Some dealers feel that it is not important to respond to communications from a franchisor. “What good will it do?” they reason.
While you should not be concerned about normal marketing communications, it is important to respond to factory correspondence potentially affecting your franchise or criticizing your dealership’s performance. Think about the following situations:
- A dealer challenges a termination by its franchisor for deficient sales performance. The dealer claims that its sales territory includes geographic areas for which it should never have been responsible. The manufacturer responds that the dealer never complained when its territory was redrawn to add the new areas.
- A dealer complains to the state because it cannot do an offsite sale at a location where it has been held for years because the franchisor removed from the dealer’s market area the census tract where the offsite sale location is located. The franchisor responds that the dealer didn’t complain when the market area reduction took place.
- A dealer complains about chargebacks for vehicles exported. The franchisor responds that the dealer did not complain when the franchisor sent the initial notice of potential export chargeback.
What is the common thread through these situations taken from actual cases? In each it is the claim by the franchisor that the dealer’s position is not legitimate since it acquiesced by silence in the face of important communications from the franchisor. So what lesson should a dealer take from this?
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Read every communication from your franchisor. Normal marketing and product communications and those that pertain to service or parts operations should be routed to managers in charge of those departments. Those that may affect the franchise or that contain warnings about the dealership’s performance must be handled by the dealer.
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Get help. Is the letter that was sent to you one that is being sent to other dealers? Or have you been singled out for the action? VADA may be able to determine whether it is a mass communication or it was sent just to you. An attorney knowledgeable about dealership law will be able to help.
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Know your rights under Virginia law. The most important protections that a dealer has come from state franchise laws. Understand those protections. If you have questions, ask the experts – VADA executives or an attorney knowledgeable in state dealer law.
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Answer all communications that are potentially prejudicial to your dealership or are a threat. Read the correspondence thoroughly. Understand each point being made. Sometimes the manufacturer’s complaint will simply be overblown. Sometimes it will be a complaint about an issue that is not required by your franchise agreement. Sometimes it will be a serious issue, but the information may be outdated by changes you have already made. Answer every point.
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If the claims are based on measurements that appear to be wrong, request detailed calculations.
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Don’t be afraid to shift the ball back into the franchisor’s court. If the franchisor is complaining about your performance despite difficult market conditions generally or in your area, invite the manufacturer to provide assistance to show how your employees can improve their performance. Franchisors like to criticize; they do not want to actually be responsible to assist in improvements. The fact that the factory ignored your invitation to help can be useful in any legal proceeding.