For most new car dealers, there is little question about their most valuable asset – their franchise. The franchise is embodied in the Dealer Agreement and further defined in the related communications that come from the manufacturer. These documents should be protected like any other priceless asset.

Until recently, most dealers would say that they would never get into a dispute with their manufacturers.  However, the recent bankruptcies changed that when worried dealers raced to their lawyers to fully understand their rights.  And the post-bankruptcy aggressive tactics of many franchisors give little comfort to dealers.  If you must take issue with your manufacturer, do you have your agreement documents to that you can understand your rights and discuss them with your legal adviser?

A dealer facing such a dispute with the factory who seeks legal advice will find that the attorney reviewing the matter will want certain key documents. On franchise issues, it will be the Dealer Agreement with all attachments and all revisions and communications from the manufacturer about it. For an incentive program, it will be the terms of the program. For warranty audits, it will be the terms of the manufacturer warranty policy as evidenced by the manufacturer’s manuals and bulletins.

So what does that tell us about what should be carefully filed and protected in the dealership?

• Franchise – the dealer’s Sales and Service Agreement should be kept by the dealer, with a copy in the general office.  All attachments and all communications about the agreement should be kept in the file.

• Incentive Programs – copies of all incentive programs should be kept.  A file for each separate incentive program should be maintained, and the program rules and communications should be kept in that file.
  
  
• Warranty Audits – the manufacturer’s manual should be maintained by the warranty administrator.  All bulletins and communications concerning warranty policies and programs should be maintained with this manual.

Some dealers feel that keeping these records is not critical because they can always be obtained from the factory. However, dealers are often surprised when they are facing deadlines for appeals or other necessary filings to protect their rights about how long it takes a manufacturer’s representatives to find relevant documents when dealers need them. Documents that are instantly available when the manufacturer wants to enforce its rights mysteriously become difficult to locate when the dealer is talking about protecting its rights. Don’t rely on the factory to tell you what your rights are. Take care of your valuable franchise documents as you would any other valuable assets.