Model agreement provisions widely adopted

MIAMI BEACH, Fla. – Responses to an informal National Marine Manufacturers Association survey show that 91 of America’s largest recreational boat brands, representing 70 percent of the market, offered 2007 contracts to their marine dealers that include all or part of the language the Dealer Manufacturer Task Force recommended, an indication the new contract provisions have been well received by manufacturers.

When the task force released the language in May 2005, NMMA officials said representatives of 60 brands had agreed to include the provisions in model year 2006 or 2007. NMMA will continue to promote adoption of the provisions at every opportunity, with a goal for as many brands as possible to fully adopt the provisions.

The NMMA board of directors authorized release of the survey results during its Nov. 1 meeting in Miami Beach and directed NMMA staff to continue to collect information from its boatbuilder members regarding the use of the provisions.

Manufacturers reported that their dealers held diverse reactions to the new contracts. Many manufacturers offered the revised contracts as their only contract. However, some boatbuilders reported minimal interest in the new three-year contracts. Dealers who didn’t want an extended contract opted to sign standard one-year agreements rather than meet the higher standards of sales, service, financing and inventory that some manufacturers required of dealers signing the three-year agreements.

As the task force anticipated, manufacturers adapted the provisions to match the unique needs of their marketing and sales strategies, said David Slikkers, task force chairman, S2 Yachts CEO and NMMA Boat Manufacturing Division chairman. But most manufacturers responding to the survey indicated that they planned to adopt more of the recommended provisions in coming years.

The recommendations of the task force, comprised of 11 boatbuilders and 13 dealers, directly addressed key contractual issues such as renewal and non-renewal of dealer contracts, multi-year contracts tied to performance standards, dealer territory, warranty repair claims, inventory availability, succession and financial requirements.

While antitrust laws preclude the disclosure of company names, the number of companies known to have adopted the provision is expected to increase as more of NMMA’s 450 boat manufacturer members give the association basic information about their 2007 contracts.

“Since customer satisfaction is the hallmark of success, boatbuilders structure their contract proposals to reflect sales performance and positive retailer-customer relationships,” Slikkers said. “Government intrusion into the establishment of business partnerships infringes on a company’s essential right to determine in tandem with their individual dealer partners which contractual terms are most reasonable, fair and workable.”

The dealer/manufacturer contract guidelines are part of the industry’s mission to create, promote and protect a business environment that fosters financial success through excellence in manufacturing, selling, and customer servicing.

“Build a better product and provide superior service to support that product, and consumers will respond by buying more marine products and services – and that is integral to the Grow Boating Initiative,” said Thom Dammrich, NMMA president. “This program is an important part of our overall effort to meet consumer expectations of quality and service by providing bedrock stability between manufacturers and dealers.”

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