Increased dealer interest in franchise laws irks RVIA chief
Addressing more than 250 people at last week’s Forecast 2008 luncheon in Washington, D.C, the president of the RV Industry Association fired a warning shot at RV dealers in reference to their increased interest in seeking franchise protection.During the Committee Week luncheon June 12, Richard Coon identified several key issues that are likely to impact the RV industry. One of them was dealer franchise laws.
“Since 2005, we have been working on 32 different franchise deals going through states (legislatures). In 2007, we have 61 different franchise bills including changes to existing laws,” he explained. “RVIA’s government affairs staff is overwhelmed in trying to keep on top of this issue.”
Coon noted that most of the legislation sought requirements that manufacturers repurchase unwanted inventory, provide full retail price on replacement parts and serve as a “full source” supplier in dealing with warranty issues.
My worry about all this is that it infuriates our members,” said Coon. “Manufacturers and suppliers are getting upset over this issue. It impacts the work we are trying to do to improve customer satisfaction. It turns us off from wanting to help the dealers.
”I warned the dealers at the RVDA board meeting this morning. All it takes is one crazy dealer to upset all manufacturers so badly that all cooperation goes down the toilet,” said Coon. “It would be a shame if that happened. If dealers see franchise laws as a way to benefit them going forward, we will have to adjust staff and money spent in that area to keep up.”
Several people in the meeting room were shocked at Coon’s not-so-veiled threat that a single RV dealer could upset all manufacturers so badly that industry cooperation would “go down the toilet.” More importantly, they were offended by the idea that this issue turns off manufacturers and suppliers to the point they may no longer desire to help the people who sell their products.
Do Coon’s comments suggest that anyone who dares disagree with RVIA’s stated position on any issue for any reason commits some type of detestable heresy? If the association is going to consider any type of discourse or opposing agendas as insubordination, it causes me to wonder who is risking industry unity.
It seems to me that whenever iron sharpens iron sparks fly, but when the process is over, both tools are stronger and sharper than they were before. Honest and open dialogue regarding this issue should take place and should be encouraged.
If dealers feel they need franchise protection, let them air their reasons why. Personally, I think it’s a mistake to turn the RV industry into a collective of franchises that could, in turn, severely limit a dealer’s ability to market and compete in a free enterprise system.
Clearly the main issue is the reason why dealers feel they need franchise protection in the first place. If dealers have indeed proposed 61 separate franchise laws to elected officials around the country, to me that signals an underlying problem that should be brought out into the open, debated and resolved. Most small business owners I know wouldn’t try to get the government involved in any aspect of their business. Apparently, RV dealers feel they have their backs against the wall on several issues and can’t get their voices heard in any other way.
Folks, if state legislatures are going to contemplate franchise-like protections for RV dealers, the debate is already underway in a very public forum – just not in this industry. The discussion, unfortunately, is taking place in committee rooms and legislative chambers around the country.
I know many dealers are upset with the requirement they must load up on inventory or risk losing their ability to carry a particular manufacturer’s product line. But some manufacturers are upset their dealer partners don’t willingly inventory all the different floor plans created to target specific markets and price points.
I know many dealers are upset that other manufacturers don’t follow Winnebago’s example by offering a 40 percent markup on all replacement parts. The dealers rationalize that if Winnie can do it and still turn a profit quarter after quarter, why can’t the other OEMs? But I know manufacturers and suppliers are upset that dealers don’t stock adequate inventory of replacement parts to ensure that their mutual customers can be cared for in a timely, efficient and cost-effective manner.
Dealers want guaranteed and protected territories. But manufacturers want the ability to ensure their products are aggressively sold. If an OEM’s data shows a market can bear the sale of 100 fifth wheels a month and their dealer is selling only 20, shouldn’t the manufacturer have the ability to make a change?
Does this industry really want to see franchise laws put in place in all states? It will greatly increase the burden on manufacturers and suppliers to ensure that they comply with a minutia of regulation that will vary from one jurisdiction to another. It will also give manufacturers and suppliers unprecedented ability to control independent RV dealers in order to “protect their brand.”
The bottom line is this. RV dealers are obviously upset enough about something that they feel their only recourse is to take the issue to state legislatures to get the relief or answers they seek. It would behoove the industry to listen to the reasons behind the dealers’ actions rather than firing shots across their bow threatening their very livelihood if they don’t tow the industry’s unequivocal “official” line.
Have people forgotten that nothing – not one thing – can happen in this industry without the cooperation of independent RV dealers who sell and service RVs assembled by manufacturers, and who stock and sell replacement parts provided by suppliers?
July 14th, 2008 at 6:30 pm
Blow out in Texas in Jan 08. Couldn’t find a dealer tire or trailer dealer to help with my master track tires.when i got home(Mi) I again tryed to address this problem with my Puma dealer (vaughan’RV ) and got no help.So I went to Discount tire and thay couldn’t tell me who made master track. I gave Up and bought a new set as the belt were broken in two more of the tires on the trailer.I had less then 2500 miles on them.
April 22nd, 2008 at 9:01 am
You certainly can run a successful business and have great relationships with dealers as you have proven time and again. However, the opposite is more the norm and people forget, or never knew, how do do business on a hand shake, a promise, and a commitment to do what is right whether it was in the favor of the manufacturer, the dealer, or the customer.
January 31st, 2008 at 11:30 pm
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July 3rd, 2007 at 10:33 pm
Bob and Sean;
Thanks for the support. Greg contacted me within minutes of my posting and I filled him in on the whole story.
With Greg’s blessing, I WILL gladly share the name on this blog. I agree that the dealers need to know when this back-handed stuff happens and who’s doing it.
We’re still reeling from this one because it truly hurts to believe in a manufacturer and to invest in that manufacturer by growing it in the local market, only to be cut off at the knees!!
Being the little guy, we’ve had it happen before, but it was always the big companies that did it. Never a big deal, because there was always another carbon copy brand out there to replace it.
By now, most people have moved on from this posting, so maybe it could be a future topic for Greg!
Greg, what do ya think?
Happy Independence Day to you all!! Support those troops, please!!
Mark
June 29th, 2007 at 5:44 pm
Mark,
You told a great story but left one thing out … the names of the products and company you were dealing with. Maybe we can read between the lines, but this is the kind of information that is important to the dealers that put their future in the hands of people they think they can trust, only to be betrayed when changes occur.
I agree with Sean, the real important element of the story is how you do business and the reputation you have earned in the industry. I’m sure there are other manufacturers out there that would give anything to have this kind of loyalty and capability in a given market.
At least you can look in the mirror and get a good nights sleep after a hard days work!
June 26th, 2007 at 2:29 pm
Mark, I think you’re giving the product too much credit in your success. It isn’t the WHAT you do, it’s the HOW you do it. That is your competitive advantage.
You can also be a historian for your customers and prospects. Just teach them how in EVERY SINGLE EXAMPLE of a company doing what you describe, the company produces an inferior product.
June 26th, 2007 at 11:34 am
I believe there is another element here that should be mentioned.
We are the little dealer. The mom-n-pop that has scratched out a decent living in this industry for 40 years. Two generations of experience that lives and breathes the RV life. The handshake generation.
Unfortunately, little dealer is surrounded by the self-proclaimed “Super Centers” that put immense pressure on the manufacturers to cave in to their promises of huge numbers.
My most recent loss came from a highly regarded, very high-end, old manufacturer. They had gone through some hard times but were building a great product and had some VERY good people in place. They were non-existent in our market 5-years ago. They needed dealers.
We took on the line with a stocking/on-order commitment of five units. We maintained a three turn on inventory for four years and a 100% CSI rating with the company. We built market awareness for that manufacturer.
Things were great, customer/dealer and manufacturer were happy and dealer was making good money.
Suddenly, the management changes at the old manufacturer. Their old names start showing up at other companies. “Beware of looming changes at the old manufacturer” they warned, “they want to be the Big guy!!”
In comes the inevitable runny-nosed, cocky, twenty-something industry “veteran” as our new rep, setting up a new dealer within 75 miles; then a few months later a “Super Center” with a carbon-copy sister product just 12 miles away!!
Then, lo and behold, the carbon-copy sister product name gets dropped!! Soon after, we (the little dealer) get a cancellation notice from the “veteran” rep (now promoted to runny-nosed, cocky, twenty-something National Sales Manager for two years of loyal service!!) that we are being dropped in favor of the “Super Center’s” commitment to carry the entire product line!!
Our State has no binding recourse for us as a dealer because non-motorized RV’s are essentially not even recognized by the State, unlike motorized vehicles.
So, even though we have (had) a dealer-manufacturer agreement, I’m out of a great product line and have to explain to my loyal customers why we no longer carry such a highly regarded product.
Bottom line Bryan of Peterson Industries, yes, there are two sides to every story, but we need binding legislation to protect the roots of this industry.
Ironically, I spoke with Bryan’s company when this all happened and inquired on getting his Excel product line. To his credit (and to my disappointment because I was unaware of this other dealer), he held to his dealer commitment and turned us down because of an existing dealer about 90 miles away!!
He protected that dealer and his store’s profitability by honoring the existing dealer!!
Kudos’ to Peterson Industries! I wish there were more like you.
Mark
June 26th, 2007 at 6:55 am
Bryan,
i think you realize that you are the exception and not the norm in the RV business today, as you pointed out some of the issues that complicate the relationship game in today’s environment.
You cerainly can run a successful business and have great relationships with dealers as you have proven time and again. However, the opposite is more the norm and people forget, or never knew, how do do business on a hand shake, a promise, and a commitment to do what is right whether it was in the favor of the manufactuer, the dealer, or the customer.
All industries are going through the relationship breakdown and it is probably not going to go back to the “good old days.” However, I’m the eternal optimist and hope that many of the manufacturers and dealers will really take a serious look at this issue and get together to make it work so that the consumer is not hurt, the dealer can make a good profit and will service anybody that shows up on his lot, and the manufacturers will make a good profit, build quality products. and support them once the transport driver pulls out of the plant driveway!
Congratulations on refusing to follow the trends of the past five to ten years that have resulted in the deterioration of the manufacturer/dealer relationship. As you have pointed out, it really doesn’t have to be this way.
June 25th, 2007 at 8:42 am
As with any issue, there are always two sides. What I am reading here is “more dealer protection… more dealer protection… more dealer protection… As a manufacturer of 5th wheels with a company who has been in the RV business for over 42 years, I’ve seen enough RV manufacturers come and go to make one’s head spin. Perhaps the best dealer protection can be controlled by the dealers themselves.
Year after year, we see some new spin-off manufacturer bringing their wares to the National RV show at Louisville. Sure enough, their booth is the “buzz” of the show. It seems nearly every dealership is there wanting to be the first in their territory to sign up for this all new (same as every other cookie-cutter model on the market) unit that is going to turn them unbelievable profits. Afterall it’s just as good, maybe even better than “________” only it’s CHEAPER!!! with even more bells & whistles.
Then within a short period of time, when the manufacture is faced with the reality of warranty issues, design issues, dealer AND retail customer service, employee health care, work comp, rising distributor prices, etc. they begin to fall behind in the “optional” areas. Paying your help and suppliers is NOT optional. Paying your dealer warranty claims is (for a short period of time anyway).
Then, when the manufacturer isn’t even around for as long as the warranty they were offering, dealers feel slighted, cheated, and betrayed, leaving a bad taste in their mouths for all manufacturers. Not to mention the effect this has on that customer base that the dealer has spent so much money nurturing and caring for. What is the customer suppose to think when you have sold them a product that is suppose to be the “next best thing” and you can’t get parts to repair it, or can’t get paid from your manufacturer to do the warranty work? Or, worse yet, the company who built the unit you told them was great, now is out of business! Are they going to trust you next time around? Perhaps not.
Now here is the good news. The good old days are NOT gone (as stated by Mike Ingram). There are still manufacturers where the owners are personal friends with the dealers. There are still manufacturers where the owners are actually RV’ers and do spend time in their coaches. Nu*Wa and Numar come to mind. I am proud of the fact that Peterson Industries still has the dealer we sold the very first unit ever produced to back in 1966! And they are still in our top 10 year after year.
So, this year when the Louisville show rolls around, don’t forget to stop and visit some of those “old reliable” manufacturers who have built their businesses on hand shakes, becoming friends with their customers, and taking care of business with integrity. Then there will be no need for franchise laws.
Bryan Tillett
President
Peterson Industries, Inc
June 21st, 2007 at 5:29 pm
What we have here is a growing minority demanding equality. Where do you get equality? Government. The good old days are gone where the owner of the factory was personal friends with his dealers and a handshake and fairplay worked . . . until it didn’t. Just like it works or doesn’t work with your next door neighbor. The result is that we hand over our issues of conduct to those we pay to do what we no longer have the time, desire or ability to do.
Franchise agreements are an attempt to create equality with a standard of performance between dealers of a specific product to give its consumers consistant service. In an industry where manufacturers court the biggest and best dealers but eventually settle for anyone that remotely qualifies, there developes a society of the haves and have nots. A franchise agreement will never equalize this situation until the manufacturers become true partners with their dealers in regard to service and operate as one in the customers best interest.
The biggest problem with the RV Industry is self-interest. Survival of the fittest at any cost. Cooperation and communication are anathema in its environment no matter how loud it’s screamed for.
I can remember when our industry had only ONE association. That didn’t work so we went to two and more. We’re now in so much discord that we’re going to turn over our mess to the States and the Fed.
Self-interest is blocking the very solutions that are available to every segment of this industry. It appears that it will remain so.
Why did Norcold and Dometic play their protracted games on their respective recalls, years before they became public? Communication at the time of discovery could have saved everybody millions, not to mention several lives.
If anyone has an answer to the self-interest dilemma, I have a solution for the communication problem. Call me if you like.
Mike Ingram
Huntington Beach, Ca
714-840-8002
June 20th, 2007 at 4:17 pm
If there are now 61 bills being discussed nationwide, it’s easy to see that this is an important issue…for both sides. And, if all sides of this industry doesn’t get its’ act together, does anyone really want the state or federal governments sticking their two cents worth into this industry anymore than they already are? What if, instead of spending a day playing golf at RVDA in Las Vegas, the membership did this:
First, prior to the convention, the association identifies the major points or subjects, that they would think the dealer body and the manufacturers would like included in any type of franchise protection law.
Second, the dealer and manufacturer membership attending RVDA breaks up into groups to discuss the pros/cons of each point covered, with the goal of having the major point resolved in simple English terms on no more than one page…not the 50-100 pages that any state legislature would take to state the same point. If there were ten identified points, then there would be ten different groups, with ten one page resolutions at the end of the day.
Third, have seminars scheduled during the meeting days, covering the points of the Monday’s groups… with the sole purpose of educating the other members of those issues. A special committee of dealers and manufacturers could meet daily to review, discuss, etc., the resolved points.
Fourth, by the end of RVDA, there should at least be a good starting structure of what the dealer body and the manufacturers could live with.
Fifth, with the result of having one structured instrument that the entire RV industry might be able to conduct business by…from the manufacturer, to the dealer and then to the retail buyer, this gives the entire industry one direction to work towards at the state legislature level.
Sixth, lay out an entire plan of attack, including a time schedule, of putting the plan action. The time is here to quit talking about doing something, and making it happen…just do it!
This should be a management issue. How each level of this industry manages itself and its’ business conduct, and something that we should all be proud of how we conduct our business. Both sides should be doing everything possible to keep it out of the legislature, where it becomes a legal issue…and something for each side to fight over…and neither side wins.
Or, is this just too much common sense?
June 20th, 2007 at 11:24 am
In the mid 70’s I went to work for a large RV dealer in Texas running the parts and service departments. Standard practice at that time was to submit for warranty repairs to the component manufacturer of whatever was being repaired. I don’t mean just the chassis - generator - tires. This was for everything but the roof and sidewalls and sometimes even they were subcontracted. We carried multiple lines , all of which were large manufacturers. We had a warranty ledger [this was pre-computer era] that contained information about submitted claims status for 30 to 40 component manufacturers who supplied everything from furnaces to radios to toaster ovens to the coach manufacturer. The two common traits that they all shared was that 1. None of them had ever sold anything directly to us and 2. They didn’t pay the warranty claims.
I inherited a service center that had outstanding warranty claims in excess of $100,000.00 and soon realized that the figure was not going to go down. The cure had to start at the point of sale of these components to the folks who wrote them their checks - the coach builders. We started over. We refused to do business with any coach manufacturer who would not provide coverage for the components that THEY purchased and provided in their products. The manufacturers began to acquiesce but they pleaded for confidentiality because they did not want this policy to become wide spread. It would make them accountable. It would make their vendors accountable.It was more work.
The prevailing atmosphere at that time was in step with Detroit’s “Big Three” - invulnerability/invincibility. We know how that worked out. These coach builders embraced change only when they were forced to do so. If we as a dealer had not forced them to change then somebody else would have.
The somebody else in this case appears to be our local Governments.
I am convinced that if a coach manufacturer knew that they absolutely were going to , by law, have to repurchase unfit merchandise, the quality of what comes to us would skyrocket.
I think that if we don’t get some protective legislation enacted, we need to learn how to communicate in some Oriental languages.
June 20th, 2007 at 10:36 am
The entire RV industry is, on it’s best day, very poor in terms of support from the manufacturers.
The availability of CORRECT parts in a TIMELY manner is completely unacceptable. If the automotive industry did business like the RV manufacturers, the US goverment would shut them down until they can prove their ability to meet the demands of their clientel.
I have served in this industry at the dealer level from Service Management to Corporate Service Management for many years. The trends are not improving.
Like many of my peers, frustration will cause me to ultimately resign from this industry.
Everyday this industry looses good experienced people as a result of frustration that stems from trying to satisfy customers that have purchased a unit manufactured by a company that cannot provide adequate parts, tech support and general information.
June 20th, 2007 at 9:00 am
Accountability is the issue at hand in my little world. It’s not our fault, send more pictures;
It’s not our fault, send more pictures;
It’s not our fault, send more pictures.
This system is obviously in need of modification. And then when the issue is brought to light, they(manufacturers) get more defensive and say they would not even want to help the dealers more. Sounds a little spoiled to me.
June 20th, 2007 at 7:29 am
I have been in the construction industry for 30+ years.
I am a want-to-be supplier to your industry.
My two cents advice:
The customer is number 1.
If your industry can not get its act together, it will be cut in half in five years.
Remember the heavy equipment manufacturers of the last 40 years? Only a few are left.
Pretty soon you’ll see R.V.’s from China if you don’t change your ways.
When there is a problem the manufacturer and the dealer, both should be involved.
You have a niche industry, mostly poorly managed, and serviced.
It’s to bad, you sell good an idea, but the products that go with it, need help.
Problems don’t get solved by blaming it on the other guy.
Fred
June 19th, 2007 at 4:48 pm
So let’s see now, we already know our customers are not happy with quality and customer service and that has been validated through several reports, some of which have never been released to the trade press or the public.
We know dealers are not happy with the relationships they tolerate with many of the manufacturers they represent, or they would not be up in arms trying to get legislation passed because nobody will listen to them.
Some manufacturers are apparently getting upset with these same dealers that they can’t communicate with so they take the argument to RVIA and have a message delivered to the dealer’s from a podium.
The RVIA is now threatening the dealer’s, who are represented by RVDA.
We haven’t heard from RVDA yet, but suspect they may have reciprocal feelings about the manufacturers but I don’t think you will see Mike Molino threating any manufacturers from a podium if they take action against the dealers.
Lumped all together one could make a pretty good argument that all the players in this game should probably enroll in a communications class. I find it absolutely amazing that we need to have this kind of discussion in today’s business world among so many well intentioned parties that can’t seem to solve their own problems.
In the end, and until they begin to get resolved, the real victim here is once again going to be the consumer.
Gene is right, the time is long overdue for industry executives and decision makers to get out from behind their desks, put their jeans on, and go camping and really listen to what our customers are saying about our industry.
You would not want to see the scorecard of executives in this industry who have never used their own products, never been in a campground or resort, and have no intention of doing so now. That’s unfortunate. There are some serious underyling problems highlighted in Greg’s blog and it sure doesn’t look like the industry is doing much to resolve them. Let’s hope that’s not true, and if it is, then let’s hope the direction is changed real soon.
June 19th, 2007 at 12:49 pm
Has RVIA published a list of these offending state franchise laws to show its members? How can RVIA equate a state introducing an entire RV franchise law with another state where the automobile dealer association introduced a small change to their franchise laws - which impact the RV dealers (motorized and/or towable) where RV dealers had no knowledge or discussion on the issue. Please ask RVIA to publish these offending laws to boil down the real number of RV dealer inspired laws, so that we can see the true breadth of the “surge.”
June 19th, 2007 at 8:47 am
Hat tip to Bob Dylan…
Gonna change my way of thinking,
Make myself a different set of rules.
Gonna change my way of thinking,
Make myself a different set of rules.
Gonna put my good foot forward,
And stop being influenced by fools.
June 19th, 2007 at 7:52 am
Hi Greg,
Just read your article and I fully agree with your concluding statement… But, unfortunately, one point still needs to be made… Dealers and The Manufacturing Community are still want to throw brick bats at each other in the hope that one or the other will win the battle of the Turf. In my view, these parties will continue to chuck the bricks over the fence until each party wakes us and recalls that it is only the Customer who is truly in charge of of the Turf.
Business School 01 teaches that when a Customer is not happy with what he/she feels is a good value for their hard-earned money, then they will move on to another venue where they can obtain the value they so much want and fills their desire.
As you pointed out in your article, Dealers and The Manufacturing Community both need to get it right before either can move ahead in resolution of their differences.
While I support the work of the U of M RV Consumer Forecast, it’s data needs to be viewed along with the reality of what RV owners are saying. Perhaps if RVIA and Dealers would get out into the campgrounds and take time to sit around the campfire, they would each come away with what is truly on the hearts of the folks who will be the Purchasers of new RVs.
This move could bring true progress….
Gene