My Franchise Has Been Terminated...Now What Do I Do? by: Ian McEwen President With the current economic downturn, no sector has been harder hit than the Auto Industry. Hundreds of Canadian Auto Dealers have been provided a termination letter, or have closed their doors for lack of financing. And, some are being asked to sign new participation agreements which place onerous performance standards on their operations. A dealer has to ask himself, "What are my options?" After the initial shock and trauma, dealers need to activate a revised business plan. Dealers have a number of options to fully utilize their facilities and employee talents. In most cases, these well established dealers have prime real estate, an experienced and highly trained workforce, a significant clientele base and modern equipment. The properties are zoned for automotive use. Your plan needs to address how you can continue to add value for the property. As a family run business, dealers also need to give considerable attention to their succession plans. So what are the options? Dealers may explore opportunities of taking on another new vehicle franchise Opportunities may exist, but the reality is that all manufacturers are well represented in the medium and larger markets. Offshore vehicle production is limited, so there are a small number of potential opportunities across the country. New manufacturers may enter the Canadian marketplace, but their products and brand might not warrant the required investment. Dealers may also have the opportunity to purchase a competitor - and given the current inventory of available OEM franchises, what is a reasonable price? Dealers may Sell or Lease facility to another Automotive Dealer Current market conditions in the finance market may play a limiting factor. This opportunity may work for a Dealer from another manufacturer who needs a better location, larger facility, or a newer one. There are a small number of potential clients. And with a larger facility, will the new, single use tenant be able to pay higher rent? Dealers may Sell or Lease facility to another Business This option is always available to a dealer/landlord. It really is a matter of finding the right business. We have seen over the years some automotive facilities turned into fitness centres or condominiums, but here again, the number of potential clients is limited. And as a lessor, the leasehold improvement costs may be excessive. Dealers may continue to operate as a Used Car Dealer with service capabilities Every dealer has this opportunity but in all honesty, new car dealers generally don't make good used vehicle dealers. The dealers would not fully utilize their service facilities, and their access to a direct supply of parts at attractive prices would be at risk. A dealer would only be able to use his Sales staff and some administrative personnel and only a small group of technical staff. To be successful, the dealer would have to make a significant investment in used vehicle inventory. Or, the dealer may develop an AUTOMOTIVE SUPERSTORE within the facility This strategy has the greatest opportunity to fully utilize the entire facility and trained personnel. The facility has the proper zoning and would require minimal modification to accommodate multiple automotive brands. The dealer would significantly reduce severance costs and help keep Canadians employed. Many franchisors provide dedicated parts purchase arrangements from their suppliers. This option will require an incremental investment in used vehicle and some initial franchise fees. Financing is available through the government's Small Business Development Plan. An alternative to this option would be for the dealer to become the master franchisee and allow key dealership personnel to become minor equity partners. Another option is for the dealer to become the landlord and lease the facility to various non-competing automotive service brands. The Marckis Group has secured exclusive contracts with a full menu of AUTOMOTIVE SUPERSTORE franchisors in:      Vehicle Remarketing      Maintenance & Light Repair Operations      Wholesale/Retail Parts Distributors      Daily Rental Vehicles      Glass Replacement      Wheel and Tire Specialists      Vehicle Detailing      Vehicle Undercoating      Body Shop We have an exceptional group of automotive senior executives including John Radford and Blair Upton who are ready to discuss in confidence this coast-to-coast AUTOMOTIVE SUPERSTORE concept. For more details about our franchise strategies for displaced dealers, contact the Marckis Group. ........... Ian McEwen is President of The Marckis Group where he specializes in Automotive Executive Search Recruiting and Career Placement; Career Outplacement; and Franchise Opportunities. For more information, visit www.marckisgroup.com or call 1-866-627-2547 #222. Contact us about your Outplacement Staff Training and Franchising needs.                                                                                                                                                  ←   Back © 2002 - 2011        The Marckis Group        All Rights Reserved        Privacy Policy