Dealers are mad about the economy. It's misdirected anger. How else would we continue buying more of the same inventory that got us into this mess and from the same gang that put us here?
Odder is that we trust that gang that is axing thousands of us. Congress is awarding them billions of dollars to do this. Our elected officials are rewarding them for cutting our jobs, terminating our franchises and eliminating our financing options.
We're living in Oz, where we're told not to look at the man behind the screen but to trust the illusion in front of us. At least the Wizard of Oz was trying to get Dorothy home. Our wizards aren't even pretending to keep us safe.
I've seen a manufacturer negotiate the closure of a 70-year-old dealership, then turn around and charge back the purchase money after the dealer closed his doors and gave up the franchise.
I've witnessed bankers demanding confessions of judgment in exchange for a few weeks before forcing a fire sale.
Many dealers are learning that buried in the fine print of their agreements is language that seems to throw away their rights.
The public and Congress have been duped into thinking that cutting dealerships will somehow make the vehicles better. By the time it's apparent that the manufacturers have always controlled the process, most dealerships will be gone.
Meanwhile, dealers are being forced to pass higher costs onto customers looking for deeper discounts, while manufactures demand that dealers recapitalize losses, as if the auto makers were disconnected from the business.
Worse still, dealers who are an inch out of line, which is most of them, face financial water boarding called “work out” until they quit or die.
Understandably, bankers and manufactures are uneasy. But if they are thought of as “too big to fail,” their distressed dealers should be included in their government bailout.
Instead, the big wigs hire thugs to force terminations of hard-working dealers. Chances are, if they want to close your store, they'll start by throwing a forbearance agreement at you in exchange for what will turn out to be not enough time. A voice in you will say you shouldn't sign. Few dealers listen.
Dealers often sign without a clue as to their rights, hoping to buy time to regroup. You may even have a few dollars tossed at you for your silence. You wonder what may happen if you resist. Can you survive biting the hand that feeds? Reaching for the pen is a short-lived fix.
It starts with seemingly appropriate calling of loans (especially floor plan) and demand for more cash reserve. Though it doesn't feel like it, it's a negotiation. Most dealers are snared long before they realize. Aggressors move fast to trap their prey. Dealers fold in fear, before understanding their options.
New- and used-car curtailments, whole-car pre-payments, fees, penalties, and threats of termination are brought to bear. Bankers and manufacturers know the value of acting before counsel arrives. It's all very cordial before lawyers show up. Relationship people stop by with veiled threats that others won't be so easy to deal with. Know this: you need an experienced attorney on your side. You won't see theirs until after you've signed self damning documents.
Unfortunately most attorneys know little about dealerships. Finding learned counsel can be tough. Lenders count on that and on their ability to convince dealers they have no rights.
If so, why the documents? Does it make sense that on the one hand they can simply terminate you, but on the other they want your cooperation — and signature?
Start learning the meaning of words like “forbearance” “waiver” and “confession of judgment.” Retain an attorney whose vocabulary includes “lender and franchisor liability.”
Doing those things may be as important as the oxygen you breathe. I know from experience. Most of that experience has been bad, and avoidable.
Peter Brandow is a veteran dealer.
