New Dealership Contracts

[TrickyNicky]

I have been browsing and contacting boat advertisements for a couple years. I am located in Canada and the US prices are very appealing. Just today I received 5 emails from different dealerships stating that under there new contract with malibu they cannot sell outside of there designated area.

Has anyone heard of this?

Any Comments?

[JeffS]

If that restriction is in there, it has to be worded very carefully and creatively because the concept of limiting trade areas is illegal and a federal offense in and within the United States. With that said - though I don't doubt that there is some attempt by the mfr limit trade area creatively included in dealership agreements, I think your problem is more international.

It's not unusual nor illegal that I know of to limit a dealer to sales within the United States. Lots of export, VAT, duty, etc responsibilities that have to be adhered to. Taxation of product sold in to Canada from the U.S. is a big issue as I'm sure you know. And Canada doesn't have a sense of humor about it that they know of.

[TrickyNicky]

If that restriction is in there, it has to be worded very carefully and creatively because the concept of limiting trade areas is illegal and a federal offense in and within the United States. With that said - though I don't doubt that there is some attempt by the mfr limit trade area creatively included in dealership agreements, I think your problem is more international.

It's not unusual nor illegal that I know of to limit a dealer to sales within the United States. Lots of export, VAT, duty, etc responsibilities that have to be adhered to. Taxation of product sold in to Canada from the U.S. is a big issue as I'm sure you know. And Canada doesn't have a sense of humor about it that they know of.

No that would no surprise me as much. I got a response saying "I really appreciate your enquiry, but my contract with Malibu does not allow me to sell new Malibu Boats outside of Northern California."

[WakeVA]

No that would no surprise me as much. I got a response saying "I really appreciate your enquiry, but my contract with Malibu does not allow me to sell new Malibu Boats outside of Northern California."

I agree that unless it is carefully worded in the fine print this is illegal and would be covered under the laws regarding price fixing.

[Bill_AirJunky]

What if the guarantees came from the dealer, not from the manufacturer?

I've never bought a new boat. Always bought a used one. And always bought it from a dealer out of my area.

[Sixball]

I believe it is correct A dealer can not sell out of his area (New)

[bennekm]

I ran into the same problem. Came to agreement with a dealer in TN for a '09 23 LSV and when the paperwork was put in front of the owner, the owner contacted Malibu and came back and said the only way I could get the boat is if my local dealership purchased it from them. I know some dealerships feel this contractual arrangement does not apply to left-over boats (However they will pay your local dealership a service fee to service your boat)....both most do abide by it. I called ~10 dealerships on left-overs and only 2 were willing to sell me a boat...and who knows, it could be similar to my exerience with the dealership in TN...when the paperwork gets written-up, the deal falls apart.

As for legality of this, since it is all Malibu dealerships (Assuming franchised), it is fully legal from my understanding. If two different companies were breaking up territories (i.e. Malibu agreed with Mastercraft that each would only sell in particular geographies), then it would be illegal. However, any company can choose to break-up geographies as they see fit....the anti-competition laws do not apply as they see Malibu as 1 company and this does not impact competition from competitive companies. At least that is what I have learned from all of the legal training I have had to take at work.

At the end of the day...it inflates prices for all of us since you can't shop the dealerships for the best price, eliminates the possibility of finding a good deal on a left-over (Unless you are lucky and your local dealership has exactly what you are looking for), and gives dealerships too much leverage as us Malibu loyalists can't really go anywhere else. On the flip side, with this economy, it probably helps dealerships stay in business since the volume of these boats are so low and they need to maximize revenue on each sale (And we need the dealerships to stay in business). So what does this mean....prices are inflated initially which inflates resale values. Look at used '08's and '09's. I was looking at 23 LSV's and they are still in the mid to high $50's, with some in the $60's! Had I been able to get the deal in TN, I was looking at low $60's for a brand new 23 LSV loaded (Probably near dealer cost). But since I nor anybody else outside of TN can buy this boat, I'm stuck buying a new 2010 from my local dealership or finding a used boat. So I took the bullet and my 2010 is being sprayed this week.