Site Control for Automobile Dealerships in 21st Century
Site control, sometimes called "point protection", is crucial in determining the intended use of the property by the dealer. It also becomes critical if the dealership fails to succeed. A "point" is an area where a manufacturer, distributor (hereinafter collectively referred to as "manufacturer", "factory") has or wants a dealer.
As explained below, there are many forms of site control. There is a distinction, however, between site control as it applies to non-dealership real property and site control regarding new car dealerships. Because of the many forms and because of the distinction with respect to car dealerships, it would be wrong to generalize that site control per se is either good or bad. Each case should be evaluated individually.
The right of first refusal can almost always limit a landowner's ability sell their real estate. The theory being that a prospective third party purchaser would not be as easily inclined to spend the time, money and energy required to compose an offer for real estate, knowing the tenant has the right to accept the offer and obtain the benefit of the third party's research and bargaining when the optionee exercises his option.
This statement is seldom true in the buy here pay here dealership around me case of a dealership selling an automobile.
BACKGROUND
While site control had been around for decades, the surge in real estate prices, in the 1970s and 1980s saw many metropolitan dealers selling their facilities for what seemed then to buy here pay here dealership auction near me be astronomical sums. Properties that dealers purchased, or constructed for buy here pay here dealership a few hundred thousand dollars in the 1940s, 50s and 60s were, by the late 1970s, selling for millions.
As real estate prices escalated, so did the cost of replacing the facilities and manufacturers were finding it difficult to obtain dealers to invest in many of those areas.
Site control was introduced in the factory's first Sales and Service Agreements in the middle of 1980.
In the 1980s there was a brief conflict between Chrysler Realty Corporation (Realty), and dealers. When Chrysler sold Realty to an independent non-automotive company, ABKO, it ended the conflict.
The situation in the 1980s was an anomaly and since Chrysler repurchased Realty from ABKO, all of the factory realty companies have been owned by the factories, whose goal is to support their dealers.
When a few factories started to include rights for first refusal in service and sales agreements kia buy here pay here dealership near me in the 1980s, many people believed that the restrictions would reduce the sales price of dealers and their facilities, chill prospects, and decrease offers.
In the 1990s, all service and sales agreements of manufacturers contained a right to first refusal. By the end of the century, nobody thought about it.
Dealers discovered in 2000 that the right of first refusal by the manufacturer had no effect on the sale price of their dealerships and facilities.
Over the course of the past 20-years, we have never seen or heard of a case where a dealership sold and the dealer received less blue sky because of site control, or the purchase price of the facility was discounted because of a kia buy here pay here dealership site control.
We have never heard of a case where a factory has offered to reduce the price, even though they may have done so in a few cases.
The factory usually exercises the contract right and simply hands it to a dealer of choice. The new dealer then pays full commercial retail for both the business and real property.