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FMCA Consignments Could Face Legal Challenge

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July 30, 2003 by   Leave a Comment

The arrangement in which out-of-state dealers sell motorhomes in states where Family Motorcoach Association (FMCA) rallies occur might be challenged in court, according to Dave McMann, vice president of sales and marketing at Meyers RV Superstore, a five-location dealership in Syracuse, N.Y., with around $130 million in annual sales.
The dealership is considering taking legal action against Monaco Coach Corp., which terminated its dealer agreement with Meyers in January.
Monaco terminated the agreement because McMann refused to order more units until Monaco’s policy regarding sales by out-of-state dealers at FMCA rallies “was cleared up,” McMann said.
The termination was unjustified because Monaco’s dealer agreements prohibit sales by “third parties,” which basically is what occurred under the consignment arrangement observed during the recent FMCA International Convention in suburban Buffalo, McMann said.
New York law prohibits dealers from outside the state, except those from its five neighboring states, from selling at events inside New York. However, the FMCA and New York officials reached an agreement under which out-of-state dealers could consign units to a licensed New York dealer for sale during the rally, which occurred from July 18-20.
Jerry Yeatts, FMCA’s director of conventions and commercial services, was not available for comment today (July 30), but during a recent conversation, he agreed the consignment system is awkward.
“This causes a problem with dealers placing a motorhome on a display space and then abandoning it for four days,” Yeatts said. “What happens if a person falls in the display area? What occurs if something is taken from a motorhome on display by an out-of-state dealer who is not permitted to be on the grounds?” he said.
On balance, the consignment system used a few weeks ago was a logical response that gave dealers “more opportunities to display and sell than in many other locations where FMCA has held conventions,” Yeatts said.
New York is not the only state where out-of-state dealers are prohibited from selling motorhomes, according to Yeatts. Oklahoma and Kansas, where the FMCA recently has conducted rallies, have very similar laws, he said.
The next major FMCA rally will be in Albuquerque, N.M., March 16-18, and McMann said, it is his understanding that New Mexico’s law is the same as New York’s.
He said he has been in contact with New Mexico state officials who are “very interested” in investigating the matter.
Monaco Chairman and CEO Kay Toolson addressed the situation during the company’s national dealer meeting in Las Vegas in June. Toolson said at that time, “Some dealers feel very strongly that if an FMCA show falls in their territory, no other dealers should be allowed to work the show. And other dealers feel that FMCA shows should be open to multiple dealers from other territories.
“If we stop having great FMCA rallies, there’s a danger of losing a very important reason why people buy RVs,” Toolson said. “We, as manufacturers, are the largest purchasers of space at these rallies; we provide the funds for entertainment; we invest service resources at these rallies; and we work closely with the dealers who bring service support of their own. We make it a happy experience. And it’s because the rallies are fun that our dealers sell a lot of product, both at the show and back on the sales lot.
“Keep in mind, sales from these shows amount to less than 1% of our annual retail sales. We know that because of the large number of models, floorplans, decors, engine choices and test drives, many of our customers do their homework at FMCA shows,. but most often return to their local dealer to place an order.
“If manufacturers change their FMCA show policies to restrict attendance to the dealer who holds the territory where the event is held, coach displays will be limited, FMCA will be less likely to raise the financial support to make the rally successful, and fewer people will come to view the new models. In turn, FMCA is going to have to cut back. The resulting spiralling effect will mean less fun rallies. Attendance will shrink, and an important part of the lifestyle we all promote may simply go away. I challenge you to ask the most vociferous opponents of our current show policy what they’d be willing to spend to continue to make these shows successful?”
McMann believes it is unfortunate that the focus of FMCA rallies has shifted from camaraderie to sales, which he feels is dominated by 10 to 15 dealers, out of 3,000 dealers nationally.
“It’s gotten out of hand” and puts dealers in the area where FMCA rallies occur at a competitive disadvantage, he said.
McMann said his views have widespread support from both the manufacturer community and the dealer body. “I don’t want to spoil FMCA rallies,” he said. “The FMAC has to work with the local dealers. They’re guests in the states (where its rallies take place).
”I’ll keep talking about this until everyone’s on the same page.”

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