A partnership that needs state protection – November 13, 2006

A comment I often get from dealers when I urge them to be active in their state dealer associations and support state franchise laws is, “I get along great with my suppliers. I don’t have a problem.”
It is not about problems, and it certainly is not about confrontation. State franchise laws level the playing field and genuinely make it easier for you to have an equitable relationship with your OEM supplier. However, the response above, since it is so common, is worth a little consideration.
I have always been an unequivocal advocate of dealers and have been quick to publicize inequities and mistreatment of dealers. I have on many occasions been accused of being unfair. That is not surprising, since I have never made any effort to be fair. I have always felt that given the vast resources available to OEMs, one vociferous advocate considering only the interests of the dealers did not seem to be that much of an imbalance.
The truth is, that other than a real bad spell during the early 1980s, there really has not been a great deal of really egregious things to talk about. OEM suppliers in our industry have come a long way when it comes to supporting their dealers. In fact I doubt there is another industry now providing the level of support, product development and training that motorcycle dealers receive today. There is no company on earth that has done more than the Harley-Davidson Motor Co. to make its dealers rich.
So, if things are so wonderful, why do we need franchise laws? It starts with the commitment you as a dealer have to make and the fact that the investment usually equals all you have, and what you could borrow from your mother. You are all in. For the OEM, you are a dot on the map in a number of department head’s offices. You have no ability to negotiate. Your OEM supplier does not wake in the morning and think about what he can do to hurt you, the opposite is more likely true. But, he does look at that map with all the pins in it to come up with the big picture.
You operate under the terms of a dealer agreement. The OEM would like to be able to change the terms of that dealer agreement when it suits the big picture. It is not a question of malice or indifference to your needs. They are not opposed to your profitability, it is just not a priority. You have worked hard, perhaps for generations, to establish your position in the marketplace. Hopefully that position is protected by a state franchise law.
When the needs of the OEM change, you are not in a position to negotiate.
There is also the issue of significant change in the global marketplace. China is already a major player worldwide. The Chinese have already demonstrated in a number of areas that they have the technology and wherewithal to produce state of the art and even leading-edge products. Every year they move a step closer to meeting the expectations of consumers in the United States. Our message needs to be, “welcome to America, but come and play by our rules.” The rules that will protect you will be those promulgated by your state legislature.
For all of its recent advances, China only understands centralized government. The concept of local authorities regulating how an international company can do business is alien to them. We may need to be the one to give them a lesson on American economics and politics.
First and foremost, we have to make clear what a “dealer” is. Please see my comments in last month’s Powersports Business. Legislation structured to protect the consuming public also is very much in the interest of the dealer, and in fact the industry as a whole.
So, if you get along great with your OEM(s), that is how it should be. It is a partnership. We all share the same objective of getting more product into the marketplace and more people safely operating what we sell. Dealers across the country, in good times and bad, have played no small role in gaining the level of public acceptance we are experiencing today.
The market is growing and so are the opportunities. When your OEM, after reviewing the pins on his map, decides that your market needs another dealer, you need to be in a position where he needs your permission.
HOW’S BIZ?
Across the country demand is up, with many dealers saying the buyers are sure a lot tougher. I do not believe that is the case. They are a lot smarter, better informed, more mature and focused. Dealers doing the same are cashing in on the current wave. Those who are not are caught in the current and hanging on. What I for many years called the “swirl”, I am now calling the “wave.” Do what you have to do to get on top. We have never had a better ride.
Cheers, Ed. psb
Ed Lemco has been involved with the powersports industry for more than 30 years. Lemco, the former owner of Lemco Management Group, is the founder and executive director of the National Council of Motorcycle Dealer Associations. Lemco currently operates a call center for dealers in St Croix.