Pub. 56 2015-2016 Issue 3

27 SPRING 2016 Again, a dealer’s lifework should be able to be sold or transferred to a qualified buyer subject to reasonablemanufacturer concerns without the threat of termination. 23 Dodge Sales and Service Agreement The Dodge agreement provides that the dealer can order and “sell at retail to customers located within the United States” specified ve- hicles as shown on the dealer’s addendum. 24 The agreement also states that the dealer has the non-exclusive right, subject to the agreement, to purchase new specified vehicles for sale within the United States for sale to customers located within the United States for sale at the dealer’s facilities and location. 25 Again, the non-exclusive right to sell vehicles is limited in this agreement to the United States–no exclusive territory is given. The breadthof territory, i.e., theUnitedStates, is indicative of the competi- tive environment in the franchised motor vehicle arena and fostered by the parties to the agreement. Legislative Response The state laws regulating the motor vehicle industry are enacted through the state’s police power as allowed under the Tenth Amend- ment to theU. S. Constitution.There is an inherent understanding by each state that the motor vehicle industry affects its general economy and the public interest and welfare of its citizens. The motor vehicle allows the citizenry to go to work; to take chil- dren to school; to travel to the hospital; to choose where to live; to participate in extra curricular activities; to travel; to shop; to deliver goods–to name only a few of the daily activities in which the auto- mobile plays a central role. The limited number of complaints filed between themanufacturer or distributor anddealer indicates that there is little desire for litigation between the two parties to the franchise agreement. The state agency with jurisdiction over manufacturers, distribu- tors, representatives and dealers in Texas also licenses these entities. If a complaint is filed regarding a new dealership point, a relocation of a dealership point, or a termination of a dealership, as well as any contested case, the parties must first participate in mediation as provided by board rule before the parties may have a case hearing. 26 If the mediation is not successful, a hearing is held by an admin- istrative law judge with the State Office of Administrative Hearings. After the hearing, the administrative law judge issues a proposal for decision and recommends a final order to the agency’s board. 27 The agency’s board issues a written final decision or order, which requires a majority vote of a quorum of the board. 28 The board con- sists of nine members appointed by the governor with the advice and consent of the senate. 29 Currently, the agency’s board chair is the manufacturer-distributor representative. New Point In order to establish a new franchised dealership point in Texas, the board weighs the interests of the public as well as the affected parties. 30 The need for the investment and building of a new dealer- ship facilitymust be shown for approval. No community wants a new facility to be built only for it to be shuttered later because there was not adequate business to sustain it. Additionally, although a business model may be able to justify a new dealership facility, the manufacturer’s experts as well as the dealer’s expertsmay not be totally infallible.Neither partywants a new dealership investment to fail–it reflects poorly on the community and themanufacturer as well as the potential loss of a person’s life savings. The board is tasked with considering the public’s interest; a com- petitive marketplace; whether the manufacturer or distributor is ad- equately represented; harmto a protestingdealer; harmto an applicant; economic conditions; financial expectations; and, market conditions. Protest standing is given to the same line-make dealership located in the same county or within a 15-mile radius. Any protest must withstand the scrutiny of the needs of the consumer with the fac- tory’s, applicant’s, and protestant’s interests. A successful protest in Texas is rare. Relocation Standing to protest a relocation is the same county and a 15-mile radius with several stated exceptions. If the proposed relocation site is not more than twomiles from the dealership’s current location or if the relocation is farther from a dealer with standing, then no protest is allowed. 31 Additional exceptions disallowing a protest are based on the popu- lation size of the county as well as if a relocation is necessary because of a natural disaster or if eminent domain is threatened or exercised. 32 No dealership is granted a “veto” right in a new point or in a relocation. There is no exclusive territory for a dealership either by statute or through the dealer’s sales and service agreement with the manufacturer or distributor. Given the outlay of money by a dealer in the showroom, offices, service department, and the required land to display inventory, the expansion and relocation of a dealership is a state’s concern for buy- ers, taxpayers, the community, as well as the dealership owner and manufacturer. Termination or Discontinuance In determining whether there is good cause to terminate or discontinue a franchise, the injury or benefit to the public is re- quired to be considered along with the dealership’s sales, facilities, investment and obligations to the public as well as the interests of the manufacturer or distributor . . 33 The public’s needs and benefits are taken into account when- ever a new dealership point, a relocation of a dealership point, or a termination of a dealership is at issue. The Texas Legislature statutorily mandates that its citizen’s needs be accounted for by the board in its decision-making and the board always weighs the public interest and welfare of Texans when arriving at a decision. The example and concern for the Pittsburgh area for the GM  DEALER FRANCHISE — CONTINUED ON PAGE 29  DEALER FRANCHISE — CONTINUED FROM PAGE 25