In other Missouri legislature buffoonery:
In 2007 we almost had midwifes legalized (widely opposed by nurses and doctors). The legislator behind it used the obscure greek term "tocology" to slip past the opponents' "grep" filters.
Trouble in Missouri
41–50 of 56 posts
Re: Trouble in Missouri
#42I live in Kansas City, MO (Independence, actually). I just called my representative's office. You can find yours here: http://www.senate.mo.gov/LegisLookup/default.aspx/default.as... My statement was as follows if anyone cars to piggy-back/draw inspiration. Hello, I am a constituent and I'd like to voice my opposition to House Bill 1124 in its current form. It has recently had anti-competitive and anti-consumer langu…
I whole-heartedly agree with your position, but how do you convincingly make the argument that it will cost MO jobs and money?
Tesla spent $2mil on a service station in St. Louis that employs 15 people. They're planning a second one in Kansas City.
Re: Trouble in Missouri
#43Earlier quoted context omitted.
Let's say you borrow money, and open a nice profitable dealership. The manufacturer, then decides to steal your profits by raising the wholesale price of cars for you until you are bankrupt, and the manufacturer buys the dealership out from under you in bankruptcy court. That type of behavior is what created franchise laws in the first place.
That smells like a just-so story. The grim scenario you describe could happen in any franchise situation. What stops McDonald's from doing this to its franchisees? Not this type of law.
Various laws, court rulings, and even provisions written into the contracts themselves as a result of earlier abuses by other franchises stop this kind of thing from happening to McD franchises.
But make no mistake--this does happen to other types of franchises. These lawsuits simply don't make the news because they're not general-interest or (for HN) tech-interest events.
Re: Trouble in Missouri
#44Earlier quoted context omitted.
Let's say you borrow money, and open a nice profitable dealership. The manufacturer, then decides to steal your profits by raising the wholesale price of cars for you until you are bankrupt, and the manufacturer buys the dealership out from under you in bankruptcy court. That type of behavior is what created franchise laws in the first place.
You shouldn't have opened the dealership without an agreement with the manufacturer giving you exclusive rights to sell in your market for enough time to justify your investment.
Once upon a time, such agreements were considered anti-competitive. Hence, states passed franchise laws providing similar protections without the exclusivity agreements.
Re: Trouble in Missouri
#45In other Missouri legislature buffoonery: In 2007 we almost had midwifes legalized (widely opposed by nurses and doctors). The legislator behind it used the obscure greek term "tocology" to slip past the opponents' "grep" filters.
Off-topic, that sounds like a dirty tactic I wouldn't support. But I wonder if you're also saying midwifes shouldn't be legalized, if so then your comment would be better received with a reason why.
Re: Trouble in Missouri
#46Earlier quoted context omitted.
This is completely wrong. Dealers own the inventory. Dealers take ownership of the car as soon as the car leaves the factory gate - they own the in-transit cars.
Completely wrong? http://en.wikipedia.org/wiki/Retail_floorplan
Read the article you referenced. In a floorplanning agreement, the franchise owners have 100% purchased the inventory and are on the hook for selling the inventory. The purchase money is financed with loans using the inventory as collateral. The dealer fully owns the inventory and (in the absence of side agreements or regulations) assumes all of the liquidity risk.
In particular, if a local franchise owner sees the manufacturer opening up its own store down the road, the franchise owner can't (in the absence of side agreements) tell the manufacturer to take back the cars because they want out of the business.
Re: Trouble in Missouri
#47In other Missouri legislature buffoonery: In 2007 we almost had midwifes legalized (widely opposed by nurses and doctors). The legislator behind it used the obscure greek term "tocology" to slip past the opponents' "grep" filters.
Off-topic, that sounds like a dirty tactic I wouldn't support. But I wonder if you're also saying midwifes shouldn't be legalized, if so then your comment would be better received with a reason why.
I didn't mean to convey an opinion on legalization, just to give a flavor of how laws get made. If asked, I'd say check the states that allow midwifes from one of the national accreditors and see how it's going. If it isn't a flaming train wreck then give it a go. (There is an underground midwife trade in the state. I know people who have had assisted home births. It does put the midwife in an awful legal position if something goes wrong.)
Re: Trouble in Missouri
#48Can someone explain to me why it should be illegal for Ford or Chevy to sell their cars directly? Is it really anti-competitive? Apple sells their phones directly, AT&T sells Apple phones directly, and resellers like Best Buy or Radio Shack sell Apple phones, and they're all doing pretty well economically. Not even arguing that Tesla should be allowed to sell cars without a dealership, why bother preventing direct sa…
It is protectionism for the dealerships. Historically Dealerships were mom and pop shops up in less-populated towns, employing a decent number of people. So they lobby the government that unless you protect us from the dealers, they will undercut our prices by selling directly to consumers, and we will have to lay off some of our employees, or go out of business. Then our small town won't have said dealerships anymor…
There's also the way the business evolved. Manufacturers don't have unlimited funds to:
1) design cars
2) design factories
3) manufacture cars
4) retail cars
So somewhere along the line someone figured out that cars are somewhat commodity, same as clothing or food. A grocery store sells several brands of food and department stores sell several brands of clothing. Cars could be done the same way.
Manufacturers liked it because it allowed them to grow much faster by selling franchise licenses and use that money for design of cars, factories and to actually build cars. It's an all around win.
But eventually manufacturers grow to the point where they aren't starved for capital anymore, have good market penetration and growth starts to slow. So a natural next step is to cut out the middlemen (the dealers who have paid franchise fees) and start direct-to-consumer sales efforts. This idea didn't sit well with the dealers who had paid those franchise fees and might have assumed they could amortize them over many years.
So laws got passed preventing manufacturers from competing with the dealers that they had sold franchises to.
But Tesla has never sold anyone a franchise ever. They're not doing naughty things to their former customers (the dealers) because they've never had dealers.
REQUIRING them to sell only to dealers doesn't make sense unless you're worried about Ford doing some kind of shady restructuring to get themselves out of all their dealer contracts and to start selling direct to consumers.
Re: Trouble in Missouri
#49Earlier quoted context omitted.
You shouldn't have opened the dealership without an agreement with the manufacturer giving you exclusive rights to sell in your market for enough time to justify your investment.
How would that matter? You are bankrupt, so you'd be forced to sell the rights to pay back the bank.
Apologies: exclusivity and price guarantees.
Re: Trouble in Missouri
#50Earlier quoted context omitted.
I'm going to guess there's a pretty strong non-compete built into the standard dealership contract.
But there are many dealerships that have like ten different brands?
Yeah, definitely doesn't seem to be the case around here. Some local dealers are just one company, but some represent a vast quantity, e.g.: