Auto dealers across the country are expressing concerns that the franchise system is under attack by OEMs and industry disruptors that aim to sell vehicles directly to consumers. State associations have taken notice and are stepping up to represent their members. Today on Inside Automotive, Ted Smith, President of the Florida Automobile Dealers Association (FADA), shares his perspective on this development.

Dealers believe they are at a disadvantage because of the pandemic’s effects, the supply chain shortfall, and other problems that are occurring at the same time, according to Smith. Dealers are currently experiencing “Tesla envy,” which refers to the comparison of their customer satisfaction and digital commerce efforts to that of Tesla.

However, dealers would face allocation adjustments that could put them at a further disadvantage if OEMs decided to set up online drop sites for customers. Agency systems are not a favorable option either because dealers thrive on relationship marketing.

As a result, reservation systems strip most dealers of their essential resources, which include selling requirements for vehicles, the ability to handle trade-ins, and the management of all financial matters.

On the other hand, Florida has recently been hit by some particularly powerful storms. However, according to Smith, dealer communities have been very successful in raising money for employee victims and their families through charitable foundations.

Florida dealers are covered by insurance in case of natural disasters. Despite the fact that state law accounts for these potential circumstances, there have been some unreported FADA violations that Smith expects to resolve in the near future.

The Sale of Business Opportunities Act, adopted at the state level, pertains to the sale of franchises and mandates that franchisors submit a yearly franchise exemption notification to the Florida Department of Agriculture and Consumer Services. According to the exemption request, dealers must properly issue a Franchise Disclosure Document (FDD).

However, according to Smith, there have been certain violations that might be remedied if the legal system gets involved. But, Smith prefers that dealers come together going forward to enforce these efforts and “to step up and take action now.” Watch the video HERE.