The Issue Whether Kawasaki Motors Corporation, U.S.A. (KMC) should be permitted to establish an additional franchised dealership for the sale of Kawasaki motorcycles, as Fun By Land and Sea, Inc. (FBLS), to be located at 3566 U.S. 92, Daytona Beach, Volusia County, Florida, pursuant to the standards established in Chapter 320, Florida Statutes.
Findings Of Fact Petitioner KMC is a licensed distributor of motor vehicles, to wit: Kawasaki motorcycles, and is authorized to sell to its dealers in Florida. Petitioner FBLS is an applicant for a Kawasaki dealership to be located at 3566 U.S. 92, Daytona Beach, Florida. Its principal is Jeffrey R. Bankston. FBLS proposes to be a multi-line dealership, carrying Ducati motorcycles, Aprilia motorcycles and scooters, assorted all terrain vehicles (ATVs) and other assorted accessories and merchandise in addition to Kawasaki products. Respondent DFM, the existing Kawasaki motorcycle dealer in Daytona Beach, Florida, is located at 480 Ridgewood Avenue, Holly Hill, Florida, which is 8.3 miles, by straight-line distance, and 12.5 ground miles from the proposed FBLS location. Its principal is Chris Gray. DFM also is a multi-line dealership, selling the following brands and products in addition to Kawasaki motorcycles: Honda, Yamaha, and Victory motorcycles, assorted ATVs, and personal watercraft and jet boats made by Sea Doo, Yamaha, and Kawasaki, and accessories and apparel of the named manufacturers. DFM has standing to protest, and timely protested, the proposed establishment of FBLS as a Kawasaki dealership, pursuant to Section 320.642(3), Florida Statutes. This proceeding is governed by Section 320.642, Florida Statutes, which sets forth the conditions for establishment of an additional dealership. Pursuant thereto, KMC may establish a new dealership if the existing franchised dealer, DFM, is not providing adequate representation of Kawasaki motorcycles in the subject community or territory. While the statute lists eleven factors which may be considered in making the determination that adequate representation is not being provided, the statute does not define "community," "territory," or "adequate representation." Information for the eleven factors overlaps in many ways. Therefore, except as noted hereafter, the eleven factors will be discussed together. For purposes of the instant proceeding, factor five, (coercion of a dealer by a manufacturer not to file a protest) is not an issue. See Finding of Fact 6. According to every standard KMC regularly uses, DFM was not meeting KMC's sales expectations at the time (1999-2000) KMC was deciding to add FBLS as a dealership. KMC does not consider DFM a "bad dealership," just one that is located in a market area that is too big for one dealer to effectively promote its product. The proposed new sales point for FBLS, commonly called an "add-point location," is located in Volusia County, Florida, which has more than 300,000 population, according to the most recent estimate of the University of Florida Bureau of Economic and Business Research. Statistical Information Due to DFM's protest, KMC re-analyzed the area served and the adequacy of DFM's representation by employing Mr. Thomas W. Longo. Mr. Longo holds a B.S. in system science engineering and an M.B.A. He has approximately fourteen years of hands-on experience with retail network analysis and network analysis of motor vehicle sales statistics. Mr. Longo was accepted as an expert in dealer network analysis.1 For his analysis, called an "Open Point Study," Mr. Longo relied on consumer behavior data commonly utilized in defining a "community or territory" (Comm/Terr), provided by the Motorcycle Industry Council (MIC), and demographic data from Claritas, which demographic data also is commonly used in the motor vehicle industry. The motor vehicle industry is unique in gathering data for all vehicles which are sold in the United States. This data permits examination of what consumers actually have done, as opposed to projecting what they may do in the future based upon a sample of less specific data. The consumer data used for Mr. Longo's analysis was provided by MIC, which collects the sales information from the major motorcycle manufacturers, assembles the data, and provides it back to the contributing manufacturers. This information includes certain attributes about the sale: when it was made, what type of motorcycle was purchased, and where the customer resides. MIC collects data on street-legal, on-road motorcycles, off-road motorcycles, ATVs, motor scooters, and dual-purpose motorcycles, which may be licensed and used on-road but which are often used for off-road purposes. Although MIC data contains information for all motorcycle products, only on-road motorcycles and dual-purpose motorcycle sales may be used for purposes of establishing adequacy of representation under Section 320.642, Florida Statutes. Mr. Longo's study used only such permissible data, which he then "broke-down" and cross-referenced in a variety of ways. A Metropolitan Statistical Area (MSA) constitutes an identifiable market area. A primary market area (PMA) represents the area, or identifiable plot, in which an existing dealer has, or a proposed dealer should have, a competitive advantage over same line-make dealers by virtue of the resident dealer's location. Within his overall assessment, Mr. Longo takes known and recorded motorcycle industry purchase behavior data and looks at it spatially. Part of the purpose of relying on actual purchase behavior patterns rather than making projections based on mean or median "demographics," such as population (numbers and age), income, employment, etc. factors, is to avoid marketing only to the mean or median of each demographic instead of marketing to all consumers on a geographic basis. Marketing to all consumers on a geographic basis is common in the motor vehicle industry and recognized by the case law developed under the controlling statute. Moreover, marketing of motor vehicles does not equate with most portable retail sales which are often marketed in single large multi- retailer locations such as malls, and for which buyer residence tracking is limited or impossible. In determining Comm/Terrs, PMAs, and markets generally, it is appropriate to consider the area assigned to the protesting dealer by KMC in its dealership franchise agreement, but consideration is not limited to that assigned area. Mr. Longo assigned each Kawasaki dealer, including Respondent DFM, a PMA with a radius of five miles around its dealership. This is the area typically indicated in the dealership franchise agreement. However, Mr. Longo considered this distance to be too small to constitute a reasonable area for analysis of market penetration. For instance, a five-mile radius would be even less than the distance provided by law for an existing dealer to qualify as a protestant against a proposed add-point dealer. Initially, each existing and proposed dealer in the area of the proposed add-point dealer plus the fringe, or surrounding area, was assigned the census tracts, as determined by the federal government after the most recent ten-year census, which are closest to that dealer or to the dealer who made the plurality of sales in the tract. All census tracts were assigned by distance, except for a few tracts in the Deltona area of Volusia County which were assigned to the dealer in Longwood, Seminole County, because the highly accurate past-sales information clearly showed that dealer had made the plurality of sales in those tracts. The area was then narrowed further. "In-sell" is a sale into one market by a dealer outside of that market. Nine Kawasaki dealers in St. Johns, Marion, Lake, Orange, Osceola, and Brevard Counties occupy the area surrounding the Volusia and Flagler County area. Consumer behavior data referred-to as "cross-sell" data, indicated that very few of the Kawasaki sales by these nine dealers were made to customers residing in Volusia and Flagler Counties. The vast majority of the sales into this area were made by protestant- Respondent, DFM. On this basis, all areas in the fringe surrounding Volusia and Flagler Counties were excluded from the Daytona Comm/Terr as defined by Mr. Longo. The Daytona Comm/Terr was defined as most of Volusia County (absent a few census tracts near Deltona) and Flagler County. At the present time, without any other Kawasaki dealer being located therein, DFM has a geographic sales advantage in the Daytona Comm/Terr. In a similar way, Mr. Longo used the assignment of census tracts within the Daytona Comm/Terr which are generally closest to DFM, and those generally closest to the add-point proposed for FBLS, together with consideration of the road network, to construct the PMAs. The "Daytona PMA" is the area in which DFM is located and in which it has a geographic advantage, and will continue to have that advantage, even if FBLS is permitted to open in the proposed location (add-point), which is the focus of this case. The "West Volusia PMA" is the area in which the proposed FBLS dealership would have a geographical advantage, if established. KMC, through Mr. Longo, defined the Jacksonville MSA as comprising four counties: Clay, Duval, Nassau, and St. Johns. KMC, through Mr. Longo, defined the Daytona MSA as comprising Volusia and Flagler Counties. Dr. Paul Mason, Ph.D., was accepted as Respondent DFM's expert in micro- and macro-economic analysis, research design, and statistical analysis of economic conditions and factors. He has never done any studies directly related to motor vehicle sales or utilized MIC data. He testified that Mr. Longo's Open Point Study and Mr. Longo's conclusions therefrom do not meet market sampling standards for projecting future sales, including but not limited to the absence of a statistical analysis of comparative market share data such as median, standard deviation, or range of distribution; the absence of a served market analysis; the absence of an averaging of adequately served markets; the absence of a segment preference analysis by dealer, county, market area, or state; the absence of separate age, income, and employment analyses; the absence of a chi-square analysis; the absence of a brand preferences analysis; problems with small sample bias; and the absence of a regression analysis, as those terms and functions are normally utilized for projection of future sales of other retail goods and services. However, Dr. Mason did not perform the computations he recommended, and his arguments that the necessary information was not implicit or "baked-into" the motor vehicle sales data was not persuasive. Respondent DFM challenged the data utilized by KMC's expert, Mr. Longo, and the methodology by which he applied that data to reach a conclusion that the Daytona Comm/Terr and Daytona PMA is inadequately represented. DFM also took issue with using the Jacksonville MSA for comparison with the Daytona Comm/Terr and Daytona and West Volusia PMAs. However, the boundaries arrived-at by Mr. Longo for each of these areas were not disputed, and no alternative Comm/Terrs, PMAs, or MSAs were offered by Respondent.2 Therefore, KMC's uncontroverted definitions of the Comm/Terrs, MSAs, and PMAs are utilized throughout this Recommended Order. Mr. Longo selected the Jacksonville MSA as a local market area which is adequately represented. Selecting a local market area establishes a "benchmark" for "adequacy of representation" against which the Daytona Comm/Terr and DFM's Daytona PMA can be assessed for adequacy of representation. Respondent attacked Mr. Longo's underlying data and methodology of selecting the Jacksonville Comm/Terr and MSA as deficient or misleading for purposes of assessing inadequacy of DFM's representation of KMC, on the same theories (see above) as it attacked his ultimate conclusions based upon his Open Point Study (analysis). However, despite Respondent DFM's cross- examination of Mr. Longo, independent evidence, and expert's opinion,3 it is found that the Jacksonville MSA is a viable benchmark for measuring adequacy of representation in this cause because the Jacksonville MSA is separate, local, adjacent, and does not overlap the Daytona Comm/Terr; it is not the highest- or lowest-served area; and it was tested against the state as a whole and against the nation as a whole, with adjustments for areas where there are no Kawasaki dealers at all; it is based on actual Kawasaki dealers' performance, adjusted for segment sales and popularity by calendar year to account for Kawasaki's model- mix change over time4; and insofar as possible, it removed from consideration those differences for which the dealer(s) or manufacturer cannot be held accountable. Finally, the Jacksonville MSA is a reasonably stable market for Kawasakis, based on the length of time the Kawasaki dealers there have been in operation, and in the Jacksonville MSA, Kawasaki has parity with three dealerships to three dealerships of Honda, Yamaha, Suzuki, and Harley-Davidson. In so finding, Respondent's expert's testimony has not been ignored. However, despite Dr. Mason's concerns, it appears that Mr. Longo's segmentation process took into account all of the necessary statutory components. Rather than looking at demographics and buyer profiles and comparing average customers to the rates at which motorcycles are purchased, segmentation is based on what those customers actually purchased. Therefore, the motorcycle sales data utilized by Mr. Longo implicitly includes ("bakes-in") those demographic components which Dr. Mason perceived as missing or unaccounted-for, even if Mr. Longo used a methodology different from that preferred by Dr. Mason. "Market share" represents the sales of a manufacturer, such as KMC, in proportion to the business available in a particular market. By measuring Kawasaki's penetration in each segment achieved in the Jacksonville MSA compared to the industry available in each segment in the Daytona Comm/Terr, an appropriate standard was established by Mr. Longo for the market share penetration KMC should reasonably expect in the Daytona Comm/Terr if KMC were receiving adequate representation. The Jacksonville MSA market share exceeds the Florida average market share for Kawasaki. Comparing either market share is acceptable under the statutory scheme and case law, but the Jacksonville MSA is a more accurate standard in this case than the Florida average for the reasons already set out and because the Florida average is composed of Kawasaki's performance in areas with adequate, inadequate, and no representation. By comparison, many areas of the Daytona Comm/Terr plus the fringe area are exceeding the Jacksonville MSA, and DFM has been increasing its share, with fluctuations, for three years, but the Daytona Comm/Terr as a whole is still only 66.7 percent of the Jacksonville market, or about two-thirds of what KMC should expect. DFM's performance is not adequate by the Jacksonville MSA standard in the Daytona Comm/Terr or in either DFM's Daytona PMA or in the West Volusia PMA, assigned to FBLS. Examination of the performance of Kawasaki as a brand in the Daytona Comm/Terr, utilizing the segmentation analysis, reveals that the efforts of all Kawasaki dealers selling into this area have failed to achieve a reasonably expected market penetration consistently during the period 1997 through the first eight months of 2000. Comparing the performance of Kawasaki in the Daytona Comm/Terr or DFM's Daytona PMA to either the Jacksonville MSA or the more conservative Florida average shows that Kawasaki has not achieved a reasonably expected market penetration. By either measure, the Daytona Comm/Terr's performance ranged between 50 percent of expected and 66.7 percent of expected, and much of this performance can be attributed to in- sell by other dealers outside the Daytona Comm/Terr. Similar patterns emerge when Kawasaki's penetration in the Daytona PMA and the West Volusia PMA is compared with expected penetration based on the Jacksonville MSA and Florida standards. Kawasaki's performance compared to the reasonably expected market share in the West Volusia PMA has remained consistently substantially below both the Florida and Jacksonville MSA standards for the period between 1997 and the first eight months of 2000. Oddly enough, Kawasaki's market penetration in the West Volusia PMA is slightly higher than it is in the Daytona PMA, where DFM is located. It is clear that DFM, the only dealer in the Daytona Comm/Terr, has not adequately represented Kawasaki even in its own PMA, but it is less clear why Kawasaki is doing better in the West Volusia PMA. The probable reason is in-sell.5 In defining the Comm/Terrs, MSAs, and PMAs, Mr. Longo considered actual past sales performance as controlled by the number of dealers, location of each dealer, and operation of each dealership, the three elements he perceives as elements of "the dealer network." A problem with the dealer network is the likeliest cause of inadequate representation. For example, the problem could be caused by an inadequate number of dealers, the manner in which the existing dealerships are being operated, or the location of the dealerships. The economic and marketing conditions in the area were reviewed to determine the most likely cause. There is a significant density of population in the area of the proposed FBLS dealership in West Volusia, which presently has no Kawasaki dealership which has demonstrated an ability to serve it. The whole Daytona Comm/Terr, as well as both PMAs, has experienced a significant household growth since 1980. These trends are predicted to continue through 2005. Industry experience has indicated that there is a sales component for motorcycles associated with household units. Demographic factors also indicate both the Daytona and West Volusia PMAs are each conducive to selling new motorcycles. They both contain a reasonable mix of upper and middle-income areas. The median household income of the new motorcycle buyer falls into the range around $50,000. Average annual employment in Volusia and Flagler Counties has grown by approximately 19,000 jobs between 1990 and 2000, indicating a generally healthy economy, and confirming the growth in the area. The current and future demographic factors indicate that the addition of a dealer is justified in terms of the economic factors and also indicate that inadequacy of representation is not due to demographic or other factors unrelated to the dealer network. In terms of growth of the total motorcycle industry, as reflected by the on-road and dual-purpose segment, there has been a substantial increase in the amount of the total industry sales available since 1996. This increase is present in both the Daytona PMA and the West Volusia PMA. The total motorcycle industry sales within the Daytona Comm/Terr have doubled from 1997 through August 2000, from 683 to 1,368. During this same period, DFM's sales into the Daytona Comm/Terr have increased from 43 to 69, an increase of 60 percent, while sales of other Kawasaki dealers to customers in the area have increased 300 percent, from 14 to 57. Respondent's suggestions that the stable and influx populations of the Daytona Comm/Terr are aging faster than the population of the Jacksonville MSA and that the Daytona market's increased employment statistics are somehow shaded by most new jobs being in the low-paying tourist industry as opposed to in industries paying over $50,000 per year involve comparing apples and oranges as applied to actual motorcycle sales made predicting potential sales to be made. In light of the growth in the total available motorcycle market in the Daytona Comm/Terr, measured by total industry sales, coupled with the demographic and employment characteristics, DFM's low market- share inadequacy is not due to local demographic or economic factors or lack of growth in the motorcycle industry, but is most likely due to DFM's inability to keep pace with the growth in its market. According to Mr. Longo's explanation, by examining the curve between zero and 100 percent of the marketing effort, the appropriate number of outlets in a market can be determined. For example, in the Daytona Comm/Terr, where Kawasaki is now solely served by DFM, Kawasaki has 10 percent of the franchises, whereas in the Jacksonville MSA, Kawasaki has 16.7 percent of the franchises. Kawasaki would be required to have two dealerships in order to have the same share of the franchises in the Daytona Comm/Terr that it has in the Jacksonville MSA. Therefore, in addition to DFM, the sole Kawasaki dealership present in the Daytona Comm/Terr at this time, a fraction of one more Kawasaki dealer is statistically necessary if Kawasaki's reasonably expected market share is to be reached in the Daytona Comm/Terr. The inadequate representation for Kawasaki in the Daytona Comm/Terr is not caused by population shifts or other demographic or income factors. Indeed, the Daytona MSA (Volusia and Flagler counties) population has grown at approximately the same rate as the Jacksonville MSA from 1990-1999, and has a higher predicted growth rate between 2000 and 2020. It is not unreasonable, based on the significant growth factors reviewed, to "round up" that need to add one more "real life" dealer at this time. Respondent's argument that one dealer should not be added because only "one-half" (actually seven-tenths) of an additional dealer has been statistically demonstrated as currently needed, based on figures now nearly one year old6, is rejected as unreasonable. The addition of one Kawasaki dealer would bring the Daytona Comm/Terr in line with other Florida markets in terms of available sales opportunities per dealer. See Findings of Fact 38 and 84. In the Daytona Comm/Terr, there are eleven competing motorcycle franchises. Yamaha and Honda have two each. Kawasaki has only one, DFM. DFM sells Kawasaki, Honda, and Yamaha motorcycles. FBLS' proposed location will be at a greater distance from DFM than the distance between the two existing Yamaha dealers and between the two existing Honda dealers, respectively. The addition of one Kawasaki dealer would bring KMC in parity with those manufacturers' presence in the Daytona Comm/Terr. The establishment of FBLS as an additional Kawasaki dealer is justified at this time based on the size of the market, measured in comparison to the Jacksonville MSA and the number of Kawasaki dealers and competitors there, and based on the comparative insufficiency of intra-brand competition (competition with other Kawasaki dealers) in the Daytona Comm/Terr. Inter-brand competition (competition with other brands) in the Daytona Comm/Terr also compares unfavorably with the Jacksonville MSA. The addition of a dealer in the Daytona Comm/Terr would increase convenience for Kawasaki customers in that area. The proposed location of FBLS in the West Volusia PMA is an area which is centrally located between the two major population centers in the Daytona Comm/Terr. It is very near the confluence of the major high speed thoroughfares in Volusia County, namely Interstate 95, Interstate 4, and U.S. 92. Mr. Ben L. Dyer, the Volusia County official in charge of the county's comprehensive plan, reported that a new highway was planned to intersect at U.S. 92 near the proposed dealership and run north to Flagler County, where a large Development of Regional Impact (DRI) also is planned. From a geographical standpoint, the Daytona Comm/Terr is large, approximately 60 miles from north to south. Even so, the driving distance between DFM and the proposed FBLS location is 15 and 18 minutes, compared to the 10-minute drive required to drive from one Honda dealership to the other and from one Yamaha dealership to the other in Daytona Beach. Locating FBLS as proposed would provide greater convenience to consumers, bring Kawasaki into greater parity with other manufacturers selling in the area, and still, presumably, have less impact on DFM than additions of new dealerships had to existing dealerships of other line-makes. The proposed add-point location will increase customer convenience by minimizing the distance which motorcycle buyers must travel to get to the nearest Kawasaki dealership. Respondent DFM offered no alternative proposed location for an additional dealership, but contended that KMC proposed to establish FBLS in the wrong place. DFM's contention appears to be that the add-point location is too far east of expected growth centers, particularly Deland and western and southwestern fringe areas of the Daytona Comm/Terr, to draw a supporting population of Kawasaki buyers. To this end, it was shown that there is a relatively low population in most of the two mile incremental, concentric circles (not census tracts) surrounding FBLS, due to conservation areas, dedicated lands, and burned-out areas. However, based on the evidence as a whole, it appears that although FBLS' proposed location on U.S. 92 (International Speedway Boulevard) is at the edge of current growth in the east Volusia/Daytona Beach area, growth of commercial development in Volusia County is generally towards the west. Further, although lands in the central part of the county have been set aside for conservation and other purposes and may not be developed, and although some of the area is set aside for only one residential dwelling per acre, the proposed FBLS location is very near the confluence of the three major highways which traverse Volusia County, namely, Interstate 95, Interstate 94, and U.S. 92. Therefore, the proposed location offers excellent accessibility to all areas of the Daytona Comm/Terr, including all areas of Volusia and Flagler counties. In addition, Mr. Richard Prioletti, the Daytona Beach planning administrator, testified that commercial growth was generally to the west, with the City of Daytona Beach being primarily "built out" and not available for additional development. Mr. Prioletti also confirmed that a Ford motor vehicle dealership and a Chevrolet motor vehicle dealership were relocating from downtown Daytona Beach to the intersection of Interstate 95 and LPGA Boulevard.7 Therefore, the fact that there may not be current substantial population within a short distance of FBLS' proposed add-point location does not eliminate it as an appropriate location, because it is appropriately located to serve all areas of the Daytona Beach Comm/Terr; appropriately located to capture in-sell now going out of the area to other dealers; and its business location is not contrary to the population and other similar business movements in the area. Respondent DFM did not give a clear estimate of the amount of lost business it would sustain as a result of the add- point dealership, either in terms of numbers of sales or financial impact, but its contention and its lay and expert witness testimony is that due to Mr. Gray's competitive nature and the allegedly unrealistic sales projections of Mr. Bankston on behalf of FBLS, a price war will ensue if FBLS is allowed to enter the Daytona Comm/Terr; that the price war will hurt DFM's business; and that the price war will drive FBLS and/or DFM out of business entirely, thereby unfavorably impacting consumers as well as the two dealers. The dealer franchise agreement between DFM and KMC specifies that the dealer is an independent businessperson and it is within the dealer's sole discretion as to how to operate its dealership. The same language will apply to FBLS if KMC is permitted to establish it. KMC is not obligated to, and has no way to, ensure either dealer's success or to prevent a price war if Mr. Gray and Mr. Bankston launch one. The only quantifiable evidence of an ensuing price war offered by DFM is that it currently has a 15 percent profit margin on the type of Kawasaki motorcycles cognizable by this statute, but would have to accept a margin of four to five percent to capture customers it is currently losing to in-sell dealers. Mr. Gray inferred thereby that he would have to make the same or a better deal to Kawasaki customers targeted by the proposed new dealership, based on FBLS's application information. His inference is not exactly a "price war," as commonly understood, and in terms of the impact that a new dealer may have on DFM, it is not highly significant, since DFM is willing to cut its profit margin to five percent now in order to capture in-sell. See Findings of Fact 89 and 92. Assuming, arguendo, that a price war ensues, customers would at least have a short-term cost benefit and no long term disadvantage if only one dealer does not make the competitive cut. However, for the following reasons, it is probable that the increased competition would not damage either DFM or the potential FBLS. Mr. Longo's estimate of sales of the proposed dealership, which is based on total industry motorcycle sales availability, rather than population, and based on 1999 data, shows FBLS as potentially selling 42 Kawasaki on-road and dual- purpose motorcycles in 1999 within 20 miles from the proposed add-point location. Mr. Bankston's application to KMC in 2000, estimated that FBLS would sell 150 new units from the proposed location. However, his estimate included 30 sales of Ducati motorcycles and 40 sales of Aprilia motorcycles and scooters, leaving 80 estimated Kawasaki sales. Mr. Bankston's estimate of 80 Kawasaki units included both on-road and off-road units and also included his estimate of the total sales of Kawasaki products he was going to make, not limited to those customers residing within 20 miles of FBLS's proposed location. Therefore, contrary to DFM's contention, it is found that Mr. Longo's year 1999 sales-estimate of 42 Kawasaki units cognizable by this statute to be sold within a 20-mile radius is not inconsistent with FBLS's 2000 sales-estimate of a total 80 Kawasaki units of all kinds to be sold to any location as set out in its dealer application. See Findings of Fact 3, 5, and 17. Gross sales loss takes into account only those census tracts which do not perform up to the expected potential for Kawasaki. Gross sales loss is the most appropriate manner to determine available opportunity, because it does not mask areas of loss with other areas of gain. For example, if the eastern half of a market was a certain number of units higher than expected, and the western half has the same number lower than expected, using a net sales analysis, there would appear to be no available sales opportunity for a brand. Mr. Longo's utilization of the gross sales loss concept avoids this masking. The gross sales loss in the Daytona Comm/Terr, as measured by Mr. Longo in those census tracts which did not reach the reasonably expected market penetration, was 65 units for the last full year measured of 1999. These 65 units presented a sales opportunity available to DFM, as did 40 units of in-sell, or 40 Kawasaki units sold by dealers outside of the Daytona Comm/Terr to customers residing inside the Daytona Comm/Terr. Utilizing the Jacksonville MSA as a standard, there was a total lost opportunity of 105 units which has not been gathered into DFM's coffers but which still would be available for DFM to compete for against FBLS, if FBLS is established as an add- point. If FBLS performs as expected in terms of its ability to sell motorcycles at various distance rings from its proposed location, it should not unfavorably impact DFM, or any impact need not be significant. The level of competition forced by the personalities of the respective principals of DFM and FBLS, is not quantifiable, but with 105 available units to compete for, it looks like a fairly level playing field. Even if the in-sell figure is removed, a gross loss (potential sales opportunity) of 65 units should provide good competition without unfair leverage by either dealer. Even if the more conservative Florida average standard is utilized to generate the potential gross loss, the gross loss of 49 units, plus the in-sell of 40 units, exceeds FBLS's projected total Kawasaki sales (not just sales of on-road units). At present, the Daytona Comm/Terr has 1,064 total available sales per dealer with only one dealer, DFM. Therefore, the proposed dealership will only bring the Daytona Comm/Terr in line with other markets. In terms of the availability of business for DFM and the add-point dealer to compete for, the addition of FBLS will place the Daytona Comm/Terr within the same range of available total industry sales per dealer as is currently the case in the Jacksonville MSA and other surrounding MSAs. Upon the credible evidence as a whole, it is found that the establishment of FBLS will benefit consumers by stimulating better prices overall and provide a more convenient place to shop for Kawasaki motorcycles and more convenient Kawasaki service without damaging either DFM or FBLS. The addition of a dealership would benefit KMC in terms of additional sales of motorcycles and market share. No evidence was presented that the existing DFM facility is inadequate or in any way inferior. In fact, a videotape and other evidence reveals an attractive, spacious, well-stocked location which should entice customers. See Finding of Fact 114. However, Kawasaki's market share deficiency demonstrates that something is preventing DFM from attaining an adequate market share for Kawasaki. The evidence as a whole suggests that the location is to blame. DFM presented evidence concerning Mr. Gray's total investment at DFM's existing location, including but not limited to its size, staff, expenses, shelf space, product lines and taxes. This investment was not broken down in any meaningful way as to Kawasaki products or related specifically to the Kawasaki dealer franchise agreement. DFM sells many other products. See Finding of Fact 5. Nonetheless, it is a substantial investment as to shared areas and items, which may not be easily separated. As to factor seven (proof that consumers would benefit by changes other than the addition of a new dealership), there was no persuasive evidence. Only Mr. Longo listed dealer- controllable generic methods which are known to improve market penetration8, but he listed these generally, and they were not specifically tied to what DFM could, or would, do. No nexus to "consumer benefit" was shown. It was not demonstrated that any of these generic methods were not currently being used or that increasing their use would be significant in this situation, and DFM did not commit itself to increasing any of these methods. DFM did commit itself to taking affirmative action to capture in-sells, that is, to avoid the loss of sales to Kawasaki dealers outside the Daytona Comm/Terr, specifically Orlando and St. Augustine (St. Johns County), but no specific strategy was expressed except for instructing DFM staff to be willing to immediately cut DFM's profit margin from 15 percent to five percent to combat in-sell.9 There was no evidence that DFM desired to relocate its facility location, but Mr. Longo advised against this as a means of one dealer attempting to cover an area actually requiring two dealers for effective marketing. Petitioner KMC, the manufacturer, does not suggest that DFM, the protesting dealer, has breached its dealership agreement. This eighth statutory factor cannot reasonably be read to include a breach by the manufacturer, but to the extent such a breach might have any bearing, it has been considered below under the heading, "Anecdotal Information." Anecdotal information Mr. Gray testified that whereas his other motorcycle brands, Honda and Yamaha, attempted to restrict the availability of product, KMC had not. How this situation resulted in the lower profit margin on KMC products that he was attempting to prove was not made clear, especially in light of his asserting DFM was willing to immediately reduce its profit margin on Kawasaki motorcycles to five percent in order to capture in-sell into the Daytona Comm/Terr. See Findings of Fact 76 and 89. DFM complained that it has not been able to sell Kawasaki police bikes since 1995. Various witnesses speculated that this was the result of a change in specifications by law enforcement; inferior product from the manufacturer, KMC; poor marketing of police bikes by DFM; or poor service by DFM. No proven causation emerged, and no statistic helped identify police bike marketing as a problem unique to DFM. Moreover, it is not unreasonable to expect that in the five intervening years, DFM would have revitalized its marketing share lost on police bikes. Respondent presented anecdotal, as opposed to statistical, information to the effect that the Daytona Comm/Terr (and inferentially DFM's PMA) is dominated by cruiser sales and that DFM has had difficulty marketing Kawasaki cruisers because they are inferior or outdated; because KMC does not offer financing plans which are competitive with other motorcycle brands' financing plans; and because KMC has warranty problems. Respondent represented that these were elements DFM, as the dealer, could not control. Assuming arguendo, the inferiority, if any, of Kawasaki's cruisers and that problems exist in marketing them, that variable would have been eliminated for statistical comparison by the Longo study, which only compared actual sales as opposed to making sales predictions based on past median behaviors. The statistical study actually shows the Jacksonville MSA as a bigger cruiser market than the Daytona Comm/Terr. Assuming arguendo, but not ruling, that product model inferiority, non-competitive financing plans, and warranty problems were somehow not "baked into" the Longo study like all other variables contained in past sales, these problems still would cut across model and dealer lines and not present marketing problems unique to DFM, its PMA, or the Daytona Comm/Terr. Likewise, it is of no consequence that the Longo Study did not give particular attention to the hours of service of various Jacksonville MSA dealers, as hours of operation are at the discretion of each dealer and a component of each dealer's actual sales accomplished, which sales data Mr. Longo utilized. Also of no consequence is the presence of a U. S. Navy base near one of the Jacksonville dealers. Respondent's witnesses contended, based on mostly stale experience, that naval personnel often shop there (near work) providing a Jacksonville MSA sales advantage. No information was provided as to what percentage of that dealer's customers were naval personnel who lived on-base or off-base, or who even purchased Kawasaki products. Nothing was demonstrated by Respondent's anecdotal evidence concerning the Navy base to legitimately vary the industry statistical data upon which Mr. Longo relied. Respondent DFM, the existing/protesting dealership is run by Chris Gray. Mr. Gray's family has been "in the business" for many years, and his wife, Christine, works in the dealership's office on a regular basis. KMC's district sales manager for DFM's location is Ken Couterier. As such, he services 45 dealers. He has been district sales manager for ten years in that location. Previously, he was a KMC district sales manager in Arkansas. Mr. Couterier's job is to maximize sales for KMC. KMC has found him to be an effective district manager in both locations. Mr. Couterier's district does not include the Jacksonville MSA. Therefore, Mr. Couterier had no effect on Kawasaki sales in that MSA. For purposes of this proceeding, DFM contends that Mr. Couterier has provided inadequate or subversive "support services" to DFM, due to the personal relationship between Mr. Couterier and Mr. Gray. The personal relationship between Mr. Gray and Mr. Couterier began to deteriorate in approximately 1992, when Mr. Gray's wife was having trouble getting rebates on Kawasaki's jet skis (not motorcycles) from headquarters. She approached Mr. Couterier for help while he was in Mr. Gray's office one day. While what was said is in dispute, the greater weight of the credible evidence is that Mr. Couterier said to Mrs. Gray something to the effect of, "Who held a gun to your head and made you become a Kawasaki dealer?" Whereupon, Mr. Gray heatedly told Mr. Couterier, in an intimidating manner, that he was out of line. Since that time, Mr. Couterier has not visited DFM on any regular basis, and attempts by third parties to heal the rift have failed. Mr. Gray eventually got his jet ski rebates, although response from the head office (not from Mr. Couterier) was admittedly slow. James Capps is the KMC executive who oversees Mr. Couterier and approximately 600 other KMC district managers in 22 states and the District of Columbia. He made the decision to add a new dealership. Mr. Capps has met with Mr. Gray and/or Mr. Gray's family members and sales manager on at least three occasions to hear their complaints concerning Mr. Couterier, which complaints involve anger over Mr. Couterier's handling of the jet ski rebate problem described in Finding of Fact 102, and their desire that Mr. Couterier call at the DFM dealership more often than he does. Mr. Capps refused Mr. Gray's request to replace Mr. Couterier as KMC's district sales manager and refused to provide Mr. Gray with a written job description for Mr. Couterier. It was not demonstrated how these refusals impeded KMC sales by DFM, or even if they did. It is not KMC's policy to require that any of its district managers visit each dealership on any regular schedule. If Mr. Couterier were to visit each of his 45 dealers on a regular rotation, he would see each one approximately every six weeks to two months, but that would not necessarily be effective management. Many of KMC's district managers' functions are performed by telephone. KMC provides its district managers with two telephones, two answering machines, a fax machine, and computers so that dealers can reach their district manager at all times. KMC also provides a telephone number for direct orders by dealers at all times. KMC will take any order for any vehicle at any time but will not guarantee delivery unless the order fits certain parameters. KMC "builds to order." Mr. Gray never complained that Mr. Couterier or KMC refused or failed to return his phone calls. Mr. Gray has never complained about motorcycle ordering problems with KMC. Mr. Gray has never complained about his cooperative advertising arrangement with KMC. Every year, Mr. Gray is issued a notebook outlining how he can take advantage of that arrangement. Mr. Gray does not always use all his advertising budget provided by KMC. Mr. Gray has never complained about extent or quality of KMC training pursuant to the dealership agreement. Mr. Gray never complained that he had trouble obtaining motorcycles from KMC. He even asserted that at all times he kept on DFM's floor one of every model motorcycle made by KMC, in every color. There was evidence that promotional events advertised by DFM were not well-coordinated by KMC and that the lack of coordination caused embarrassment to Mr. Gray and DFM. Mr. Gray's construction is accepted that the failure of celebrities to appear as promised by KMC made DFM "look like idiots," but no intentional act of KMC, Mr. Capps, or Mr. Couterier was demonstrated, and no nexus between these clearly egregious events and any DFM sales figures was shown to exist. Mr. Gray also contended that KMC breached its contract (statutory factor eight) with him and denied his opportunity for growth and expansion (statutory factor four) by failing to evaluate and review DFM's market share and evaluate it in comparison with other dealers and by not providing assistance in promoting the sale (assistance in marketing) of KMC products, but Mr. Capps and Mr. Couterier testified credibly that KMC provided DFM market share data monthly and more market share data at least two times a year at sales meetings. They did concede that no one from KMC sat down with Mr. Gray and specifically did subtractions and comparisons using that data; that no one specifically warned Mr. Gray that DFM was below KMC's expectation of a 15 percent market share; and that no one from KMC specifically advised Mr. Gray that he was experiencing in-sell problems. Mr. Capps, at least, felt these types of assistance should have been provided by KMC to DFM. However, with the exception of the in-sell problem, the other analyses could have been done by Mr. Gray himself from the data regularly `provided by KMC, and he is an independent businessperson. See Finding of Fact 75. Accordingly, it is found that KMC was in substantial compliance with its dealership agreement and that it was not demonstrated that anything Mr. Couterier or Mr. Capps did or did not do with regard to Respondent DFM accounted for DFM's sales not meeting KMC's expectations or a reasonably expected market share as demonstrated in the Open Point Study.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter its final order approving the establishment of Fun By Land and Sea, Inc., as a Kawasaki dealership at 3566 U.S. 92, Daytona Beach, Florida. DONE AND ENTERED this 4th day of June, 2001, in Tallahassee, Leon County, Florida. ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 4th day of June, 2001.
The Issue Whether El Sol Trading, Inc. (El Sol) should be permitted, over Respondent's protest, to establish an additional dealership for the sale of motorcycles manufactured by Jiangmen Qipai Motorcycle Co, Ltd. (QIPA Motorcycles) at 7000 Park Boulevard, Pinellas Park, Florida.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is an existing franchised dealer of QIPA Motorcycles. Its dealership is located at 6239 Park Boulevard, Pinellas Park, Florida. The driving distance between Respondent's dealership and the location of the new dealership El Sol proposes to establish at 7000 Park Boulevard, Pinellas Park, Florida, is roughly one mile.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Highway Safety and Motor Vehicles issue a Final Order denying El Sol approval to establish a new QIPA Motorcycle dealership at 7000 Park Boulevard, Pinellas Park, Florida. DONE AND ENTERED this 18th day of November, 2010, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of November, 2010. COPIES FURNISHED: Julie L. Jones, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Steve Hume, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Gloria Ma El Sol Trading, Inc. d/b/a Motobravo, Inc. 19877 Quiroz Court City of Industry, California 91789 Lindsey Park Eco Green Machine, LLC 7000 Park Boulevard, Suite A Pinellas Park, Florida 33781 David Dubin Seminole Scooters, Inc. 6239 Park Boulevard Pinellas Park, Florida 33781
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").
Findings Of Fact 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. 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. OYK is an existing dealer for Yamaha motorcycles. It is located in east Orlando, at 9334 East Colonial Drive. 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. 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 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/ 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. 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. 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. 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. 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. 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. 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. Adequacy Of Representation 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. Market Penetration 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 Polk data is used for years prior to January, 1994. Since then, sales are measured by the information compiled by MIC. 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. Polk data includes registrations of motor scooters registered for street use. Kawasaki does not compete in the motor scooter market. 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. 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 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. 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. 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 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. 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. 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. Duval County Comparisons 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. 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. 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. 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. 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. 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 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. 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. 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. 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. 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. 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. 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. Tri-County Comparison 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. Likely Cause 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. 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. Orange County has a population of more than twice that of Seminole County. Orange County is projected to continue its population growth through 2020. 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. Inter-brand Comparisons 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. 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 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. 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 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. 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 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 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. 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. 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. 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 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.
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.
The Issue The issue in this case is the propriety of Respondent's protest of a proposed establishment of a motorcycle franchise dealership in St. Petersburg, Florida, based on issues specifically within the purview of Sections 320.642 and 320.699, Florida Statutes (2006).1
Findings Of Fact The parties did not appear at the formal hearing. The parties did not object to the date, time, or place of the hearing. The representative for MotorSports represented by telephone to the administrative assistant for the undersigned that he did not intend to appear at the administrative hearing. However, the representatives for the other parties provided no advance notice of their intent not to appear at the hearing. The parties did not file a motion to continue or reschedule the hearing.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order finding that the protest filed by Respondent is proper regarding issues specifically within the purview of Sections 320.642 and 320.699. DONE AND ENTERED this 9th day of May, 2007, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of May, 2007.
The Issue The issue here presented concerns the attempted cancellation of the dealer franchise held by Ken's Kawasaki, Inc., petitioner, to sell Kawasaki motorcycles; specifically, Kawasaki Motors Corp, U.S.A., is taking action which would bring about the cancellation of Petitioner's motorcycle franchise. The alleged authority for considering the propriety of this action is as found in Section 320.641, Florida Statutes (1979).
Findings Of Fact The Petitioner, Ken's Kawasaki, lic., is a licensed-franchised Kawasaki motorcycle dealer in Gainesville, Alachua County, Florida. Its dealer license is as authorized by the State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, and its franchise is as issued by the Respondent, Kawasaki Motors Corp, U.S.A. The dispute arises following action on January 31, 1980, when the Respondent sent a letter to the petitioner indicating that the Sales and Service Agreement (franchise) between the parties would be terminated effective April 30, 1980. The reason for this termination, as expressed in the correspondence directed to the Petitioner, was the belief held by the Respondent that the terms and conditions of the aforementioned Sales and Service Agreement, in particular paragraph 26, subsection 4, allowed for the termination or cancellation if there was a "discontinuance if the operation of dealer's business for a period of five (5) consecutive days unless such discontinuance is the result of a national disaster," which term was felt to have occurred. In response to this notification of cancellation, the Petitioner through one of its owners filed a verified complaint before the State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles. This complaint was referred to the State of Florida, Division of Administrative Hearings, for consideration pursuant to Section 120.57(1), Florida Statutes, and the hearing was conducted on October 1 and 2, 1980, in Gainesville, Florida. (The procedural conduct of that hearing is as set forth in the transcript of the hearing.) The history of the Petitioner's franchise with Respondent began on February 3, 1978, with the acceptance by those parties of a Kawasaki 1978 Model Year Authorized Dealer's Sales and Service Agreement. This agreement terminated on September 30, 1978. This franchise was then extended to include the period December 31, 1981, in keeping with a Kawasaki Authorized Dealer's Sales and Service Agreement which was executed on January 29, 1979, and this is the agreement which was in effect at the time of the entry of the termination letter dated January 31, 1980. In the spring of 1979, Kenneth Meyers, a principal in the Petitioner's corporation, informed Jimmy Capps, who was the District Manager for the Respondent in the Georgia - and Florida area, that the Petitioner intended to sell Ken's Kawasaki, Inc., motorcycle business. In pursuit of its decision to sell, the petitioner listed its business with a number of real estate agencies in the Gainesville, Florida, area. Among those brokers was Sherwood Commercial Brokers and within that brokerage firm Walter E. Murphree, Jr., was a principal. In September, 1979, the brokerage firm referred George O. Hack to Meyers as a prospective purchaser of the Petitioner's motorcycle business. During the same month, on September 13, 1979, District Manager Capps visited the petitioner's business location to discuss with the Petitioner the fact that the dealership was "out of trust". ("Out of trust" means that the inventory of the dealership subject to a floor plan financing arrangement, has been sold without obtaining the title documents held as security for the floor plan financing and without accounting for the proceeds, and was therefore in violation of the financing arrangement.) In this instance, some of the motorcycles that had been financed by the Respondent through a floor plan had been sold "out of trust". Again in September, 1979, Meyers contacted Capps in Atlanta, Georgia, and indicated that George O. Hack, James W. Opp, and Walter E. Murphree, Jr., had shown an interest in acquiring the petitioner's business. This contact occurred subsequent to the entry between the Petitioner and Hack, Opp and Murphree as principals in Gainesville Motorcycle Corporation, Inc., into an arrangement referred to as a "Contract for Purchase and Sale of Assets" of the Petitioner corporation. None of the principals in Gainesville Motorcycle had held any position with the petitioner prior to this contract agreement. To effectuate the purpose of transferring the franchise from the petitioner to Gainesville Motorcycle Corporation, Inc., an arrangement was made by Hack to have a meeting with Capps to discuss the acceptance by the Respondent Gainesville Motorcycle Corporation, Inc., as franchisee of the Respondent. This meeting was held on October 22, 1979, in Gainesville, Florida. In the course of the meeting, a discussion was held on the requirements of the Respondent which must be met before the prospective franchisee would be accepted. This included the necessity to execute an application provided by the Respondent and the necessity to demonstrate the financial liquidity of Gainesville Motorcycle Corporation, Inc., in the person of its principals, by having them provide sound financial statements to the Respondent. One of the principals of Gainesville Motorcycle Corporation, Inc., Hack, owned and operated a Yamaha dealership in Gainesville, Florida, and this was a matter of which Capps either knew about prior to the meeting or learned of in the course of the meeting. In dealing with this subject as it related to the possibility that two motorcycle lines would be sold from one store, Capps made known that the acceptability of his circumstance would be dependent on the expectation by the Respondent that the Kawasaki line of product would be promoted on an equal basis with the existing Yamaha line. The idea of selling other manufacturers' motorcycles from the same store in which the Kawasaki product line was being offered is not foreign to the Respondent. The arrangement for the sale of two product lines from one store, to include the Kawasaki line, is acceptable, subject only to equal treatment in the promotion and sales of the Kawasaki product line when contrasted with that of the competing motorcycle product. Sometime in late October, 1979, Hack forwarded three financial statements for the principals Hack, Opp and Murphree to the Respondent in Atlanta, Georgia, together with an application for franchise in the name "Gainesvi1le Motorcycle Corporation". (This application of Gainesville Motorcycle Corporation was not presented as evidence in the hearing.) After receiving the material from the Gainesville Motorcycle Corporation and its principals, a decision was made by the Respondent not to approve their request for franchise and this decision was based upon the unacceptable financial position of those principals. The decision not to accept was communicated by letters addressed to those three principals, dated November 2, 1979. Subsequent to the receipt of the letters, Hack contacted the Respondent to ascertain if it was a possibility that other materials could be submitted in support of the application which would cause the Respondent to change its position on the franchise question. Hack was told that the Respondent would evaluate additional information if it was presented. On November 5, 1979, William A. Parsons, attorney representing the Petitioner, wrote to the Respondent to advise the Respondent that a closing on the pending sale of the Petitioner's business was scheduled for November 19, 1979, and in particular, requesting information from the Respondent. In response to Parsons's correspondence, the Respondent wrote to him on November 8, 1979, and advised Parsons that the sale of the franchise to Hack, Opp, Murphree or anyone in general had not been approved at that time. On November 8, 1979, another dealer visit was made by Capps to the petitioner's location. Further discussion was held between Capps and Meyers on the reason for disapproval of the Gainesville Motorcycle group's reguest for franchise, and Capps also determined in the course of that visit that some of the other floor plan financers of the petitioner, namely, ITT Diversified Credit, had removed one of the Petitioner's motorcycles and other items associated with the business; the effect of that action by ITT being to place the Petitioner in the position of no longer having available inventory in motorcycles to be sold. On November 17, 1979, the petitioner closed the doors to its Kawasaki motorcycle store for the purpose of taking inventory and had not reopened at the time of the hearing in this cause, October 1 and 2, 1980. At no time since the November 17, 1979, date has the Petitioner been engaged as a Kawasaki dealer. Notwithstanding the communication through the letter of November 8, 1979, from the Respondent to attorney Parsons indicating that the Hack, Opp, and Murphree group had not been approved as a Kawasaki franchise dealer, the parties to the purchase contract went to the closing scheduled for November 19, 1979, and on that date through a telephone call directed to officials within the Respondent corporation in Atlanta, Georgia, the parties to the closing were informed that the Hack group had not been approved as prospective franchisees to sell Kawasaki motorcycles, in substitution for the Petitioner corporation. In late November, 1979, Meyers contacted Gary Warren, who operated a Suzuki motorcycle dealership in Gainesville, Florida, to determine if Warren was interested in buying the petitioner's business. Warren thereafter determined to make an application to the Respondent to be granted the Kawasaki franchise for Gainesville, Florida, and agreed with Meyers that he would discuss the possibility of purchasing some of the merchandise items held by Ken's Kawasaki. On November 30, 1979, the Respondent forwarded the necessary material to Warren for Warren to make an application to be the Kawasaki franchise dealer. On December 1, 1979, Hack, Opp and Murphree entered into an arrangement with the Petitioner's landlord by which these parties agreed to lease, with the option to buy, those premises which were then occupied by the Petitioner, on the condition that the new group pay those arrearages in rent then owed by the Petitioner to the landlord. After reviewing Warren's application to become a Kawasaki dealer, Warren was informed that he had been approved. This approval was made known in late December, 1979. Also in late December, 1979, Hack informed Capps that the Yamaha dealership would be moved Petitioner's premises around Christmas of that year. Capps came to Gainesville on January 23, 1980, to enter into a mutual commitment agreement leading to the completion of arrangement s to establish Warren as the local Kawasaki dealer. (During that same trip, Capps went to the location of the Petitioner's dealership and discovered that the Yamaha dealership was in place at that location and there were no signs indicating that the Kawasaki dealership was still in operation at that locale. On that date, the mutual commitment agreement was executed and in provisions of that document was an agreement that Warren would buy his parts kit, accessory kit, and special tools from the Petitioner and that the dealership would operate as "Suzuki- Kawasaki of Gainesville". In pursuit of the agreement to purchase the parts kit, accessory kit and special tools from tie petitioner, discussion was held between Meyers and Warren. Prior to the discussion, Warren had been solicited by ITT Diversified Credit to buy certain products which they had removed from the Petitioner's business. In addition, the petitioner's landlord took Warren to a storage facility where some of the Petitioner's parts and accessories had been stored. Warren was concerned about the Petitioner's merchandise and for that reason asked Meyers to provide bills of sale and to conduct an inventory prior to any purchase by Warren. No bills of sale were forthcoming and Meyers having placed the value of the goods above their fair market value, Warren declined to purchase any of the items owned by the Petitioner in association with its Kawasaki dealership. After receipt of the January 31, 1980, letter or termination end prior to filing his protest to the the cancellation on April 26, 1980, meetings were held between Meyers and the principals of Gainesville Motorcycle Corporation on the subject of filing the protest and after discussion the decision was made to have Hack, on behalf of Gainesville Motorcycle Corporation, finance the protest with the expectation that the Gainesville Motorcycle Corporation would gain the award of the Kawasaki motorcycle franchise through the present action. It is not the intention of Kenneth Meyers to continue to operate the Kawasaki motorcycle business in keeping with his existing franchise issued by the Respondent and Meyers, in making this statement, is authorized to speak for the Petitioner. At present, Kawasaki motorcycles are not being sold from any Kawasaki dealership located in Gainesville, Florida, and this has been the case since November 17, 1979. This lack of sales has not been the result of the Respondent failing to deliver products to the Petitioner. There was no showing in the course of the hearing that the Respondent failed to fairly evaluate the applications of Gainesville Motorcycle Corporation and Gary Warren, prior to determining to accept Warren as the replacement dealer for the Petitioner.
Recommendation Based upon the full consideration of the facts found therein and the Conclusions of Law reached it is RECOMMENDED that the Petitioner, Ken's Kawaski, Inc.'s complaint for unfair cancellation of its dealer franchise agreement be DISMISSED and the cancellation of the Petitioner's franchise agreement with Respondent, Kawasaki Motors Corp, U.S.A., be UPHELD. 1/ DONE AND ENTERED this 3rd day of November 1980, in Tallahassee, Florida. CHARLES C. ADAMS Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November, 1980.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by P. Michael Ruff, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s request for withdrawal, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED and no license will be issued to Moto Dealer Import, LLC and A-1 Scooters, LLC to sell motorcycles manufactured by Shanghai JMSTAR Motorcycle Co. Ltd. (IMST) at 2204 West 15" Street, Panama City (Bay County), Florida 32401. DONE AND ORDERED this 4, of July, 2009, in Tallahassee, Leon County, Florida. 'ARL A. FORD, Direct6r Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division Motor Vehicles this VA KE! day of July, 2009. NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. CAF/vlg Copies furnished: Jack Lin Moto Dealer Import, LLC 4998-B South Royal Atlanta Drive Tucker, Georgia 30084 Wayne Wooten Moto Import Distributors, LLC 12202 Hutchinson Boulevard, Suite 72 Panama City, Florida 32407 Susan Viafora A-1 Scooters, LLC 2204 West 15'" Street Panama City, Florida 32401 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room A432 Tallahassee, Florida 32399 P. Michael Ruff Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602 Nov 7 2008 9:51 Fax: Nov 7 2008 09:50am 002/002 Moto Dealer import LLC nig, “4998-5 South Royat Atenas Dr, Tucker, GA 30084 TEL: (6781937-4000 FA (678 997-4695. . waruinotodealerimport.com 14-06-2008 Case # 08-5065 Case # 08-5080 To: P. Michael Ruff - Administrative Law Judge _ MDI no longer wants Big Boys Toys Florida, LLC as an appointed dealer distributor in Florida for line-make Zhejiang Summit Huawin Motoreycle Co. Ltd. (POPC) and Shanghai JMSTAR Motoreycle Co. Ltd (MST). We do not want to sell our products to this company. We do not wish to proceed with the hearing or any other action in this case. If you need any additional information please contact me at 678-937-1690. Thank You, Jack Lin COPIES FURNISHED: Wayne Wooten 770-539-4978 Mr. Michael Alderman -Esquire 850-617-3101 Dept. of Hwy Safety and Motor Vehicles 850-617-2827 — Deborah-Osman A-I Scooters, LLC Susan Viafora 2204 W. 15th St, Panama City, FL
