Anyone on this forum thinking about buying a Chrysler franchise?

[JoeRocket]

Hahaha, I didn't think so. However, if there is, I'll pass on a little sumpin-sumpin to y'all: Before you sign the dealer agreement when aquiring your franchise, pay attention to the parts inventory.




Here's an example of a situation that happened to...uhh....a friend of mine. In Mexico. Yeah, that's it. Mexico.




The incoming dealer is in negotiations with the outgoing dealer, right?

"Hey, um...you really have a lot of inventory, Mr. Outgoing Dealer. Probably 150K more than you should for your volume."

"That's OK, Mr. Incoming Dealer," Mr. OD says. "It's all returnable on the Termination return."

"Holy crap...really?" says Mr. ID.

"Yep.....ask our Chrysler rep"

"True dat, G." sez Mr. Chrysler rep.

"Well, hell. Lemme just sign this heah document and let's get the party started!"



Oops.


What they failed to mention is that yeah, everything is returnable......as long as it (1) isn't a superseded or discontinued part, (2) isn't a part with a current year application - which means if the buy/sell is happening in 2009, then all part #s that fit any 2009 model vehicles aren't returnable, (3) and if the part isn't resellable - basically missing/damaged packaging, etc. And if that happens to be around 100K worth of crap because that stuff wasn't watched and/or documented properly (hint: it almost never is), then guess who gets to break out the vaseline? These things ARE stated on the Buy/Sell agreement. Not in bold print, not somewhere it stands out. At this point, you are probably like one of the poor saps in your finance office buying a car. You have about 435.72 documents to sign, so you are just setting your pen on fire and not taking the time to read and comprehend each and every line of text on the documents.

So, how would you know these things? Simple. You have YOUR people conduct the pre-purchase inventory so these items can be identified. Not an inventory company. You want someone that is intimately aware of what he's looking for in your specific manufacturer(s) guidelines.

Use what you learn from the inventory as bargaining leverage. You may want to purchase only the returnable items. Then again, you may be in a situation where Mr. OD is hard up for cash to support a rampant coke/hooker habit and is dumping his store uber-cheap. It might be a great deal even if you do buy the junk. But still, knowing what you are getting you can still set up a way to clean it up when you get your grubby little hands on it, see? This way, you won't come back from your 20group meeting with a pounding headache and a new ulcer when you discover that half of your 400K parts investment is garbage and then take it out on your Parts Manager who you stuck with that turd of an inventory. Just sayin'.


But wait...there's more. Order now and we'll throw in an IOP order free!!!


"IOP? WTF is an IOP?" Well, Mr. ID, I'm glad you asked. Honestly, I really don't remember what the letters I O P stand for. Basically, it's definition is "offsetting order." Whatever the dollar amount that you finally end up scraping together that IS actually returnable.....you have to make an offsetting order for that same (or more) amount. You didn't think that Chrysler was just going to shell that cash out, did ya? Oh, so your perfect inventory level is 285K? You are sending back 220K of the 375K you bought? Welp, tough.

The Termination Return concept originated as a way to insure that the new dealer could start out with a good, solid inventory. Great idea, in my opinion. But it has been bastardized over the years to protect the manufacturers wallets so much that the best thing you can do to insure you will start out correctly is to do the proper research before you sign the dotted line.

Your Parts Manager will thank you.