In case you missed it in the Q1 issue of the DrivingSales DealerExec magazine, Maryann Keller-principal of the automotive consultancy Maryann Keller & Associates, shared her experience at an FTC panel discussion on direct vehicle sales and the franchise law system late last year. She shares her experience and how the FTC is skewing the facts by looking at incomplete and insufficient data. Check it out:

Exposing FTC Biases Against Dealership Franchise Laws by Maryann Keller

In November the Federal Trade Commission invited me to participate in a panel discussion on direct sales of vehicles. This would be one session in an all day event exploring state franchise laws. Before the event, I was assured both sides would be equally represented and have the same opportunity to express their opinions on RMAs and terminations, warranty reimbursement and direct sales. But the Jan. 19 event was anything but fair, with participants opposed to franchise laws (including all of the panel moderators and academics) outnumbering those in favor, by about 3 to 1.

The situation confronting dealers is challenging because of the parties aligned against franchise laws. The FTC’s opposition to franchise laws has dominated the public debate. The agency relies upon the “research” of their chosen academics that delight in uttering inflammatory phrases like “dealer lobby,” “crony capitalism” and “monopoly pricing power.” It doesn’t matter that these economists demonstrate total ignorance of the operation of the automobile and vehicle distribution industries. Nevertheless, this agency and its academic cohorts influence decision makers and the general public. As a society, we automatically assign credibility to university professors and assume neutrality in scholarly research. By contrast, advocates in favor of franchise laws are fewer and often linked to dealers through their associations or legal representatives and therefore are seen as protecting the status quo for their own benefit. The media also hold an antidealer bias and repeat the claims of the pseudo research.

The second keynote speaker of the morning, Francine Lafontaine, the former FTC Director of the Bureau of Economics, provided us with examples of her academic sloppiness. In 2010, Ms. Lafontaine published her report “State Franchise Laws, Dealer Terminations, and the Auto Crisis.” She concluded in that report that having too many dealers caused market share losses, which contributed to the bankruptcies of GM and Chrysler. Apparently Ms. Lafontaine reached her conclusions without reading any of the many books or the business press that chronicled decades of inferior products, failed acquisitions and investments, expensive labor contracts, stock buy backs, etc.

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