Vol. 34 No. 1 A Publication of the Illinois Automobile Dealers Association Automobile Dealer News Getting to Know IADA Chairman DAVID PARKHILL
Located in Central Illinois, we serve the entire state. We specialize in automobile dealers in the following areas: Certified Public Accountants Memberships in: AUTOCPA Group The American Institute of Certified Public Accountants The Illinois CPA Society Serving more than 250 Automobile Dealers throughout the United States Woodward & Associates, Inc. 1707 Clearwater Avenue ·P.O. Box 1584 ·Bloomington, IL 61702 (309) 662-8797 ·Fax (309)662-9438 ·Email woodwardassoc@cpaauto.com ·http://www.cpaauto.com Dealership valuations Automobile dealer legal support Buy-Sells for dealerships LIFO inventory computations Financial statement analysis Corporation Income Tax returns Personal Income Tax returns CPA prepared financial statements Dealer estate planning Employee theft consulting Internal control studies and audits Profit consulting Training office managers/CFO’s 401K Audits
Julie a. Cardosi, esq. 3040 spring Mill drive, suite B springfield, iL 62704 (217) 787-9782 jcardosi@autocounsel.com www.autocounsel.com EXCLUSIVE. STRATEGIC. RESULTS. ConCentrations: Dealership Mergers & Acquisitions Dealership Franchise Law Business Litigation / Motor Vehicle Review Board Disputes Manufacturer / Franchisor Relations Business & Commercial Law Advertising Compliance Review Consumer Complaints Dealership Succession Add Points Real Estate Law Employment & Labor Law Federal & State Regulatory Compliance BaCkground: Principal, Private Law Firm Former, IADA Legal Counsel Former, Illinois Assistant Attorney General, Deputy Chief, Consumer Protection Division Drafted Illinois Motor Vehicle Franchise Act Amendments Creating Motor Vehicle Review Board Drafted Illinois Motor Vehicle Advertising Regulations Exclusively representing the unique business interests of automobile dealers for over 30 years. LAW OFFICE OF JULIE A. CARDOSI, P.C.
6 Getting to Know IADA Chairman David Parkhill 10 Dealer Spotlight: K&J Chevrolet, Carlyle, IL Understanding Your Customer Reaps Rewards 12 Dealer Spotlight: Truck Centers, Inc. A Long-Haul, Family Road Trip 15 Counselor’s Corner Mandated Paid Leave for Employees Around the Corner — Will Your Dealership Be in Compliance with the Illinois PLFAW? 17 Consultant’s Corner Why Use a Broker 18 Over-Sharing in the Workplace? Why Your Company May Need a TikTok and BeReal Policy 22 The Right Time for a Risk Management Reset 24 The Secret to Controlling Dealership Expenses CONTENTS Vol. 34 No. 1 Chairman David Parkhill / 217.352.4275 Sullivan Parkhill Automotive 440 W. Anthony Dr. Champaign, IL 61822 Vice Chairman John Alfirevich / 708.429.3000 Apple Chevrolet, Inc. 8585 W. 159th St. Tinley Park, IL 60477 Secretary/Treasurer Jamie Auffenberg / 618.624.2277 St. Clair Auto Mall Auffenberg Auto Mall 1130 Auffenberg Ave. Shiloh, IL 62269 Executive Director Joe McMahon / 217.753.0220 Illinois Automobile Dealers Association 300 W. Edwards, Springfield, IL 62704 2023 OFFICERS ©2023 Illinois Automobile Dealer News | The newsLINK Group, LLC. All rights reserved. Illinois Automobile Dealer News is published four times each year by The newsLINK Group, LLC for the Illinois Automobile Dealers Association (IADA) and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the IADA, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The Illinois Automobile Dealer News is a collective work, and as such, some articles are submitted by authors who are independent of the IADA. While the Illinois Automobile Dealer News encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at: 855.747.4003. Illinois Automobile Dealers Association 300 W. Edwards St. Springfield, IL 62704 T 217.753.0220 / F 217.753.3424 IllinoisDealers.com 6 Scan here to check out the new, interactive IllinoisDealers.com website! 18
THE FIRST DMS WITH A $0 CORE FEE. EVERYTHING YOU NEED, NOTHING YOU DON’T. INTRODUCING CLOUD-NATIVE FLEXIBILITY SECURITY & CUSTOMIZATION AN AVERAGE OF $6,500 IN SAVINGS PER MONTH DominionDMS.com
Getting to Know IADA Chairman DAVID PARKHILL David Parkhill is President and CEO of Sullivan-Parkhill Holdings, Inc. He was elected as the 2023 Chairman of the Illinois Automobile Dealers Association (IADA) during its annual meeting for the election of officers, held in November 2022. Previously, David served as IADA Vice Chairman, Treasurer and Secretary. David has served on the boards of the Don Moyer Boys and Girls Club, The Community Foundation of East Central Illinois and the Champaign Country Club. He is a founding member and Chair of NCM 20 Group and former Chair of NADA 20 Group GC06. David will be married to his wife, Katie, for 35 years in June of this year. He has two children: Joseph Parkhill in Denver, CO, and Rachel Sanvidge in Champaign, IL, and also has a grandson Brodie. He has many hobbies: skiing, mountain biking, hunting and golf, to name a few. We had a chance to sit down with David and talk about his life, career and thoughts on his chairmanship. We enjoyed getting to know David and hope you do as well. 6 Illinois Automobile Dealer News
Education and Career David grew up in Champaign, IL, and fondly remembers his first job: “I grew up in the auto business, and at 12 years old, I had my first job at the family dealership. I earned $2.00 per hour and always had money in my pocket for a soda or an ice cream cone.” In 1984, David graduated with a Bachelor of Science in Finance from Indiana University and began a career in the banking industry, but plans changed. David missed the auto industry, and in 1991, he returned to Champaign. “I wanted to run a business and own a business, and this was an opportunity for me,” David said. “I had grown up here and liked the car business, what I knew of it, so I moved back.” David had been back for seven years when the next challenge arose. General Motors wanted dealerships in the same market to consolidate. Sullivan Chevrolet was the only compatible partner in town, but it had Volvo, which Chevrolet didn’t want in one of its stores. And, “Oldsmobile and Cadillac did not want Mercedes-Benz in there,” David remembered. “We had to pivot as a company. We spent a lot of time figuring out how we were going to do that,” David said. In the end, it was decided that the merger of the two would create Sullivan-Parkhill Automotive, Inc. at 440 West Anthony Drive, the region’s largest Chevrolet, Oldsmobile and Cadillac dealer, and Sullivan-Parkhill Imports, Inc., selling Mercedes-Benz and Volvo vehicles from 401 West Marketview Drive. The two companies merged. David, his cousin John and Kevin Sullivan took the reigns, and history was made. Sullivan-Parkhill Automotive, Inc. is 25 years old this year. Carrying a Family Legacy Forward David is a fourth-generation dealer and carries forward a legacy rich in history, as this year marks 100 years since the opening of Parkhill Motor Sales. Parkhill Motor Sales, Champaign’s longest-running car dealership, was started by David’s great-grandfather, T.D. Parkhill in 1923. The world was much different at that time; David shared, “If you wanted a drink after hours, you were out of luck, as it was the fourth year of Prohibition. If you wanted a new suit, Jos. Kuhn & Co. had some on sale for $37.50. If you were looking to pick up dinner on the way home, a pound of pork chops would run you around 20 cents at Abbott & Wells on Main Street. If you wanted a new Chevrolet Superior Utility Coupe — with its extrawide doors, high hood, and single seat with room for two, all for the low, low price of $680 — one could head on down to the Flatiron Building on North Hickory Street, home to the new Parkhill Motor Sales.” The family business has had to adapt time and again, surviving a world war, the Great Depression, 12 other recessions, two oil crises, 17 presidencies, General Motors filing for bankruptcy, and more recently, a global pandemic. The family has persevered, and in David's words, “Things couldn’t have turned out better.” Industry Insights Looking ahead to what this year will bring and the challenges that the industry faces, David said, “Dealers face a number of issues; one being direct sales by the OEM’s which is in violation of the state laws of Illinois.” David firmly believes that dealerships are the best way to sell cars and are able to provide a level of service that Parkhill Motor Sales, August 1969 7 illinoisdealers.com
the consumer cannot receive from the direct sales model. Dealerships provide choices for products and services that benefits the consumer. The second challenge David brought up was the FTC Rules — which some think are unfair and an overreach of the federal government, “making it difficult for the consumer to buy a car online and use the digital process.” He continued, “It’s just not well thought out, so we’re trying to get the FTC along with every other dealer in the country, every other state, to rethink some of what they’re trying to do and what they’re proposing for all of us to do.” The FTC Rule was supposed to go into effect this past December, but it’s been suspended for six months to get a better handle on what needs to happen and what’s practical going forward. The third challenge he foresees is consumers’ adoption of EVs and how dealers service and maintain cars going forward. “EVs will create a whole industry of batteries — trying to extend the life of batteries and getting better range for the consumer to alleviate some of the range anxiety — and there’s going be more infrastructure that needs to be built to help facilitate the charging out there,” David stated. Leadership “My father, Bergen Parkhill, was the IADA Chairman in 1998 and was always a great supporter and asset to the Illinois dealership industry,” David reflected. “He set a good example, and I have been an active member and supporter of the association for many years, so it only makes sense it’s my turn to lead and contribute.” David went on to say that he wants to help the association in any way he can, and “leadership seems like the logical next step.” He knows that the franchise system is essential to the success of Illinois dealerships, and supporting IADA and what they stand for is paramount to the future. “We need engaged members who are willing to contact their legislative representatives and discuss issues,” he stated. “Representatives don’t realize the severity of some of these issues, so it’s crucial that members make their voices heard and discuss the issues that are directly affecting them. Together, we can properly bring the issues to the representatives’ attention.” David is looking forward to engaging with members this year and hopes that the membership becomes well-versed in the issues and makes their voices heard. He went on to say, “The IADA team is very good at knowing the issues and helping people understand those issues” and “IADA wants to help dealers in any way they can.” In Conclusion David has learned many things throughout his experiences with dealerships and the industry. If he had to pick three pieces of advice, he would say: 1. There are always two sides to every story; know both sides before making a decision. 2. Every big decision has unintended consequences, so be prepared. 3. Do not confuse effort with success. David shared “that it’s a real privilege to serve as IADA Chairman and to contribute to history — being part of this organization is important to me and the future success of IADA is something that I care about.” 8 Illinois Automobile Dealer News
CALL US NOW 877.875.6906 30 Two Bridges Rd. Suite 240, Fair eld NJ 07004 • vanguarddealerservices.com FOLLOW US ON OUR SOCIAL NETWORKS OUR DEALERS BENEFIT FROM: Free, Confidential, Honest Sales Strategy and Proficiency Analysis. Free F&I Specialists/ Emergency Fill-in Better Managed Sales and F&I Departments Low Employee Turnover Compliance Experts Continuous In-house Coaching Higher CSI Scores and Customer Retention Rates EV Solutions Specialists Ongoing Compliance Staffing Support SCAN ME F&I PRODUCT TRAINING SALES TRAINING
K&J Chevrolet, Carlyle, IL Understanding Your Customer Reaps Rewards From left to right: Tony Jansen, Julie Jansen, Scott Loepker DEALER SPOTLIGHT 10 Illinois Automobile Dealer News
Growing up in Bartelso, IL, a downstate farming community with a population of 450, K&J Chevrolet, Carlyle, Principal Dealer Tony Jansen learned early on that farming sets the pace of the local economy. Starting at age 12 while working at his family’s Chevrolet dealership in Germantown, IL, he learned the nuances of serving the needs of farmers. “Farmers are smart and frugal,” Jansen explains. “They make the purchases they need first, like a planter or a combine, then they’ll decide between living with the old pickup or buying a new one.” Jansen, who also owns the K&J Chrysler Dodge Jeep Ram dealership in Carlyle, has worked hard to understand the business of farming and can often be found driving around the county, talking with farmers about their business. “It’s all about relationships here,” Jansen says. “Our sales philosophy is low-key and ‘no pressure’ because that’s how everyone is.” But 2022 was a bit unusual for sales. Jansen says in a typical year, the fourth quarter is very busy. But this past year, although farmers in his area have experienced good weather conditions and rates, their confidence has been shaken by high fuel prices, inflation, and the threat of recession. Riding the highs and lows, Jansen remains committed to supporting the local community, including donating the use of property adjacent to K&J Chevrolet to local high schools’ Future Farmers of America clubs. “I really enjoy watching the crops grow out my window and helping high school students learn,” he says. In addition, Jansen sponsors a ‘P.A.L.S.’ event at which area high school students spend half of a day learning about personal finance and decisionmaking from professional community volunteers such as bankers, insurance agents, and his own various department employees. During COVID, his team held outdoor drive-in movie nights, a welcome relief when most entertainment options were closed. And this past year, Jansen was pleased to see that the company’s annual toy drive had doubled in volume, filling four trucks with donations from generous customers and staff. “Everyone volunteers here,” Jansen says. Today, Jansen is eagerly looking to the future. His nephew, Scott, current Sales Manager at K&J Chevrolet, is poised to take the reins and his daughter, Julie, at the Breese Chrysler Dodge Jeep Ram dealership, will one day take over that business. “I’m nothing without our farming customers and employees who understand them,” Jansen says. “I’ve truly been blessed.” 11 illinoisdealers.com
DEALER SPOTLIGHT Truck Centers, Inc. A Long-Haul, Family Road Trip A wise person once said, “Some of us grew up playing with tractors and trucks. The lucky ones still do.” This could very well describe the Hopkins family, owners of Truck Centers, Inc., a longtime IADA member. With the third generation currently running the family business that includes 12 locations in three states, almost all Hopkins family members have been involved over the years. “I started at a Truck Center dealership when I was 11 years old,” explains Katie Hopkins, President and COO. “I answered phones, worked weekends and hung around after school. I just loved being there.” Her brother, Justin Hopkins, the company’s Executive Vice President and current member of the IADA Board of Directors, credits his dad, John Hopkins, for not just introducing him to the business, but imparting life lessons along the way. “My dad taught me that relationships with everyone I come into contact with are the key to what we do,” he explains. “He modeled the importance of doing what you say you’re going to do and owning it.” Truck Centers currently employs approximately 700 people across all locations and the Hopkins family aims to treat all of them like one big extended family. “We’re very family-oriented,” Katie explains. “We give our employees gifts on Mother’s Day and Father’s Day because we want to celebrate their commitment to their own families. We provide flexibility to the staff so that they can prioritize their children and spouses when needed.” Katie says that this emphasis is reinforced by employees themselves. In regular staff surveys, the most frequent comment received by management is that the dealership owners treat them “like family”. “We have a lot of second- and third-generation employees, which really speaks to how we’ve been able to care for them,” Justin says. One example is Mike Yates, a trusted partner, who has been with the company for more than 45 years. His sons, Trevor and Tyler, also now play key roles in the business. However, like the automobile industry, the pandemic meant big changes. According to Justin, for almost three years Truck Centers has been receiving less than two-thirds of the inventory it needs for customers due to supply chain failures and a lack of frame rails, chips, etc. “It’s been hard for our sales team having to say no to customers, disappoint them, and not have a single extra truck to sell,” John says. 12 Illinois Automobile Dealer News
Focusing on long-term relationships with customers, offering better service, and being transparent about supply have become a top priority. “In a way, COVID forced us to improve our customer communication and has actually made many of our relationships better,” Justin says. The Hopkins family works hard and continues to learn from each other. John, who has handed many of the day-to-day responsibilities to Katie and Justin, serves as a sounding board for them and stays involved in the industry as Vice Chairman of the Freightliner Dealer Council and will serve as Co-Chair in 2023/2024. John admits that his children have taught him how to text, FaceTime, and Zoom, but they have also shown him the power of living passionately, both professionally and personally. He admires how they continue to give back to the communities they serve. “Dad has shown us how to do everything with integrity,” Katie says. “He has lived his life this way and it shows.” Truck Centers currently employs approximately 700 people across all locations and the Hopkins family aims to treat all of them like one big extended family. 13 illinoisdealers.com
CVR: THE EVR SOLUTION BUILT FOR YOUR CDK DMS THE BEST CUSTOMER VEHICLE REGISTRATION EXPERIENCE IN ILLINOIS CVR is the only choice for automotive dealers who demand an EVR solution with a flawless, robust and secure integration to the CDK DMS. Unlike our competitors, we’ve partnered with the IADA to deliver a faster and more efficient titling and registration process. Your customers won’t have to do anything after the sale except drive away happy in a fully registered vehicle. We’ve also teamed with Automotive Titling Corporation (ATC), to offer a full in or out-of-state solution that creates an integrated, 50-state workflow within your CDK DMS. The strongest integrations and solutions available for your DMS are here right now. To learn more and get started, email a CVR representative at cvr-il@cvrconnect.com or call 800.333.6995 © 2022 CVR. All Rights Reserved. 22-4261 SPEED/ACCURACY No more rekeying of data BETTER PROTECTION Safer consumer data CUSTOMER SUPPORT The finest in the industry INTEGRATION Connect with your DMS We also work with the IADA to provide compliance and training webinars to keep your staff up to date. As the builders of the first EVR for use in Illinois over 20 years ago, not only have we learned how to do this right, we know from experience how to treat you right. That’s why we’re committed to innovation while continuing to provide the most complete account service and customer support in the industry.
Counselor’s Corner JULIE CARDOSI Law Office of Julie A. Cardosi, P.C. Mandated Paid Leave for Employees Around the Corner — Will Your Dealership Be in Compliance with the Illinois PLFAW? In January 2023, the Illinois General Assembly passed the Paid Leave for All Workers Act (“PLFAW”)1 and as of the writing of this article, the legislation is expected to be signed into law by Illinois Governor Pritzker and once signed, will become effective January 1, 2024. This new law will require most all Illinois employers to provide employees up to 40 hours of paid leave which employees can take “for any reason of the employee’s choosing” during a designated twelve-month period. The PLFAW broadly defines “employers” and will essentially apply to all private employers regardless of size, including franchised automotive dealerships, and certain public employers including state and local governmental units and agencies.2 The new law will cover these employees working in Illinois whether full-time, part-time, temporary, short-term, exempt or non-exempt, with certain specifically carved out exceptions (i.e., employees defined in federal Railroad Unemployment Insurance Act or Railway Labor Act; employees working in construction industry covered by a collective bargaining agreement; etc.). Under the PLFAW, employees will be able to earn and use up to a minimum of 40 hours of paid leave (or a pro rata number of hours of paid leave), during a 12-month period which the employer designates in writing, such as in employment policies or an employee handbook. Employers can choose to “frontload” the leave on the first day of employment or the first day of a designated 12-month period, or use an accrual method (e.g., employees’ paid leave accrues at rate of 1 hour of paid leave for every 40 hours worked up to a minimum of 40 hours paid leave, or greater amount if the employer elects to provide more than 40 hours of paid leave).3 Employees may also determine how much paid leave they need to use, but employers are permitted to establish a reasonable minimum increment for the use of paid leave not in excess of two hours per day. In calculating the paid leave under the PLFAW, employers must pay the employee’s standard hourly rate of pay. For employees whose wages also include commissions, in calculating their paid leave, they must be paid at least the full minimum wage applicable in the jurisdiction in which they’re employed. Under the PLFAW, employers will not be permitted to require any documentation or certification of the need to take leave; however, employers may require up to seven calendar days’ notice of “foreseeable” leave if the employer has a written policy provided to employees outlining the notice requirements and procedures. This written policy must be provided to the employee on the employee’s first day of employment, or on January 1, 2024, whichever is later. If the leave is not foreseeable, employees must provide notice as soon as practicable. Employers will also not be allowed to interfere 15 illinoisdealers.com
with, deny or alter an employee’s work hours or days to avoid providing the required paid leave. Regarding an employee’s unused, accrued paid leave, under the PLFAW, if employers frontload the paid leave on the first day of employment or the first day of a designated 12-month period, they will not be required to carry over the employee’s unused paid leave to the next 12-month period. An employer may also require employees to use the paid leave before the end of the 12-month period. If, however, the employer uses the accrual method, then accrued, unused and earned paid leave would be permitted to be carried over to the next 12-month period. Also, under the PLFAW, employers will not be required to pay employees accrued, unused paid leave when the employee separates from employment (e.g., terminates, resigns, retires), provided the employer has not credited PLFAW leave to an employee’s paid time off bank or employee vacation account. Finally, if an employer rehires a separated employee within 12 months of separation, the employee’s earned paid leave has to be reinstated. The PLFAW will be enforceable by the Illinois Department of Labor (IDOL), with specific record-keeping requirements which must be maintained for a specific time period, and conspicuous posting obligations, with penalties for non-compliance by the employer. Employers will also be prohibited from undertaking adverse action against employees for the exercise of their rights. In addition to IDOL enforcement against violations, employees may seek damages, attorneys’ fees and expert witness fees and penalties against employers. Your dealership should review existing paid leave policies prior to January 1, 2024, and consult with private counsel and human resources advisors about the PLFAW. If the dealership has in place a policy that provides at least 40 hours of paid leave, the employer may not be required to modify the policy, but that policy must offer an employee the option, at the employee’s discretion, to take paid leave for any reason. Julie A. Cardosi is Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for over 35 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. Formerly in-house staff legal counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership compliance matters, transfers of ownership, mergers and acquisitions, franchise law, commercial real estate transfers, dealership employment and other areas impacting day-to-day dealership operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com, or at 217-787-9782, ext. 1. 1. Illinois Senate Bill 0208, 102nd Illinois General Assembly. 2. Excludes Illinois school districts under the Illinois School Code and Illinois park districts under the Illinois Park District Code. Also, does not apply to employers covered by a municipal or county ordinance in effect as of 1/1/24 requiring any form of paid leave to employees. 3. Employees classified as “exempt” from the overtime requirements under the Fair Labor Standards Act are considered to work 40 hours in each workweek for purposes of paid leave accrual unless their regular workweek is less than 40 hours. Paid leave begins to accrue on the employee’s first day of employment, or on January 1, 2024, whichever date is later. Employers can require that employees wait the later of 90 days from their start date, or 90 days from January 1, 2024, to begin using earned paid leave. 16 Illinois Automobile Dealer News
Consultant’s Corner sell the exact same products with the exact same process regardless of your needs. But aren’t the big box guys safer to do business with? No, your relationship is direct with the insurance company either way. Administration agreements and reinsurance treaties provide cut-through language — so your agreements are backed by the actual insurance company the broker represents. As a broker, not only will we customize training and service solutions for you — but we will also perform analysis specifically built around bringing your needs forward. Additionally, brokers have lower turnover. So their clients can enjoy long periods of uninterrupted service and maintain relationships for years. If a direct field staff has a long-term employee, they’ve historically been the weaklings — doing just enough to scrape by another year. Not a go-getter, but a middle third performer who doesn’t rock the boat. Brokers receive dramatic pricing discounts from the insurance companies because of the volume they produce and the efficiencies of the arrangement. But also, don’t forget there is a competitive landscape where the insurance companies are competing to offer brokers the best pricing vs. a direct company where internal margins are being managed by executives without competition. For more information, please contact Francis Fagan with Brown & Brown Dealer Services at 312-608-4979 or francis.fagan@bbrown.com. Francis is the Regional Training Director for Illinois and Indiana. At Brown & Brown Dealer Services, we put the emphasis on training. Visit our website at www.bbdealerservices.com for our training calendar and to meet our nationally renowned trainers. JOEL KANSANBACK EXECUTIVE VICE PRESIDENT Brown & Brown Dealer Services When considering who to choose for such an important role as their F&I partner, dealers must ask why they would consider a broker. That is, why consider a broker vs. a single-line agent or a direct employee vertical company? When a vertical employee is competing with a broker or agent, they like to characterize brokers as middlemen — or more specifically, unnecessary middlemen. This implies a higher cost and perhaps a less efficient delivery mechanism than direct employees. But you must ask yourself, which one is more efficient and cost-effective for the insurance companies? Having a bunch of salaries, bonus plans and expense accounts to deliver their products or only compensating a broker on actual production. Think of how the two enterprises are staffed. Brokers have commission-based people who are rewarded only for what they produce or insurance companies with salaried executives who are “managing” a book of business. If your dealerships offered their employees no base salary, no guarantee, no minimum wage and only paid-for results — that is the arrangement insurance companies have with brokers. When dealing with a broker, they bring you multiple solutions. Those solutions can be tailored to your specific needs. Alternatively, if a direct employee has one program to offer — then guess what program they are going to say is the best? Additionally, brokers can vary the solutions within your dealer group, tailoring products and coverages based on the needs of your respective franchises and locations. Brokers think nimble, fast-paced, flexible, and solution-oriented. The big box direct guys WHY USE A BROKER 17 illinoisdealers.com
By Fisher Phillips OVER-SHARING in the WORKPLACE? Why Your Company May Need a TikTok and BeReal Policy By now, many of us have seen a TikTok video filmed at someone’s workplace — a “day in the life” video, someone complaining about their coworkers, supervisors, or customers, or someone talking about an unrelated subject while at the office. And a relatively new platform, BeReal, goes a step further by encouraging users to provide an unfiltered view into their “real” everyday life at random moments throughout the day. Of course, such organic social media clips can be a valuable tool that helps market your brand and build stronger employee relationships — but where do you draw the line? These posts might include employees performing their duties during a meeting with co-workers or at a workstation, which raises privacy and confidentiality concerns. Moreover, employees flocking to social media to discuss their bosses and general work experiences — positive or negative — could lead to other troubles. When these videos go viral, employees may become unofficial spokespersons for your organizations, influencing the conversation about work norms and creating trends that impact employers globally. With these changing dynamics, you may want to set new guidelines for social media use while ensuring your policies don’t run afoul of employment and labor laws. Here are four tips for updating your social media policies to reflect this modern era and stay on top of the latest developments: 1. Ensure Policies Reflect Recent Trends In the early days of widespread social media use, your policies may have simply prohibited employees from using company equipment to post non-work-related content online and required work posts to be business appropriate. But social media use is rapidly evolving in new ways that you may not have anticipated when your policies were first drafted. 18 Illinois Automobile Dealer News
What should you know about current trends as you consider policy changes? For one thing, TikTok has quickly grown in popularity over the past two years with more than a billion monthly active users — which means your employees are likely using the platform and are probably doing so during work hours. The app allows users to upload videos from five seconds to 10 minutes. TikTok then filters videos through their feed using an algorithm and shares them with other users. These videos may receive millions of views, comments, likes, and shares. While TikTok is popular, it’s obviously not the only platform featuring employees on the job. Unlike TikTok — where users are hoping to go viral — the BeReal app takes a less sensational approach. BeReal doesn’t have filters, hashtags, or even followers. To view someone’s BeReal, you have to request to be their friend. The app encourages users to provide an unfiltered view into their “real” everyday life. Each day at a different time, the app simultaneously notifies all users to “BeReal” and share a photo within two minutes, regardless of their location. The camera on the app will then take a photo of the user with the front-facing camera while also taking a photo on the back camera, creating a BeReal snapshot to share with friends. This app can be potentially problematic for employers. Many times, BeReal alerts occur during work hours, so users end up taking pictures of their workplace or work area. Because BeReal is shared among friends, the app may create a sense of safety, and users might forget to censor confidential information. Moreover, while BeReal doesn’t have the same “viral” nature as TikTok, that doesn’t stop users from sharing their posts beyond the app on other platforms. This trend illustrates that the new generation of workers values the transparency these apps provide, with many not considering that their candid photos may also reveal company information. 2. Strike a Balance Before you decide to curb all TikTok and BeReal posts from the workplace, you should recognize that such posts can pay dividends. Employees who are active on social media may be more equipped to understand the social pulse of the company’s customer base. Additionally, allowing employees to contribute to company-sponsored social media posts shows that the company trusts them, which can increase confidence and make employees feel valued. Furthermore, social media networking may help employees collaborate, share ideas, and solve problems. This can lead to better employee engagement and retention. Moreover, utilizing social media in the workplace can make the company more desirable to potential applicants, particularly Gen Z and Millennial job seekers. Social media is here to stay, and employers should recognize that policies barring all forms of social media use in the workplace may be unrealistic. In fact, about 72% of respondents to a 2021 Pew Research Center survey said they use some form of social media and 77% of respondents to an earlier survey reported using social media regardless of whether their employer had a policy in place. 19 illinoisdealers.com
While not every company can allow on-the-job posts, those with flexibility might want to dedicate resources to creating a mutually beneficial, collaborative policy around social media use in the workplace. For example, allowing employees to share their experiences with your company through social media may promote transparency and provide job seekers with credible information on what it’s really like to work for your business. 3. Address the Potential Pitfalls While employers may benefit from employees’ on-the-job social media posts, you should address potential dangers, including legal and business concerns. Of the many legal concerns, the most glaring are privacy protections and confidentiality. As employees capture authentic moments during the workday for BeReal or post TikTok “day in the life” videos, they frequently walk around the workplace, recording offices, conference rooms, common spaces, the cafeteria, and more. The videos may inadvertently capture confidential information, such as audio of an internal meeting, the image of a client’s name, or a trade secret. Confidentiality issues also arise with employees who work remotely. For example, employees may take a video of their innovative at-home workspace while a Zoom meeting is in progress or while their computer screen displays proprietary information. You should also be cognizant of how allowing employees to post on the job can potentially harm your organization’s reputation. TikTok and BeReal attract users who want to be authentic rather than staged, heavily filtered, or otherwise unauthentic. Thus, employees who choose to post on these platforms do not shy away from capturing the “realness” of their job. This, in turn, can lead to your employees sharing information that negatively affects the company, such as human resources concerns (including allegations of unprofessional comments made by colleagues), complaints about working conditions, and products liability issues. All of these discussions raise reputational and legal concerns that you should consider. 4. Set Realistic Parameters With these benefits, risks, and (pop) cultural considerations in mind, what should your modern social media policy include? If you already have a solid employee handbook, a good place to start is by reminding employees that your existing policies still apply when using social media platforms. For example, an equal employment and harassmentprevention policy would cover discriminatory or bullying behavior towards colleagues whether online or in person. You should remind employees whom they should contact when they have a workplace concern. Additionally, let employees know that confidentiality policies apply when sharing content, so their computer screens and documents should not be visible in the background. However, depending on the nature of your business and your employees’ roles, you may want to create a more targeted policy on social media use. For instance, you may have different risks to manage if you encourage employees to engage with your brand, employ a younger workforce, or otherwise have a strong social media presence. As you likely know, your policy should be in writing and followed consistently. Where to go from there is more complicated. The explosion in social media use has only highlighted how regulating employee speech is difficult, nuanced, and occasionally backfires. But, of course, there are still some best practices: • Develop policies in collaboration with legal counsel, HR, technology, communications, and diversity, equity, and inclusion (DEI) teams. Be sure the policy matches the company’s voice and recognize that this is not a one-template-fits-all exercise. • Use plain language and examples. “Do not share client information, even if their name is covered” 20 Illinois Automobile Dealer News
is more helpful than “Posting client information will subject employees to discipline up to and including termination."* • Keep up with guidance from the National Labor Relations Board (NLRB) — which is subject to change. Note that blanket bans on discussing wages or complaining about supervisors or working conditions are not permissible under federal labor law. The Trump administration issued an employer-friendly rule to evaluate whether a policy interferes with employees’ rights to organize and engage in protected concerted activity. However, that ruling is potentially on the chopping block in a pending NLRB case. If the NLRB reverts to the prior, more restrictive evaluation, policies currently compliant could suddenly run afoul of the National Labor Relations Act (even in nonunionized work settings). This includes seemingly benign provisions about “respectful” content and limits on who is authorized to speak to the media. • Confirm applicable state laws. There is a legislative trend to prohibit employers from requiring employees to engage with social media as a condition of employment or even to ask for their social media usernames as part of a job application. • Develop a plan for consistently responding to policy violations. Two employees violating the same rule, in the same way, should not be treated differently based on whether they tripped the algorithm and went viral. Relatedly, consider the reputational risk of a too-harsh response — someone fired for social media content may likely use the same platforms to discuss their termination. Conclusion If you have questions regarding your social media policy, contact your Fisher Phillips attorney, the authors of this Insight, or any attorney on our Data Security and Workplace Privacy Team. We will continue to monitor developments in this area, so ensure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. The authors wish to thank Law Clerks Taric Mansour and Jazmin Luna for their work co-authoring this Insight. *This section has been edited to reflect the automotive industry. To see the original post, please visit: https://www.fisherphillips.com/news-insights/ over-sharing-iworkplace-company-may-need-tiktok-bereal-policy.html. Are you ready for growth? Advertise in this magazine and watch your revenue soar. A place where your company gets wings! Space is limited. Contact us today to get your spot. 801.676.9722 | 855.747.4003 sales@thenewslinkgroup.com 21 illinoisdealers.com
THE RIGHT TIME for a Risk Management Reset By Brandon Artigue, Director, Financial Risk Management, Truist Securities The past two years have seen auto retailers adapt to limited vehicle inventory and pandemic restrictions while driving profits to new heights. Now dealers face rising interest rates — a critical concern for an industry that relies on capital to fund operations and growth. For some, it’s time for a balance sheet review and risk management reset. Changing Conditions Dealers Must Watch The Fed (Federal Reserve) has already taken aggressive steps by raising rates to throttle persistent inflationary pressure in the U.S. In the past year, we’ve seen the Fed hike the short-term rate by 3.00% (300 basis points). But with low inventory and reduced need for floor plan loans, many dealers haven’t yet felt the full impact of rising rates. 1-Month CME Term SOFR Since the Beginning of the Pandemic As you imagine what’s next for the economy and your dealership, the impact of rising rates comes into sharper focus. For instance, if vehicle supply and demand start to realign, higher inventory levels could mean more floor plan loans on balance sheets. As you look at business assets, the recent surge in inflation strengthening real estate values could provide an additional source of funds that you can tap into if needed. Unfortunately, when it comes to expansion and new construction, inflation will cut the other way by driving up building costs and the loans needed to finance them. Sustained volatility in economic and market conditions makes planning for these possibilities and others both challenging and critical. Your risk management planning needs to focus on balance sheet moves available to you today – options that may be closed off tomorrow – to protect your dealership from economic and rate volatility and keep your cost of capital low. Actions to Get Ahead As economic and market conditions are shifting, you’ll want to ground your capital decisions in your business plans for your dealership and your personal goals as an owner. You can walk through a few steps — on your own or with your banker — to gauge the impact that rising rates will have on your business and identify actions you can take to mitigate their effect. 22 Illinois Automobile Dealer News
Step 1: Start with your goals and plans. Balance sheet risk management starts by asking, “Where will my business be in five years?” Your goals might lead you to look for funds to grow, seek ways to release capital to equity holders or lenders, or explore other restructuring moves that might accomplish a bit of both. Timing of those capital flows matters, and your options may look very different if you’re planning to exit the business versus being committed for the long haul. Step 2: Evaluate funding flows. Look at where you need funds, where you have them, and what sources (and especially at what cost) you can tap into to find capital. What happens to your cost of capital and valuation as rates rise? Where do you have needs in the future that will likely have to be met with additional, higher-cost capital? Have you considered ways to manage cash more strategically now that effective liquidity management can yield elevated returns? Step 3: Envision what the future looks like for your dealership. Add the dynamics that you expect will change over the coming years. When do you think floor plan inventory will return to normal levels? One year? Two years? Potentially a longer time frame? What do higher construction costs mean for your dealership? Will the economy cool before you have to undertake your next building project? What changes will the ongoing electrification of vehicles and any regulatory shifts bring to your dealership? Step 4: Get specific about actions you should take. When you’re protecting yourself in a rising rate environment, your primary move is to raise capital earlier when rates are lower and consider financial instruments like swaps as insurance. It doesn’t make sense for all situations, but commercial real estate and blue-sky loans are often amenable to this strategy. As you’re thinking about what works for your business, some of the strategies below might fit your situation: • If you expect inventory to return to more normal levels but want to protect your business from the risk of higher floating rates, you could target more liquidity to cushion against increased interest expense on floor plan lines. Or, to protect your bottom line, consider fixing rates on other outstanding loans that may currently be variable and subject to future rate hikes. • If you want more cash to invest in growth or to be ready for whatever comes next, you can secure loans now. Consider a cash-out commercial mortgage that, if fixed, could protect you from higher interest rates down the road and give you funds for capital expenditures like renovations or preparing for the shift to EVs. If rates continue to climb, you’ll have the peace of mind of having funds at a lower cost to cover future uncertainty. (Don’t forget that the cash-out proceeds from the loan can be earning interest all along.) • If you need cash for family/shareholder dividends or to finance a transition or succession, think about a dividend recap, particularly if you need liquidity now while you’re continuing to make moves that could help your dealership draw a higher valuation in the future. Or, as mentioned before, you could tap into increased real estate values to provide these proceeds. Step 5: Look at all elements of financial risk. Interest rates may be front and center, but a comprehensive approach to financial risk needs to look beyond the cost of capital. Cyberfraud threats and weather events, along with business property, lot inventory, and liability exposure, can have a devastating effect on a thriving dealership. Insurance can protect you from events that can put your dealership at financial risk – talk to Truist’s McGriff Insurance to see how we can help. Preparing your dealership for a range of financial possibilities should be a priority for you and your financial advisors. With a rising rate environment, now’s the time to talk to your Truist Dealer Services relationship manager about a balance sheet risk management review. Have You Taken Measures to Keep Your Cost of Capital Low While Rates Rise? Preparing your dealership for a range of financial possibilities should be a priority for you and your financial advisors. With a rising rate environment, now’s the time to talk to your Truist Dealer Services relationship manager about a balance sheet risk management review. 23 illinoisdealers.com
The Secret to Controlling Dealership Expenses By Sharon Kitzman, VUE DMS One of the significant challenges of running any automotive dealership is moderating expenses. General managers and dealer principals are responsible for controlling many costs, including payroll, vehicle inventory, floorplan, and parts inventory. Monthly bills add up, and there is less revenue to put toward necessary resources. A major opportunity for expense control may be the dealership’s software stack. According to the 2022 DMS Market Report by the Dealer Tech Nerd, the average franchise dealership spends $30,000 a month on software. With a mindset shift and careful evaluation, those costs can be reduced. A Breakdown of Dealership Software Costs Dealership software can be broken down into 29 categories. Here is an outline of the most expensive and necessary solutions for a typical franchise dealership. • The Dealer Management System or DMS is the core hub that connects all dealership data between departments and even multiple stores within a dealership group. The average monthly cost is $6,300. • Many areas of a business use Customer Relationship Management (CRM) tools to execute, track and analyze communications with customers and prospects, and maintain a historical profile of these interactions to help grow relationships. This software costs $2,000 per month. • Equity Mining software helps a dealer use customer information from a CRM and evaluate the revenue potential of a customer, considering trade-ins, future potential services, and more. This tool costs $2,000 per month. • Vehicle Inventory Management is software that holds the details for each vehicle on the lot, including owner history, the going market value, photos, and more. This software averages $1,700 per month. Amounts vary by category, but all tools contribute to this significant monthly cost. Knowing the value of each tool will allow you to evaluate your needs and consider how you might reduce costs. 24 Illinois Automobile Dealer News
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy ODQxMjUw