The Florida Department of Highway Safety and Motor Vehicles is reviewing minority dealer Roland Daniels' 1998 purchase of seven Florida Saturn stores.
In an April 6 letter to Daniels obtained by Automotive News, the department asked for proof that Daniels' dealer agreement with Saturn Corp. is legal under the Florida franchise statute. Florida prohibits factory-owned dealerships in all but a few circumstances.
'The purpose of this letter is to request information that will help the department understand if the relationship between you and the Saturn Corp. is a bona fide relationship,' wrote Ronald Reynolds, administrator of the dealer license section.
DEALER GROUPS COMPLAIN
Two dealer associations - the Greater Tampa Bay Auto Dealers Association Inc. and the South Florida Auto-Truck Dealer Association - asked the Florida Department of Highway Safety and Motor Vehicles to investigate the Daniels acquisitions. The organizations question the agreement's legitimacy.
The review of the Daniels acquisition is unusual. But after getting complaints about the Daniels purchase, the department has started taking a closer look at dealer license applications when a manufacturer is named as an investor, Reynolds said in an interview last week.
The department requires manufacturers to submit a copy of the dealer agreement if they have an ownership interest in a store. The department is developing rules to help determine when automakers can invest in retail operations.
Bill Betts, a Saturn spokesman, said, 'Saturn believes that it has complied fully with the law in Florida.'
ISSUE SURFACING IN MANY STATES
The dealer concerns in Florida are part of a growing national conflict over whether manufacturers should be allowed to have an ownership interest in dealerships.
Ford Motor Co. and General Motors recently invested in dealerships outside of Florida. Some states ban or restrict factory ownership. Local dealer associations in several states - including Florida - are lobbying state regulators and legislatures for tighter constraints on the practice.
The Florida statute allows manufacturers to have an ownership interest in a dealership temporarily for no more than a year or in a joint venture with an independent operator who has made a significant investment with his or her own money. The dealer must be able to buy out the factory's stake over a reasonable time period.
STAKE IS 1%
Daniels, of Gainesville, Fla., bought seven stores Dec. 31 under Saturn's dealer development program, which is designed to help undercapitalized dealer candidates buy dealerships. Under the agreement, Daniels has a 1 percent stake in the operation, and Saturn owns the rest. He only has to increase his stake to 50 percent within 20 years.
The department's letter to Daniels asks 19 questions centering on where he got the $520,000 he invested in the stores and whether the agreement fosters a full buyout in a reasonable period.
Daniels said he will respond in writing to the questions this week.