Tuesday, December 31, 2013

More on dealer inside info

Many people view powersports dealerships as equal to McDonald's franchises. They're not. Far from it. The arrangement between a motorcycle manufacturer and its dealers is really very different. A franchiser such as McDonalds or Burger King dictates virtually everything its franchisees do. Operating hours, days closed, promotion participation, recipes, vendors, appearances of the product, and on and on. All are strictly controlled and the franchiser makes regular visits to check up its franchisers, not to mention regularly exacts an agreed-upon percentage of their gross income.

Motorcycle dealers on the other hand have worlds more leeway. It's a different thing altogether. They can reconstruct the motorcycle in a different way than original before selling it, they can sell whatever else they choose to alongside the manufacturer's product, choose their own operating days and hours, exercise complete control over their marketing strategy, appearance of their stores, all of that. And the host company does not exact any percentage, and performs only the most cursory of checkups, if any at all.

Becoming a powersports dealer is basically two things: buying the right to put the manufacturer's logo on your building, and acquiring the benefit of unique access to the host manufacturer's product, parts, and information. That's it. But it is enough, and it is significant. Powersports manufacturers do not make available these benefits to non-dealers. They also are considerably more protective of their dealers' territories, unlike fast food franchisers who frequently allow two stores on the same block!

The point is that unlike a franchise, a powersports dealership is an independent operation, and one whose principal is wholly and uniquely responsible for everything about its function. Not that manufacturers don't want to know when the dealers it has put a certain amount of trust in and have invested in are sullying its name in one way or another. They do, you can be sure. They just don't have a lot of leverage to apply (depending on the exact details of the dealer agreement, but most are similar) when the dealer isn't representing them the way they would like.


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