STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KAWASAKI MOTORS CORP., U.S.A. ) and RICHARD WEBER REAL ESTATE ) INVESTMENT CO., INC. d/b/a ) ORLANDO YAMAHA KAWASAKI, )

)

Petitioners, )

)

vs. ) CASE NO. 95-3852

) CYCLE SPORTS CENTER, INC., ) AND J.P. CYCLES, INC., d/b/a ) SEMINOLE POWERSPORTS, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated hearing officer, Daniel Manry, held a formal hearing in this case on November 9, 1995, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Dean Bunch, Esquire Kawasaki Motors Corp., Cabaniss & Burke, P.A.

U.S.A. 909 East Park Avenue Tallahassee, Florida 32301

For Petitioner: Richard Weber, President Richard Weber Real 9334 East Colonial Drive Estate Investment Co. Orlando, Florida 32817 d/b/a Orlando Yamaha

Kawasaki

For Respondents: Lon Wagner, Qualified Representative Cycle Sports Center 3812 Heatherington Road

Inc., and J. P. Cycles, Orlando, Florida 32808 Inc., d/b/a Seminole

Powersports

STATEMENT OF THE ISSUE

The issue for determination in this proceeding is whether Kawasaki Motors Corp., U.S.A. ("Kawasaki") should establish a new dealership doing business as Orlando Yamaha Kawasaki ("OYK").

PRELIMINARY STATEMENT

Respondents filed their protest in this matter on July 17, 1995, and timely requested a formal hearing. At the formal hearing Kawasaki called Mr. Jim

Capps, its Regional Sales Manager, as its only witness. Kawasaki submitted 23 exhibits for admission in evidence. Petitioner, OYK, called no witnesses and submitted no exhibits for admission in evidence.

Respondents called Mr. Mark Schmidt, owner of J.P. Cycles, Inc., d/b/a Seminole Power Sports ("Seminole Power Sports"), and Mr. Thomas Wagner, owner of Cycle Sports Center, Inc. ("Cycle Sports"), as their only witnesses.

Respondents submitted 12 exhibits for admission in evidence.

The identity of the exhibits and the rulings thereon are described in the record of the formal hearing. None of the parties requested a transcript of the formal hearing.

Kawasaki and Respondents timely filed their proposed recommended orders ("PROs") on November 27, 1995. OYK did not file a PRO. Proposed findings of fact in Kawasaki's PRO are accepted in this Recommended Order. Proposed findings of fact in Respondents' PRO are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Cycle Sports is an existing Kawasaki dealer in Orange County, Florida ("Orange County"). It is located at 4001 John Young Parkway, in west Orlando, Florida ("Orlando"), north of West Colonial Drive.

   
   

2. Seminole Powersports is an existing Kawasaki dealer in Seminole County, Florida ("Seminole County"). It is located at 3401 North Highway 17-92, in Longwood, Florida.

   
   

3. OYK is an existing dealer for Yamaha motorcycles. It is located in east Orlando, at 9334 East Colonial Drive.

   
   

4. Kawasaki is an importer of motorcycles. It proposes to establish an additional Kawasaki dealership at the present location of OYK (the "proposed dealership"). The two dealerships operated by Respondents are each located within 12.5 air miles of the proposed dealership.

   
   

5. Orange County has a population in excess of 300,000. On April 1, 1994, the population of Orange County was 740,167.

1. Community or Territory

1. The term "community or territory" is not defined in Section 320.642, Florida Statutes. 1/ The relevant community or territory to be considered in determining whether the proposed dealership should be established is a question of fact. 2/

   
   

2. Each dealer's primary area of responsibility is entitled to great weight in determining the relevant community or territory. 3/ The dealer agreements between Respondents and Kawasaki define each dealer's primary area of responsibility as the area lying within a circle centered at each dealership, with each circle having a radius of five miles.

   
   

3. The proposed dealership is not located in the primary area of responsibility of either dealer. Cycle Sports is located approximately 10 miles from the proposed dealership. Seminole Sports is located approximately 11.5 miles from the proposed dealership.

4. Buying patterns of Yamaha motorcycle purchasers at the proposed dealership and those of Kawasaki motorcycle purchasers at Respondents' dealerships provide a reasonable basis for determining the relevant community or territory to be served by the proposed dealership. No Kawasaki sales records are available for the proposed dealership. It is not yet a Kawasaki dealer.

   
   

5. The majority of Kawasaki motorcycle sales in 1994 made by Cycle Sports were made to customers in Orange County. Sales were concentrated in the west Orange County near the selling dealer.

   
   

6. The majority of Kawasaki motorcycle sales in 1994 made by Seminole Powersports were made to customers in Seminole County. Although Seminole Powersports made some sales to customers in Orange County, those sales comprised a small portion of the total sales made by Seminole Powersports.

   
   

7. The majority of Yamaha sales in 1994 made by OYK were made to customers residing in Orange County. Sales were concentrated in east Orange County near OYK.

   
   

8. Based on consumer behavior, Orange County is the appropriate community or territory to be considered in determining whether the proposed dealership should be established. Respondents presented no credible and persuasive evidence to support an alternative definition of the relevant community or territory.

1. Adequacy Of Representation

   
   

   1. Respondents do not adequately represent Kawasaki in the relevant community or territory for purposes of Section 320.642. Adequacy of representation is determined by considering relevant factors in Section 320.642.

      
      

      1. Market Penetration

         
         

   2. Market penetration, or market share, is the percentage of Kawasaki products sold compared to the total products sold in the industry, regardless of the selling dealer. Sales are determined on the basis of registration and other sales information compiled by R. L. Polk and Co.("Polk") and the Motorcycle Industry Council ("MIC").

      
      

      2.1(a) Types Of Vehicles And Data

      
      

   3. Polk data is used for years prior to January, 1994. Since then, sales are measured by the information compiled by MIC.

      
      

   4. Polk data includes on-highway motorcycles. On-highway motorcycles are those registered in each state for use on highways. Most all terrain vehicles ("ATVs") are not registered in the State of Florida. Registrations of ATVs in the Polk data are not useful in determining Kawasaki's market penetration.

      
      

   5. Polk data includes registrations of motor scooters registered for street use. Kawasaki does not compete in the motor scooter market.

      
      

   6. Consideration of ATVs and motor scooters is not appropriate to determine the adequacy of performance by Kawasaki dealers. Only registrations of on-highway, two-wheel motorcycles in the Polk data are properly considered in determining adequacy of performance.

   7. MIC data includes sales of all vehicles sold by the major motorcycle brands, regardless of whether the vehicles are registered for street use. MIC data reflects all sales and is not limited to only those vehicles registered in each state.

      
      

      2.1(b) Inappropriate Standards

      
      

   8. National and state averages are not appropriate standards for measuring the adequacy of representation in Orange County. National and state averages include dealers that provide inadequate representation.

      
      

   9. The state average for Florida includes Pinellas County. In 1994, Kawasaki achieved only 7.42 percent of the on-highway market in Pinellas County compared to the Florida average of 15.23 percent. Kawasaki is "outdealered" by its closest competitors in Pinellas County.

      
      

   10. Osceola County is just south of Orange County. Kawasaki has no dealers in Osceola County. Yamaha and Suzuki have dealers in Osceola County.

       In 1994, Kawasaki achieved only 6.25 percent of the on-highway motorcycle market in Osceola County.

       
       

       2.1(c) Appropriate Standard: Duval County

       
       

   11. Duval County, Florida ("Duval County"), represents a reasonably achievable standard for evaluating Kawasaki's performance in Orange County.

       When Kawasaki had an equal number of dealers in Duval and Orange counties as its major competitors, Kawasaki achieved equivalent market penetration in both counties.

       
       

   12. In Duval County, Kawasaki has two dealerships. During a part of 1988, all of 1989, and a part of 1990, Kawasaki had an two dealerships in Orange County. The second dealership was approximately three miles closer to Cycle Sports than the proposed dealership.

       
       

   13. In 1989, Kawasaki's market penetration in Duval County was 27.48 percent, and its market penetration in Orange County was 30.56 percent. In 1994, Kawasaki also achieved a 27.48 percent market share of on-highway motorcycles in Duval County.

       
       

       1. Duval County Comparisons

          
          

   14. In 1994, Kawasaki achieved a market penetration of 27.48 percent of

       on-highway motorcycles in Duval County. Kawasaki's market share of dual-purpose motorcycles was 47.05 percent. Its market share of off-road motorcycles was

       21.84 percent. Its market share of other vehicles was 24.70 percent.

       
       

   15. These percentages indicate the reasonably expected level of penetration for the four segments in which Kawasaki competes ("expected sales"). Applying them to total industry registrations available in Orange County in 1994, Kawasaki achieved only 56 percent of its expected sales. Kawasaki lost

       108 sales in Orange County from the reasonably expected penetration measured by the Duval County standard.

       
       

   16. The majority of lost sales were sales of on-highway and dual purpose motorcycles. In 1994, 91 lost sales came from these street-legal segments. Thus, on-highway sales comprise 84 percent of total lost sales.

   17. In 1994, Kawasaki sold 27.48 percent of on-highway motorcycles in Duval County. The same year Kawasaki sold only 11.69 percent of on-highway motorcycles in Orange County. Kawasaki's market penetration in Orange County was only 42.5 percent of that in Duval County. For the first six months of 1995, the efficiency of Orange County compared to Duval County was only 35.2 percent, i.e., 9.84 percent in Orange County compared to 27.98 percent in Duval County.

       
       

   18. In 1994, Kawasaki sold 47.05 percent of dual-purpose motorcycles in Duval County but only 22.6 percent of the same segment in Orange County. That is an efficiency rating of only 48 percent.

       
       

   19. In 1994, Kawasaki achieved an efficiency of 67 percent in the off-road category, i.e., 14.7 percent in Orange County compared to 21.84 percent in Duval County. In ATVs Kawasaki's Orange County performance achieved 82 percent of the penetration in Duval County, i.e., 22.60 percent in Orange County and 27.48 percent in Duval County.

       
       

       2.3 Comparisons To National and State Averages

       
       

   20. As previously found, national and state averages are not appropriate standards for determining adequacy of representation. Those averages contain dealers that inadequately represent Kawasaki. Nevertheless, Kawasaki's representation in Orange County fell short of those standards in 1994 and 1995.

       
       

   21. The on-highway segment accounts for most of the units sold in the United States and in Florida. In that segment, Orange County performed poorly in comparison to national and state averages.

       
       

   22. In 1994, Kawasaki's market penetration in Orange County achieved only

       77 percent of the Florida average, i.e., 11.69 percent compared to 15.23 percent. It achieved only 85 percent of the national average, i.e., 11.69 percent compared to 13.80 percent.

       
       

   23. For the first six months of 1995, Kawasaki did worse in Orange County. It achieved only 59 percent of the Florida average, i.e., 9.84 percent compared to 16.54 percent, and 62 percent of the national average, i.e., 9.84 percent compared to 15.93 percent.

       
       

   24. In the first six months of 1995, Kawasaki's penetration in the on- highway segment in Orange County was down almost two percentage points, from

       11.69 percent to 9.84 percent. The state and national averages were both up from 15.23 percent to 16.54 percent in Florida and from 13.80 percent to 15.93 percent nationally.

       
       

   25. The lower penetration in Orange County at a time when state and national averages are up is the lowest efficiency for Orange County since 1987. 1987 was the year before a second Orange County Kawasaki dealership was established from 1988 through 1990.

       
       

   26. The only year in which a second Kawasaki dealer was in business in Orange County for the entire year was 1989. Kawasaki's market penetration in Orange County in 1989 was approximately twice its market penetration during 1994 and the first six months of 1995. In 1989, for example, Orange County achieved

       30.56 percent of on-highway motorcycle registrations, or 141 percent of the Florida average of 21.75 percent and 160 percent of the national average of

       19.13 percent.

       
       

       1. Tri-County Comparison

          
          

   27. If Orange, Seminole, and Osceola counties are used as the relevant community or territory, the performance of Kawasaki differs little from the market penetration in Orange County alone. In the on-highway segment, Kawasaki's market share for the three-county area in 1994 was 81 percent of the state average and 90 percent of the national average. For the first six months in 1995, however, Kawasaki's market penetration in Orange County dropped to 58 and 60 percent of the state and national averages, respectively.

       
       

       1. Likely Cause

          
          

   28. The motorcycle market in Orange County has increased consistently since 1991. In 1991, total on-highway motorcycle registrations were 431. In 1992 they were 502. In 1993, they were 623. In 1994, they were 650. Registrations increased 50.8 percent from 1991-1994.

       
       

   29. The likely cause of Kawasaki's inadequate representation in Orange County is the inability of a single dealer to keep up with such growth. Kawasaki sales in Orange County fell after Kawasaki was left with only one dealer in Orange County in 1991.

       
       

   30. Orange County has a population of more than twice that of Seminole County. Orange County is projected to continue its population growth through 2020.

       
       

   31. Orange County has become too large for one Kawasaki dealer to serve. The addition of a Kawasaki dealership in east Orlando is justified by growth in the motorcycle market and by population growth generally.

       
       

       1. Inter-brand Comparisons

       
       

   32. Kawasaki suffers inadequate representation when inter-brand competition is considered. Kawasaki enjoys relatively equal dealer representation with its major competitors in Duval County. In Orange County, however, Kawasaki has only one dealer compared to two dealers for Yamaha and Suzuki.

       
       

   33. There is ample opportunity for two Kawasaki dealers to share the Orange County market. Even with two dealers in Orange County, Kawasaki will have only as many dealers as do two of its major competitors.

       
       

       2.6(a) Sales Patterns

       
       

   34. Yamaha has two dealerships in Orange County. Yamaha enjoys superior sales in east Orlando where OYK is located. The adverse affect of distance on Respondents' ability to adequately represent Kawasaki in Orange County is demonstrated by the dearth of Kawasaki sales in east Orlando.

       
       

   35. Sales patterns of the dealerships demonstrate that Respondents are not located to provide convenient interbrand competition. Customers opt for the brand represented in east Orlando, i.e., Yamaha. Kawasaki is not represented in

       east Orlando. Respondents are too far from the proposed location to overcome the convenience disadvantage suffered by consumers there.

       
       

       2.6(b) Customer Convenience

       
       

   36. The distance between Cycle Sports in west Orlando and OYK is 12.1 miles. This represents a driving time of 25 to 31 minutes. The distance between OYK and Seminole Powersports, in Seminole County, is 15.3 miles. This represents a driving time of 25 to 47 minutes.

       
       

   37. Customers in east Orange County can travel a very short distance to OYK, a Yamaha dealership. To buy a Kawasaki, customers must travel 25 to 31 minutes west, or 25 to 47 minutes north, to a Kawasaki dealership.

       
       

       2.6(c) National And State Averages

       
       

   38. From 1989 to 1994, Kawasaki sales in Orange County fell 61 percent while its national and state market share fell only 28 percent and 30 percent, respectively. Kawasaki's market share of on-highway motorcycles fell 28 percent from 19.13 percent to 13.80 percent. The state market share fell 30 percent from 21.75 percent to 15.23 percent. In Orange County, Kawasaki's market share fell from 30.56 percent, in 1989, to 11.69 percent in 1994.

   
   

   3. Impact Of Proposed Dealership

   
   

   1. Sales patterns of Cycle Sports most overlap those of the proposed dealership. Cycle Sports is not primarily concerned with an additional motorcycle dealership. The primary concern of Cycle Sports is that Kawasaki will permit the proposed dealership to establish another watercraft dealer.

      
      

   2. Respondents presented no credible and persuasive evidence of any adverse impact on profitability or sales from the proposed dealership. The proposed dealership will not negatively impact existing dealers. The proposed dealership will bring additional exposure for the brand and additional opportunity for customers to comparison shop among brands.

      
      

   3. The negative impact on Kawasaki is measured by lost sales opportunities. The proposed dealership will provide Kawasaki with an opportunity to capture those lost sales.

      
      

   4. The addition of a Kawasaki dealer in Orange County will have a positive impact on consumers. They will benefit from additional inter-brand and intra-brand competition. That competition will benefit consumers in terms of price, service, and product availability.

   
   

   4. Size And Permanency Of Investment By Existing Dealer

   
   

   1. Respondents expanded their respective facilities since purchasing their Kawasaki dealerships. The additional investment represented by the expansion of both dealerships was not required by Kawasaki to comply with respective dealer agreements or otherwise. The additional investment was the result of Respondents' separate and independent choice.

      CONCLUSIONS OF LAW

      
      

   2. The Division of Administrative Hearings has jurisdiction over this proceeding pursuant to Section 120.57(1). The parties received adequate notice of the formal hearing.

   
   

   5. Standing

   
   

   58. Respondents have standing to protest the proposed dealership within the meaning of Section 320.642(3)(b). Respondents are each located within 12.5 miles of the proposed dealership.

   
   

   6. Burden Of Proof

   
   

   59. Section 320.642 governs Kawasaki's request to establish OYK as a Kawasaki motorcycle dealership. Petitioners must show that existing Kawasaki dealers are not providing adequate representation in the community or territory to be served by the proposed dealership.

   
   

   1. Inadequate Representation

      
      

      1. Respondents do not adequately represent Kawasaki in Orange County. Representation is inadequate based on types of vehicles and market penetration in the community or territory.

         
         

         1. Types Of Vehicle

            
            

      2. Kawasaki's motorcycle dealers sell four basic types of wheeled vehicles. They are: on-highway motorcycles, which possess the appropriate equipment to be registered for highway use; dual purpose motorcycles, which are equipped for street use, but may also be used off road; off-road motorcycles which are not equipped for street use, and cannot be registered for that purpose; and all terrain vehicles, or ATVs , which are used in off-road settings.

         
         

      3. Section 320.642 governs only the addition of motor vehicle dealerships as that term is defined in Section 320.60(11). Section 320.60(11) defines a "motor vehicle dealer" as any person or entity that sells, repairs, or services three or more motor vehicles annually. Section 320.60(10) defines the term "motor vehicle" as:

         
         

         any new automobile, motorcycle or truck the equitable or legal title to which has never been transferred by a manufacturer, distributor, importer or dealer to an ultimate purchaser. (Emphasis supplied).

         
         

      4. In order to be a motorcycle dealer, the vehicle sold must be a "motor vehicle". The term "motor vehicle" is defined in Section 320.01(1)(a), as follows:

         
         

         1. An automobile, motorcycle, truck, trailer, semitrailer, truck tractor and semitrailer combination, or any other vehicle operated on the roads of this

            state, used to transport persons or property, and propelled by power other than muscular

            power, but the term does not include traction engines, road rollers, such vehicles as run only upon a track, bicycles, or mopeds. (Emphasis supplied).

            
            

      5. Section 320.27(1)(a), defines a motor vehicle as:

         
         

         any motor vehicle of the type required to be registered and titled under Chapters 319 and 320...

         
         

      6. Only on-highway and dual purpose motorcycles are "motor vehicles" within the meaning of Section 320.27(1)(a). Only on-highway and dual purpose motorcycles are required to be registered and titled and driven on the roads of this state. Other products, such as off-road vehicles and personal watercraft, may or may not be manufactured and distributed by the same entity which distributes motorcycles. However, the sales of those other products are not governed by Section 320.642.

         
         

      7. Inadequate representation exists for on-highway and dual purpose vehicles. It also exists if the analysis is expanded to all wheeled vehicles sold by Kawasaki dealers, including off-road and ATV vehicles.

         
         

         1. Community Or Territory

   
   

   1. Section 320.642 does not define community or territory. The relevant community or territory must be determined according to the facts and circumstances in each case. Sea Crest Cadillac, Inc. v. Larry Dimmitt Cadillac, Inc., DOAH Case No. 88-2252 (Fla. Dept. of Highway Safety and Motor Vehicles 1989), aff'd Larry Dimmitt Cadillac, Inc. v. Sea Crest Cadillac, Inc., 558 So.2d

      136 (Fla. 1st DCA 1990).

      
      

   2. In determining the relevant community or territory, the area described in the contract is a material fact entitled to "great weight." However, it is not conclusive. Bill Kelley Chevrolet, Inc. v. Calvin, 308 So.2d 199, 201 (Fla. 1st DCA 1974); Larry Dimmitt, 558 So.2d at 136.

      
      

   3. Consumers do not treat Orange and Seminole counties as a single interconnected market. There is very limited cross-sell across counties. Consumer behavior shows that Orange County is the appropriate community or territory. Even if Seminole and Osceola counties are considered to be the community or territory, Kawasaki is inadequately represented.

      
      

   4. Inadequate representation may be demonstrated in the community or territory as a whole, or in an identifiable plot within the community or territory. Dave Zinn Toyota, Inc. v. Department of Highway Safety and Motor Vehicles, 432 So.2d 1320, 1322 (Fla. 3d DCA 1983), (community or territory as a whole); Bill Kelley Chevrolet v. Calvin, 322 So.2d 50, 52 (Fla. 1st DCA 1975) cert. denied 336 So.2d 1180 (Fla. 1976)(identifiable plot within a community or territory). If Orange, Seminole and Osceola counties are considered to be the community or territory, Orange County may be considered to be an identifiable plot within the community or territory.

   
   

   8. Legislative Purpose

   
   

   1. Section 320.642 was not enacted to foster combinations to prevent the introduction of dealer competition which is reasonably justified in terms of market potential. Bill Kelley Chevrolet, 322 So.2d 50 at 52. The express goal

      of Chapter 320 is to protect the welfare of Florida citizens by: (1) maintaining competition; (2) providing consumer protection and fair trade; and (3) providing minorities with opportunities for full participation as motor vehicle dealers in the community. Section 320.605.

      
      

   2. The addition of OYK as a Kawasaki dealership in Orange County will advance the legislative purpose for Section 320.642. It will protect the welfare of Florida citizens by providing additional competition and consumer benefits such as enhanced competition in service, availability, and price.

   
   

   9. Section 320.642(2)(b)3. and 11: Reasonably Expected Market Penetration And Volume of Registrations of Existing Dealers

   
   

   1. Kawasaki's reasonably expected market penetration in the community or territory is appropriately determined by comparing a metropolitan market that is performing adequately. That market is Duval County. Such comparison markets are routinely used instead of state or national averages as the appropriate standard to determine performance in the market at issue. See, Teriy Ford Company and Ford Motor Company v. Hollywood Ford, Inc., DOAH Case No. 94-402, page 7, (Fla. Dept. of Highway Safety and Motor Vehicles 1995); American Suzuki Motor Corp., and Fun Stream Recreation, Inc. v. Mechanical Services of West Palm Beach, Inc. and Deerfield Suzuki, Inc., DOAH Case Nos. 94-6991 and 95-27, page 17, (Fla. Dept. of Highway Safety and Motor Vehicles 1995).

      
      

   2. Even if the market penetration in the community or territory is compared to state and national averages, Kawasaki's penetration is inadequate. Kawasaki's Orange County market penetration has been well below reasonably expected levels since 1991. The level of registrations achieved by Kawasaki dealers selling motorcycles in Orange County has declined.

   
   

   10. Section 320.642(2)(b)10: Economic and Market Conditions

   
   

   75. Orange County has experienced considerable growth in the motorcycle market in the last few years. That growth is projected to continue. The same is true for the projected population growth in Orange County.

   
   

   11. Section 320.642(2)(b)6: Distance Between Existing Kawasaki Dealers and the Proposed Dealer Location

   
   

   1. The ability of existing Kawasaki dealers to sell Kawasaki motorcycles in the market diminishes with distance. Kawasaki cannot compete effectively with non-Kawasaki dealers located in east Orange County.

      
      

   2. Establishment of a Kawasaki dealer at the proposed location will enable Kawasaki to offer better convenience to consumers. It will not threaten competitive advantages the existing Kawasaki dealers enjoy near their own dealerships.

      
      

   3. Existing Kawasaki dealers are so far from east Orlando that their sales are not likely to be substantially impacted by the addition of OYK. The location of the proposed dealership is three miles further away from the existing dealer in Orange County than was the second Kawasaki dealership that previously existed in Orange County.

   
   

   12. Section 320.642(2)(b)9: Adequacy of Competition

   79. An inter-brand competitor in east Orlando, Yamaha, offers greater convenience to east Orlando consumers. That has resulted in inadequate Kawasaki inter-brand competition in Orange County as a whole. Kawasaki's market share is low. Its effectiveness in Orange County has declined.

   
   

   13. Section 320.642(2)(b)9: Adequacy of Convenient Consumer Care for Kawasaki

   
   

   80. Existing Kawasaki dealerships in west Orange County and in Seminole County are not conveniently located to provide adequate Kawasaki sales and service in east Orlando. A Kawasaki dealer in east Orlando will benefit consumers. It will provide a growing number of Orange County residents with a more convenient place to shop for a new Kawasaki motorcycle and with a more convenient Kawasaki service location. It will also provide Orange County consumers with an increased inventory to choose from and expanded opportunities to compare the value and service offered by Kawasaki and other brand dealers.

   
   

   14. Section 320.642(2)(b)1: Impact On Existing Dealers

   
   

   81. Respondents presented no credible and persuasive evidence of any adverse impact on profitability or sales from the proposed dealership. The proposed dealership will not negatively impact existing dealers. The proposed dealership will bring additional exposure for the brand and additional opportunity for customers to comparison shop among brands.

   
   

   15. Section 320.642(2)(b)1: Impact on Kawasaki

   
   

   1. Kawasaki is currently losing available sales each year due to the inability of existing Kawasaki dealers to penetrate the Orange County market at reasonably expected levels. In light of the opportunity available, lost motorcycle sales are significant.

      
      

   2. Lost sales are due in relevant part to the inability of existing dealers to adequately represent Kawasaki in a large and expanding market. The addition of a Kawasaki dealer in east Orlando will make Kawasaki more competitive and enable it to capture a reasonable share of the market.

   
   

   16. Section 320.642(2) (b) 1: Financial Impact on the Protesting Dealer

   
   

   1. Existing dealers will not lose sales as a result of the addition of the proposed dealership. Even if some sales are lost, the manufacturer is not statutorily required to prove an absence of any financial impact on the protesting dealer. Monmouth Chrysler-Plymouth, Inc. v. Chrysler Corp., 509 A.2d 161, 168-69 (N.J. 1986).

      
      

   2. There are significant sales available, even if the projected growth of Orange County is disregarded. The proposed dealership will not have a negative affect on existing dealers.

   
   

   17. Section 320.642(2) (b)2: Dealers' Investment To Comply With Dealer Agreements.

   
   

   86. Respondents introduced evidence of additional investments in their respective facilities since acquiring their Kawasaki dealerships. Neither of the dealers offered any evidence that the investments were made to comply with their dealer agreements, were suggested by Kawasaki, or were undertaken

   primarily to serve Kawasaki. The investments, were made at the dealers' own instance and do not demonstrate that the need for an additional dealership should go unsatisfied.

   
   

   18. Section 320.642(2)(b): Weighing of the Factors.

   
   

   1. Conflicting factors in Section 320.642 must be balanced. Graham v. Estuary Properties, Inc., 399 So.2d 1374, 1378 (Fla. 1981). The appropriate weight to be given each factor is not prescribed statutorily but varies depending on the facts in each case. North Ridge General Hospital v. NME Hospitals, Inc., 487 So.2d 1138, 1139 (Fla. 1st DCA 1988).

      
      

   2. Taking each of the factors listed in Section 320.642 into consideration, existing Kawasaki dealers are not adequately representing Kawasaki in the relevant community or territory. Kawasaki satisfied its burden of proof. Kawasaki showed that an additional dealership at the proposed location is appropriate.

   
   

   RECOMMENDATION

   
   

   Based upon the above findings of fact and conclusions of law, it is,

   
   

   RECOMMENDED that a Final Order be issued granting the application of OYK to establish an additional Kawasaki dealership at 9334 East Colonial Drive, Orlando, Orange County, Florida.

   
   

   DONE and ORDERED this 5th day of January, 1996, in Tallahassee, Leon County, Florida.

   
   

   
   

   DANIEL S. MANRY, Hearing Officer Division of Administrative Hearings The DeSoto Building

   1230 Apalachee Parkway

   Tallahassee, Florida 32399-1550

   (904) 488-9675

   
   

   Filed with the Clerk of the Division of Administrative Hearings this 5th day of January, 1996.

   
   

   ENDNOTES

   
   

   1/ All references herein to Sections, unless otherwise noted, shall be to Florida Statutes (1993).

   
   

   2/ The argument the term "community or territory" is defined as in Section 320.642(3)(b)1 as the 12.5 mile circle around each dealership has been repeatedly rejected. Gulf Oldsmobile GMC Truck, Inc. v. Stinnetts' Pontiac Service, Inc. DOAH Case No. 90-3030, Order dated August 14, 1990; and Coral Oldsmobile-GMC Truck, Inc. v. King Motor Company, DOAH Case No. 91-0861, Order dated August 6, 1991, attached, as Exhibits A and B.

   
   

   3/ Larry Dimmitt Cadillac, Inc. v. Seacrest Cadillac, Inc., 558 So.2d 136 (Fla. 1st DCA 1990).

   
   

   APPENDIX TO CASE NO. 95-3852

   Respondents' Proposed Findings Of Fact 1.-2. Accepted in substance

2. Accepted in part and rejected in part as not supported by credible and persuasive evidence

4.-5. Rejected as not supported by credible and persuasive evidence

6. Rejected as irrelevant and immaterial

7.-8. Rejected as not supported by credible and persuasive evidence

9. Rejected as recited testimony

10.-12. Rejected as not supported by credible and persuasive evidence

13. Rejected as irrelevant and immaterial

14.-17. Rejected as not supported by credible and persuasive evidence

18.-19. Rejected as irrelevant and immaterial

1. , 22. Rejected as not supported by credible and persuasive evidence

2. Rejected as irrelevant and immaterial

COPIES FURNISHED:

Dean Bunch, Esquire Cabaniss & Burke, P.A. 909 East Park Avenue

Tallahassee, Florida 32301

Richard Weber, Esquire 9334 East Colonial Drive Orlando, Florida 32817

Lon Wagner, Qualified Representative 3812 Heatherington Road

Orlando, Florida 32808

Charles J. Brantley, Director Division of Motor Vehicles

Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500

Enoch Jon Whitney, Esquire General Counsel

Neil Kirkman Building Tallahassee, Florida 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.

Docket for Case No: 95-003852

Orders for Case No: 95-003852