Handling Manufacturer Communications

Mike Charapp, Author, Auto Dealer Law

With NADA quickly approaching and franchise meetings on the horizon with OEMs, the time is now for dealerships to familiarize themselves with how to respond to factory communications. Some dealers feel that it is not important to respond to communications from a franchisor. “What good will it do?” they reason. This is dangerous thinking. While you should not be overly concerned about normal marketing communications, it is important to respond to factory correspondence that potentially affects your franchise or criticizes your dealership’s performance.

Here are some recommendations:

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.

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? Your state association 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.

Know your state law rights. The most important protections that a dealer has come from state franchise laws. Understand those protections. If you have questions, ask the experts – your state association executives or an attorney knowledgeable in state dealer law.

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 Sometimes it will be a serious issue, but the information may be outdated by changes you have already put in place. Answer every point. Tell your story.

Request detailed calculations, if the claims are based on measurements that appear to be wrong,

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.

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The above tips are excerpted from Chapter 9: Handling Manufacturer Communications in Auto Dealer Law. Auto Dealer Law is available now and can be purchased at NADA booth # 3226 or the guide and subscription service can be purchased at www.autodealerlaw.com.