Dealer Statutes – The Fundamentals of Association Advocacy


In the summer of 1961, Vince Lombardi strode into the first meeting of the Green Bay Packers training camp holding up a pigskin and famously said “Gentleman, this is a football.”

In that short statement he reiterated how the fundamentals would be their focus. He wasn’t speaking to a pop warner team, these were professional athletes who had narrow­ly lost the championship game a few short months prior. The anecdote is instrumental to any organization, no matter how large or successful, you must be good at the funda­mentals to succeed.

In today’s political environment, the world seems to be spinning faster and faster and it’s hard to name something outside the purview of state and federal government to regulate. Staying on top of taxes, transportation, and trade just to name a few besides the largesse of government spending packages in recent memory is a task that can suck you in and con­sume all your time. All of these areas of poli­cy are important and require close scrutiny to keep dealers apprised of what is happening. However, it’s important to take a step back from time to time and evaluate what your core competency is.

Going back to the establishment of dealer associations, there have always been two con­sistent reasons for their existence: advocacy and manufacturer relations. On the advocacy side of the equation, the primary focus from inception to now has been on dealer statutes. The statutory framework providing the basis for the contractual relationship between deal­ers and manufacturers is the most fundamen­tal aspect of a dealer association’s advocacy ef­forts and that emphasis has not changed under the formation of the North American Equip­ment Dealers Association. It is as fundamen­tal as the football, so to speak.

Not all state statutes are created equal. Be­cause of the balkanization of state associa­tions, there are many versions of state deal­er statutes regulating the agreements between manufacturers and dealers. Statutes have been amended over the years to keep up with chang­ing manufacturer contracts and business con­ditions too. Despite this, it’s interesting to note that nearly every state has an independent stat­utory framework relating to equipment deal­ers that is separate and distinct from general franchise laws. This speaks to the nuances and intricacies of our industry that cannot be cate­gorized with other types of franchises and the importance of the association as the only en­tity that represents the voice of the dealer in this area of legislation.

To understand and rationalize all the areas of importance in this area of legislation, the association developed the nine key principles relating to dealer agreements. The principles themselves can be found on NAEDA’s web­site and there have been many articles written about them. Suffice it to say that these are not only principles that should be imbued in man­ufacturer contracts, they are also the elements that should make up dealer statutes.

In an effort to include the nine key prin­ciples in dealer statutes, model legislation was drafted over ten years ago to reflect the prior­ities of dealers. The process for creating the model bill included consultation with the manufacturers and culminated in a document that encompassed all of the nine key princi­ples. The test for whether the manufacturers supported the model legislation came when a bill was introduced in Texas. In 2011, the model legislation was adopted by the Texas legislature and the manufacturers did not op­pose it. Shortly after, the model legislation was also adopted in Oklahoma. Since then, there have been several state updates to dealer stat­utes following pieces of the model legislation that demonstrate creating a cooperative pro­cess with the manufacturers has been the most reliable method to ensure success in the state legislature. However, it is worth noting there are instances where state legislation has gone further than the model bill and passed with­out manufacturer support.

The reality is many state dealer statutes are still lacking in fundamental areas that protect the dealer and provide a more equal footing in negotiations with the manufacturer that ben­efit the dealer and their customers. There are also calls from dealers to make dealer statutes more consistent in individual states as dealer’s footprints expand across state lines. As a dealer driven, consensus organization, it is ultimate­ly up to the dealers in each state to determine what their dealer statutes should look like.

Whichever direction dealers decide on, it is the fundamental responsibility of our asso­ciation’s advocacy efforts to pursue those out­comes. NAEDA has a dedicated government affairs team with decades of collective experi­ence to make that happen. Even with all that expertise and the nu­merous legislative and regulatory challenges we are involved in, we continue to focus on the fundamentals and not forget what a foot­ball is.

Article Written By Eric Wareham

ERIC WAREHAM is senior vice president of government affairs for NAEDA. He has extensive legal and policy experience in both a trade association and the private sector. Prior to joining the association, he was general counsel for an Oregon-based heavy civil construction company. He also served as the director of government relations and general counsel for an association in the wood products industry, has managed state and national political campaigns and held numerous positions in a state legislature. Wareham is a graduate of the Willamette University College of Law and Augusta University.


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