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Jared Hamilton
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Brian Pasch

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Franchise Dealers Are Being Transformed Into Internet Eunuchs

As I recently posted, the OEM compliance officers are cracking down on franchise dealers and independent third parties from owning domain names that include OEM names.   I think we have a case of Spring fever that is reaching epidemic proportions.

In the case of franchise dealers, the OEM's are holding back real money to force their franchise dealers to turn over "non-compliant" domain names. 

For example, if ABC Toyota located in Dallas Texas purchased domains and and hosted inventory websites on these domains, these dealers are being forced to take down these sites and turn over the domains to the OEM.

The compliance evangelists as I stated in a previous post are causing third party lead generators and independent websites to rejoice.  Why? Because by binding the creative hands of franchise dealers, they must rely on third parties to increase the exposure for the cars the need to sell.

Franchise dealers are screwed unless the dealer advisory board gets united and forces an honest discussion with their OEM's.  OEM's have to understand, as I started in my previous post, that dealers can purchase radio, TV, billboards, and print media across PMA lines to increase their visibility but they can't operate a domain or even if Trenton is in their PMA? 

Am I the only one that sees this crazy double standard?  The irony is that an independant service center CAN own and show up on Page One in Google search as long as the site does not use the Toyota logo or confuse the public that it's a franchise service center!!

I will volunteer to visit any OEM marketing team to discuss their restrictions on multiple dealer owned websites that contain the OEM name. I would love to share my thoughts why current policies are  fueling higher marketing costs, aiding their competition, and restricting healthy competition. 

There is a balance that I have in mind, however the pendulum is swinging far right at the moment.

Are Independent Dealers Being Attacked?

The caffeine induced OEM lawyers are also going after independent car dealers, advertising portals, and third party lead collectors that use the OEM name in a domain.  I just want to make members of this community aware of this attack on free trade and entrepreneurs.

The OEM lawyers are also sending out bullying letters without disclosing the case law I cite below.

For independent dealers and third party lead generation companies, there is good news.  There is case law that shows that owning a domain name that includes an OEM word is not against the law

The key is that the website should NOT have the OEM logo on the website.  Also, the website design should NOT confuse the public that the OEM is endorsing the independent website.  In simple terms, don't make the site look like the OEM's authorized template design.

Here is a summary of a famous case that made Toyota take a step back in their aggressive attacks on free trade on the Internet.  The source of this article is on Traverse Legal's website.

Lexus Domain Lawsuit

In this recent trademark-infringement lawsuit, Plaintiff Toyota brought suit against Farzad and Lisa Tabari for using the Toyota’s mark ‘LEXUS’ in 2 domain names that advertised the Defendants’ auto brokerage services ( and

The court of appeals ruled in favor of Defendants’ and against the injunction preventing their use of ‘LEXUS’ anywhere in the domain names used for their auto brokerage service.

Procedural History;

The district court found trademark infringement and ordered the defendants to cease using the domain names ( and and enjoined them from future use of the ‘LEXUS’ trademark in connection with any other domain name.

On appeal, the U.S. Court of Appeals for the Ninth Circuit vacated and remanded the district court’s decision. It held that the district court’s injunction was overbroad because the court failed to properly apply the nominative ‘fair use’ doctrine.

As an Internet Lawyer will tell you, the ‘fair use’ doctrine provides that any use of a third party’s trademark does not constitute infringement if; the plaintiff’s product or service is not readily identifiable without use of the mark, no more of the mark is used than is necessary, and the use of the mark does not falsely suggest a sponsorship or endorsement.


The Ninth Circuit Court of Appeals held, “at the very least, the injunction must be modified to allow some use of the Lexus mark in domain names by the Tabaris.”

The July 20, 2010 article “Use of another’s trademark in domain name may be permissible as a nominative fair use” provides a useful tip to Website owners wishing to employ the use of a third party trademark without incurring a trademark infringement lawsuit;

TIP: When using a third party’s trademark to refer to the third party’s goods or describe your own goods, be sure that the goods are not readily identifiable without use of the mark, that you use no more of the mark than necessary, and that you do not falsely suggest a sponsorship or endorsement by the trademark holder.”

For important related articles on the fair use doctrine;

Trademark Fair Use: Some Guidelines When Making a Nominative Use of Another’s Trademark

What is The Takeaway?

If independent dealers and third parties can leverage organic search and test multiple website designs to increase conversion or visibility, why not franchise dealers?  Why should franchise dealers not be allowed to own multiple domains that include the OEM name to promote sales, service, parts, and warranty plans that include town names in their PMA? Their state name?  Their county name?

To be fair, a Lexus dealer called "ABC Lexus of Dallas" can own and operate "ABC Luxury Cars" but they can't use the OEM name or logo.  They can't operate a website called "ABC Certified Preowned Lexus" only their approved name of "ABC Lexus of My Town".

It gets even crazier.  Now OEM's are locking down what content dealers can create on their own sites.

This week there has been a flurry of odd activity.  One OEM mandated website provider is telling dealers they can not add new content pages, like pages for upcoming 2012 models, because only OEM content can be used. 

I thought they were joking but they were not!  There was NO ETA on when the "new and approved" content was coming, but they were not going to assist the dealer to create more blank pages for their own website so the dealer's content writers could complete the page build. This is scary stuff.

It seems that unless franchise dealers start to wake up, every franchise dealer will have a cookie cutter online presence with no real creativity in content.  I get the impression that OEM compliance teams think that franchise dealers are stupid and will screw up OEM branding so they have decided to clamp down on any online creativity.

I think we should consider calling franchise dealers by a more accurate term: "Internet Eunuch"

The case law suggests that independent dealers can create microsites using OEM names but franchise dealers can not.  Go figure. This can really change the online landscape now that OEM's are hammering their eunuch's.

Since I didn't get much feedback from my previous post post, does this get anyone's interest???



Adam Ross
It gets my interest. The dealer should have a right to purchase a domain name that includes the manufacturer's name - they paid for the franchise agreement and the right to market themselves as a dealer of that brand, both on and offline. The only manufacturer that has a case would be Lexus because of the "Covenant". The law seems to be backwards on this one, as you point out.
Dennis Galbraith
This is very good research Brian, and a clear call to action. Dealers need to be able to align their marketing with the way consumers want to shop. We are a transient society. Every urban area has a segment of shoppers who are new to the community. They will search to find the dealers in their area, and having the right URL remains a critical advantage in those search results. My hypothesis is that vehicle owners new to a community typically search for service on their existing make before shopping for a new vehicle. If the local franchised dealer cannot compete with the local independent service centers online, the relationship between the consumer and the brand is at risk. OEMs should think this through. Spending billions of dollars on TV ads won't make up for driving an online wedge between owners of the brand and the dealer network that serves them.
Joey Abna
This drives me insane. Dealers are graded on everything from CSI, Retention, Response Times, Facilities, Market Share and the list goes on. The internet is a great tool for helping improve all of these areas but restricting a dealer to one cookie cutter website does not improve anything. The OEM and the Dealer should be the trusted online sources for information on a brand. The OEM can't do it with one site and neither can the dealer. We need each other to further both of our interests. When the dealer and the OEM can't play nice together it opens the door wider for the third parties to fill the void. As part of this whole discussion OEMs should really think hard about putting all of their eggs in one basket when it comes to choosing their preferred providers of digital products. Some of these choices adversely effects the ability of a dealer to compete in their market. So, if you are a dealer that is restricted to only one website and that platform has shortcomings that make it hard for you to compete you are hosed. OEMs should consider some kind of standard that the providers can all adhere to and give dealers more flexibility and choice and still maintain the relationship with the OEM services.
Eric Miltsch
Great stuff Brian - thanks for sharing. The OEM's are choking themselves because of someone in their Ivory Tower decided to "make a policy" - policy that could cripple the distribution channel they so desperately need.
Jim Bell
Yikes! Thanks for the info Brian. I have to wonder how long it takes them to come to me for url's that I have micro sites for. If in my case Honda doesn't want doesn't own certain url's, I will grab them that has to do with Honda and my city, state, etc. You think they will come to me for

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