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Is Texas dealer bill a harbinger of things to come?

The decision by Texas dealers to pursue legislation covering dealer/manufacturer agreements seems to have surprised many. It shouldn’t have. The dealers actually made it known during both the 2010 and 2011 American Boating Congress in Washington that they believed such legislation was needed and planned to seek it this year.

During the recent recession-weary years, not much has been written or said about this always contentious subject. The passage of Texas H.B. 1960, however, now raises the question of whether this issue will move to center stage in other states that have, heretofore, talked about or proposed such legislation.

So what has really happened in Texas? If you read the comments following the initial report in Trade Only Today (June 29, 2011), you’d think the sky had fallen in — that the dealers had gone over the top in pushing a bill that was somehow unfair to manufacturers and would even cause them to stop doing business in Texas!

Whoa, I thought, I gotta read this bill. So I did, every word of it. And as I read it, the whole thing seemed awfully familiar. That’s because all the provisions in it were the same as those developed by a Special Task Force and unanimously recommended by the boards of NMMA, MRAA and announced with great fanfare at ABC in May 2005. In announcing those Task Force recommendations, current NMMA chairman David Slikkers said the goal was to improve dealer/manufacturer relationships and end the need for dealer agreement legislation in the states. So why this bill in Texas?

In the six years since, the Texas dealers simply haven’t seen the industry recommendations adopted into their agreements, explained Ken Lovell, president of the Boating Trades Association of Metropolitan Houston. So, they finally had to turn to their legislature to pass just those specific recommendations. Nothing more.

If there’s some measure of joy among Texas dealers, there should be an equal amount of disappointment elsewhere. After all, if it’s six years after the work of the task force, once hailed as a “new day” for dealer/manufacturer relations by the task force chairman Slikkers, and it is necessary to legislate the recommendations, it has all failed to live up to its promise. In turn, valuable limited industry financial and human capital must be spent on both sides (NMMA opposed the bill in Texas) on this issue instead of targeting increased demand for our industry’s products and services.

But, during the last few years, dealers have experienced, as never before, the high degree of risk they assume in representing a manufacturer’s boats and engines. Those dealers still in business have seen, first hand, friends and colleagues lose everything in this unprecedented recession. Going forward, given the capitalization requirements and inherent risks in marine retailing, it’s understandable that dealers will pursue supplier agreements that give them more reliable relationships, even if it’s necessary to realize it through legislation.

And, if Texas is any indicator, the dealer/manufacturer agreement recommendations so well done by the Task Force and endorsed by NMMA and MRAA constitute the right model.

Comments

2 comments on “Is Texas dealer bill a harbinger of things to come?

  1. Doug Reimel

    I for one prefer not to have legislation. But, if all else fails Dealers must pursue legislation to protect the dealers assets. It is not just about protecting assets it is also about ROI (return on investment) and growing the business. I for one hope Michigan is next. A three year contract with a 30 day cancelation clause is just a 30 day contract. Remember always brand your dealership with your brand not your products.

  2. Chris S

    Much of the Task Force’s recommendations were similar to the 2004 New York Dealer Legislation that we passed. It is very fair. Is it so wrong to require ample notification for cancellation? Buyback of boats, product, tools and signage? Posted warranty labor reimbursement(NY is on a 3 year phase in)? Best of luck to Kenny and the dealers in Texas!

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