Are you worried about an unfair termination of your manufacturer contract; mandatory capital improvements; or fair reimbursement for warranty repairs? A law signed in 2013 in New Hampshire (SB126, referred to as the “Dealer Bill of Rights”) guarded against just those issues — and has been challenged by farm equipment manufacturers for the last 3 years.
The challenges were brought all the way to the U.S. Supreme Court and on Oct. 3, the court denied the appeals. The law is here to stay in New Hampshire. Other states have similar laws, but Ralph Gaiss, CEO of the Northeast Equipment Dealers Assn., believes the New Hampshire Law is the most comprehensive and fair dealer law for equipment, auto and powersports dealers.
“The law includes common sense provisions for dealers defining what constitutes ‘good cause’ for an equipment manufacturer/supplier to cancel/terminate a dealer; enables dealers more flexibility when selling their business; limits mandatory capital upgrades to facilities; includes a ‘buy local’ provision when updating/upgrading facilities is required; and proper reimbursement warranty work done by dealers. Frankly, there are far more benefits to list,” he says.
Another important aspect of the law is enforcement. Any disputes are first heard by the New Hampshire Motor Vehicle Industry Board as opposed to going straight to the courts — a less expensive process for dealers.
The precedent set in New Hampshire is critical to dealer rights nationwide. Gaiss explains, “First and foremost, the SCOTUS (Supreme Court of the United States) ruling sets a national precedence in favor of dealers over the manufacturer’s ‘constitutionality’ objection. Secondly, in many respects the law has become the ‘gold’ standard, a reference for other states identifying issues and solutions for their consideration.”
The scenario in New Hampshire — with the trip to the U.S. Supreme Court — may have been extreme. However, now that this has been resolved, perhaps other dealers need to re-examine their own state legal protections.
“I think it’s fair to say equipment and other dealers are frustrated. Manufacturers continue ‘updating’ their dealer and other subsidiary divisions (financing) agreements more frequently. As the marketplace keeps changing, anti-trust laws severely limit a dealer’s ability to negotiate effective changes to what most would agree are one-sided supplier contracts. Dealers feel disadvantaged when presented with new agreements, then told to sign it…or else?” Gaiss says.
Two questions for you:
- Based on the dealer rights legislation in your state, do you feel you are protected?
- What is your biggest concern re: your agreements with your manufacturers?
Email me or comment below. To encourage candid conversations, we can withhold attribution upon request if we share your comments.
Go here to read the news about the U.S. Supreme Court ruling.