The Illinois Motor Vehicle Board has blocked the termination of a suburban Chicago franchise by accepting a hearing officer's decision that Ford Motor Co. lacked sufficient cause to drop Village Ford Inc. of Bolingbrook.
'This is the first termination case in Illinois that is about market penetration,' said Chicago lawyer James Roche, who represents Village Ford.
Citing comments in the decision about ambiguities and unclear standards in the sales and service agreement, he added: 'It's a blast on Ford's franchise agreements.'
Ford has appealed in Cook County Circuit Court.
'Dealer performance is critical to customer satisfaction and the company's success,' Ford spokeswoman Susan Krusel said. 'Village Ford was not meeting the performance criteria for its territory size that we defined in the sales and service agreement. Dealers in surrounding areas even began marketing and selling vehicles in Village Ford's territory to satisfy customer demand.'
Board hearing officer Robert Wagner upheld the protest of dealer Christopher Lucente. Wagner found that Ford had failed to prove Village's primary market area was 'commercially reasonable' or that Ford's sales analysis adequately had considered local marketing conditions, such as the store's hard-to-reach location, lack of visibility from the street and traffic patterns.
Village relocated to its present site in 1989 at Ford's urging, the decision said. In 1990 it had a 13.1 percent market penetration, but sales of new cars and trucks declined after the removal of a bridge that was the major connector between the north and south halves of its primary market area.
Even so, it was among the top 15 percent of 322 dealerships in the Chicago region and ranked 45th in total sales in 1998, the year before Ford's termination notice, according to Wagner's decision.
'Ford failed to take into consideration the limitation of Village's current facility and failed to provide Village an opportunity to relocate and modernize its facility to increase its sales,' Wagner said, referring to Lucente's repeated requests to Ford to redefine the primary market area and to allow it to relocate.
He rejected Ford's contentions that the dealership hadn't marketed parts adequately and hadn't employed and trained competent personnel.
Wagner also said Village could pursue its administrative protest without first appealing to Ford's dealer policy board. The company's internal appeal merely provides formal notice of a dispute, which Ford knew about from the protest submitted to the state board, he said.
Ford's Krusel said the company intends during the appeal to clarify questions about how its performance criteria were determined.
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