June 2, 2010
We note the recent press reports about plans by Ford Motor Co to phase out the Mercury brand.
In case the brand is phased out, we want to remind you of several provisions in Virginia Law concerning franchise and line-make terminations.
1. Under Virginia Code, manufacturers are required to repurchase certain items from dealers as follows: new vehicles purchased by the dealer within 18 months of termination, parts and accessories, signs, and special tools. There are some requirements concerning the condition of each of those items. The manufacturer is responsible for the costs associated with returning these items to the manufacturer. See §46.2-1569 (5b)
GO HERE: http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-1569
2. When a manufacturer terminates a line-make, dealers are entitled to additional compensation for the fair market value of their franchise as well as assistance for the costs of their facilities used for that franchise. Virginia Code lays out the method for determining the amount of compensation. See §46.2-1569 (5c)
GO HERE: http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-1569
3. A manufacturer is required to continue to provide parts and service support to a dealer whose line-make is terminated for a period of 5 years. See §46.2-1569 (5a)
GO HERE: http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+46.2-1569
We will continue to monitor this issue and provide additional information as it becomes available.
June 7, 2010
Mercury dealers received an agreement from Ford Motor Company last week that included a “Mercury Resignation Benefits Offer”. The letter outlines how the amount of compensation was determined for the dealer. Last week we sent to Mercury dealers the applicable sections of Virginia Code that outline the compensation dealers are entitled to receive upon termination of a franchise.
Several dealers have contacted us concerning the agreement. A dealer who wishes to challenge the amount of compensation being offered can do so by providing their own valuation of the franchise and real estate expenses. This can be done with the assistance of a valuation professional. We can provide referrals upon request.
As with any agreement of this nature, you should consult your legal counsel.
As a Mercury dealer, you have undoubtedly already received written notification from Ford Motor Company that it is discontinuing the Mercury brand. The notification to you consists of four documents, all of which are dated June 2, 2010.
The opening letter introduces the package and confirms the June 2 announcement of the termination of Mercury. It notes that an offer, a formal notice of termination, and a settlement agreement and release are attached.
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