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Saturday, April 7, 2007
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Sled dealers are fighting back Change sought in franchise law Senior Reporter Brothers Motorsports had a 15-year relationship with Polaris when the Baxter business received a letter saying the snowmobile manufacturer decided not to renew the annual dealer relationship.
Steve Van de Putte, Brothers Motorsports vice president and general manager in Baxter, tried to fight Polaris' decision and hired an attorney to argue wrongful termination. It became a miserable relationship, Van de Putte said. When an interested party wanted to buy his inventory and had a letter from Polaris approving that transaction, Brothers Motorsports ended the struggle and sold the machines.
Now Van de Putte is leading an effort by power sports dealers - those who sell watercraft, all-terrain vehicles and snowmobiles - to seek legislative protection. Van de Putte said the law, which would basically give power sports dealers franchise protection, would be similar to what auto dealers already have and the same protection power sports dealers have in neighboring states.
If it passes, the law would limit a manufacturer's ability to terminate a dealer relationship and a manufacturer would typically be required to buy back inventory if the dealer relationship was terminated. Another goal of the proposed state law is to protect dealers from what they say is manufacturer pressure to order more inventory than they want.
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Jon Hunter, Internet manager at Brothers Motorsports, paused in the power sports dealer's showroom. Brothers Motorsports in Baxter is one of the dealers involved in an effort to seek legislative protection for power sports dealers in their relationships with manufacturers. Brainerd Dispatch/Nels Norquist
» Purchase reprints of this photo.
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Van de Putte said Polaris wanted him to order 82 snowmobiles when he was thinking about ordering 41. But without ordering 82 new sleds, Van de Putte said he wouldn't get the factory rebates allowing him to sell last year's models at a discount.
The Minnesota Retailers Association is pushing for the legislation.
Calls to Polaris Industries offices in Medina were not returned.
Scott Lambert, Minnesota Auto Dealers Association executive vice president, said he hopes the power sports dealers are successful in their quest for legislation.
"I think you are really protecting the consumer as well," Lambert said.
"I think the consumer will find it a much more stable environment to buy and service products."
The state's auto dealers have been protected by a franchise law since 1980, meaning a manufacturer cannot terminate a dealer relationship without cause and if a dealer is losing a franchise the manufacturer buys back the inventory. Lambert said manufacturers are not being asked to eat the equipment as they buy it back and then redistribute it to other dealers.
"Without a franchise law it's a very one-sided relationship and the manufacturer can be really abusive to the dealers they are asking to distribute their product," Lambert said. "Right now the dealers carry all the manufacturers' risk. Manufacturers have a take it or leave it strategy, Lambert said, adding he thinks everyone deserves a little more protection than that.
"I think it's long overdue for the power sports," Lambert said. "They are not breaking new ground. I think they are pretty late to the party."
At Minnesota Inboard Water Sports in Baxter, Sally Heidmann, general manager, and owner Joe Mueller, were in favor of the legislation for franchise protection.
As the sixth-largest Malibu boat dealer nationwide, Minnesota Inboard feels protected by its size. But Heidmann said they understand the devastating consequences when a manufacturer leaves a dealer, especially after a long-term relationship.
Van de Putte said the business relationship between dealers and manufacturers has changed a lot in the last 20 years with manufacturers wanting power sports dealers to be more like their auto counterparts, putting up million dollar facilities on multimillion dollar real estate. Dealers invest in parts, signs and training.
At the same time, Van de Putte said manufacturers want to have dealer relationships with annual renewals, giving dealers little protection for their investment.
Van de Putte said Minnesota companies Polaris and Arctic Cat have political clout here and manufacturers say franchise protection will hurt their revenues. Minnesota Public Radio reported manufacturers are arguing the state should not be involved in the business relationship they have with dealers, that forced repurchase of inventory is wrong, that weaker dealers will be protected at the manufacturer's expense and consumers will end up paying more.
Van de Putte doesn't agree and points to franchise protections with those same manufacturers for dealers in neighboring states.
"If they can do it - Wisconsin, Iowa, South Dakota - why can't we have it in Minnesota?" Van de Putte said. "Just treat us the way they do all the other dealers and we'll be fine."
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.
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