Vehicle Dealership Agreement

A vehicle dealership is considered to be a safe and lucrative business investment. Once a person invests in a dealership, he/she can be sure to benefit from the brand value and goodwill of a vehicle manufacturer and make the sales figures soar high. There is also the added benefit of receiving high quality stock-in-trade and high-level training for their own personnel which shall be provided by the manufacturing company. The company also benefits from the market penetration and reach of the dealer in selling to end customers. The primary legal document which facilitates the arrangement between a car/motorcycle manufacturer and a dealer is called a dealership agreement.

What Is A Vehicle Dealership?

A vehicle dealership is a channel of vehicle distribution where cars or motorcycles of a particular manufacturer may be sold by a certified dealer.  The vehicles sold may be either old or new. There may also be maintenance servicing performed for existing owners of their motor vehicles by technicians/mechanics trained by the manufacturer. The investment in infrastructure and facilities is made by the dealer, while the stock in trade may be the property of the manufacturer.

What Is A Vehicle Dealership Agreement?

A Vehicle Dealership agreement is a document created between a company and a dealer which begins the business relationship between them. It contains details about all the investments made, the facilities to be provided, the modes of payment and other details regarding training and certification of the employees and dealership. It can include details like:

Introduction

Here, details about the nature of businesses of both parties are mentioned. The type of vehicles manufactured by the company can also be described here.

Purpose

The intention of the manufacturer/company to establish a network of dealerships throughout the specified territory and the expertise of the dealer in running similar businesses can all be mentioned here.

Further, a brief mention about the assurances from both party about transparency, integrity, skills and other qualities made by both parties can be mentioned briefly. They form the basis of the terms and conditions which will be mentioned next.

Terms and Conditions

This part may be divided into-

Rights of the Dealer

The primary right would be to buy and sell products of the company as better specified in the schedule given. The dealer also would be allowed to use signboards of the company in their premises. The dealer also can be allowed to use the intellectual property rights of the company in advertisements and sales.

Rights of the Company

The company may reserve the right to grant dealership to other dealers or entities in any location.

Duties of the Dealer

The duties of the dealer include the selling of vehicles of the manufacturer according to the terms and conditions of the agreement, to service the products manufactured by the company. The most important duty would be to set up a satisfactory dealership in the given location and to make all payments in time to the company.

Duration and Termination

The duration of the agreement should be mentioned clearly along with the ways in which it may be terminated by the parties.

Ownership

The names and titles of authorised representatives of the dealer should be made note since they shall be responsible for the dealership. Management of the company can also be described in detail and mention be made of the persons responsible for handling dealerships. Such descriptions avoid confusions in future and highlight the channels of authority.

Change in Ownership

The company may insist that any changes in the ownership of the dealer should be after its approval. The reason is that the future of any dealership depends upon the quality of management and understanding between the parties.

Location of the Dealership

The company’s right to manage a network of dealerships in any geographical area is important. Thus the dealer may be allowed to operate only within the region designated to them through the agreement.

Purchase, delivery and terms of sale

The ways in which the dealer shall acquire products to be sold should be mentioned along with ways in which it shall be delivered to the dealer and the discretion of the company in pricing of the same.All details regarding minimum quantity of order, claims and liability for delay in delivery by the company can be found mention here.

Other details

There are plenty of other details to be added in a vehicle dealership agreement. They include assistance to be provided by the company, training and certification, spare parts delivery, customer satisfaction standards to be followed by dealer, working hours, periodical appraisal of performance of dealer among other details. Get a detailed agreement drafted by LegalDesk.com for more.

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