Manufacturers start to take back control From June this year,
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OEMs have had the power to force multi-franchise dealerships to go one-brand-one-site Sitting in the corner of the room is a large white elephant with Block Exemption Regulations (BER) written on it. On 1 June, BER 330/2010 saw several amendments come into force that put control back in the hands of the OEMs.
What has happened requires a degree of paraphrasing to describe: OEMs can now force multi-franchise dealerships to clearly separate franchises at the point of sale/service to avoid 'consumer confusion'. So, if two franchises occupy one space, an OEM can demand they be separated.
Out goes the compulsory franchising by an OEM of any workshop meeting pre-set parts and service standards, even if it is next door to an existing one, as per the 2003 relaxation of BER legislation.
Terms and conditions are looser regarding termination, and if a dealership is sold the OEM has the right to stop the transfer of the franchise — although not the deal.
To facilitate the changes, OEMs are renegotiating contracts with dealerships — some have already done so. There isn't any suggestion that changes to terms and conditions are 'significant' but it's clear the dealer councils will have to work a little harder to meet the needs of the network against the requirement of the parent.
A few dealers have raised fears about the longer term effect of the changes, especially if one brand is seen to step on the toes of another. OEMs are not shy when it comes to confrontation.
For several years, multi-franchise dealerships have been in a win-win situation, but it may only be a matter of time before the bigger OEMs start to flex their muscles at the expense of those who enjoy less market share.