94-000402 Terry Ford Company And Ford Motor Company vs. Hollywood Ford, Inc., And Department Of Highway Safety And Motor Vehicles Status: Closed Recommended Order on Tuesday, June 13, 1995.

Summary: Application for relocation of dealership met statutory requirements/ inadequacy of representation shown/standing not shown.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TERRY FORD COMPANY and )

FORD MOTOR COMPANY, )

)

Petitioners, )

vs. ) CASE NO. 94-0402

)

HOLLYWOOD FORD, INC., and )

DEPARTMENT OF HIGHWAY SAFETY )

AND MOTOR VEHICLES, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in this case before

Errol H. Powell, a duly designated Hearing Officer of the Division of

Administrative Hearings on December 19-22, 1994, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Dean Bunch, Esquire

FORD MOTOR Cabannis & Burke, P.A.

COMPANY 909 East Park Avenue

Tallahassee, Florida 32301

For Respondent: Joseph S. Geller, Esquire

HOLLYWOOD Peggy Fisher, Esquire

FORD, INC. Geller, Geller, Burton & Garfinkel

1815 Griffin Road, Suite 403

Dania, Florida 33004

STATEMENT OF THE ISSUE

The issue for determination is whether the requirements of Section 320.642,

Florida Statutes, are satisfied regarding the protest to the relocation of an

existing Ford dealer.

PRELIMINARY STATEMENT

By Notice of Publication in December 1993, Hollywood Ford, Inc. (Respondent

Hollywood Ford), was notified of the intent by Ford Motor Company (Petitioner

Ford) to relocate Terry Ford Company (Terry Ford). By letter dated January 18,

1994, Respondent Hollywood Ford notified the Department of Highway Safety and

Motor Vehicles (DHSMV) of its protest against the relocation of Terry Ford on

the grounds that:

1. The proposed relocation would be within

12.5 miles of Respondent Hollywood Ford;

2. At least 25 percent of Respondent Hollywood

Ford's retail sales have been to persons within

12.5 miles of the proposed relocation during any

12-month period of the 36-month period immediately

preceding December 1993;

3. The proposed relocation is farthest from the

present location of Terry Ford than from the

present location of Respondent Hollywood Ford; and

4. Even though Petitioner Ford promised the prior

owner of Respondent Hollywood Ford that his dealer-

ship should be relocated to the proposed relocation,

this same promise/offer was not made to the current

dealer operator of Respondent Hollywood Ford because

the current dealer operator is a minority

[Black/African-American].

On January 21, 1994, this matter was referred by the DHSMV to the Division

of Administrative Hearings. A formal hearing was scheduled on December 19-22,

1994, pursuant to notice.

At the hearing, Petitioner Ford presented the testimony of two witnesses

and entered one composite exhibit into evidence. 1/ Respondent Hollywood Ford

presented the testimony of two witnesses (one by telephone testimony) and

entered six exhibits into evidence.

A transcript of the formal hearing was ordered. At the request of the

parties, the time for filing posthearing submissions was set for more than ten

days following the filing of the hearing transcript. Several extensions of time

were granted beyond the time originally set for posthearing submissions. The

parties submitted proposed findings of fact which have been addressed in the

appendix to this recommended order.

FINDINGS OF FACT

1. Terry Ford Company (Terry Ford) is an existing dealer of Ford Motor

Company (Petitioner Ford), selling Ford cars and light trucks. Terry Ford is

presently located at 1000 North Federal Highway, Pompano Beach, Broward County,

Florida.

2. Hollywood Ford, Inc. (Respondent Hollywood Ford), is also an existing

dealer of Petitioner Ford, selling Ford cars and light trucks. Respondent

Hollywood Ford is presently located at 1200 North Federal Highway, Hollywood,

Broward County, Florida.

3. Terry Ford and Respondent Hollywood Ford sell the same line-make motor

vehicles.

4. In December 1993, Petitioner Ford notified the Department of Highway

Safety and Motor Vehicles of its intent to relocate Terry Ford to the northeast

corner of the intersection of Sunrise Boulevard and the Sawgrass Expressway in

Broward County, referred to as the Sawgrass location. In December 1993, a

notice of Petitioner Ford's proposed relocation of Terry Ford was published.

STANDING

5. The population of Broward County is more than 300,000.

6. The distance from Respondent Hollywood Ford to the proposed relocation

at Sawgrass is 14.9 miles, measured in air distance, and 18 miles, measured in

driving distance. The measured distance is greater than 12.5 miles.

7. Respondent Hollywood Ford maintains the names and addresses of retail

sales customers who purchase new vehicles from it. The addresses are referred

to as registered addresses, and they indicate the address of the purchaser even

though the vehicle may be registered elsewhere. For any 12-month period of the

36-month period prior to the month in which the notice of the proposed

relocation was published, Respondent Hollywood Ford did not make 25 percent of

its retail sales of new vehicles to customers within 12.5 miles of the proposed

Sawgrass location. 2/

COMMUNITY OR TERRITORY

8. Section 320.642, Florida Statutes, does not provide specific criteria

for geographically defining community or territory. Consumer behavior data are

utilized in making decisions concerning the definition of community or

territory.

9. The existing dealers are contractually assigned areas of responsibility

by Petitioner Ford. The area of responsibility designated for Terry Ford and

Respondent Hollywood Ford is the Fort Lauderdale Multiple Point (MP). The MP is

comprised of Broward County. There are six existing dealers in Broward County.

10. Petitioner Ford assigns the six existing dealers in Broward County a

primary marketing area (PMA). A PMA is an area, or identifiable plot, in which

an existing or proposed resident dealer has or should have a competitive

advantage over same line-make dealers by virtue of the resident dealer's

location. Unless there is some overriding consideration, 3/ a census tract or

other geographic description, such as zip codes, where census tracts cannot be

used, defines PMAs. Petitioner Ford designates the collection of census tracts

within Broward County closest to each of the six existing dealers and the

proposed Sawgrass dealership as the closest dealer's PMAs.

11. Respondent Hollywood Ford's PMA is the area in which it is located and

has a geographic advantage.

12. The Sawgrass PMA is the area in which the proposed Terry Ford

dealership would have an advantage upon relocation. Currently, no dealers of

any line-make are in the Sawgrass PMA.

13. The sales patterns of the existing dealers show that the sales to

consumers residing in six census tracts to the northwest of the MP are dominated

by these dealers. Whereas, the sales patterns of non-MP dealers in Dade and

Palm Beach Counties to the north and south of Broward have very minimal

intrusion into the Fort Lauderdale MP. Accordingly, insufficient cross-sell

exists to warrant inclusion of the non-MP dealers in the community or territory.

14. Cross-sell is a dealer selling to customers not within its community

or territory.

15. Broward County, plus the six census tracts northwest of Broward

County, is a single interconnected market. The cross-sell data show that at

least 30 percent of the customers in each PMA purchase Fords from Ford dealers

within the community or territory, but outside the PMA where they reside, and

that at least 30 percent of the sales of each of the dealers go to customers

living outside the dealer's PMA but within the community or territory. There is

sufficient cross-sell among the PMAs but a limited amount of cross-sell to the

adjacent areas outside the MP.

16. For this case, the community or territory is Broward County, plus the

six census tracts northwest of Broward County. It is hereafter referred to as

the Broward Community or Territory.

ADEQUACY OF REPRESENTATION BY EXISTING DEALERS

17. A determination then must be made whether the existing franchise

dealers in the Broward Community or Territory are providing "adequate

representation" in the Broward Community or Territory. Section 320.642, Florida

Statutes, specifies eleven factors which may be considered in making such a

determination.

A. Development of a Reasonable Standard

Factor Number 3

The reasonably expected market penetration of

the line-make motor vehicle for the community

or territory involved, after consideration of

all factors which may affect said penetration,

including, but not limited to, demographic

factors such as age, income, education, size

class preference, product popularity, retail

lease transactions, or other factors affecting

sales to consumers of the community or territory.

18. Market penetration or share is a measure of the performance of a

dealer network in the community or territory as a whole, or in an identifiable

plot within the community or territory such as the Sawgrass PMA. Registration

data of all brands of vehicles are used.

19. Measuring market penetration in the identifiable plot or within the

community or territory requires first a determination of the appropriate market

as the standard for comparison. Historically, Petitioner Ford and other

automobile manufactures examine state and national average penetration, as well

as any local adjacent areas of adequate penetration, in making such a

determination.

20. In this case, the appropriate market to be used as the standard for

comparison is an adjacent local market area where Petitioner Ford is achieving

market share higher than the national and state share. For the Sawgrass PMA,

the appropriate market for the standard of comparison is what Petitioner Ford

refers to as the Mullinax PMA.

21. Petitioner Ford categories its vehicles of retail cars and light

trucks into seven segments: basic large, basic small, lower middle, luxury,

middle special, small special, and upper middle. Measuring Petitioner Ford's

penetration in each segment of the Mullinax PMA compared to the industry

available ( retail cars and light trucks) in each corresponding segment in the

Sawgrass PMA establishes an appropriate standard for what the Sawgrass PMA

should expect if it (Sawgrass PMA) was receiving adequate representation.

Measuring the penetration in this manner takes into account differences in

consumer preferences, i.e., product popularity, between the two markets of what

Petitioner Ford's penetration within the Sawgrass PMA should be as a whole.

22. For the Broward Community or Territory, the appropriate market to be

used as the standard for comparison is the adjacent local market area referred

to by Petitioner Ford as the West Palm Beach Community or Territory. Again,

using the segment analysis, the reasonably expected market share for Petitioner

Ford in the Broward Community or Territory is 20.8 percent which is a reasonable

minimum standard for the Broward Community or Territory.

23. The reasonably expected market share for Petitioner Ford in the

Sawgrass PMA, using this segment analysis, is 21 percent of the retail car and

light truck industry, which is a reasonable minimum standard for the Sawgrass

PMA.

24. Other demographic data of age and income characteristics reveal no

extraordinary differences in the demographic characteristics of the Sawgrass PMA

population versus the Mullinax PMA, or of the Broward Community or Territory

versus the West Palm Beach Community or Territory.

25. Furthermore, in numerous census tracts within the Broward Community or

Territory, Petitioner Ford is achieving the minimum standards expressed for the

Mullinax PMA and the Broward Community or Territory.

B. Performance of the Dealer Network in Comparison to the Standard.

Factor Number 11

The volume of registrations and service

business transacted by the existing dealer

or dealers of the same line-make in the

relevant community or territory of the

proposed dealership.

26. Using the Mullinax PMA as the standard, adjusting for local segment

popularity, in 1992, 1993 and the first six months of 1994 (annualized),

Petitioner Ford's penetration in the Sawgrass PMA, as compared with its expected

market share, was between 85.4 percent and 90.1 percent effective.

27. Using the West Palm Beach Community or Territory as the standard,

adjusting for local segment popularity, in 1992, 1993, and the first six months

of 1994 (annualized), Petitioner Ford's penetration in the Broward County

Community or Territory was as expected in 1992, but fell to between 89.1 percent

and 91.1 percent of what was expected for 1993 and the first half of 1994

(annualized), respectively.

anslating the percentages into the number of units required to be

registered in order to bring the Sawgrass PMA and the Broward Community or

Territory to the expected level, the 1993 and 1994 (annualized) shortfall for

Sawgrass was 413 units and 324 units, respectively, and for the Broward

Community or Territory as a whole was 2007 units and 1842 units, respectively.

29. Petitioner Ford's penetration was well below expected levels in 1992,

1993, and the first six months of 1994. The existing dealers are not providing

adequate inter-brand competition.

C. Likely Cause of the Inadequacy of Representation.

30. A point of inquiry now is the likely cause of the inadequate

representation being provided in the Sawgrass PMA and the Broward Community or

Territory by the existing dealers. For this purpose, economic and marketing

data are considered.

Factor Number 10

Whether the establishment or relocation of

the proposed dealership appears to be warranted

and justified based on economic and marketing

conditions pertinent to dealers competing in

the community or territory, including anticipated

future changes.

31. Both the Sawgrass PMA and Broward County have experienced substantial

growth in population and household trends, including driving age and new car

household purchase increases, from 1980 to 1994. This increase in population

and household trends is expected to continue through 1999.

32. The Sawgrass PMA contains a reasonable mix of upper and middle income

areas. The expected range of household income of the average or median new car

buyer, including a Ford buyer, is around $50,000, with most new vehicle

purchasers of any brand having household incomes greater than $15,000. These

demographic factors indicate that the Sawgrass PMA is conducive to selling new

motor vehicles.

33. In Broward County between 1980 and 1994, average annual employment

increased by approximately 160,000 jobs indicating a generally healthy economy

and substantial growth.

34. Increased population results in increased utilization of roads and

increased road congestion leading to greater travel time to get between

dealerships, which results in convenience having a greater impact in the minds

of consumers. The impact of convenience means an increased opportunity for the

Sawgrass PMA.

35. All of the changes and the reasonably expected future changes indicate

that the inadequate representation is the result of substantial and reasonably

expected continued growth. Furthermore, these factors indicate that

representation in the Sawgrass PMA is needed.

Factors Number 6 and 9

Distance, travel time, traffic patterns, and

accessibility between the existing dealer or

dealers of the same line-make and the location

of the proposed additional or relocated dealer.

Whether there is adequate interbrand and

intrabrand competition with respect to said

line-make in the community or territory and

adequately convenient consumer care for the

motor vehicles of the line-make, including the

adequacy of sales and service facilities.

36. Petitioner Ford's ability to achieve a reasonable and adequate level

of representation is directly related to how well the size of its dealer network

keeps pace with expanding sales opportunities. In West Palm Beach, where

Petitioner Ford is receiving adequate representation, Petitioner Ford has 7.2

percent of the franchises; whereas, in Broward County, Petitioner Ford has 6.3

percent of the franchises. In order to have the same share of the franchises in

Broward County as in West Palm Beach, Petitioner Ford must have 6.8 dealerships

in Broward. Presently, Petitioner Ford has 6 dealerships in Broward and

proposes to relocate a dealership, Terry Ford, instead of adding a new

dealership.

37. Based on the size of the market, measured in comparison to West Palm

Beach and the number of Ford dealers and competitors located there, relocating

Terry Ford within the Sawgrass PMA would provide greater convenience to

customers. Relocation would offer the levels of customer convenience which are

necessary for Petitioner Ford to achieve reasonably expected market penetration.

38. In comparison to West Palm Beach where Petitioner Ford's

representation is adequate, without a dealer in the Sawgrass PMA, consumers in

the Sawgrass PMA would be 7.4 miles on average from the nearest Ford dealer;

whereas, in West Palm Beach, consumers are 4.6 miles from the nearest Ford

dealer. However, with a dealer in the Sawgrass PMA, consumers would be 4.4

miles on average from the nearest Ford dealer which is on par with West Palm

Beach.

39. As for the Broward Community or Territory, relocating to the Sawgrass

PMA would maximize customer convenience there.

40. Also, distance and proximity have an effect on the ability of all

Petitioner Ford's dealers in the Broward Community or Territory to adequately

represent Petitioner Ford. The market share of each dealer decreases as the

distance from the dealership location increases.

41. Relocating the existing Petitioner Ford dealer would provide increased

interbrand and intrabrand competition. Such action would also provide greater

convenient consumer care.

D. Impact of the Relocation of the Proposed Dealer.

Factor Number 1

The impact of the establishment of the proposed

or relocated dealer on the consumers, public

interest, existing dealers, and the licensee;

provided, however, that financial impact may

only be considered with respect to the protesting

dealer or dealers.

42. Relocation to the Sawgrass PMA will provide consumers in that area

with a more convenient location for access to new vehicles by Petitioner Ford

and with more convenient Petitioner Ford locations.

43. Presently, Terry Ford and Respondent Hollywood Ford are not that

competitive and the relocation would not alter their competitive situation. As

to distance, the air distance from Respondent Hollywood Ford to the Sawgrass

location is 14.9 miles and from Respondent Hollywood Ford to Terry Ford is 15.5

miles; the driving distance is 18 miles and 19 miles, respectively, and the

driving time is 22 minutes and 25 minutes, respectively.

44. A large untapped opportunity for Petitioner Ford exists in the Broward

Community or Territory, and especially in the Sawgrass PMA. Relocating Terry

Ford would not decrease the sales of Respondent Hollywood Ford, but should

increase the sales opportunities of Respondent Hollywood Ford.

45. In 1993, there were a total of 4,845 units of lost opportunity to

Petitioner Ford dealers in Broward County. These units would be available to

Petitioner Ford dealers, including Respondent Hollywood Ford. Of this total,

2,375 units were gross registration loss in the Broward Community or Territory,

as measured in the census tracts which did not reach the reasonably expected

market penetration. Also, of the total units, 2,470 units were insell, i.e.,

units of Petitioner Ford sold by dealers outside Broward County (outside the

market) to customers inside Broward County (inside the market).

46. If Terry Ford performs at the relocation as it currently does at its

present location, Terry Ford will sell as many units as it presently does and

would, therefore, have no impact on the existing dealers, including Respondent

Hollywood Ford. However, if Terry Ford performs as does the average Broward

County dealer and increases its sales because of increased customer convenience,

using 1993 registration totals, Terry Ford would reasonably expect to sell 1,895

cars and light tracks. This expected number of sales would be an increase of

689 sales over its current level.

47. The projected 689 additional sales would come from the loss

opportunity which Petitioner Ford and its dealers are now experiencing because

of the mislocation of its dealers in the market. Using the total loss

opportunity (4,845 units), comprised of losses to Petitioner Ford because of the

failure of existing dealers to achieve the minimum expected market penetration

plus losses to the Broward County dealers because of insell from outside the

market, the additional sales of Terry Ford would be only 14.2 percent of the

existing opportunity.

48. As to Respondent Hollywood Ford specifically, Petitioner Ford has

offered Respondent Hollywood Ford the opportunity to relocate to the Pompano

PMA. If Respondent Hollywood Ford relocates to Pompano and performs like the

average dealer in Broward County, it would have an additional 1,448 sales over

what it currently does. Combining these additional sales with the projected

incremental sales of Terry Ford, performing as an average dealer, produces a

total increase of 2,137 sales, or 44 percent of the lost opportunity. The

remainder of the loss opportunity, consisting of over 2,000 units, would be

available for Petitioner Ford's other dealers, using more effective interbrand

competition.

49. There is no evidence to suggest a negative impact on Petitioner Ford's

existing dealers.

E. Investment of the Existing Dealers

Factor Number 2

The size and permanency of investment reasonably

made and reasonable obligations incurred by the

existing dealer or dealers to perform their

obligations under the dealer agreement.

50. There is no evidence to suggest that Respondent Hollywood Ford's

facility is inadequate.

51. However, the inadequate market penetration by Petitioner Ford in the

Sawgrass PMA shows that Petitioner Ford's dealers are not appropriately located

to serve the Sawgrass PMA.

F. Manufacturer's (Licensee's) Actions Regarding Opportunities for Growth

Factor Number 4

Any actions by the licensees in denying its

existing dealer or dealers of the same line-

make the opportunity for reasonable growth,

market expansion, or relocation, including

the availability of line-make vehicles in

keeping with the reasonable expectations of

the licensee in providing an adequate number

of dealers in the community or territory.

52. Petitioner Ford performed a market survey which recommended adding a

seventh dealer instead of relocating a dealer. Petitioner Ford's Regional Sales

Manager for the Orlando Region which includes Florida and parts of Alabama and

Georgia, decided to relocate a dealership in an effort to fulfill Petitioner

Ford's goal of working with the existing dealership, rather than adding

representation to fill the needs of the consuming public, before deciding to

seek additional representation. The Regional Manager's decision would allow the

current dealers the opportunity to fill the need for obtaining adequate and

convenient representation.

53. Neither Petitioner Ford nor Respondent Hollywood Ford dispute the

advantage to the decision of relocating a dealership in the Sawgrass PMA, rather

than adding a seventh dealership. However, Respondent Hollywood Ford contends

that it, rather than Terry Ford, should be relocated to the Sawgrass PMA.

54. In deciding which dealer to relocate, Petitioner Ford considered the

risk, in addition to the opportunity, for the relocated dealership. Typically,

in a green field site a dealer sustains losses for approximately two years

before building up parts and service business to affect the losses so it can

become profitable. A green field site is an area where there has not been a

dealer previously and there is no customer base established.

55. Terry Ford's dealership has the capacity, experience, capabilities and

proven successful track record for relocation which makes it a prime candidate

for relocation to the Sawgrass PMA. Moreover, Terry Ford has the financial

capacity to sustain anticipated start-up losses for the approximate two-year

start-up period.

56. Respondent Hollywood Ford's situation is much different. It is a

Dealer Development Corporation in Petitioner Ford's minority dealer program of

the Dealer Development Program (Program). In the Program, a dealership is

started with the majority of the capitalization being provided by Petitioner

Ford and becomes a Dealer Development Corporation. The owner becomes a

shareholder in the Dealer Development Corporation and becomes the Dealer

Development operator of the dealership. The Dealer Development operator has an

opportunity to buy out the Dealer Development Corporation when profits will

allow, which is usually within five years. This Program is one method by which

Petitioner Ford increases its minority dealerships.

57. The operator of Respondent Hollywood Ford is a minority, i.e.,

Black/African-American. He purchased his interest in the dealership in 1990.

Petitioner Ford's Regional Manager recruited him due to Petitioner Ford's

commitment to its minority dealer program of the Dealer Development Program.

58. Petitioner Ford's Regional Manager did not consider Respondent

Hollywood Ford as a likely candidate for relocation to the Sawgrass PMA. His

decision was based on the substantial need for capital in a start-up area and

the significant risk associated with relocation to a start-up area.

59. From 1991, which is the first full year of Respondent Hollywood Ford's

operation under the minority operator, through the first six months of 1994, the

total opportunity for sales increased for Respondent Hollywood Ford. The total

number of retail cars and light trucks registered to persons living in the

Hollywood PMA, which represents the total opportunity available to Respondent

Hollywood Ford, grew from 3,555 to an annualized rate of 5,708, which was an

increase of 60.5 percent. This rate of growth was faster than that experienced

by the Broward Community or Territory which was 56 percent.

60. In 1993, Petitioner Ford performed a market study which showed that

Respondent Hollywood Ford's market was in decline and was the smallest PMA,

i.e., offering the smallest sales opportunity in the market. Respondent

Hollywood Ford's market share of the total retail registrations available was

consistently lower, in virtually every distance ring moving away from the

dealership, than Petitioner Ford's other five dealers in the Broward Community

or Territory.

61. Out of the six existing Petitioner Ford dealerships in the Broward

Community or Territory, Respondent Hollywood Ford is the lowest performing

dealer. Respondent Hollywood Ford's performance has been the lowest even though

its operator has managed to make it a somewhat profitable dealership since he

became its operator.

62. Terry Ford has been profitable and has had outstanding customer

satisfaction which means that Petitioner Ford's image is strong and a customer-

base exists in Terry Ford's area. Terry Ford's growing market is projected to

continue to grow through 1999. Relocating Terry Ford to the Sawgrass PMA would

open an opportunity to replace Terry Ford in the Pompano PMA with another

dealer.

63. Petitioner Ford proposes to place Respondent Hollywood Ford in the

Pompano PMA, replacing Terry Ford. In comparison to sales potential, as

measured by total industry registrations of new retail cars and light trucks,

the Pompano PMA has been more than twice the size of the Hollywood PMA (6,027

registrations vs. 2,854 registrations, respectively). Petitioner Ford has

offered Respondent Hollywood Ford to relocate from the Hollywood PMA to the

Pompano PMA, but Respondent Hollywood Ford has rejected the offer.

64. Respondent Hollywood Ford contends that it, instead of Terry Ford,

should be offered to relocate to the Sawgrass PMA based upon Petitioner Ford

promising the previous owner of Respondent Hollywood Ford that he (the previous

owner) would get the Sawgrass PMA for the relocation of his Hollywood Ford

dealership. This offer was not made to the minority operator of Respondent

Hollywood Ford. Moreover, Respondent Hollywood Ford contends that Petitioner

Ford did not make the offer because the operator of Respondent Hollywood Ford is

a minority.

65. Respondent Hollywood Ford has failed to produce sufficient evidence to

support its position that the former owner of Respondent Hollywood Ford was

promised the Sawgrass PMA by Petitioner Ford for the relocation of his

dealership. Furthermore, Respondent Hollywood Ford has failed to produce

sufficient evidence that Petitioner Ford refused or failed to make the offer to

the operator of Respondent Hollywood Ford because the operator is a minority.

G. Coercion of the Dealers

Factor Number 5

Any attempts by the licensee to coerce the

existing dealer or dealers into consenting

to additional or relocated franchises of the

same line-make in the community or territory.

66. No evidence was presented to show that Petitioner Ford coerced any of

the existing dealers to consent to the relocation of Terry Ford to the Sawgrass

PMA.

67. However, Petitioner Ford's Regional Manager did inform the operator of

Respondent Hollywood Ford that the failure of Respondent Hollywood Ford to

accept the offer to relocate to the Pompano PMA would cause him (the Regional

Manager) to consider recommending to Petitioner Ford that his (operator of

Respondent Hollywood Ford) dealer operator contract be terminated. The Regional

Manager considered the relocation of Respondent Hollywood Ford to the Pompano

PMA as presenting significant sales and profit opportunity. For Respondent

Hollywood Ford to reject such relocation was considered by the Regional Manager

to not be in the best interest of either Respondent Hollywood Ford or Petitioner

Ford. The operator of Respondent Hollywood Ford rejected the offer to relocate

to the Pompano PMA, which caused the Regional Manager to consider the operator

to not be a team player. The Regional Manager recommended the termination of

Respondent Hollywood Ford's dealer operator contract. However, the Regional

Manager subsequently came to the conclusion that the operator's rejection was a

business decision by the operator even though it was a decision with which he

(the Regional Manager) did not agree. No evidence was presented to show that

the Regional Manager's conduct was a threat to the operator of Respondent

Hollywood Ford in an effort to force the operator to consent to Terry Ford

relocating to the Sawgrass PMA.

H. Other Concerns

Factor Number 7

Whether benefits to consumers will likely

occur from the establishment or relocation of

the dealership which the protesting dealer or

dealers prove cannot be obtained by other

geographic or demographic changes or expected

changes in the community or territory.

Factor Number 8

Whether the protesting dealer or dealers are

in substantial compliance with their dealer

agreement.

68. No evidence was presented by either party regarding Factors 7 and 8.

CONCLUSIONS OF LAW

69. The Division of Administrative Hearings has jurisdiction over the

subject matter of this proceeding and the parties thereto, pursuant to Section

120.57(1), Florida Statutes. The parties were duly noticed for the formal

hearing.

STANDING

70. Section 320.642, Florida Statutes, provides in pertinent part:

(3) An existing franchised motor vehicle

dealer or dealers shall have standing to

protest a proposed additional or relocated

motor vehicle dealer where the existing motor

vehicle dealer or dealers have a franchise

agreement for the same line-make vehicle to

be sold by the proposed additional or relocated

motor vehicle dealer and are physically located

so as to meet or satisfy any of the following

requirements or conditions:

* * *

(b) If the proposed additional or relocated

motor vehicle dealer is to be located in a

county with a population of more than 300,000

according to the most recent data of the United

States Census Bureau or the data of the Bureau

of Economic and Business Research of the Univer-

sity of Florida:

1. Any existing motor vehicle dealer or dealers

of the same line-make have a licensed franchise

location within a radius of 12.5 miles of the

location of the proposed additional or relocated

motor vehicle dealer; or

2. Any existing motor vehicle dealer or dealers

of the same line-make can establish that during

any 12-month period of the 36-month period preceding

the filing of the licensee's application for the

proposed dealership, such dealer or its predecessor

made 25 percent of its retail sales of new motor

vehicles to persons whose registered household

addresses were located within a radius of 12.5

miles of the location of the proposed additional

or relocated motor vehicle dealer; provided such

existing dealer is located in the same county or

any county contiguous to the county where the

additional or relocated dealer is proposed to be

located.

71. It is undisputed that Respondent Hollywood Ford is an existing dealer

of Petitioner Ford and has the same line-make vehicle to be sold by the proposed

relocated dealer, i.e., Terry Ford. Also, it is undisputed that Broward County,

which is the county in which the proposed relocated dealer will be located, has

a population in excess of 300,000.

72. However, Respondent Hollywood Ford has failed to demonstrate that it

has standing pursuant to Subsection 320.642(3)(b)1 or 2, Florida Statutes.

Respondent Hollywood Ford failed to show either that it was located within a

radius of 12.5 miles of the proposed relocation of Terry Ford or that, for any

12-month period of the 36-month period prior to November 1993, it made 25

percent of its retail sales to customers within a radius of 12.5 miles of the

proposed relocation of Terry Ford.

ADEQUACY OF REPRESENTATION OF EXISTING DEALERS IN THE COMMUNITY OR

TERRITORY

73. Assuming that Respondent Hollywood Ford has demonstrated that it has

standing, the next step is to examine the adequacy of representation by the

existing dealers of Petitioner Ford in the community or territory. Petitioner

Ford has the burden of demonstrating that the existing dealers provide

inadequate representation. Subsection 320.642(2)(a)2., Florida Statutes.

74. Subsection 320.642(2), Florida Statutes, provides in pertinent part:

(2)(a) An application for a motor vehicle

dealer license in any community or territory

shall be denied when:

1. A timely protest is filed by a presently

existing franchised motor vehicle dealer with

standing to protest as defined in subsection

(3); and

2. The licensee fails to show that the

existing franchised dealer or dealers who register

new motor vehicle retail sales or retail leases

of the same line-make in the community or territory

of the proposed dealership are not providing

adequate representation of such line-make motor

vehicles in such community or territory. The

burden of proof in establishing inadequate

representation shall be on the licensee.

(b) In determining whether the existing franch-

ised motor vehicle dealer or dealers are providing

adequate representation in the community or

territory for the line-make, the department may

consider evidence which may include, but is not

limited to:

1. The impact of the establishment of the

proposed or relocated dealer on the consumers,

public interest, existing dealers, and the

licensee; provided, however, that financial

impact may only be considered with respect to

the protesting dealer or dealers.

2. The size and permanency of investment

reasonably made and reasonable obligations

incurred by the existing dealer or dealers to

perform their obligations under the dealer

agreement.

3. The reasonably expected market penetration

of the line-make motor vehicle for the community

or territory involved, after consideration of all

factors which may affect said penetration,

including, but not limited to, demographic factors

such as age, income, education, size class

preference, product popularity, retail lease

transactions, or other factors affecting sales

to consumers of the community or territory.

4. Any actions by the licensees in denying

its existing dealer or dealers of the same line-

make the opportunity for reasonable growth,

market expansion, or relocation, including the

availability of line-make vehicles in keeping

with the reasonable expectations of the licensee

in providing an adequate number of dealers in

the community or territory.

5. Any attempts by the licensee to coerce the

existing dealer or dealers into consenting to

additional or relocated franchises of the same

line-make in the community or territory.

6. Distance, travel time, traffic patterns,

and accessibility between the existing dealer or

dealers of the same line-make and the location of

the proposed additional or relocated dealer.

7. Whether benefits to consumers will likely

occur from the establishment or relocation of the

dealership which the protesting dealer or dealers

prove cannot be obtained by other geographic or

demographic changes or expected changes in the

community or territory.

8. Whether the protesting dealer or dealers

are in substantial compliance with their dealer

agreement.

9. Whether there is adequate interbrand and

intrabrand competition with respect to said

line-make in the community or territory and

adequately convenient consumer care for the

motor vehicles of the line-make, including the

adequacy of sales and service facilities.

10. Whether the establishment or relocation

of the proposed dealership appears to be warranted

and justified based on economic and marketing

conditions pertinent to dealers competing in

the community or territory, including anticipated

future changes.

11. The volume of registrations and service

business transacted by the existing dealer or

dealers of the same line-make in the relevant

community or territory of the proposed dealership.

75. Section 320.642, provides no definition for "community or territory".

The community or territory is determined by the facts presented in each

individual case. Larry Dimmit Cadillac v. Seacrest Cadillac, Inc., 558 So.2d

136, 138 (Fla. 1st DCA 1990). A dealer's contractual area in the franchise

agreement is a material fact and entitled to great weight but is not conclusive

of what constitutes community or territory. Larry Dimmit Cadillac, supra.

Moreover, where exceptional circumstances exist, there may be a showing that a

separate market area exists within the contractual area and that the separate

market area is the community or territory. Larry Dimmit Cadillac, Supra.

76. Petitioner Ford has demonstrated that, based on consumer behavior and

cross-sell patterns, Broward County, plus the six census tracts northwest of

Broward County, constitutes the community or territory. Broward County forms a

well connected market, separate and distinct from the remainder of the South

Florida area to the north in Palm Beach County and the south in Dade County.

77. Petitioner Ford has met its burden in establishing that its existing

dealers are not providing adequate representation in the Broward Community or

Territory.

78. Regarding Respondent Hollywood Ford's argument that, because of the

legislative intent found in Section 320.605, Florida Statutes, 4/ and because

Respondent Hollywood Ford's operator is a minority, it should be relocated to

the Sawgrass PMA, instead of Terry Ford, the argument is not persuasive.

RECOMMENDATION

Based upon the foregoing Findings and Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter

a final order approving the application of Terry Ford, Inc., to relocate its

ford dealership to the northeast corner of the intersection of Sunrise Boulevard

and the Sawgrass Expressway in Broward County, Florida.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 13th day of

June 1995.

___________________________________

ERROL H. POWELL

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of June 1995

ENDNOTES

1/ The composite exhibit was the basis for the testimony by Petitioner Ford's

expert witness and consisted of 73 pages and an appendix.

2/ Respondent Hollywood Ford failed to produce credible evidence of registered

addresses within the prescribed percentage, distance and time period.

3/ An example of an overriding consideration is a natural or man-made barrier

or demonstrated consumer unwillingness to travel from one area to another as

verified by consumer behavior data.

4/ Section 320.605, Florida Statutes, provides:

320.605 Legislative intent.--It is the intent of the Legislature to protect

the public health, safety, and welfare of the citizens of the state by

regulating the licensing of motor vehicle dealers and manufacturers, maintaining

competition, providing consumer protection and fair trade and providing

minorities with opportunities for full participation as motor vehicle dealers.

(Emphasis added).

APPENDIX

The following rulings are made on the parties' proposed findings of fact:

Petitioner Ford Motor Company

1. Partially accepted in findings of fact 4 and 1.

2. Partially accepted in finding of fact 2. Also, see Preliminary

Statement.

3. See Preliminary Statement.

4. Partially accepted in finding of fact 5.

5. Partially accepted in finding of fact 6.

6. Partially accepted in finding of fact 7.

7-9, 22, 23, 35 and 40. Rejected as being argument, or conclusion of law.

10. Partially accepted in finding of fact 17.

11 and 12. Partially accepted in finding of fact 8.

13. Partially accepted in finding of fact 9.

14-16. Partially accepted in finding of fact 13.

17 and 20. Partially accepted in finding of fact 15.

18. Partially accepted in finding of fact 10.

19. Partially accepted in findings of fact 10, 11 and 12.

21. Partially accepted in findings of fact 15 and 16.

24. Partially accepted in finding of fact 17.

25, 32, 38, 48, 55 and 66-70. Rejected as being subordinate.

26. Partially accepted in finding of fact 18.

27. Partially accepted in finding of fact 19.

28. Partially accepted in finding of fact 20.

29. Partially accepted in finding of fact 21.

30. Partially accepted in finding of fact 23.

31. Partially accepted in finding of fact 22.

33. Partially accepted in finding of fact 24.

34. Partially accepted in finding of fact 25.

36. Partially accepted in findings of fact 26 and 27.

37. Partially accepted in finding of fact 28.

39. Partially accepted in finding of fact 29.

41. Partially accepted in finding of fact 30.

42 and 43. Partially accepted in finding of fact 31.

44. Partially accepted in finding of fact 34.

45. Partially accepted in finding of fact 32.

46. Partially accepted in finding of fact 33.

47. Partially accepted in finding of fact 35.

49 and 50. Partially accepted in finding of fact 36.

51. Partially accepted in finding of fact 37.

52 and 53. Partially accepted in finding of fact 38.

54. Partially accepted in finding of fact 39.

56. Partially accepted in finding of fact 40.

57. Partially accepted in finding of fact 41.

58. Partially accepted in finding of fact 42.

59. Partially accepted in finding of fact 43.

60. Partially accepted in finding of fact 44.

61. Partially accepted in finding of fact 45.

62 and 63. Partially accepted in finding of fact 46.

64. Partially accepted in finding of fact 47.

65. Partially accepted in finding of fact 48.

71. Partially accepted in finding of fact 49.

72. Partially accepted in findings of fact 50 and 51.

73. Partially accepted in finding of fact 53.

74. Partially accepted in finding of fact 64. Also, see Preliminary

Statement.

75. Partially accepted in finding of fact 65.

76. Partially accepted in findings of fact 52, 54, and 57.

77. Partially accepted in finding of fact 52.

78. Partially accepted in finding of fact 54.

79. Partially accepted in finding of fact 55.

80. Partially accepted in findings of fact 56, 57 and 58.

81. Partially accepted in finding of fact 59.

82. Partially accepted in finding of fact 60.

83. Partially accepted in finding of fact 62.

84. Partially accepted in findings of fact 62 and 63.

85. Partially accepted in findings of fact 61 and 63.

86. Rejected as subordinate, argument, or conclusion of law.

87-90. Partially accepted in findings of fact 66 and 67.

Respondent Hollywood Ford, Inc.

1-4, 6, 12, 16-19, 25, 27-31, 40, 50-56, 59, 63, 65-69, 80, 83, 85, 89,

105-107, 110, 123, 125, 138, 139, 145-147 and 150. Rejected as being

subordinate.

5 and 90. Partially accepted in findings of fact 56 and 57.

7. Partially accepted in finding of fact 4.

8 and 9. See Preliminary Statement.

10. See Statement of the Issue.

11. Partially accepted in finding of fact 52.

13-15, 23, 32-39, 41-48, 71, 72, 97, 99-101, 103, 104, 115, 116 and 118-

120. Rejected as being irrelevant, or unnecessary.

20-22, 24 and 26. Partially accepted in finding of fact 56.

49. Partially accepted in finding of fact 57.

57 and 58. Partially accepted in finding of fact 62.

60, 70, 78, 79, 82, 84, 86-88, 92, 95, 96, 124, 143 and 152-160. Rejected

as being argument, or conclusion of law.

61, 111 and 112. Partially accepted in finding of fact 67.

62. Partially accepted in findings of fact 55 and 61.

64. Partially accepted in findings of fact 9 and 10.

73, 75 and 76. Partially accepted in finding of fact 60.

74, 98 and 135. Rejected as being irrelevant, unnecessary, argument, or

conclusion of law.

77. Rejected as being subordinate, irrelevant, or unnecessary.

81, 113 and 126-133. Rejected as not supported by the more credible

evidence.

91. Partially accepted in finding of fact 55.

93 and 94. Partially accepted in finding of fact 58.

102 and 134. Partially accepted in finding of fact 46.

108. Partially accepted in findings of fact 37, 39 and 41.

109. Partially accepted in finding of fact 12.

114. Partially accepted in findings of fact 31, 48, 63 and 67.

117. Rejected as argument, not supported by the more credible evidence, or

conclusion of law.

121. Partially accepted in finding of fact 31.

122. Partially accepted in findings of fact 62 and 63.

136. Partially accepted in findings of fact 20 and 22.

137. Partially accepted in findings of fact 18-25 and 45-48.

140. Partially accepted in finding of fact 20.

141. Partially accepted in finding of fact 13.

142. Partially accepted in findings of fact 18-29, 36-39 and 45-48.

144. Partially accepted in findings of fact 36-39.

148. Partially accepted in finding of fact 38.

149 and 151. Partially accepted in findings of fact 36-38.

NOTE: Where a proposed finding of fact has been partially accepted, the

remainder has been rejected as being irrelevant, unnecessary, cumulative, not

supported by the more credible evidence, argument, or a conclusion of law.

COPIES FURNISHED:

Dean Bunch, Esquire

Cabannis & Burke, P.A.

909 East Park Avenue

Tallahassee, Florida 32301

Joseph S. Geller, Esquire

Peggy Fisher, Esquire

Geller, Geller, Burton & Garfinkel

1815 Griffin Road, Suite 403

Dania, Florida 33004

Charles J. Brantley, Director

Division of Motor Vehicles

Room B439, Neil Kirkman Building

Tallahassee, Florida 32399-0500

Enoch Jon Whitney

General Counsel

Neil Kirkman Building

Tallahassee, Forida 32399-0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.