The ownership and operation of a motor vehicle dealership and the inter-relationship of its various departments present a very unique challenge. From the economic pressures faced by dealers to the relationship with manufacturers, a dealer’s focus needs to be on much more than just selling vehicles.
A dealer needs advisers with a thorough understanding of the issues facing dealers daily. Clark Hill has guided and represented the interests of motor vehicle dealers through the complex web of federal and state regulation for decades. In many cases, we serve as de facto general counsel to dealership groups ranging from a single point, single line dealer to multi-state, multiple line dealer group.
As a result, our attorneys have developed a solid and broad-based understanding of all facets of dealership operations. In addition to their day-to-day involvement with the issues and challenges facing dealers today, several of our attorneys are active in the National Association of Dealer Council, a national organization of dealer lawyers designed to educate its members on the legal issues affecting motor vehicle dealers and to share best practices from across the country.
We utilize a multidisciplinary approach in our representation of motor vehicle dealers. Regardless of the nature of the legal issue you or your dealership face, we can help.
Consumer complaints are a part of doing business. In a dealership, they sometimes appear to be a major part of doing business. Our attorneys undertake a preventative counseling approach and assist dealership clients in implementing systems and industry best practices to avoid consumer disputes. In the event a consumer complaint is received, our attorneys work with our clients to resolve the complaint as quickly and efficiently as possible. If litigation becomes necessary, our attorneys have decades of experience in defending dealerships against consumer complaints ranging from disputes arising out of a single transaction to class actions involving thousands of plaintiffs.
As with any business, dealerships often become involved in disputes with their vendors. Whether it’s a dispute with a uniform company or a dispute with a dealership’s management system provider, our deep industry knowledge and experience in the dealership industry provides a significant benefit to dealership clients by giving our attorneys the ability to either explore alternative solutions and resolutions to these types of disputes or provide an aggressive litigation strategy.
Warranty and incentive audits can be a major disruption to a dealer’s business and pose significant exposure (both monetary and non-monetary) to dealers. Manufacturers all have teams of experienced auditors tasked with auditing dealers to seek the recoupment of warranty and incentive dollars paid to dealers by manufacturers. These teams are experienced and aggressive. A dealer needs a partner on its side to help it through this process. Our attorneys have significant experience in representing dealers in all types of audits and assisting dealers in minimizing the amount sought by manufacturers.
Dealership Acquisitions and Sales
Buying or selling a motor vehicle dealership is a very complex transaction with many working parts. From the structure of the entities and the negotiations with both the other party and the manufacturer to the coordination of the closing details such as the timing of the inventories, the assignment, and assumption of all operating contracts and the consummation of the transaction, our attorneys have significant experience in handling dealership buy-sell agreements. Whether a dealer is a single-point dealer in a rural area or part of a national, publicly-held dealership group, this knowledge and experience, obtained over decades of representing dealers, allows our attorneys to guide clients through this process efficiently and effectively.
Dealership Structure and Succession
The structure of a dealership’s operations can have significant legal and tax consequences. Whether it’s a long-time family-held dealership, a new dealership being acquired, or a new point is established by the manufacturer, the dealership must be structured properly. Equally important is the succession plan for the dealership. Too often, dealers do not devote enough thought to what will happen in the event something happens to the dealer’s principal. Many issues need to be assessed in developing a solid succession plan, such as manufacturer requirements, licensing requirements and, perhaps, most importantly, how to safeguard the value of the dealership in the hands of the dealer principal’s heirs. Our attorneys routinely advise clients regarding the structuring of entities to limit potential liability, emphasize tax benefits, provide for the future growth of the business, and to provide for the orderly transition of the dealership to the successor while protecting the value of the business for the dealer’s heirs.
Every state has different licensing procedures with which dealers must comply to obtain the necessary licenses to operate their businesses. Often, these procedures are complex and time-consuming. Our attorneys are well-versed in navigating these procedures in various states and routinely work with the administrative licensing agencies to ensure that a dealer’s license is issued promptly.
Obtaining financing accommodations is a necessary component of the dealership industry. From flooring lines and working capital lines to real estate loans, the challenges posed by motor vehicle dealership financing are unique and require a thorough understanding of the dealership industry. Gone are the days that captive finance companies and competitive lenders are viewed as a dealer’s partners in the success of their dealerships. The increased scrutiny faced by lenders causes increased scrutiny of their lending relationships. This often results in hard-line approaches being taken against dealers. The knowledge and experience of our attorneys serve as a valuable resource for dealers when facing the demands of lenders. From the initial negotiation and documentation of a dealer’s loan documents to defending against a lender’s attempt to pull a flooring line, our attorneys have significant experience in protecting dealers in these areas.
Dealership operations are some of the most regulated retail operations in the United States. From the requirements of the Red Flags Rule, the FTC Privacy Rule, the Safeguards Rule, and Adverse Action Notices to the impact of the FTC’s authority under Dodd-Frank, a dealer needs to be more vigilant than ever concerning its operations and its compliance programs. Our attorneys routinely assist dealership clients in these areas by conducting compliance audits, form review, and training sessions for dealership personnel.
An often overlooked area of compliance relates to the advertising of automobiles by dealerships. Many times, dealers rely on advertising agencies to produce advertisements that comply with various statutes and regulations at the state and federal levels. Unfortunately, this reliance can be dangerous for a dealer as it is the dealer, and not the advertising agency, that will be held responsible for any non-compliant advertisement by the Federal Trade Commission or local Attorney General’s Office. The attorneys of our Dealership group work with our dealer clients in reviewing radio, television, and print advertisements, as well as direct mailers and sweepstakes, offers to ensure the compliance of such items before dissemination to the general public.
Real Estate Issues
Many real estate issues faced by dealers and their related real estate entities are unique to the automobile dealership industry. From environmental and zoning issues to issues relating to site control and manufacturer-required facility improvements, we have the experience to assist dealer clients in negotiating, documenting, and litigating real estate issues.
Employment Law Issues
Dealerships have been fertile ground for claims of employment discrimination and wrongful discharge for years. We provide counsel to dealership clients regarding the implementation of employment policies and the preparation and adoption of employment handbooks to help reduce the exposure faced by dealers. Also, we routinely advise dealership clients on day-to-day operational issues relating to a wide range of employment-related issues, such as Wage and Hour, FMLA, ADA, drug testing, and workers’ compensation issues. If litigation becomes necessary, our attorneys have the experience to protect the interests of dealer clients.