One brand makes palms sweat

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The push by some manufacturers for dealers to carry only one brand of boats received a major setback recently. The announcement by Brunswick Corp. that it will stop producing 4 boat lines brings into sharp focus whether it’s in the best interest of dealers to embrace a one brand business model.

Brunswick recently notified its dealers there will be no 2009 models of its fishing brands -- Sea Pro, Sea Boss, Palmetto and Laguna. Production will permanently end by July 1. The announcement came as a pretty big surprise. After all, we’re not talking about some relatively small builders. Most observers would likely assume such a thing wouldn’t happen at Brunswick, the industry leader. But it sure makes the concern for being a one brand dealer even more compelling.

Certainly from a manufacturer’s prospective, having a one brand dealer offers advantages. Among them, the builder gets 100 percent of the dealer’s available credit; complete attention to selling that single line and, theoretically, a stronger dealer relationship.

For the dealer, one brand has benefits, too. For example, it means less models to deal with, not as many parts to stock, less time away from the store for training and meetings, better warranty handling (maybe), among others. But is putting all the eggs in one basket worth the risk? Certainly the Brunswick action dramatically emphasizes the fact that at any time a manufacturer, even one this big, can unilaterally opt to close up shop, leaving the dealer hanging.

The risk to dealers is even more obvious when we consider that Dealer Agreements essentially allow the manufacturer to do anything he chooses; there's no reasonable long-term advance notification requirement and no provisions for compensation or assistance for the dealer. With Agreements like that, it’s not rocket science to understand why dealers are not warm to the idea of investing in single brands.

In fairness, it has been reported Brunswick is providing the effected dealers with sales incentives (rebates) to help move their inventories. It seems to me, that is the least they can do. Hopefully, they’re also considering the repurchasing of boats left in inventory after July 1, along with parts, signs and special tools, if any.

That said, however, the fact that even the industry-recommended 3-year Dealer Agreements do not provide any protection or help for dealers under such circumstances should give sweaty palms to any dealer pondering a one brand deal.

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