Do you want legal protection?

  03 June 2013

You’ve gotta love the way they do things in America. Not everything they do, obviously; but I suspect you’re going to like this.

The New Hampshire Senate has just approved a bill that revises portions of the state’s franchise laws, known as the auto retailers’ ‘Bill of Rights’.

Among other things, it would prevent manufacturers from forcing retailers to upgrade facilities more frequently than once every 15 years. It would also allow retailers to buy goods and services locally – and ensure they are reimbursed at the market rate for parts used in warranty work.

Not surprisingly, the New Hampshire Automobile Dealers Association is ‘definitely supportive’ of the bill and there are hopes that at least the sentiment, if not the precise legislation, might be taken up in other states.

As you may know, franchise law in the USA is often drafted on a local basis and usually in favour of the retailer.

A Chrysler dealership in New Jersey has filed a lawsuit to halt the manufacturer’s efforts to terminate his franchise, claiming current market share means renovations agreed in 2007 are no longer viable. Meanwhile, electric carmaker Tesla is fighting a state-by-state battle to allow it to open its own stores rather than use a franchised network.

The comparison with our new European Block Exemption rules that came into force this weekend could not be starker, especially as the car manufacturers now have the upper hand.

I’m not suggesting that we should outlaw manufacturer ownership of dealerships but some basic freedoms to trade would be nice.

As of now, you can’t sell the core asset of your business (the franchise) without manufacturer permission, you can have your contract terminated without any recourse to arbitration and you will have to use suppliers approved by your manufacturer partner, whether you like it or not.

Meanwhile, the European Commission is looking for evidence of Unfair Trading Practice. Somehow, I doubt it’s going to result in the same kind of protection they have in New Hampshire.

Rupert Saunders

 

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