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Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.

Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.

Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.

Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.

Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.

Why is Succession Planning Critical

They say that death and taxes are the only inevitable things in life.  No one likes planning for their death, but such planning can be critical to the future success of your dealership(s).  There have been many times where we have seen bad planning, or no planning at all, lead to family disputes and litigation.  In addition, failure to properly plan can lead to issues with the dealership’s lenders, major vendors, and/or employees. 

            Most manufacturers have a process to approve a succession plan for the dealership and approve a successor “dealer-operator”.  It is important that you follow the steps to name a successor dealer-operator for your dealership under the terms of the Dealer Sales and Service Agreement and any other rules provided by your particular manufacturer or manufacturers. 

If Your Manufacturer will not approve your Successor Dealer-Operator

If the manufacturer will not approve a qualified successor dealer-operator, Louisiana law provides some protections.  La. R.S. §32:1267(A)(1) states that “The terms of the franchise notwithstanding, any dealer may appoint by will, or other written instrument, a designated successor to succeed in the ownership interest of the dealer in the dealership upon the death or incapacity of the dealer.”  La. R.S. §32:1267(A)(2) states that “Unless good cause exists for refusal to honor the succession on the part of the manufacturer or distributor, any designated successor of a deceased or incapacitated dealer of a dealership may succeed to the ownership of the dealership under the existing franchise if:  (i) the designated successor gives the manufacturer or distributor written notice of his or her intention to succeed to the ownership of the dealer within sixty days of the dealer’s death or incapacity; and (ii) the designated successor agrees to be bound by all the terms and conditions of the franchise.”

            La. R.S. §32:1267(A)(4) states that “If a manufacturer or distributor believes that good cause exists for refusing to honor the succession of a deceased or incapacitated dealer, the manufacturer or distributor may, not more than sixty days following receipt of notice of a designated successor’s intent to succeed and receipt of such personal or financial data, serve upon the designated successor notice of its refusal to honor the succession and of its intent to discontinue the existing franchise with the dealer not earlier than six months from the date such notice is served.”  La. R.S. §32:1267(A)(5) requires that the notice must state the specific grounds for the refusal to honor the succession.  La. R.S. §32:1267(A)(6) states that “In determining whether good cause for the refusal to honor the succession exists, the manufacturer or distributor has the burden of proving that the designated successor is not of good moral character or does not otherwise meet the manufacturer’s or distributor’s reasonable standards as a franchisee.” 

Lenders

            In addition, many lender agreements have a due on death clause.  Failure to properly plan for the death of a majority-owned could cause a dealership to lose its floor plan line of credit, working capital line, property loans or other lending sources.  These lending institutions may not give your loved ones much time to find other financing sources upon the dealer-operator’s death.

Employees

            Employees also can be disgruntled or leave depending on the succession plan of the dealership.  If the child of the dealer-operator takes over with little or no previous experience at the dealership, then long-term employees may refuse to work with that person and leave the dealership.  However, if the successor dealer-operator has worked in various departments of the dealership for many years and has shown his or her value to the dealership, employees will usually respect the change of leadership.  The dealer-operator has to give a management or leadership role of a department to the successor dealer-operator so the successor can learn how to manage the dealership and its employees before he or she is thrust into the role of running the entire dealership due to the sudden death or incapacity of the dealer-operator.

Conclusion

            With careful planning and much needed follow-up with the manufacturer, you can avoid a lot of these problems for your surviving spouse and family members by getting a successor dealer-operator approved prior to your death.  This will create a seamless transition for your loved ones, business partners, creditors, vendors, and dealership employees.

            If you have any questions regarding this matter, please do not hesitate to contact me.