Unreasonable Factory Performance Standards For Dealers And What Dealers Should Do When Faced With Them

May 31, 2016

Eric L. Chase

Publication
NYSADA The News

Eric L. Chase

 

For years, a growing number of automotive franchisors have tried to impose extraordinary performance standards on dealers. Here's the scenario: A dealer does not meet certain standards - say, in sales, CSI or facilities. The factory mails or hands to the dealer a pre-drafted amendment to the existing dealer agreement, ostensibly requiring the dealer to raise sales penetration and/or CSI scores to "average or above," based on a state or regional benchmark, and to maintain that level of performance for an extended period of time or indefinitely. There is nothing subtle about such amendments or the covering letters. They express disappointment and concern. In substance and tone, the franchisor says to the dealer, "sign this, or else...."

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