I appreciate your patience. Moving on to our second session today. Just before we get started, just a few housekeeping notes. If you would like to ask a question, please use the Zoom Q&A tab at the bottom of the screen. And before we get started with the next session, I just want to understand what product lines you guys represent. So bust out those cell phones and respond to our next poll. Tell us a little bit about the manufacturers you guys offer at your dealership. So we're seeing Case. Case was up there. It looks like you guys had gotten the head start on us in the previous session. Hale, Combelco. Who else do we have? Takeuchi. DitchWitch. All right. So this is relevant. And while you guys are doing that, this is relevant for our next session. Because today we are going to talk about negotiating termination rights, buyback obligations, dealership laws, and other commonly overlooked but critical dealership agreement provisions. You may know that AED has a contract support available for purchase that can assist on these issues. And of course, you can always reach out to Mr. Waite. James Waite is a business lawyer with over 20 years in the equipment industry. He authored the American Rental Association's book on rental contracts and represents equipment lessors throughout North America on a wide range of issues, including negotiating, drafting rental contracts, as well as buying, selling, and financing rental companies and their equipment. Please welcome James Waite. Thanks very much. Good afternoon or good morning to some of you. It's an honor to be here with the AED at the Small Dealer Conference. Thank you for joining this presentation on dealership agreements. The AED was kind enough to ask me to present on this topic because I've represented a number of dealers around the country in negotiating and documenting dealership agreements and in connection with helping resolve issues that sometimes arise with manufacturers. As most of you already know, dealership relationships tend to differ in a number of important respects from other types of business associations due in large part to the heavy reliance the parties place on one another. Manufacturers need dealers to provide facilities, staffing, local advertising, marketing, sales, repairs, maintenance, warranty service, and a range of other services critical to the manufacturer's ability to sell and maintain their equipment. Likewise, dealers rely heavily on manufacturers for equipment, parts, supplies, consumables, supplies, tooling, manufacturers, software, manuals, rather, software, marketing, and other support, as most of you know. Ultimately, however, dealers tend to wind up in a weaker negotiating position after commencement of the relationship with respect to things like pricing, parts availability, warranty support, territory exclusivity, and often even the ability to procure more equipment. This is due to a number of factors, not least of which is the fact that dealers, even large ones, generally don't have as much money or legal support as manufacturers. Not to mention the fact that in most cases, the dealer has already purchased and paid for or financed an entire fleet of equipment and all of the necessary infrastructure and support by the time an issue arises. This imbalance was first widely recognized by state legislatures around the U.S. in the early part of the 20th century with the expansion of the automobile industry and the proliferation of auto dealerships throughout the country. Auto dealers, as you probably recognize, tend to face many of the same issues dealers and lessors face when dealing with large, well-capitalized manufacturers who keep entire legal departments and dozens of lawyers busy making certain these manufacturers maintain every possible advantage with respect to their dealership relationships. Not surprisingly, in response to this, many states throughout the country have responded by enacting laws designed primarily to protect dealers and to ensure that they're treated fairly with respect to things like termination rights and limitations, notice requirements, repurchase obligations, requirements that the manufacturer, of course, repurchase not only equipment but also parts, supplies, specialized tooling, marketing materials, computer hardware, and even software in some cases. Dealership transfers to buyers or heirs of the original owners tend to be issues. Warranty claims, as most of you know, and a long list of other issues. One of the major problems is that state laws differ dramatically throughout the country. Some states, take Wisconsin for an example, have uber-expensive dealership laws that cover effectively everything. Wisconsin's law defines a dealership to include an arrangement by which a person is granted the right to sell or distribute goods or services at wholesale, retail, by lease agreement, or otherwise. Other states, like Colorado, specifically exclude earth-moving and heavy construction equipment from coverage altogether. And still others leave you wondering whether your equipment is covered or not. For example, Arizona's law covers only, in quotes, machines designated for or adapted and used for agriculture, livestock, grazing, light industrial, and utility purposes. So does it cover your equipment or doesn't it? It sort of depends on the definition you give to those terms or that you can talk a court into giving those terms. Adding to the confusion are judicial interpretations of these statutes. The Missouri Supreme Court, for example, has found that the term power equipment actually means large machinery. Then, even if your state's dealership statute does appear to cover your type of equipment and operation, you will need to determine whether your state's law will, A, supersede your dealership agreement, for example, in California, B, supplement it, for example, in Michigan, or C, be overruled by it entirely, at least in some respects, for example, in Pennsylvania, remembering that any one or more of these may be a part, may play a part rather depending on where you are and where the manufacturer is located. And after you've managed to unpack all that, you or your lawyer will need to factor in the range of judicial interpretations and rulings in the various state courts, federal courts, and appeals courts, which can themselves be unpredictable to say the least. For instance, in Southern Equipment Company versus Deere and Company, a manufacturer's inaction in response to encroachment by one dealer on the area of another dealer was deemed not to constitute a change in competitive circumstances prohibited under the dealer statute. In other words, the manufacturer could actually not be held liable for failing to ensure that another dealer did not encroach upon Southern Equipment's territory. The lesson here, make sure your dealer agreement grants you exclusivity and that the manufacturer agrees to enforce it, or at least if another dealer does sell into your territory, you get a commission on the sale. And how about application of another state's laws? In GrabQuick v. Trimble, a California manufacturer was actually able to require the application of California law under its dealership agreement against a dealer seeking to apply the laws of the dealer state. The lesson here is that sometimes your state law may trump the laws of a manufacturer's state, but if the dealership agreement requires the application of the laws of another state, maybe the manufacturers, and I've seen cases where the laws of an entirely different state, take New York for instance, have been deemed applicable. So in those cases, you may yet be forced to litigate claims in the manufacturer's home state, usually not a good result. The lesson of course here is to negotiate to the extent you can the applicability of your state's law to the relationship rather than the manufacturer's state or some other state that might place you in jeopardy or where at best, you may not know or understand what your rights and remedies are. Repurchase obligations, which of course tend to be critical. A Colorado appeals court case rather, found that a manufacturer was not required to purchase equipment a dealer bought after receiving notice of termination of the dealer agreement from the manufacturer. This even though the manufacturer gave the dealer an additional 90 days to make purchases after termination. The dealer purchased the equipment and then tried to return it, but the manufacturer then refused to accept it. The appeals court said that the agreement was actually terminated upon giving of the original notice by the manufacturer, therefore the dealer's right to return was terminated with the original termination of the dealership agreement. The lesson, be careful to clarify that if your purchase right is extended, so is the dealership agreement. And finally, with respect to these examples, in Taylor Equipment Company doing business as MidCon versus John Deere, Deere and Company refused to approve MidCon's proposed assignment of its dealership to a willing buyer in connection with MidCon sale of its business, forcing MidCon's owners to then sell the business to a different buyer for $1,715,000 less. The dealer contract provided that MidCon could not assign its dealership agreement without the prior written consent of Deere. Technically, it did not require Deere to act reasonably. The court of appeals therefore deemed the restriction enforceable and said that John Deere was not implicitly required to act reasonably. Note, by the way, the same result came in Maryland in an unpublished opinion in Enfield Equipment versus Deere and Company in the Fourth Circuit. Lesson here, make sure your dealership agreement includes a right to assign the dealership if the company is sold. And perhaps the owners should consider including other provisions like should they retire or pass away, allowing for transfer of their dealerships so that the value isn't so heavily impacted upon assignment. This by the way, these rulings are only the tip of the iceberg. There are many, many more throughout the country. And contrary to what you may think would be the case, ordinarily with dealership statutes that were themselves designed to protect dealers, what we find is that courts routinely interpret them as much in favor of the manufacturer as they do in favor of the dealer. So this militates heavily in favor of making sure that your dealer agreement actually addresses the issues you want to address. So as I mentioned, a dealership winds up being in many ways like a partnership. Among other things, the parties need to decide how the relationship will work, who will pay for what, and what happens if the relationship expires or terminates. As I also mentioned, some state statutes address some of these issues, none of them address all of them. But in most cases, it comes down to what the dealership agreement says. And those can say almost anything, and they often do. I've seen at least as many five-page dealership agreements as I have 50-page dealership agreements. And I can tell you that almost none of them bears any resemblance to the others. And shorter is definitely not better because of the protections that need to be built in for dealers. So they bear very little resemblance to one another, save only for the fact that in broad terms, the efforts of the manufacturers, lawyers who wrote them were understandably almost entirely directed at protecting the manufacturers. So when you think about dealership agreements, obviously while factoring in the reality that these relationships need to remain positive and mutually beneficial if they're going to work, you still need to take some reasonable steps to protect yourself and your business. So start with these basic considerations. Who runs things? How much control is the manufacturer going to have over your business with respect to things like operations, products, pricing, facilities, staffing, marketing and advertising, maintenance, warranty work, expiration and termination, and of course, repurchase obligations if and when the agreement is terminated. Then as I said, factor in applicable laws and any other relevant legal and operational considerations. Then consider who the manufacturer is, although probably the most common opening statement I hear from manufacturers reps is, oh, we never negotiate our dealership agreements. Remember who you're talking to. Is that a person whose life will be made easier if you simply agree to the first draft the manufacturer puts in front of you? And remember, even when people say they don't negotiate, they usually do. I just brought a truck from a dealer who advertised a no haggle price, just as one example. Turned out they did haggle on it, but only a little, but they haggled a lot on the value of my trade-in, the interest rate, the warranty, the maintenance, and the free oil changes. So when you're dealing with a manufacturer, it pays to consider a few things. First, the size and strength of the manufacturer. Are we talking about a first-tier manufacturer like a Deere or a Caterpillar or Komatsu? Or are we talking about a second, third, or fourth-tier manufacturer? Because it can bear heavily on their willingness to negotiate. Secondly, but related, the size and strength of the dealer in the current market environment. That has tended to waver a bit over the past 10, 15 years with market fluctuations. And in some cases, what you would think would be an intransigent dealer, because they're very large and or have a reputation for not negotiating, they turn out actually negotiating, being more receptive to negotiations than you would expect. And you may also factor in other market conditions. Consider today's release in equipment world that said that the EU is now going to impose import sanctions, additional import duties on U.S. manufacturers of construction equipment. What effect do you think that's going to have on large manufacturers who sell heavily into the European market and in the U.S.? I suspect that's going to bear heavily or it could bear heavily on their negotiation stance and willingness to negotiate things going forward with their dealers in stateside. Alternative offerings can be an issue. Many different types of manufacturers may be out there now. They may also have their own dealer networks already established. But we see cases where particularly where something like an overseas manufacturer, maybe a Sani or a Lugong or a Shandong or somebody else is trying to get into the market, trying to break in alternative offerings or maybe second tier offerings might be an option if you can't get a first tier offering to negotiate. Whether you're single or multiline can bear, what's the fit with your current operation? How willing are you to negotiate or how much do you need to negotiate your relationship? Are you just trying to get into it initially, break some ground and then go forward? Or is this just an add-on to a very well-established operation already? The states in which you operate can have big meaning. For instance, if you cross state lines and you have operations in more than one state, one of the issues that can come up is, do you benefit more by the laws of one state versus another? You might do a little forum shopping yourself. Then the manufacturer's general openness to negotiation, regardless of other issues. I've come across manufacturers throughout the world who have had reputations for being absolutely unwilling to negotiate anything, but who as a product of one set of circumstances or another have ultimately found themselves much more willing to negotiate than was expected. As you might guess, balancing the relationship here so that the dealer is protected as much as possible requires consideration of a long list of issues. We actually, in my firm, perform an 88-point review of each dealership agreement that comes in the door. Then we try to negotiate as many relevant protections as we can when a dealer retains us to negotiate that dealership agreement. Of course, not all of the issues apply in every case, but we find that most of them apply at least to a degree across a vast majority of the dealership agreements we negotiate. Obviously, we don't have time to go through each of the issues in detail today. Instead, I've pulled out 17 of the issues that in my view tend to be most important and most often discussed when we consider negotiating a dealership agreement. First of all, your purchase commitment. You want to identify the number of machines and the levels of parts, consumables, and other items that you are going to be required to purchase and when. By the way, this is something that we can very often negotiate and limit so that you don't wind up out over your skis a bit and you have time to build up this relationship and make the requisite number of sales and you don't have a manufacturer breathing down your neck with a threat of termination. Pricing, obviously critical. List the prices to be charged by the manufacturer for a whole host of items, equipment, parts, tooling, supplies, consumables, IP licensing, which by the way has become more important in recent years, and other items that you may need to purchase alongside these things. There might be, for instance, marketing materials that come from the manufacturer that you need to be able to purchase in bulk that you may want to state prices for so that you don't wind up being surprised by a bill that you have difficulty paying after the fact. Also for how long these prices are going to last. Knowing that most dealership agreements will, in the initial draft form, will come saying we can change, we the manufacturer can change these prices at any time. That's a very dangerous position for an equipment dealer to be placed in if the manufacturer turns around the next year and increases prices by 20%. So think about the price change issues to be negotiated into a dealership agreement for just a second. You want to always require reasonableness where possible, and then try to limit those prices in price increases to things like changes in the CPI, the consumer price index. Try to factor in most favored nation status. That is, the manufacturer is going to sell to you on at least as favorable pricing as the manufacturer sells to its best dealer or equal to or less than its best prices offered throughout its network. And then finally, get a termination threshold. If nothing else, if the price increases by more than a stated percentage, you need to have the right to terminate. Now, none of these things have I, I can say almost never have I found any of these things built into an initial draft of a dealership agreement. These are all things that we have to negotiate, and we usually have to overcome the claim that we, the manufacturer, don't negotiate anything in our dealership agreements. Now, in payment terms, you, you, you want to be very clear about what terms you're going to get and require the approval of both parties for changes, because as I said, you can place yourself in serious danger by allowing unilateral adjustment of either prices or payment terms. And again, most favored nation status as a fallback with or termination, right? Deliveries. This has been an issue, especially as a matter of fact, for some overseas manufacturers. Reasonable timing of deliveries, factoring in when your customers are going to need things like not just equipment, but parts and supplies can be critical to uptime to maintaining uptime. So require your manufacturers to make these deliveries within a stated time. And if for instance, a dealership agreement requires you to buy OEM parts as opposed to aftermarket parts, think about negotiating in the ability to buy non OEM parts. If you have to wait beyond a certain state of length of time so that your customers don't wind up getting upset for having to wait too long. Exclusivity, a huge issue. As I mentioned before, when you negotiate with a manufacturer, part of what you're doing is dedicating a great deal of your own time and effort to establishing and maintaining your own brand recognition within a given territory. You want that territory to be exclusive so that you can avoid other dealers and possibly the manufacturer itself selling into your territory. And then if they do try to negotiate in a commission on those sales. So national accounts, I routinely see these built into dealership agreements and very rarely are manufacturers willing to take these out. Once in a while, I've managed to achieve that for a dealer, but usually manufacturers, especially higher tier manufacturers will insist on being able to sell to national accounts within your territory. But when you then start thinking about things like providing warranty service to those customers within your territory, now you need to start factoring in things like fair pricing on the services and the parts that you provide and possibly getting a commission on those sales into your territories, even though they're agreed upon national accounts beforehand. Revisioning, especially with respect to larger manufacturers, dealership agreements often come in with a stated minimum, either number of units to be purchased or dollar amount of units to be purchased, but they don't necessarily say in some cases, which units or which makes and models you're gonna be able to purchase. That can be hugely important to you because as most of you know, some types of equipment in some areas are more popular than in others and some types and makes models of equipment manufactured can be very different in terms of their quality, utility and uptime. So negotiating in a provision that identifies upfront which types of equipment you're going to buy can be extremely important with respect to some manufacturers and the parts and supplies to be made by the manufacturer, as I said before, can also be hugely important in this respect. Facilities, as most of you probably know, many manufacturers will require that you maintain a certain number of square footage, that that number of square footage be in a certain condition in a certain types of building, that those buildings maintain and satisfy certain pre-agreed specifications or possibly and dangerously specifications that the manufacturer decides on after you've executed a dealership agreement and possibly bought additional equipment. So things like location and size, specifications, showroom, warehouse, yard, et cetera. And then think about this, you may be looking to expand the number of facilities you maintain even within your own territory. So building in expansion rights and limiting your expansion obligations can also be terribly important. And then also, when you think about expansion, we have cases come up where dealers may want to expand into as yet untapped adjacent territories, for instance, or get a right of first refusal with respect to occupied territories that may be sold out later and may be up for offer. Consider all of those things when getting into your agreement in the first place, and down the road, negotiating a winning expansion strategy will be much easier and much less expensive. Staffing requirements, huge issue, especially nowadays with all the employment lawsuits going on around the country. Staffing, I think, is going to remain a very big issue for a very long time in the equipment industry. So some considerations. What does the manufacturer want up front? Typically, they want to know, at least in broad terms, that you're going to maintain adequate staff in order to operate your facility and sell their equipment effectively. So sales, marketing, advertising, maintenance and repair, parts and supplies, delivery, management, and other staffing requirements might be included, I will tell you, it's more common, even in big equipment agreements, or even in the lengthy ones that some of the bigger manufacturers put forth, much more common to say things like reasonably appropriate levels of staffing across the board. To the extent you get into details, pay very close attention to it because there may be a particular issue that a manufacturer is driving at, and that issue may create some exposure for you down the road. Marketing and advertising. Issues like the required annual spend by the dealer, an annual plan, licensing limitations for the manufacturer's trademarks, and other intellectual property, and any specifics with respect to advertising content. And less commonly, any support to be provided by the manufacturer might be included. Again, this is one of those things that you rarely see manufacturers commit to providing any particular level of support in the first draft of a dealership agreement, but this is something that we very often negotiate specific levels and or requirements of manufacturer support, particularly with respect to larger first and second tier manufacturers, because they routinely make it available and we know it going in, so we might as well get as much benefit from that as we can for our dealer clients. Changes to equipment designs and specifications. This can be a real hazard. Negotiate for a right to return and exchange obsolete machines. Obsolete designs can be a killer because obviously you can't sell them. So being able to replace them with new designs and specifications can be critical. But at a minimum, require reasonable levels of parts and consumable support for the lives of all machines, even those being obsoleted and those being discontinued by new design, as a result of new design and or specification changes. This is hugely, this can be hugely important with respect to equipment you've sold two, three, five years in the past on which you're still required to provide service and maintenance. Parts, supplies and consumables require reasonable levels of parts and consumables support, of course, for the lives of all machines, including those discontinued or rendered obsolete, as I just said, by design specification changes. Note, you may want to negotiate for post termination support as well. Though we usually see this closer to the end of a relationship where a manufacturer or a dealer has already indicated that they intend to terminate the relationship, being able to continue providing parts support, warranty support and service after that termination can be critical. And bear in mind, you may be dealing with a more or less reluctant manufacturer after the fact, or a manufacturer who is now maintaining dwindling supplies of parts for obsolete equipment. Service requirements, identify in the agreement the levels of warranty service, if any, that you're going to be required to provide and whether that service requirement will extend to equipment sold by the manufacturer and or other dealers in your territory. If it's going to, you will also need to know how and when you'll be compensated and by whom. For instance, will that compensation be provided by the manufacturer or perhaps the remote dealer who sells into your territory? And if that happens, can you possibly negotiate a guarantee by the manufacturer so that you have some assurance of receiving payment after the fact? Notices, this is one of those sneaky, important issues. But the notice paragraph in a dealership agreement can be critically important because you need as much notice as possible for things, not only terminations and non-renewals of the agreement itself, but also for things like model specification changes, price changes, other modifications to the equipment and or the relationship. You're going to need this in most cases and you're going to need as much of it as possible in order to prepare yourself for the upcoming changes. Change of control, again, for sales of a dealer's business or transfers upon death, negotiate for automatic approval. You'd be surprised at how many times we get manufacturers to agree to an automatic approval. If for instance, the dealership is transferred to one or more of the current owners or managing members or one of their heirs. And then with respect to transfers to unknown parties or possibly dealers in another jurisdiction, that automatic approval might yet be available. But in any event, if you have to negotiate back from that, at least get the manufacturer to agree not to unreasonably withhold its approval because as we saw in the cases I mentioned before, a manufacturer's denial of that approval can be enormously expensive if and when you go to sell your business off. And finally, of course, buyback considerations. These are probably the most often raised issue in any dealership agreement and for good reason. Include at least a requirement that unsold equipment and parts as well as display items and other peripherals, parts, consumables, supplies, et cetera, are all included in the manufacturer's buyback obligation. Now, you will be surprised. You would be surprised at how the various state statutes differ on this issue. Some will require that equipment be used, say, less than 50 hours. Some will require it to just be new and undamaged or relatively new. Some will set forth 100% repurchase obligations in terms of the amount of the original price paid. Some will limit that to 90% or even down to 75% depending on the state of repair of the items to be repurchased. But those are all things that typically can be negotiated. And depending on which state laws applies, which state laws might apply, to the extent the manufacturer recognizes that, you might have an easier time getting, say, one of the strategies we employ here is, if we have a dealer in multiple states, we'll try to employ the most favorable revisions from each state so that we get the dealer as much protection as possible. Again, bear in mind, manufacturers generally don't want to and don't have the financial incentive to argue too terribly much about this going in because they have a ready market for their equipment through their dealer network. That said, no dealership agreement that I've read to date, save only maybe one or two, has ever included a repurchase obligation on the part of the manufacturer. They generally start with, the manufacturer has no repurchase obligation and then leave it to the dealer to find out whether the dealer's state law actually imposes a repurchase obligation on the manufacturer or not. So, be sure to research your state laws that may apply to your particular dealership arrangement. If your state's dealership statute doesn't include an obligation, the manufacturer repurchase your inventory upon termination, be sure to include a provision in your dealership agreement that requires 100% repurchase of undamaged and or unopened parts and equipment upon termination. And then provide a specific time deadline for payment of those amounts. Remembering that, of course, a manufacturer will have some economic incentive to push out its payment obligation as far as possible. You want that to be as near as possible. Remember also that manufacturers and dealers are often located in different states or perhaps countries. Because many states statutes still don't include a provision requiring application of laws of the state where the dealer is located. For example, Illinois, Delaware, Maryland, Ohio, Pennsylvania, Wisconsin, Hawaii, and Arkansas. It remains possible in many states to include a provision requiring application of the laws of some remote state. As I said before, possibly the manufacturer's state or in some cases, even the laws of an entirely distant state like New York, which can be far less dealer-friendly and which can, as a result, eliminate most, if not all of the protections you originally thought you had. So in the final analysis, dealership agreements can be immensely valuable. But this is an area where state laws tend to vary substantially and form agreements are almost non-existent. Most manufacturers treat dealers well and most dealers reciprocate, even recognizing, each recognizing the other's importance in their overall business. But markets like relationships tend to change over time. And what appears to be a great deal today can wind up looking like a tremendous burden tomorrow. So consider your options here and negotiate these agreements carefully. Do not believe most sales reps who will tell you that these agreements cannot be negotiated. In the vast majority of cases, they actually can. Feel free to contact us if we can help. And to that end, you may wanna consider having any of your active dealership agreements reviewed and analyzed by one of our attorneys here. As I said, we perform an 88-point dealership agreement analysis, even for people who don't want us to negotiate. The information, the knowledge can be tremendously valuable, not only when dealing with your current manufacturer relationship, but also with other manufacturer relationships in the future. Feel free to contact us at 866-582-2586 or at info at jameswhaitlaw.com if we can ever be of help. That concludes my presentation. In the last few minutes here, I'd like to open it up for questions, if anybody has them. Looks like we do have a couple of questions. The first from Keith Johnson. Keith, well, it's more of a comment. Keith just says, thank you for your presentation. Very helpful. So thanks for that, Keith. And then Keith also asked, curious, do you represent OEMs from their side of dealer agreements? We have been asked to on rare occasions. We don't usually do that. We try to maintain our relationships on the dealer side of the fence. So on the rare occasion where I can identify a manufacturer who's dealing with a dealer that I haven't yet dealt with, which doesn't happen that often anymore, I will consider it. But again, it's very much the exception from the general rule. Great. Well, that appears to be all the questions that we have right now. If there's not anything else, James, any closing comments? No, I just caution everyone to never assume that dealership agreements are a one-size-fits-all affair. They are very far from that. And one of the things that tends to happen with agreements in very far-reaching industries like this is there tends to be a presumption that there's some sort of consumer protection law or a safety net made available to business owners. That is very much not the case, other than with respect to, other than in respect, most states will impose an implied duty of good faith and fair dealing, which as you might guess, is entirely up to a court to decide based on the facts and circumstances surrounding any given dispute. But by and large, this is the wild, wild west. These dealership agreements contain, it can contain anything or nothing. And barring some sort of a rough claim of breach of that duty I just mentioned or possibly unconscionability, there are virtually no protections out there other than these dealership statutes, which themselves vary so dramatically that from one state to another, it can be impossible to tell whether a dealer has any protections, some protections, or no protections at all. That's why when you put this all together, negotiating these relationships with manufacturers in a document tends to, three, five, 10 years down the road, when somebody finally looks back to understand what these agreements consist of, that's the time when they become enormously important. And for most people who in the past have tended to say, we'll just kind of sign whatever the dealer puts in front of us, that can yield devastating results in something like an airship or an attempted sale of a dealership. So the time to do these things is right now while you have an opportunity because people tend to be a little euphoric when they're negotiating these relationships up front. Now, everything's gonna be great. We're gonna be best friends and we're gonna make a lot of money and do these. And that is very often the case. And oh, by the way, we're playing golf on Friday. Yeah, that's right. But remember in that golf game that you still need to sign on the dotted line can mean a great deal, not only to you, but to all of your employees and all of your family members because these dealerships tend to be, they tend to be the primary repositories of value for most dealership owners and their families for their entire lives and the lives of their kids and grandkids. So we negotiate these things hotly where we can upfront in order to protect not just the current owners, but everybody down the line. Absolutely. Well, thank you so much, James. And just one last question came in from Maurice Smith. He was just curious if you had any quick tips for negotiating with OEM captive finance arms. Well, so they're famous for saying we don't negotiate our terms. So those things can be all over the map, but negotiating payment terms can be enormously important. So getting as much time on things like, here's one that I always try to build into financing agreements. A notice and opportunity to cure provision if payments go late. You can, for instance, some financing agreements will say as soon as you default, as soon as you breach your payment obligation to go late one day, you're automatically in default. And by the way, now we can default you not only on your financing agreement, but across your dealership agreement and across all other agreements with the manufacturer and any other parties involved. So that's called a cross default, by the way. So the first thing you do with respect to those default provisions is you get as much notice value, you tend to extend that out 30, 60, 90 days, if you can. And then separately, try to build in a notice provision that says we will not be deemed in default until 30 days after we have received notice from you of the fact that we are in default. The argument, not only does that extend your time to pay, but it also actually has value to you in the sense that sometimes you're not gonna know. You may not, some of our dealer clients actually don't realize that they skipped a payment somehow, or the payment wasn't delivered. Maybe it was lost in the mail, a less effective excuse nowadays, but payments do sometimes go late through no fault of the dealer. Getting that notice can be critical to maintaining your status with the manufacturer of the finance company. And then separately, on the cross default issues, try to break those apart. Most financing arms will understand what you're doing if you say, we can't cross default it against our dealership agreement or our parts supply agreement, services agreement, et cetera. Try to break those cross defaults apart and have them in individual silos so that if you default on a payment obligation, cure the default and go on about your business and don't worry about being defaulted across because you don't need to get your manufacturers, your dealership agreement terminated because you made a late payment. Absolutely. Well, thank you, James, for that. Always appreciate your time and expertise whenever it comes to keeping our members informed on issues like these. So we're going to head into some uncharted waters here. This is the WIT rooftop. We're supposed to be there in person this year, maybe next year, but we're going to do the AED Power Break next. It's a 45 minute interactive session featuring discussion topics and special guests where participation is just meant to be treated like we're all having lunch at the conference or having a beverage on the rooftop here. So don't worry if you're wearing sweatpants like the 42% of American workers who are now all working remote, myself included, don't worry, we're not going to ask you to change, but we have set this up as a way for everyone here this week to interact with each other just like you would a standard conference. So when you get there, set your Zoom view to speaker view. That might help your recommended viewing experience and we'll see you there at 1230. The link to that is in the chat. Appreciate it.

dealership agreements

negotiation

territory exclusivity

termination rights

state laws

provisions

purchase commitments

equipment specifications