Colorado dealers have stronger franchise laws that they say now level the playing field with manufacturers.
Gov. John Hickenlooper on Wednesday signed into law a bill providing that all franchise protection laws enacted in the state's history will apply to all dealers regardless of when they signed their franchise agreements, says Colorado Automobile Dealers Association President Tim Jackson and the governor's Website.
"This doesn't create any new rights for dealers, it ensures the protections that have been enacted into law by the Colorado General Assembly in previous years," Jackson says.
The bill, introduced in the state's senate in April, is significant because in 2009, 2010 and 2011 the state legislature passed key franchise protection laws, including one in 2011 that limits manufacturer-mandated renovations to no more than every seven years, Jackson says. But some manufacturers ignored the new laws saying the dealer signed a franchise agreement prior to the law being passed, Jackson says.
The days of manufacturers being able to make that argument "are gone for them" now, says Don Hicks, CEO of Shortline Auto Group in Aurora, Colo., and a board member of CADA and the National Automobile Dealers Association.
Hicks was the only Colorado dealer of about 260 to testify before the state senate in support of the measure. He says most dealers were too afraid of manufacturer retribution to testify.
"It is a dramatic change for us," says Hicks. "I like a nice fair fight. If somebody else has brass knuckles, I want brass knuckles too. I watched the manufacturers and I deal with the manufacturers and they don't have our best interests in mind all the time."
Shortline has three separate dealerships that sell Subaru, Hyundai and Kia in Aurora, a Denver suburb. He owns a Porsche store in Colorado Springs. Annual new and used vehicle sales are about 5,000 for the group, Hicks says.
The bill also makes dealers walk a fine line, Hicks and Jackson say.
For example, under a recently passed Colorado franchise law, manufacturers' warranty and incentive audits are limited to the most recent 9-month period rather than several years, Hicks says.
"That's bad news for the manufacturers, but it's also bad for the dealers because if the dealers don't submit a warranty claim or an incentive claim in that 9 month period, too bad, so sad. You don't get the money." Hicks says.
He adds, "It makes everybody toe the line, the dealers and the manufacturers."
Colorado, in 1937, was one of the first states to enact dealer franchise laws.
Jackson says the state has yet to address the issue of how much to require manufacturers to pay on warranty claims.
"Some states require manufacturers to pay at the retail level on warranty claims," Jackson says. "Colorado has not addressed that yet. It's something in consideration for the future."