In a key confrontation last week with Republic Industries Inc. over the transfer of a Florida franchise, Honda decided to do nothing.
American Honda Motor Co. allowed a July 7 deadline to pass without taking action to prevent the transfer of the Miami Honda dealer franchise to Republic. Republic and the de la Cruz family, which owned the dealership, closed on the $40 million stock deal the same day.
Honda had faced the choice of accepting or rejecting Republic's offer to purchase Miami Honda or taking no action at all. It chose to take no action.
'We told them we were not filing an administrative challenge, but we also notified them we expected them to comply with our dealership agreements and policies,' said Art Garner, a spokesman for American Honda in Torrance, Calif.
FLORIDA IS TOUGH
Florida is among the toughest states for a manufacturer to oppose the transfer of a franchise. Under state law, a manufacturer is liable for triple damages to both buyer and seller if it cannot prove the prospective buyer is unworthy. Since the Miami Honda deal was a stock transaction, Honda would have had to prove Republic lacked good moral character to justify stopping the transaction.
'It clearly was a very expensive gamble for Honda and one they chose not to take, probably wisely,' said Dan Myers, a Tallahassee attorney representing Miami Honda.
Last spring, Honda did not oppose the transfer of the Courtesy Acura dealership in Orlando to Republic.
Honda, along with Toyota Motor Sales U.S.A. and Saturn, has been a vocal opponent of Republic's rapid acquisition of dealerships.
Unlike Toyota, which is battling Republic state-by-state, Honda is pursuing a nationwide legal strategy. A Honda lawsuit against Republic is pending in U.S. District Court in Los Angeles.
THE RIGHT TO LIMIT
The suit was filed May 7, the day after Republic announced plans to buy Miami Honda and the other de la Cruz dealerships. The suit accuses Republic of attempting 'a hostile takeover of American Honda's dealership network.'
American Honda wants the federal court to uphold its right to set a policy that allows a single entity to own no more than seven Honda dealerships and three Acura stores.
Republic says that at least one entity, Hendrick Automotive Group, already owns more than the limit.
Republic filed a motion to dismiss the Honda suit; it expects a hearing in August, according to Jim Donahue, Republic vice president of corporate communications.
Media-savvy attorney Daniel Petrocelli, who represented the Fred Goldman family in its successful wrongful death civil suit against O.J. Simpson, represents Honda in this case.