STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HOLLYWOOD ISUZU, INC., and ) AMERICAN ISUZU MOTORS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 81-2598

) DEPARTMENT OF HIGHWAY SAFETY ) AND MOTOR VEHICLES and DAVE ) ZINN TOYOTA, INC., d/b/a ISUZU ) OF NORTH MIAMI, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted in this matter on December 14 and 15, 1981, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: James D. Adams (Hollywood) Miami, Florida

For Petitioner: William E. Sundstrom (American) Tallahassee, Florida

For Respondent: Karl J. Leib, Jr.

Miami, Florida

On or about September 28, 1981, Hollywood Isuzu, Inc. ("Hollywood Isuzu" hereafter), applied to the Florida Department of Highway Safety and Motor Vehicles for a motor vehicle dealer's license to operate an Isuzu automobile dealership in Hollywood, Florida. The application was based upon a letter of intent to enter into a franchise agreement that had been issued to Hollywood Isuzu by the American distributor of Isuzu automobiles, American Isuzu Motors, Inc. ("American Isuzu" hereafter). An existing dealer of Isuzu automobiles in Dade County, Dave Zinn Toyota, Inc., d/b/a Isuzu of North Miami ("Isuzu of North Miami" hereafter) filed an objection to issuance of the license with the Department of Highway Safety and Motor Vehicles. On October 15, 1981, the Department forwarded the matter to the office of the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a hearing. The final hearing was scheduled as set out above by notice dated November 25, 1981.

At the final hearing, George Nassief, the owner of Hollywood Isuzu, testified on behalf of Hollywood Isuzu. American Isuzu called the following witnesses: David Zinn, the owner of Isuzu of North Miami; William G. Abbott,

American Isuzu's Regional Manager for the Eastern United States; Mark Darling, American Isuzu's Regional Sales Manager for the region which includes the State of Florida; David Corker, American Isuzu's Zone Service and Parts Manager for South Florida; and George Smith, the owner-operator of an Isuzu dealership in Plantation, Florida. David Zinn and Craig M. Zinn, the operator of a Toyota dealership in Hollywood, Florida, testified on behalf of Isuzu of North Miami. American Isuzu Exhibits, which have been labeled "American Exhibits," numbered 1 through 8; and Isuzu of North Miami Exhibits, which have been labeled "Protestant's Exhibits," numbered 1 through 12 were offered into evidence and received.

At the conclusion of the final hearing, the parties requested that a transcript of the hearing be prepared, and that a schedule for the filing of post-hearing legal memoranda be set so that the parties would have an opportunity to use the transcript in preparing post-hearing legal briefs and proposed findings of fact and conclusions of law. The final post-hearing submissions were received on February 16, 1982. American Isuzu and Isuzu of North Miami submitted post-hearing legal memoranda including proposed findings of fact and conclusions of law. Proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law which follow. They have been otherwise rejected as contrary to the evidence, not supported by the evidence, irrelevant to the issues or legally erroneous

The issue in this proceeding is whether the Department of Highway Safety and Motor Vehicles should issue a license to Hollywood Isuzu to operate an Isuzu automobile dealership in Hollywood, Florida. American Isuzu and Hollywood Isuzu contend that existing Isuzu dealers are not adequately representing Isuzu in the relevant market area, and that Isuzu of North Miami has not complied with its licensing agreement with American Isuzu. Isuzu of North Miami contends that it and other dealers are presently adequately representing Isuzu in the relevant market and that it has not violated terms of its agreement with American Isuzu.

FINDINGS OF FACT

1. American Isuzu is the licensed distributor of Isuzu motorcars and trucks in the United States. American Isuzu licenses franchise dealers to market Isuzu cars and trucks to the consuming public. Isuzu products are manufactured in Japan. American Isuzu began marketing Isuzu products in the United States in March, 1981. Isuzu products compete primarily with other compact imported cars and trucks such as Datsun, Toyota, Volkswagen and others. American Isuzu supports the application of Hollywood Isuzu for licensure to market Isuzu products in Hollywood, Florida.

   
   

2. Isuzu of North Miami is owned by David Zinn. Isuzu of North Miami is currently under contract with American Isuzu and duly licensed to market Isuzu products at a location in northwestern Dade County, Florida. Zinn is a capable automobile dealer. He operates a successful Datsun dealership in Stuart, Florida, and a successful Toyota dealership in north Dade County, Florida. Zinn's was the first Toyota dealership in Florida. He has been involved in automobile sales for most of his life. His stature as a successful dealer has been recognized. At the time of the hearing, he was serving as Chairman-Elect of the Board for the American International Automotive Dealership Association, an organization which advances the interests of imported-automobile dealers. Zinn is fully qualified to operate an Isuzu dealership. Isuzu of North Miami is located on U.S. Highway 441 in northern Dade County. The facility is directly across the street from Zinn's Toyota dealership. He has constructed a complete

   sales and service facility in order to effectively market and service Isuzu automobiles. He has invested approximately $850,000 in the Isuzu dealership. At the time of the hearing, construction on the facility had not been entirely finished, but it was sufficiently completed so that sales and service functions were under way.

   
   

3. Hollywood Isuzu is owned by George Nassief. Nassief has been involved in automobile sales for the past thirty years. He currently owns and operates three automobile dealerships in Ohio. He has won dealer awards from Ford, Pontiac, Toyota and Honda. Nassief has been interested in developing an automobile dealership in south Florida. American Isuzu has granted Hollywood Isuzu a franchise contract to operate an Isuzu dealership at 1321 North Sixtieth Avenue, Hollywood, Florida. Sixtieth Avenue is also known as U.S. Highway 441. The Isuzu of North Miami facility is less than five miles from the proposed Hollywood Isuzu location on the same roadway. In order to sell and service Isuzu products, Nassief proposes to construct a complete sales and service facility. He has already purchased land, hired an architect and begun preparation of the site. He plans to invest approximately $700,000 in the venture. Nassief is fully qualified to operate an Isuzu dealership.

   
   

4. American Isuzu has developed marketing concepts or strategies to advance its entry into the American automotive market. For initial penetration, American Isuzu chose several market areas primarily in the western and southeastern United States. Florida is a well-recognized imported automobile market, and south Florida is the major Florida market. American Isuzu targeted south Florida as a primary zone for its initial efforts. Initial plans were to locate four dealerships in Broward County and three in Dade County. A decision was made to select dealers from individuals who had demonstrated themselves as successful dealers of other products. American Isuzu decided to establish average-sized dealerships rather than "size-of-market" dealers. Ultimately, American Isuzu desires to have each of its dealers be average in size.

   Voluntary trade restrictions that have been imposed upon automobiles imported from Japan have interfered somewhat with American Isuzu's initial plans.

   However, three Broward County and two Dade County dealerships have been established. One Broward dealership is located on U.S. Highway 441 in Plantation, Florida, approximately six miles north of the location proposed by Hollywood Isuzu. The other two Broward County Isuzu dealerships are located in the northern and central portions of the county, along U.S. Highway 1 in the City of Fort Lauderdale. These locations are to the east of the Plantation location, the proposed Hollywood location and Isuzu of North Miami.

   
   

5. During the time that Zinn was negotiating with American Isuzu for an Isuzu franchise, he proposed to locate in western Broward County near the presently proposed Hollywood Isuzu location. The then District Manager of American Isuzu, Mr. Mike Bonamy, declined to approve that location, and instead insisted upon the north Miami location. Bonamy suggested that Zinn would be able to serve the west Hollywood market from the northern Dade County location. Zinn was led to believe that a Hollywood location would be approved, but that it would be located along U.S. Highway 1, rather than on the same highway as his dealership. Isuzu of North Miami does not oppose the creation of a fourth Isuzu dealership in Broward County, but rather opposes the location of it on U.S. Highway 441, rather than U.S. Highway 1.

   
   

6. American Isuzu has not delineated specific market areas for its dealerships. American Isuzu is seeking to penetrate the broad south Florida market by the introduction of various dealerships. A primary source of customers within this area is located in the western portions of Broward and

   Dade Counties. Through existing dealerships, Isuzu has obtained a market penetration reflected as a percentage of total import sales which equals its penetration statewide in Florida. American Isuzu's entry into the American market would be facilitated by strongly penetrating certain market areas, then expanding from that base. American Isuzu has sought to accomplish this strategy by locating numerous dealers in south Florida. Despite the emphasis, American Isuzu has not penetrated south Florida more pervasively than it has the state, generally. American Isuzu is clearly capable of marketing additional automobiles in south Florida. In order to accomplish that in harmony with its policy of maintaining average-sized dealerships, it is necessary that American Isuzu establish an additional Broward County dealership. The western portion of Hollywood, where Hollywood Isuzu proposes to locate, is a logical choice for the additional dealership. Numerous clusters of dealerships have been established along U.S. Highway 441 in northern Dade County and western Broward County. In close proximity to Isuzu of North Miami, there are Toyota, Mazda and Volkswagen dealerships. In close proximity to the proposed Hollywood Isuzu location, there are Toyota, Honda and Datsun dealerships. In close proximity to the Plantation Isuzu dealership, there are Mazda, Toyota and Datsun dealerships. Such "clusters" of competing dealerships tend to stimulate sales. Location of an Isuzu dealership at the proposed Hollywood location should not operate to reduce sales on the part of Isuzu of North Miami. Rather, the dealership should aid Isuzu in further penetrating the Broward and Dade County markets. By increasing the visibility of Isuzu generally, the additional facility should also serve to stimulate Isuzu sales. While Isuzu of North Miami can offer Isuzu automobiles to potential customers in the west Hollywood area, it cannot stimulate such sales as well as a specific dealership in that location could.

   
   

7. American Isuzu has charged that Isuzu of North Miami has not complied with certain provisions of its licensing agreement. These allegations are not supported by the evidence. Isuzu of North Miami originally proposed to appoint David Zinn's son Craig to manage the Isuzu of North Miami facility. Craig Zinn has, however, decided to pursue another opportunity. It does not appear that the absence of Craig Zinn from the Isuzu of North Miami picture renders Isuzu of North Miami unable to adequately sell and service Isuzu automobiles. Indeed, it appears that Isuzu of North Miami has personnel who are fully capable of operating a successful dealership. American Isuzu has alleged that Isuzu of North Miami does not have a sufficient number of trained service personnel and has not purchased sufficient tools. These allegations are not sustained by the evidence. It does appear that Isuzu of North Miami has at least two trained and qualified Isuzu mechanics and has purchased tools with which it can properly service Isuzu automobiles.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Sections 120.57(1) and 120.60, Florida Statutes.

   
   

9. Section 320.642, Florida Statutes, establishes the following standards to be applied by the Department of Highway Safety and Motor Vehicles in considering applications for licensure as motor vehicle dealers:

   
   

   The department shall deny an applica- tion for a motor vehicle dealer license in any community or territory where

   the licensee's presently licensed fran- chised motor vehicle dealer or dealers

   has complied with licensee's agreements and are providing adequate representa- tion in the community or territory for such licensee. The burden of proof

   in showing inadequate representation shall be on the licensee.

   
   

   The licensee in this matter is the distributor of Isuzu automobiles, American Isuzu. American Isuzu has established that its presently licensed franchised dealers are not providing adequate representation in the Broward County market. American Isuzu is capable of penetrating the Broward County market to a greater extent than has been attained. Such penetration cannot be accomplished consonant with American Isuzu's marketing policies and strategies without the establishment of an additional Broward County dealership. The marketing policy of establishing numerous average-sized dealerships is not unreasonable and, indeed, will serve to increase the visibility of the Isuzu product. Location of an Isuzu dealership in west Hollywood will serve to promote a better penetration of the Broward County market.

   
   

10. The legislative intent of Section 320.642, Florida Statutes, is not to eliminate competition among franchise dealers, but rather to protect dealers from unfair treatment by manufacturers. Plantation Datsun v. Calvin, 275 So.2d

    26 (1 DCA Fla. 1978). The statute is not designed to prevent the introduction of dealer competition when it is reasonably justified in terms of market potential. Bill Kelley Chevrolet v. Calvin, 322 So.2d 50, 52 (1 DCA Fla. 1975). The evidence in this matter does not establish that placing an Isuzu dealership at the proposed Hollywood location would constitute unfair treatment of Isuzu of North Miami. It does appear that placing a dealership at the proposed location would serve the valid marketing objectives of American Isuzu.

    
    

11. American Isuzu has failed to establish that Isuzu of North Miami has not complied with its franchise agreement.

RECOMMENDED ORDER

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

RECOMMENDED:

That the Department of Highway Safety and Motor Vehicles enter a final order granting the application for a motor vehicle dealer license submitted by Hollywood Isuzu, Inc.

RECOMMENDED this 9th day of March, 1982, in Tallahassee, Florida.

G. STEVEN PFEIFFER Assistant Director

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 1982.

COPIES FURNISHED:

James D. Adams, Esquire Quinton, Lummus, Dunwody

& Adams

186 S.W. 13th Street Miami, Florida 33130

William E. Sundstrom, Esquire Myers, Kaplan, Levinson, Kenin

& Richards, P.A.

1020 East Lafayette Street Tallahassee, Florida 32301

Karl J. Leib, Jr., Esquire Leib & Martinez, P.A.

12th Floor, Ponce de Leon Plaza

201 Alhambra Circle

Coral Gables, Florida 33134

Mr. John D. Calvin, Director Division of Motor Vehicles Department of Highway Safety

and Motor Vehicles Neil Kirkman Building

Tallahassee, Florida 32301

Docket for Case No: 81-002598

Orders for Case No: 81-002598