Protecting motorsports dealers

Motorsports dealers say they need protection from manufacturers who unfairly terminate their franchise agreements, and a House committee approved a bill that would do just that.

Sponsored by Rep. David Dill (DFL-Crane Lake), HF1157 would set minimum standards for franchise agreements between manufacturers and dealers of snowmobiles, all-terrain vehicles and watercraft. The House Commerce and Labor Committee approved the bill March 9 and sent it to the House Civil Justice Committee.

Dealers say the manufacturers can and have canceled franchise agreements for dubious reasons, effectively eliminating their ability to sell the manufacturers’ products and refusing to buy back inventory the dealers have already purchased.

The bill would protect dealerships by forbidding manufacturers from terminating agreements without good cause. Manufacturers who do terminate agreements would be required to buy back the inventory purchased by the dealer.

Steve Vandeputte, owner of Brothers Motorsports, said his dealer agreement with Polaris was terminated in 2006. He said Polaris never gave him a reason, and refused to buy back his product, leaving him with a huge financial burden.

“I said, ‘If you don’t want me as a dealer anymore, all I ask is that you buy my product back and make me whole.’ They said under Minnesota law, they don’t do that and they don’t have to. End of story,” Vandeputte said.

Dill argues that since dealerships in the automobile, motorcycle and farm implement industries are afforded similar legal protections, motorsports dealers should be too; however, opponents say that’s not necessarily the case.

Annamarie Daley, a lobbyist representing Arctic Cat, argued that motorsports dealerships are different because manufacturers’ products are sold right next to their competitors — unlike automobile dealers, who typically sell only a single company’s products. She said the bill would put manufacturers at a competitive disadvantage.

“If you decide one day you want to walk away from Arctic Cat and go sell Honda, any dealer can do that and force all of its inventory onto Arctic Cat,” she said.

A companion, SF406, sponsored by Sen. Tom Bakk (DFL-Cook), awaits action by the Senate Judiciary Committee.