In April 2002, I wrote an article, “Free Advice to Manufacturers on How to Write a Friendly Dealer Contract.” Even though it was free, I was underwhelmed by the response from my manufacturing friends. Now we have a new thrust for action, courtesy of Tiara's David Slikkers and the efforts of his task force. I’m delighted that David’s group was able to pull it off, because dealer folks have been trying unsuccessfully for a long time. No doubt the prospect of more state legislation gave a boost.
The resulting guidelines are a tremendous step forward — better than I believed possible for step one. While perfection is seldom attained on the first go-round, corrections needed for its minor shortfalls are in the nature of evolutionary “tweaks.” In that spirit, let me offer an updated list of my suggestions. They have a lot to do with phraseology, and only a little to do with basic content, thanks to Slikkers and company, who did a good job on most issues.
• Your dealer contract should be a sales tool, not a barrier to commerce. Don’t depend on your lawyer to write the first draft of the contract. He will defend his language as holy writ, once he has committed it to paper (and charged you handsomely). Write it yourself or have someone attuned to dealer relationships do it for your company.
• The contract should culminate your mutual courtship, not deride the goodwill you have worked at building. Outline the way you expect to do business as cordially and succinctly as you can. Point out the exits for both parties and cover the miscellany that you hold dear to effectively doing business.
• When you have two stacks of paper in hand, your efforts and the industry guidelines, let your lawyer polish it. Your bill should be much less than if you asked him to create the agreement out of whole cloth. The back and forth necessary to reach the final workable product should be much shorter, too (read: cheaper). I guarantee you will be surprised at how little it changes.
• Don’t ask for information you are not prepared to furnish on your own company. Ask nicely if you must, and state a good reason why you’re asking. If Enron had built boats, there would be a lot of hurt going around. Your better dealers worry about their suppliers more than you think. Courtesy is even more important when we write than when we speak. Your dealer can read an irritating clause as many times as necessary to make absolutely sure he is annoyed.
• Deal with “sticky” problems forthrightly. Inventory at dissolution, warranty labor rates, parts profits and the other contentious issues need to be covered. Look for ways to minimize damage to all parties and protect the brand from consumer ill will.
• Ask some of your best dealers to vet your efforts. They will be honored and may provide surprisingly good suggestions.
• Throughout the contract, emphasize that you are partners in the effort to move the product and fulfill the customer’s boating dream. There is very little that the two of you acting with unity can’t do. Our industry’s research shows that the boating customer expects us to work shoulder-to-shoulder for his happiness. Anything less, and he is history, though he may leave behind a lawsuit naming all parties.
• Keep it brief. Anything much beyond a couple of thousand words is approaching a problem area, at least for me. I once fired a bright and well-respected lawyer for writing a document with a single sentence that contained 196 words. His entire product was unnecessarily long and an incomprehensible nightmare. His successor cut the number of pages in half with good clarity. If you have any trouble understanding it, pity your poor dealer. Or maybe pity you if he won’t sign it.
Admonitions to my fellow dealers:
1. Read the new contracts carefully. Make sure you understand them before signing. Hopefully you will see some of the new efforts for the next model year. Comment favorably and unfavorably alike on the terms. Your manufacturers need feedback during this joint effort.
2. Ease off on pushing state legislation long enough to see if your new contracts mirror the spirit of the task force. There is plenty of time later if they don’t, and legislation is as hard to correct or remove as it is to create. Maybe harder.
I want to think a new day of courtesy and goodwill is dawning in our industry. The signs are there. After all, we are in a recreational market where the class act is king. Certainly we marine professionals can behave like ladies and gentlemen who like each other rather than ruffians scrambling for a dollar at other’s expense.
Editor's Note – John Underwood is CEO of Lockwood Marine on the Georgia coast. He has served as chairman of the Marine Retailers Association of America (2001 and 2002) and on boards for the American Boatbuilders and Repairers Association and American Boat & Yacht Council. He can be reached at firstname.lastname@example.org.