and anti-competitive. Manufacturers are getting bolder, as evidenced by the direct attack on the franchise system. Legacy Manufacturers Selling Direct As you are aware, in 2024, Honda and Volkswagen announced that they want to forego the dealer network and sell the manufacturer line-makes Afeela and Scout, respectively, direct to consumers, which is a slap in the face to their dealer bodies. In 2025, dealers in Florida sued Volkswagen in Miami, which has survived a motion to dismiss. In April 2025, the California New Car Dealers Association (CNCDA) sued Volkswagen and Scout based on the changes that California passed to its franchise laws. While those suits are pending, Scout has obtained a dealer’s license in both Colorado and Missouri. This will be an issue to watch in 2026. Support Your State and Metro Dealer Associations Dealers will be leaning on their state and metro associations more than ever. The associations need dealer support as they are the advocates in the state you operate, and they work hard to ensure dealers have friends on both sides of the aisle, regardless of political divides. State associations protect dealers against negative legislation that challenges franchise and licensing laws. The associations introduce legislation and lobby on your behalf to improve dealer franchise protections by educating the elected officials on your business so they can understand the need for those protections. For these reasons, you need to support the associations, financially and through personal activism by getting to know your local representatives. There are still many lingering questions regarding the Hyundai and Amazon partnership. As we predicted, Ford has thrown itself into the partnership mix for used vehicles. As we have seen so far, Amazon has served the same purpose as other lead provider websites and has not circumvented the dealership franchise system. However, monitoring the Amazon and manufacturer relationship in 2026 will be critical to ensure your rights are protected as a franchise dealer. Be Prepared To Enforce Your Franchise Rights State franchise act protections are not self-enforcing. OEMs continually have documents or programs that may disregard or violate state franchise law. OEMs have taken certain liberties over the years as to which franchise laws they want to follow and which they do not. If you are not enforcing your rights, the manufacturer will take full advantage of dealer complacency. Many states have protections for fair payments for performing warranty repairs. You may have to enforce your right to entitled reimbursement at retail for labor and parts. You may have to enforce your right to incentive monies for each new program that the manufacturer introduces in states such as Virginia that allow you to receive program monies even though you do not upgrade your facility to each of the program’s requirements because you renovated your facility within the last 10 years. Failing to enforce your rights on the facility upgrade programs could mean you are leaving hundreds to thousands of dollars per vehicle on the table while encouraging the manufacturer to continue to skirt franchise laws. Performance Threats OEMs continue their standard threats about dealer performance, particularly sales. If you get a letter critical of your performance, respond and dispute it. Explain why your performance is not deficient. Be clear about the negative impact of inventory shortages. Explain why the standard you must meet is improper; for example, your PMA is incorrectly defined, making you responsible for sales in geographic areas where you have no advantage. NEVER agree that you have breached your dealer agreement. Warranty Audits In 2025, many manufacturers performed warranty audits and claimed hundreds of thousands of dollars in chargebacks against dealers. Many of the warranty audits are a result of manufacturers who are strapped for money and want to recoup it from the dealers. Some of these audits completely violate the laws in which the dealers operate. For those audits that are excessive or completely in violation of the law, you should be challenging them either through the internal manufacturer process (i.e., Ford’s Dealer Policy Board) or through your state administrative agency under the state franchise act. Any audit should be a wake-up call to the dealer to know whether their procedures and processes for warranty claims need to be fine-tuned. If the same mistake is occurring, training and possibly hiring warranty experts may be necessary to stop the same issue from occurring in the next audit. Avoid freely giving your money back to the manufacturer! Warranty Rate Increase Requests Insist on proper labor and service reimbursement for warranty and recall work. Warranty work and repairs to remedy recalls have increased dramatically. Many states have changed the methods and procedures related to retail reimbursement. Make sure you are following your state law when seeking an increase in your rate. It is best practice to hire an expert to submit the package. Due to various statutes changing around the country, many manufacturers are quick to deny the request as well as haggle with you. An expert is the best practice to set up a challenge under state law that the submission was done correctly. Continued from page 11
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