California motor vehicle dealerships have unique legal protections when it comes to manufacturers trying to add new franchise points in a specific market area. This action is known as an “add-point,” which can negatively affect the business interests of the dealerships that are already established in the area.
Established dealerships often protest against the add-points because they want to preserve their long-term business interests. In California, this is done by filing a protest with the New Motor Vehicle Board, which allows existing dealerships to have a voice in their market share and the potential split that would occur if another dealership with the same brand was added to the market.
Protests must be handled precisely
The core issue that must be addressed in an add-point protest is whether the new point would have harmful consequences for the existing dealership. The protest puts the onus on the manufacturer to prove that the add point is justified based on factors, such as performance metrics, consumer convenience, market penetration and retail competition.
Dealers who file a protest can submit information that shows how the add-point would impact them. This can be through market studies, industry expert testimony, financial data or any other source that proves the point. This can contribute to a stronger protest.
Because these protests can be complex, it’s often best to work with someone who understands the procedures and how to handle each step. This can make the difference between having a sustainable dealership or having a saturated territory that undercuts the financial stability of the existing dealership.