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Old 02-09-2015, 09:02 AM   #1
XDCX
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Default Utah cities hire lobbyist to change Dealership Franchise Laws

Here's a link to a report in the West Jordan Journal about three Utah cities that have hired a lobbyist to persuade state lawmakers to change Utah's existing Dealership Franchise Laws - click here

According to the report, Utah has a "15 Mile Law" that prevents any dealerships from opening in West Jordan City and the city wants the sales tax revenue that dealerships generate.

I thought it was interesting that most objections to state franchise laws typically come from the OEMs - in this case the Utah Dealers need to worry about local city governments making changes to their existing protections.
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Old 02-09-2015, 02:05 PM   #2
steve_biegler
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After reading the article it states there are many dealerships in the Salt Lake valley that are within the 15 mile limit. All preceding the adoption of the law.

My question is, can those stores be sold to a new buyer or would the law kick in at that point? And what if one wants to move to a new location?

Anybody know?
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Old 02-10-2015, 08:39 AM   #3
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Quote:
Originally Posted by steve_biegler View Post
After reading the article it states there are many dealerships in the Salt Lake valley that are within the 15 mile limit. All preceding the adoption of the law.

My question is, can those stores be sold to a new buyer or would the law kick in at that point? And what if one wants to move to a new location?

Anybody know?
While I'm no expert I'm quite confident that any of the existing dealerships could be sold to new buyers without any problems - essentially they're "grandfathered" in.

Concerning relocation of an existing point, as long as the new location passes the 15 mile law I would envision the only potential roadblock would be from the OEM. (OEMs can be pretty squirrely about allowing dealerships to move their physical location.)

Concerning the possibility that the existing law in Utah is changed, my bet is the 15 mile limit is vulnerable. In my experience 8 and 10 mile laws are most common. A 15 mile law in a metro market could mean that an OEM would only have one dealer to service a potential customer base of 500K+ people.
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Old 02-10-2015, 12:54 PM   #4
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there has never been brought to my attention any problem with the transfer of a dealer principal's ownership of a dealer within a state mandated 15 mile limit. If such a problem existed for a dealer, the state law would be changed using the state political process. Only in Michigan do the Manufacturers have enough state clout to mess with an existing dealers transfer rights. I even doubt they could do it there...UNLESS the manufacturer built some all encompassing clause in the new post bankruptcy contracts. (And I will bet the "first right of refusal" clause does this nicely!)
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Old 02-23-2015, 05:17 AM   #5
johnpico
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For what it is worth, existing mileage laws do not mean much to the factories.

They win over 90% of the protests.

For example, California has a 10-mile law, yet
- Honda defeated a challenge to put a new point only 4.3 miles from another dealership (Long Beach Honda v American Honda);
- VW defeated a challenge to put one at 4.8 miles (Michael VW v VOA); and
- Toyota won one at 5.0 miles (Fremont Toyota v TMSUSA)

Those protests can cost the dealer $200,000 or more in costs and attorney's fees.

Just a hint. Most of the dealers lose because they focus upon how THEY will be damaged, rather than the CONSUMER. The factories are armed with data showing how the public will benefit from the action, while most of the dealers merely complain how they will be hurt, rather than how the public will be damaged.

If you feel like you have to protest and the only argument you have is how you will be hurt, then show how your going under would hurt the public. If you only want to talk about how you are going to lose money, then you are just adding fuel to the fire by funding a losing cause.

That's 42-years of experience talking. http://www.advisingdealers.com/PubsAndCerts.html

PS - This post isn't legal advice, but it would probably worth it to pass it on to your attorney if you are considering protesting and have not yet settled on a strategy.
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Old 02-23-2015, 10:45 AM   #6
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Quote:
Originally Posted by johnpico View Post
For what it is worth, existing mileage laws do not mean much to the factories.

They win over 90% of the protests.

For example, California has a 10-mile law, yet
- Honda defeated a challenge to put a new point only 4.3 miles from another dealership (Long Beach Honda v American Honda);
- VW defeated a challenge to put one at 4.8 miles (Michael VW v VOA); and
- Toyota won one at 5.0 miles (Fremont Toyota v TMSUSA)

Those protests can cost the dealer $200,000 or more in costs and attorney's fees.

Just a hint. Most of the dealers lose because they focus upon how THEY will be damaged, rather than the CONSUMER. The factories are armed with data showing how the public will benefit from the action, while most of the dealers merely complain how they will be hurt, rather than how the public will be damaged.

If you feel like you have to protest and the only argument you have is how you will be hurt, then show how your going under would hurt the public. If you only want to talk about how you are going to lose money, then you are just adding fuel to the fire by funding a losing cause.

That's 42-years of experience talking. http://www.advisingdealers.com/PubsAndCerts.html

PS - This post isn't legal advice, but it would probably worth it to pass it on to your attorney if you are considering protesting and have not yet settled on a strategy.
Great post - thanks for the information.

While I'm not happy to hear that OEMs have been so successful in appealing a protest it's good information to know - especially the information about how the OEM is likely going to present their case.
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