Owners of nearly 1600 U.S. dealerships are engaged in the most important struggle of their careers – arbitrations to save their dealerships rejected or wound down in arbitration. These dealers are gathering materials both to assist their representatives in putting together their cases and to respond to manufacturer demands for documents. Many of these dealers are struggling to put together information that is critical if they are to prevail.
Benefit from the experience of these dealers: make sure that you keep and safeguard your important franchise documents.
A new car dealer’s franchise is embodied in the Dealer Sales and Service Agreement and the related documents. Dealer rights, and protection of those rights, may be based on communications with the manufacturer. Dealer compensation may depend on the manufacturer’s programs and on performance reports. So what should a dealer carefully file and protect?
Franchise
The dealership’s Sales and Service Agreement should be kept by the dealer, with a copy in the general office. All attachments to the agreement should be kept in the file.
General Factory Communications
Manufacturers frequently send important general communications to all dealers. Sometimes those general communications may contain a section with important information specific to your dealership. Examples are changes in your area of primary responsibility (which could have an impact on sales effectiveness), updates in your working capital requirements, revisions to retail plans, and similar messages. Keep general manufacturer communications.
Factory Communications Specific to Your Dealership
Communications that are sent only to your dealership – complaints about deficient performance, warnings of alleged non-compliance, threats of punitive actions – must be answered. Keep the factory communications and your responses.
Dealer Performance
All dealer performance reports, including comparisons with other dealers, should be saved. All manufacturer reports on the dealer’s sales effectiveness, CSI performance, and financial performance could one day be critical to the dealership’s very existence.
Manufacturer Business Plans
Manufacturers frequently send dealers reports about their plans for the dealership or its market. These could one day be critical in measuring the success of the dealer’s performance, especially if you must challenge a threatened termination or a new dealer point.
Incentive Programs
Copies of all incentive programs should be kept. A file for each separate incentive program should be maintained, and the program rules and communications should be kept in that file. These will be important in an incentive audit.
Warranty Performance
The manufacturer’s warranty manual should be maintained by the warranty administrator. All bulletins and communications concerning warranty policies and programs should be kept with this manual. These will be important in challenging a warranty chargeback.
Factory Awards and Honors
Do you think that the commendation for top wholesale parts dealer in the district and the thank you letter from the regional manager for last month’s sales performance are not important? They will be if you ever have to justify your dealership’s performance in some legal proceeding.
Some dealers feel that keeping these materials is not critical because they can always be obtained from the factory or online. However, that may not be the case.
Dealers are often surprised when they are facing deadlines for appeals or other filings necessary to protect their rights about how long it takes a manufacturer’s representatives to find relevant documents. Documents that are instantly available when the manufacturer wants to enforce its rights mysteriously become difficult to locate when the dealer is talking about protecting its rights. And Chrysler dealers whose franchises were rejected in the Chrysler bankruptcy found themselves excluded from the Chrysler computer system with just a few days’ notice.
Don’t rely on the factory to tell you what your rights are. File and safeguard your valuable franchise documents as you would any other valuable assets.
April 2010