The Recreation Vehicle Industry Association (RVIA) has vowed to fight proposed franchise laws in 17 states that the association says could, if passed, put some RV manufacturers out of business and cause “the industry as we know it to disappear.”
“With the combined impact of them all, we consider this to be a very serious issue,” Dianne Farrell, RVIA vice president of government affairs, told RVBusiness. “It could cause a lot of businesses to fail. We are going to be working on the bills as hard as we possibly can.”
Typically, RV provisions have been included in automobile franchise laws championed by state automobile dealers associations that seek to protect car dealers from the auto sector’s financial turmoil that likely would cause many dealerships to be shuttered.
RVIA President Richard Coon, in a March 9 letter to Recreation Vehicle Dealers Association (RVDA) President Mike Molino, asked for support amending or defeating the bills, warning that RV manufacturers and dealers alike could be put out of business by the slew of legislation.
In response, Molino wrote to Coon that RVDA “does not take positions on proposed or enacted state legislation … but leaves the specifics of state legislation to dealer groups in each state.”
At issue are what RVIA characterizes as “onerous” provisions requiring inventory – in some cases regardless of age – to be repurchased by manufacturers “with or without cause” along with “blue sky value” requirements that would mandate manufacturers to compensate dealers for the value of their businesses along with “facilities assistance” to pay dealership costs for up to three years.
“It’s not really a buy-back problem, it’s a termination problem,” Farrell said.
Because the bills are being considered separately in the various states, provisions of each proposed law are different, Farrell said, adding that all are at different stages of the legislative process.
“We are basically saying that while these provisions are being written for car dealerships, they are totally inappropriate for RVs,” Farrell said. “The RV industry doesn’t have the same kind of relationship because RV dealerships are not brand specific.”
In the letter, Coon said a Texas law passed more than a decade ago that RVIA opposed requiring repurchase of inventory without cause “already has severely financially damaged many manufacturers, and, as you know, has been invoked many times by RV dealers who are not going out of business.”
Should a large number of other states adopt similar “draconian requirements,” the result “will be disastrous,” Coon wrote.
“There is not a single manufacturer in our industry that has the financial wherewithal to repurchase the amount of inventory they could be asked to repurchase, let alone provide ‘facilities assistance’ or make blue sky payments,” Coon wrote. “While some individual dealers could benefit early on by taking advantage of these provisions, the vast majority will suffer. These proposed laws will only serve to hasten the demise of manufacturers, and in doing so, will have the same impact on their dealers. RVIA does not cry wolf. Our industry is in jeopardy and we must work together to save it.”
Any decision for the national association to oppose proposed state laws would have to be made by the RVDA board, Molino said, pointing out that some of RVDA leaders “were original proponents of the Texas legislation.”
“The wolf cry they heard when that legislation was proposed was that RV manufacturers would have to abandon Texas,” wrote Molino, who told RVBusiness he would have no comment beyond the letter. “In fact, the Texas law has not stopped retail activity in the state. Texas has grown in market share almost annually, and Texas led the nation in total RVs retailed in 2008.”