attorney fees.

Basically, the legal issue boils down to this: Peterson, and likely other Mini dealerships that are not also BMW dealers, believe they have been discriminated against on BMW's part. They invested money in their dealerships over the years and because sales are decreasing – sales fell by 7.3 percent last year – many can't afford to remain open. The only possible savior, at least right now, is to integrate Mini with a BMW showroom. Mini isn't the only small car brand facing problems. In fact, Daimler is preparing to end sales of its Smart brand in the US. Fiat is also in trouble.

BMW denies the allegations in Peterson's lawsuit and has filed a motion to dismiss. Both sides have agreed to dismiss some of the claims against each other, but this court case is clearly not over yet.