2014s top legal trends for dealers: regulation, franchise demands

2014s top legal trends for dealers: regulation, franchise demands

In communicating with dealers perceived as underperforming, many auto franchisors try to coerce agreements in which a signing dealer agrees to minimum performance of above average in sales penetration and above average in CSI, Chase says.

The third problematic trend for dealers is excessive consumer activism and class action lawsuits, which Chase says are advanced by the strong regulatory environment no less than emboldened plantiffs lawyers.

Other top trends are involuntary franchise termination and termination threats, and the factory store issue raised by Tesla.

The ranking of the trends is based on the number of dealers likely to be affected, the probability of change from the current situation, and the seriousness of a trends effect on dealers.

The years top legal trends for dealers, compiled annually by attorney Eric L. Chase of Bressler, Amery & Ross, Florham Park, N.J., bring good news and bad news. In the bad news column for dealers and the private sector generally, 2014 will be what Chase calls the high water mark of regulatory activity.

The regulatory elephant in the room, of course, is the Affordable Care Act. The regulations are extremely complex and problematic, as much so as ACAs dysfunctional rollout. As of late 2013, says Chase, those regulatory pages totaled 30 times the pages of the actual legislation. Other regulatory thickets that are more dealer-specific will continue to come from the Consumer Financial Protection Bureau, the EPA and the FTC. The FTC is likely to act against dealer advertising practices where regulators find deceptive price quotes; and spot delivery, where delivery occurs before financing is final.

Now some good news: 2014 will be a year of remarkable sales rebound and profit for dealers. But along with that, franchisors will look for big-ticket investments by their dealers, such as relocations, renovations and brand exclusivity and image programs. And, says Chase, automakers will push for more sales.

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