VIEWPOINT - ANGER AT HONDA'S TERMINATION LETTER; PART TWO

I see that my response to Honda’s sudden axing of multiple L&G dealers last September proved to be the most read story in Service Dealer in 2020, indicating that the dealer/manufacturer relationship and the thorny issue of contracts touches a real nerve.

 

If you recall, Honda summarily issued termination notices to 50 dealers, effective 31 December 2020 without any advance consultation or discussion. It came as a bolt from the blue to most of them. I described their handling of the sacking as disrespectful to dealers who had been their partners for many years.

   

Now a fresh insult. Those dealers affected have been sent a Termination letter with threatening instructions sent by First Class Recorded Delivery, but incorrectly dated 5 January 2020.

 

The letter is addressed to ‘Dear Franchise Partner’ (although the franchise had formally terminated on 31 December 2020), instructed the sacked dealers to discontinue using any Honda trademarks, trade names etc covered by its Intellectual Property Rights and to destroy or return to Honda (at the dealers expense) any signs, instructions books, technical pamphlets, catalogues, documents, paperwork or examples- within 14 days or risk legal infringement.

 

Furthermore, at the same time Honda sent letters directly to the customers of the sacked dealers confirming the removal of their franchise and simply directed them to their website for alternative dealers ‘to service or repair your Honda product’, adding ‘we apologise for any inconvenience’.

 

There was no explanation or rationale given, and one dealer has already had a phone calls asking if he is ‘going bust’?

 

He said, “I’m angry and also very saddened. We’ve lived and breathed Honda for over 30 years. We looked after their products and put them right at our expense if not covered by warranty, including many machines that had been bought on-line. When I got the termination letter in September, without any warning, I felt physically sick.

 

"We’ve always played the game, registering machines when many non-specialist outlets would not have done so, and they kick us in the teeth by writing to OUR customers, planting a seed of doubt that we might have done something wrong. To me Honda are the Power of Nightmares.”

 

Strong words. Like most of you, when I get a letter addressed to Dear Homeowner, it goes straight in the bin.

 

In all my many years covering this industry, I have never come across such a callous, uncaring, unprofessional approach to ending a business partnership as that displayed here by Honda. To address a dealer who has spent thousands upon thousands of pounds with your company over the years, promoted, sold and serviced your products as ‘Dear Franchise Partner’ is quite unforgivable – and then to put the wrong date adds insult to injury.

 

But that’s only the tip of the issue. I understand that this dealer still has over £10,000 worth of machines to sell. To comply with the instructions in the letter, it would appear that he cannot display with Honda logos nor advertise these machines that he has paid for in good faith, if he is not to infringe Honda’s Intellectual Property Rights with all its threatened penalties.

  

I’m no lawyer, but that would seem to constitute restraint of trade.

 

Most dealers ‘do the right thing’. They fill in registration cards and hand over details of their customers to manufacturers whereas many non-specialist sellers do not. Honda know that in such cases, their authorised dealers are obligated to put things right.

 

Here, Honda has misused the word Partner.  They use it with the implication that there is, or was, a mutually beneficial Partnership between two parties. Nonsense. Dealers signing dealership agreements, drawn up by international lawyers, must know that they have little or no protection against any negative action taken by the manufacturer.

 

I’ve asked Keith Christian, Director of BAGMA, for his view. He says, “Threatening legal action by letter if there is no compliance to their rules is just an insult to the integrity and long term support they have been accorded by the dealers they have sacked.”

 

He adds, “The Honda brand carries a huge amount of weight internationally and they are a well-respected company. Surely, they could be big enough and sensitive enough to handle the changes they have made more professionally and more sympathetically in respect of the dealers that have supported them over the years.”

 

In summary, it saddens me to write in these terms, because Honda have established a strong position in the OPE market over the years, during which time the division has been headed by some highly professional and approachable people.

 

Not anymore. Dealers tell me that any attempt for them to have a dialogue with Honda, either in September or recently, have been impossible. The organisation is now seemingly run by answering machines and malfunctioning mail merge communications!  

 

Obviously, dealers signed a contract and Honda are quite entitled to ensure that all its terms are complied with, but its the way they have gone about handling a livelihood endangering decision that is totally contrary to acceptable business relationships.