A manufacturer's power to create a new dealership location is the power to destroy any number of existing dealerships within the market.
FCA's drive to create hundreds of new locations across the U.S. may be a sign of real optimism about the future. And that sign of strength is certainly good news to dealers and dealer advocates; that is until a rash of new points threatens to undermine the financial stability of incumbent dealerships, the employees who work there, and the consumers and communities that rely on these established businesses.
This is the problem: If a manufacturer with a mature dealer network isn't satisfied with the performance of its incumbent dealers, that manufacturer immediately thinks "new locations, stronger, better operators." They invariably point the finger of blame at the dealer and forget that there are three fingers on that same hand pointing right back at the factory.
Many states, New Jersey included, have enacted state franchise laws that give dealers the right to protest a new or relocated dealership point, at least under certain circumstances. Let's be clear, though. A right to protest doesn't give a dealer veto power over the manufacturer's decision. It simply allows them to argue before an impartial tribunal that creating a new point or relocating an existing one will do substantial harm to the incumbent dealer's investment and will destabilize the market, rather than improve brand performance.
These proceedings require expert witnesses and extensive research to show how the creation of a new dealership or relocated dealership will build brand performance in the market, as opposed to, say, building a more competitively-priced and equipped vehicle.
They also require independent fact-finders to assess the impact on consumers and whether a new or relocated dealership location will improve access to a competitive sales and service network. Again, building or relocating a store that will destroy or render unprofitable an existing dealership doesn't improve customer access to sales and service and is prohibited under the law in many states.