Franchise laws were written to protect dealers from OEM overreach and in many cases they do exactly that. But they also protect the worst operators in every market from the consequences of running a bad business. A dealer principal who provides terrible service, burns customers, hemorrhages staff, and consistently underperforms on every metric the OEM tracks cannot be terminated. The legal and financial cost of terminating a franchise is so high that most OEMs will absorb a decade of underperformance rather than fight it out in court. The result is that consumers in those markets get stuck with a bad store representing a brand indefinitely. The OEM cannot fix it. A better operator cannot get the point. The customer has no alternative. I have watched a dealer in my region operate this way for eleven years. The OEM knows. The district manager knows. Nothing happens. We talk about franchise law as though it only protects the good actors. It protects everyone equally and the industry refuses to be honest about the downside of that.
- Home
- Forums
- Dealerships
- General Forum
- State franchise laws
Add new comment