From the Desk of Jerry Abboud, Executive Director

Many of you may have noticed changes at the PDAC website www.pdaco.org this month as well as different formats for our email communications. This is all part of our campaign to keep our members and all Colorado powersport dealerships informed of what the PDAC is doing around the state. From now on, you'll be receiving a monthly newsletter from the PDAC packed with items that we think may affect you and your customers. If you have any news or items that you think may interest other PDAC members, we'd love to hear about it so please email them to us at info@pdaco.org



Lawyers Having a Field day at the Capitol
With the Democrats in control of both Houses and a democrat as governor in Colorado, the politically driven legislative agenda has swung back to create a more difficult environment for small business. A good bit of this is driven the Colorado Trial Lawyers Association. Having had Tort Reform measures and other strategies limit jury awards and reduce frivolous litigation, the shoe is on the other foot. One prime example is Senate Bill-117. In cases where employees sue under unfair employment practices or on the basis of discrimination, the current statute provides the prevailing party with attorney fees. The new legislation on its way to Governor Ritter allows only for an award of attorney fees to the Plaintiff. This means a frivolous suit can be brought; a business can successfully fight it and still be stuck with attorney fees. It does not apply to businesses with 15 or fewer employees. Will Governor Ritter who ran on a platform of supporting small business sign the bill? It is an indicator of things to come.

Like wise, House Bill-1247 requires an employee to receive 3 times the amount of improperly withheld wages where the current statute has a 50% penalty. Trail lawyers work on a contingent fee basis in many such cases. So if the governor signs this bill be keenly aware when an employee leaves and what they are owed. There are at least 7 more bills that affect litigation in the process, all of which hurt small business and all of which continue to run right through the system despite the out cry from small businesses representatives. Will this same cadre of people give something back to the business community? Time will tell if health insurance becomes more affordable and the crushing weight of unnecessary government regulation is eased. Right now, small business is going to have to be vigilant. This is a very good time to have your insurance coverage reviewed. From employee discrimination to garage keepers. Wait until the session ends and have your policy reviewed. And please let us know if the 2007 General Assembly’s actions create a spike in your insurance premiums. PDAC will continue to work with the small business community to slow the bleeding and bring legislation like House Bill-1081 forward to offset difficulties in the business climate.

Speaking of House Bill-1081, it is going well and provides franchise protection for powersports dealers by way of licensing. Relevant market areas would apply, fly by night operators selling junk with no parts or service or warranty backup will find their business ethics challenged by a strong licensing theme. Consumers will find the protection they need while having the Dealer Board investigate consumer issues. Dealers and consumers will find the rules governing sales of street legal vehicles and non-street legal product under the same regulation. (don’t worry, issues of non- titled vehicles have not been forced into the MV model; titles are just not a part of the process at this time. But next year look for a title to file your lien and make sure the stolen vehicles become harder to pedal to an unsuspecting dealer.


Update on Senate Bill-193
Senate Bill-193, which created $50,000 personal injury coverage for all vehicles including motorcycles, died in Senate Appropriations. Although the bill had been amended from compulsory to opt-out form. The bill would have created great difficulties for motorcyclists because all premiums would have come with the emergency medical coverage included automatically unless the consumer specifically said they didn't want the coverage. As has been preached for 35 years by this association, personal Injury protection insurance will kill the street bike sales faster than bird flu. There is discussion at this moment of introducing the bill again, before the session ends. PDAC is following this development closely.

New Rules to be Promulgated for Motorcycle Safety Training Programs in Colorado
New Rules could provide more options in motorcycle training to consumers by allowing training centers to use different curriculum than the one sanctioned by the Motorcycle Safety Foundation.

2007 Senate Marks Sunset of Motor Vehicle Dealer Licensing Board
Senate Bill-221 is the current sunrise legislation that PDAC is working with the other vehicle associations to reauthorize the board and all dealer franchise protection. The bill has passed the Senate, the Business Affairs and Labor Committee in the House and is on its way to the House floor. The bill provides a few changes: dealer bond goes to $50K and the salesman’s to $15K, there is a possibility of going away from open book testing. The few other changes are related to process in hearing complaints before the board, but do not change structure or the boards operating authority.

Senate Bill-44 OHV Registration Fund
Sadly, Senate Bill-44 that would have repaid the OHV Registration fund the $700,000 borrowed from the fund by the state in 2002, died a quick death as have other attempts to get the money back. It seems keeping programmatic monies that never see the program is a non-partisan position. If it is any consolation, the money was - uh - “borrowed” to provide inoculations for children when the state was in a real budget crisis. Good news is the bill reauthorizing the Parks Board to set fees moved easily through the General Assembly and is on to the governor. There is a dire need for an increase in the OHV and snowmobile registration programs if public lands are to be kept open. Like medical coverage for street bikes, land closures are the bird flu that can kill the rest of what you sell.

Powersports Protection House Bill-1081
House Bill-1081 by Representative Marostica and Senator Tochtrop, is the bill PDAC has sought for years, (see the “Power in Numbers” article” below). It requires sellers of OHV, snowmobiles and personal watercraft to be licensed by the Motor Vehicle Dealer Board to provide recourse to the customer and basic services like parts and repairs in addition to registering manufacturers of these products. It contains the same franchise language as the motor vehicle dealer laws. It protects the consumer and the dealer. The bill has had a major rewrite and tough going at times, but it is alive and well having passed through the House and the Senate Transportation Committee. The bill is written so that there are no dual requirements for existing motor vehicle dealers such as licenses, bonds and testing. Existing dealers need only purchase a powerpsorts license at about the same rate as a motor vehicle license.

House Bill-1117 Helmet Law passed Senate committee on March 5, 2007
Colorado House Bill-1117 (Primavera - D) "Concerning The Requirement That A Protective Helmet Be Worn By A Person Under Eighteen Years Of Age During The Operation Of Certain Vehicles" is specific to motorcycles and motorized bicycles, and nothing else. Although the bill is restricted to people under eighteen years of age, other states are now facing legislation to strike the under 18 provision from similar laws. In fact, Oklahoma House Bill-1539, currently proposed in the OK Legislature, contains the language to strike the under 18 provision of the current OK helmet law. Right now, it appears the bill may be permanently stalled in the Senate Appropriations.

Pueblo Honor Farm closes hundreds of acres to OHV
March 22, 2007
Off-road enthusiasts in Pueblo will have less territory to explore beginning this weekend. A 200-250 acre area is still available for off-roading inside the Pueblo Motorsport Park; the space that belongs to the city is now going to be off limits. Stricter rules at the park have some riders revved up. "It made me a little angry," says dirt bike driver Brian Weigel, "they want to take our dirt away, it's just like taking our bikes away." Off-roading is now off limits on the area known as the Pueblo Honor Farm-more than 2300 acres of open space on Pueblo's west side. "The signs will be up, the police officers will be pretty adamant about people staying off the property," says Debra Hill with the City of Pueblo, "but once this two week period is over, you will get a ticket." - Stephanie Wurtz, KRDO

Click here to read the entire article "City Property Off Limits for Off Roading" on krdo.com

PDAC and the Colorado OHV Coalition are working together to find a solution to give people back their riding opportunity in Pueblo; this is far from the final status. We have been negotiating with Colorado State Parks to create an OHV Park for motorized recreationists that will be all theirs. It is a tough situation as the City of Pueblo seems to lack a clear understanding of good faith or a willingness to help the motorized recreationists who have been using this opportunity for the decades it has been provided. Thanks to the OHV Registration Fund and our two organizations, this battle is far from over but we do need the local support of all the motorcycle dealers in the area.


US SENATE INTRODUCES HEALTH INSURANCE BILL FOR MOTORCYCLISTS!
U.S. Senator Susan Collins (R-ME) and U.S. Senator Russ Feingold (D-WI) recently introduced S. 616, "The HIPAA Recreational Injury Technical Correction Act." Identical legislation passed the full Senate in the 108th Congress and obtained 177 bipartisan cosponsors in the House.

S. 616 aims at ending health care discrimination for individuals participating in legal transportation and recreational activities-activities like motorcycling, snowmobiling, skiing, horseback riding, and all-terrain vehicle riding.

This legislation addresses a loophole caused by a Department of Health and Human Services' rule making it possible for health care benefits to be denied to those who are injured while participating in these activities.

"While I was pleased that the rule prohibits health plans and issuers from denying coverage to individuals who engage in certain types of recreational activities, such as skiing, horseback riding, snowmobiling or motorcycling, I am concerned that it would allow insurers to deny health benefits for an otherwise covered injury that results from participation in these activities," Collins stated.

"People participating in activities like motorcycling, skiing, snowmobiling and other outdoor activities should not be put at risk because of a health insurance loophole. This bipartisan legislation will offer outdoor recreation lovers the protection they deserve," Feingold noted.

On August 21, 1996 an important opportunity arose when President Clinton signed the Health Insurance Portability and Accountability Act (HIPAA), prohibiting employers from denying health care coverage based on a worker’s pre-existing medical conditions or participation in legal activities, such as motorcycling.

In 2001, the Department of Health and Human Services released the final rules that would govern the HIPAA law. The rules recognize that employers cannot refuse health care coverage to an employee on the basis of their participation in a recognized legal activity. However, the benefits can be denied for injuries sustained in connection with those activities. Therefore, you were guaranteed the right to health care coverage but not guaranteed any benefits in return for your monthly payments.

The AMA is urging all motorcyclists to notify their Senators and tell them to co-sponsor and support S. 616, "The HIPAA Recreational Injury Technical Correction Act." - American Motorcyclist Association, www.ama.com


Power in Numbers
State dealer associations, strong franchise laws are good business for powersport dealers
by Dennis Johnson, www.dealernews.com

Like any close relationship, the connection between many powersport dealers and their OEMs can be antagonistic. In fact, the decades-old give-and-take --- or take-and-take, depending on your point of view --- of the retail motorcyle world can be downright shaky at times.

Add to this mix a marketplace where challenges to a dealer's business come as fast as capitilism can throw them, and things can get volatile. Sure there are love stories out there, but in many cases the dealers and the OEMs have business interests that don't mesh.

The news in July (ed: 2006) that Kawasaki inked a deal with outdoor retailer Cabela's to sell ATVs and Mules at five of its locations raises the issue of franchise laws and state dealer associations. With one of the major Big Four Japanese OEMs following a trail blazed to the big boxes by Artic Cat and BRP, are the others close behind? In the future, will dealers be competing against Costco for consumer dollars? It doesn't take Nostradamus to prognosticate the outcome of that retail war.

What the Kawi/Cabela's news mostly confirms is that although powersports business is rooted squarely in fun, sport and recreation, it's a business nonetheless.

On All Fronts
The threats dealerships face don't come only from the OEMs. The explosion of the so-called New Asian market that is tweaking the traditional sales channel has product being sold through auto supply stores, roadside sales lots and Internet websites. Outdated franchise laws and well-intentioned consumer legislation also represent time bombs ticking in the powersports future.

Given this scenario many industry experts swear that there is safety to be found in strong dealer associations backing gutsy franchise laws. It's these two institutions that serve as the frontline of defense for dealers in dealing with OEMs and other issues, says Ed Lemco, the sales-guru-turned-association-champion.

"State dealer associations need to ramp up and be stronger than ever. Dealers have historically been very complacent. We are talking about nothing less than the future of the business as we know it," Lemco says. "Individuals dealers in every state need to take the lead."

Even America's Powersports' former chief, Clark Vitulli, stresses the importance of strong dealer associations and vigilance over existing franchise laws. "I really encourage dealers to get involved in their state association, know what the laws are and go to the meetings," Vitulli says. "You don't have to be anti-manufacturer, you just want to be fair."

Since selling Lemco Management Group last year (ed: 2005), Lemco has helped resurrect or, in some cases, create state dealer associations across the country. He launched the National Council of State Dealer Associations as a national resource for those to form associations in their individual states. Since its inception, the NCSDA has reactivated or formed groups in Georgia, Oklahoma, Nebraska and Nevada. Up next is Arizona.

In a recent speech before the Colorado dealers association, Lemco says he urged its members to enact or strengthen state franchise laws. "My message to Colorado dealers was that there was a real crisis confronting us and to not take no for an answer. Anything less than 100 percent support from dealers is not acceptable," he says. "Without franchise law, the dealer is subject to the whim of the OEM supplier."

Strong associations can lend a powerful, singular voice to protective legislation that covers the interests of all the dealers in the state. The groups serve as political might to lobby for needed laws - lobbying being something that's uncharted waters for most dealers.

Following in Its Tracks
In the infancy of the powersorts business, franchise laws were the domain of automobile dealers. As motorcycle dealers become more sophisticated and manufacturers more powerful, the laws were seen as a way to protect powersports retailers too. By allying themselves with various state car dealer associations, motorcycle dealers grafted their products onto the existing laws. In some states, ATVs and other OHVs were added to the laws.

 

Currently California, Florida, Iowa, Maine, Texas, Virginia and Washington are recognized as having strong franchise laws, although Virginia's suffered a blow in 2005 when a federal appeals court declared a portion of it unconstitutional. The decision followed a lawsuit filed by Yamaha against the state DMV and Jim's Motorcycle Inc. in Bristol, VA., over a new franchise notification requirement for OEMs. Dealers in the 20 or so states without associations are dependent on the state's auto dealer groups.

Pay the Pros
Given what's at stake, Lemco stresses that associations are essential enough to be professionally run. Not only do professional association managers double as lobbyists, they also work with lawyers and others in drafting protective legislation.

"We have a strong message that can be sold to the legislatures, but it does have to be sold, and there will be resistance from the OEM suppliers," Lemco says. "It takes money, and it takes a strong base of support from every community. Dealers are a visible force in their communities. The state associations need their money and their name."

One such example of this involves the Nevada Motorcycle Dealer Association, one of the youngest in the country. The dealer group was launched in March out of the need to pass registration requirements for ATVs and OHVs added to the Silver State's books.

Because of existing titling laws, many Nevada dealers lose sales to surrounding states because of buyers skirting Nevada's sales tax. Residents pay sales tax only after registering their OHVs, and given titles aren't required for OHVs, there is hardly an incentive to register them and, thus, pay the sales tax

While a new law requires off-road riders to have stickers showing they've paid the state sales tax, there are no fines for offenders and little enforcement, so it's basically a stern warning.

"I really see the greatest benefit of an association...for my dealers in Nevada right now is the legislative advocacy. These guys are so busy running their business I can barely get them to come to meetings," says Susan Fisher, the association's manager. "What I promise my guys is I will make it easy for them to get involved in the political process."

Fisher maintains a database linking each dealer's location with its corresponding local representative, giving dealers access to everything needed to keep in touch with the pols whose decisions affect their business. As an added bonus, the association has worked out a program for dealer member that offer them discounts on dining and entertainment.

Nevada isn't the only state where ATVs are of curent concern. Lemco, Vitulli and others say that almost all state franchise laws need to be updated to include four-wheelers and dirtbikes. The laws often protect dealers only in cases involving titled vehicles, and with some states not requiring off-road vehicles to be registered, they fall outside the scope of the law, Vitulli says.

It's this scenario, he says, that allow many retailers outside the traditional powersports sales channel --- read big-box stores --- to sell off-road machines. Vitulli offers a unique prospective to the issue given his background on both sides of the automobile industry, in the marine and RV business, and then with America's PowerSports. Under his leadership, the network expanded into states with some of the strongest franchise laws.

I see two sides of it. I know what you have to do to distribute products to your customers. On the other hand, being on the dealer's side too, it's frustrating," he says.

For a franchised dealer in a state where stores like Bass Pro, Gander Mountain or Cabella's are located, Vitulli says it's tough competing against their purchasing and marketing power, where the product that is your life and blood can be used as their loss leader.

For its part, Kawasaki states that it is expanding in Cabela's locations where its local sales were off. Company spokesman Russ Brenan tells Dealernews that Kawasaki will be selling its vehicles to Cabela's at the same price and terms it uses for all dealers. Cabela's was also required to have the proper service facilities.

ATV Victory
In Virginia, where the state's franchise law took a hit, the state dealer association lobbied for and got passed tough legislation relating to ATV and dirtbike sales, says Charlie Finley, manager of the association.

The new laws require that newly purchased ATVs and dirtbikes be titled at the DMV, and that the owner show he has paid Virginia sales tax by offering a receipt as evidence. As an added bonus, the state DMV administratively decided that big-box stores wanting to sell ATVs and dirtbikes with engines larger than 500cc need to be licensed through the state as dealers.

"This levels the playing field because the Pep Boys and the Wal-Marts have to have the service and parts that a dealership has...either that or stop selling [ATVs]," Finley adds.

Vigilance is Good Business
For every state like California, where strong associations and franchise laws protect dealers, there's a state like Virginia where one court case hacks chuncks out of its legal support for dealers. This is often the case as it's difficult to kill a law that's on the books, it can be slowly bled to the point of anemia.

 

Although the powersports business grows steadily more sophisticated, it may never be as high-priced and high-pressure as the automotive side. However, there are several similarities, says Robert Bass, a lawyer with Myers & Fuller. The law firm deals exclusively with automobile and powersports dealerships. Bass is also the legal counsel for Lemco's national dealer group.

Bass says he's already seeing the motorcycle OEMs growing more aggressive in dealing with their dealerships, using Honda's Powerhouse dealer program as an example. He says he's hearing from dealers who are getting heat from the OEM about exclusivity, and is seeing retrictions on multiple-store ownership.

With increasing worries over the New Asian imports, threats from OEMs, the changes in the sales channel, and legislation that is not in their favor, dealers need all the clout they can get.

I tell dealers that the dealership is the primary family asset," Bass says. "You need to protect that with the same vigilance that you would your family."