The Issue The issue in the case is whether an application for a new point franchise motor vehicle dealership filed by El Sol Trading, Inc., and Finish Line Scooters, LLC (Petitioners), should be approved.
Findings Of Fact There was no evidence presented at the hearing to establish that the Respondent has a franchise agreement to sell or service CHUA motor vehicles, the line-make to be sold by Finish Line Scooters, LLC. There was no evidence presented at the hearing that the Respondent's dealership is physically located so as to meet the statutory requirements for standing to protest the establishment of the new point franchise motor vehicle dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order dismissing the protest filed in this case by Scooter Elite, LLC, and granting the Petitioners' request to establish a new point franchise motor vehicle dealership for the sale of CHUA motorcycles. DONE AND ENTERED this 9th day of March, 2010, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 9th day of March, 2010. COPIES FURNISHED: Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Gloria Ma El Sol Trading, Inc., d/b/a Motobravo, Inc. 19877 Quiroz Court City of Industry, California 91789 Kirit Kana Scooter Elite, LLC 7204 Central Avenue St. Petersburg, Florida 33707 John V. Leonard Finish Line Scooters, LLC 6600 Gulf Boulevard St. Pete Beach, Florida 33706 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue The issue in this case is whether Petitioners are entitled to a motor vehicle dealership that is proposed to be located in Fort Walton Beach, Florida.
Findings Of Fact The evidence showed that the dealership proposed by Petitioners would sell the same line and make of motorcycles as those sold by Respondent. The proposed dealership would also compete in the Respondent’s territory since it would be located in the same county as Respondent and would be within 20 miles of Respondent. Respondent has standing to protest the establishment of the proposed dealership. On September 18, 2007, a Notice of Hearing setting the date, time and location of final hearing was issued in this case. The Notice of Hearing was mailed to the last known, valid addresses of the Petitioners, which were also the addresses provided in Petitioners’ Notice of Publication. Neither Notice of Hearing was returned. This cause came on for hearing as noticed. After waiting more than an hour, the Petitioners failed to appear to prosecute their claim. There has been no communication from the Petitioners before, during, or since the hearing to indicate that they would not be attending the final hearing. Because of Petitioners’ failure to appear, there was no evidence to demonstrate that Petitioners are entitled to a franchise motor vehicle dealership in Fort Walton Beach, Florida. Absent such evidence, the establishment of the proposed dealership should be denied.
Recommendation Accordingly, in consideration of the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by the Florida Department of Highway Safety and Motor Vehicles denying the establishment of Petitioners’ proposed franchise. DONE AND ENTERED this 31st day of January, 2008, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 31st day of January, 2008. COPIES FURNISHED: Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Carl A. Ford, Director Division of Motor Vehicles Neil Kirkman Building, Room B-439 Tallahassee, Florida 32399-0635 Judson M. Chapman, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 David Wray Wholesale Nation Automotive, Inc. 319 Miracle Strip Parkway Fort Walton Beach, Florida 32548 Mei Zhou SunL Group, Inc. 8551 Esters Boulevard Irvine, Texas 75063 Curtis Mitchell Coastal Powersports 12 Eglin Parkway Southeast Fort Walton Beach, Florida 32548
The Issue Whether the application of Peace Industry Group (Peace) and Bayside Auto Sales, Inc. (Bayside) to establish an additional franchised dealership for the sale of Astronautical Bashan motorcycles to be located at Bayside Auto Sales, 1301 Harrison Avenue, Panama City, Bay County, Florida, should be granted.
Findings Of Fact Petitioner Peace is a licensed distributor of motor vehicles in Florida and is authorized to sell motor vehicles to its dealers in Florida. Petitioner Bayside is a licensed motor vehicle dealer in Florida and is located at 1301 Harrison Avenue, Panama City, Florida. Respondent Moto is a licensed motor vehicle dealer in Florida and an existing Astronautical Bashan dealer located at 12202 Hutchison Blvd Suite 72, Panama City Beach, Florida. Currently, Moto sells the product line of Peace, including the Astronautical Bashan product line. Additionally, Moto has a franchise agreement with Peace. The agreement establishes a franchise territory with a 25-mile radius around Moto’s location. Petitioner Peace proposes to establish Bayside as a dealership for the sale of Astronautical Bashan motorcycles. The proposed dealership would be within six miles of Moto’s dealership. The two dealerships are located in Bay County and are separated by the Hathaway Bridge. Both draw customers from Bay County, with at least 20 percent of Moto’s customers located within 20 miles of Moto’s location. There was no consumer data or analysis of sales in the motorcycle industry offered into evidence. However, Moto’s franchise agreement with Peace establishes a market area of at least a 25-mile radius from Moto’s location. Bayside clearly is located within Moto’s market area. There was no evidence which demonstrated Peace’s market share in the motorcycle market. There was no evidence presented analyzing the motorcycle market in the Panama City area. Likewise, there was no evidence presented regarding anticipated growth in the market area. This type of evidence is generally presented by the distributor or manufacturer of the product. As indicated, Peace did not appear at the hearing. Given this lack of evidence, the market share for Peace or Astronautical Bashan motorcycles cannot be established. Moreover, a determination that the establishment of a second dealership in the Panama City territory is warranted must be based on the economic and marketing conditions pertinent to dealers competing in the territory. Given this lack of evidence, Petitioners failed to establish that Peace was underrepresented in the Panama City/Bay county area. Since there is no evidence to support the establishment of a second dealership, Petitioners’ application to establish such a dealership should be denied.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying the establishment of Peace's dealership at Bayside, 1301 Harrison Avenue, Panama City, Florida. DONE AND ENTERED this 13th day of February, 2009, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of February, 2009. COPIES FURNISHED: Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Larry Bradberry Bayside Auto Sales, Inc. 1301 Harrison Avenue Panama City, Florida 32401 Wayne Wooten Moto Import Distributors, LLC 12202 Hutchison Boulevard, Suite 72 Panama City Beach, Florida 32407 Lily Ji Peace Industry Group, Inc. 6600-B Jimmy Carter Boulevard Norcross, Georgia 30071 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety And Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety And Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Patricia M. Hart, 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 Continental Motor Group, Inc. to sell motorcycles manufactured by Benzhou Vehicle Industry Group Co. Ltd. (SHWI) at 885 Southeast Monterey Road, Stuart (Martin County), Florida 34994. Filed December 17, 2009 8:31 AM Division of Administrative Hearings. DONE AND ORDERED this /54,of December, 2009, in Tallahassee, Leon County, Florida. Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Divis/kthf Motor Vehicles this uday of December, 2009. ,.<.;?C?.c,,Dealllr7lcenieAdmlnistratorNOTICE 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. Copies furnished: Jack Lin Moto Dealer Import, LLC 4998-B South Royal Atlanta Drive Tucker, Georgia 30084 Mark Mourning Wenmark, Inc. d/b/a All The Wheel Toys 1540 Northwest Federal Highway Stuart, Florida 34994 Onofrio Bruno Continental Motor Group, Inc. 885 Southeast Monterey Road Stuart, Florida 34994 Patricia M. Hart Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room A432 Tallahassee, Florida 32399 Nalini Vinayak Dealer License Administrator Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602
The Issue Whether J.S. Imports, Inc. should be granted a new point Mazda dealership at 631 South Military Trail, West Palm Beach, Florida, pursuant to Section 320.642, Florida Statutes.
Findings Of Fact Petitioner, Mazda Motor of America, Inc., is a manufacturer of automobiles and trucks which are distributed and sold through a network of dealerships. Under Florida law Mazda is denoted a "licensee." On January 5, 1996, a notice of publication for a new point franchise motor vehicle dealer was published which announced Mazda intends to allow the establishment of J.S. Imports, Inc., as a dealership for the sale of Mazda vehicles at 631 South Military Trail, West Palm Beach (Palm Beach County), Florida 33415. The notice further provided, in pertinent part: Mazda Motor of America, Inc., intends to engage in business with J. S. Imports, Inc., as a dealership on or after February 1, 1996. The name and address of the dealer-operator and principal investor of J. S. Imports, Inc., is: John Staluppi, Jr., 42 Davidson Lane East, West Islip, New York 11795. * * * Dealerships of the same line-make which can establish standing to protest the establishment of the new point may do so by filing a written petition or complaint with the Florida Department of Highway Safety and Motor Vehicles. Thereafter, on February 1, 1996, Respondents, Stewart Mazda, Delray Mazda, and Jupiter Dodge Mazda, filed a petition or complaint challenging the proposed new point dealer. Respondents are the existing Mazda dealerships located within Palm Beach County. There are no other same line-make motor vehicle dealerships which are physically located so as to meet or satisfy the requirements of Section 320.642(3), Florida Statutes. Thus, all dealers with the potential for standing have participated in this proceeding. Palm Beach County is a county with more than 300,000 population. Respondent, Stewart Mazda, is located at 2001 South Dixie Highway, West Palm Beach, Florida, and is within 12.5 miles of the proposed location for the new point site. In fact, the Stewart dealership is within five miles of the proposed new point. Respondent, Delray Mazda, is not located within 12.5 miles of the proposed location. Nevertheless, Delray Mazda established that during any 12 month period of the 36 month period preceding the filing of the licensee's application for the proposed dealer Delray Mazda made 25% of its retail sales of new motor vehicles to persons whose registered household addresses were within a radius of 12.5 miles of the proposed site. Respondent, Jupiter Dodge Mazda, is not within 12.5 miles of the location for the proposed new dealership yet it also met the sales standard described in paragraph 7. The proposed new motor vehicle dealer, J.S. Imports, Inc., is owned by John Staluppi, Jr., the son of John Staluppi. No other person or entity owns more than a 10% interest in JSI. It is proposed that J.S. Imports, Inc. will be located at 631 South Military Trail, West Palm Beach. Such real property is part of an automobile mall or auto mall (a cluster of automobile dealerships) which is owned or controlled by John Staluppi. The new Mazda vehicle sales facility would be located at 631 South Military Trail; however, the service facility for the dealership would be located elsewhere within a shared space at 561 South Military Trail, West Palm Beach. Both parcels are owned or controlled by John Staluppi. Both parcels are part of the same auto mall. As part of its documentation to establish the dealership, J.S. Imports, Inc. (JSI) submitted an unsigned lease for the subject property between John Staluppi and the proposed dealer. On or about October 25, 1996, just prior to this case going to hearing, John Staluppi entered into an agreement to sell the assets of the automobile dealerships located within the auto mall. He also agreed to lease the real estate upon which they are located. The lease included the sites for the new Mazda point as well as the service location. Without going into details of the agreement which are not material to the issues of this case, and without listing all of the corporate entities involved in the transaction, the principals in this new agreement were John Staluppi and Terry Taylor. Material to this case, however, is the covenant between Mr. Taylor and John Staluppi, Jr. Those parties reached an agreement to sublease the real estate at 631 South Military Trail and the service department at 561 South Military Trail, West Palm Beach. Such agreement to sublease was also executed October 25, 1996. Based upon the foregoing, as of October 25, 1996, the proposed site for the Mazda new point dealer continued to be 631 South Military Trail with service work to be at 561. These sites are identical to the information submitted by the applicant to the Department of Highway Safety and Motor Vehicles. This information was also disclosed to Respondents during discovery of the case, prior to the prehearing stipulation. Subsequently, the transaction between Mr. Taylor and John Staluppi was abandoned. Mr. Taylor’s deposit on the transaction was refunded. Apparently, these parties no longer intend to abide by the terms of the asset purchase agreement. JSI does not own the proposed site. If approved, JSI will lease the property from John Staluppi or entities he owns or controls. As of the time of hearing, JSI did not have a signed lease for the subject property. Typically, Mazda does not submit applications for new point dealerships without some documentation substantiating control of the proposed site. A proposed dealer would normally either own or control the proposed site. Control of the site may be shown by a lease, an option to purchase or an option to lease. In this instance, Mazda presumed the proposed site would be secured through the efforts of John Staluppi, Jr. on behalf of his company which would lease from his father. Moreover, Mazda believes its agreement with JSI (for the applicant dealer to reimburse it for costs or expenses incurred should the dealership effort fail due to an act or omission of JSI) adequately protected its interests in this regard. As of the dates of filing the application for a new point dealership, the notice of same, and the hearing in this cause, no person or entity, other than John Staluppi, Jr., had a beneficial ownership interest in the proposed dealership. To determine whether an additional same line-make dealer should be approved, the existing network of motor vehicle dealers must be evaluated to determine whether they are providing adequate representation to the community or territory. The applicable statutory criteria do not define "adequate representation" nor the "community or territory." Typically, sales data of past dealership performance is utilized by all parties to establish a community or territory (Comm/Terr) and to evaluate the dealers' effectiveness. In this case how the Comm/Terr should be defined is disputed by the parties. Although entitled to weight in the consideration of how the Comm/Terr should be defined, the dealer agreements with the three existing dealers (Respondents) do not assign an area by geographical boundaries. Respondents believe the Comm/Terr, based upon their interpretation of their agreements, should be defined as Palm Beach County as a whole. In contrast, Mazda studies have defined the market for these dealers in different ways; however, it believes the Comm/Terr should be Palm Beach County excluding the primary market area (PMA) ascribed to Jupiter Dodge Mazda. In making this determination, Mazda constructed the PMAs for the existing dealers as well as the new point (or open point) which has been designated as the Staluppi PMA. Within the Staluppi PMA it is presumed that dealer would have a competitive advantage in the market. Similarly, within the Stewart PMA that dealer would have the competitive edge due to customer preference and convenience. The actual shopping patterns of Mazda customers was also assessed. In this case, the three dealers are located in three distinct geographical areas: one toward the northern boundary of the county at Jupiter; one to the south at Delray; and one in the eastern central portion at downtown West Palm Beach. The proposed Staluppi/JSI site is west of the Stewart location. Based upon the actual shopping patterns the majority of the sales by these three existing dealers are made to customers in the same county. Because few of Mazda's customers come from adjacent counties, the largest area which should be used to define the Comm/Terr is the county itself. Within Palm Beach County there are also identifiable plots associated with the three dealers which show that while Stewart and Delray are connected to the JSI site (via established purchasing patterns), Jupiter is not. For this reason, Mazda's expert in rendering his initial opinions regarding this matter excluded Jupiter from the Comm/Terr. This approach has been deemed persuasive. Currently, there are three clusters of automobile and truck dealerships within the Palm Beach Comm/Terr: Delray, where Mazda is now located; Military Trail/Okeechobee Boulevard, where Mazda wants to be located; and North Lake Boulevard. Eighty percent of the customers who shop for new cars, regardless of brand, go to one of the three clusters. Mazda is not represented in two of these popular shopping venues. Mazda and Dodge are the only brands offered in Jupiter. Less than 5% of the customers from the remainder of Palm Beach County (away from the Jupiter PMA) went to Jupiter to purchase a new vehicle. To determine a reasonable expected market penetration standard, it is appropriate to exclude certain factors, such as the consumer preferences for certain types of vehicles (independent of brand) over which the dealers have no control. Market penetration is the traditional standard used to measure adequacy of representation because it reflects the competitive efforts of the competing dealers. Registration data of all brands is used to comprise a single indicator called market share, which is an objective and accurate measure of market activity. Registration data reflects actual consumer purchases. Actual registrations account for demographic characteristics, including age, income, education, size-class preferences, and product popularity. Market penetration for any area is computed utilizing all registrations to addresses in the area, regardless of the location of the selling dealer. After registration data is compiled, the performance of the Comm/Terr can be compared to another market area (allowing for differences in segment popularity). In this case, Mazda compared the Palm Beach Comm/Terr to the Miami/Ft. Lauderdale market. Typically, manufacturers and companies which compile data regarding vehicle sales classify new vehicle sales into segments. These segments list models which are comparable to one another and are, presumably, competing for the same customer. Mazda classifies its vehicles into nine segments. Although it could be argued Mazda is ineffective against Ford, General Motors, and Chrysler, part of that theoretical ineffectiveness is due to the lack or absence of entries from Mazda into markets or segments flooded by those make vehicles. For example, Mazda does not have a vehicle to compete with a Chevrolet Suburban. Nevertheless, on a segment-by-segment basis where Mazda competes with an entry comparable to the other line-makes (in size and class) Mazda's effectiveness can be computed and demonstrated. By measuring Mazda's penetration in each segment achieved in the Miami/Ft. Lauderdale area, applied to the industry data available in each segment in the Staluppi/JSI PMA, an appropriate standard is established for what could be expected if the latter were receiving adequate representation. Similarly, by applying the penetration rate to the Palm Beach Comm/Terr as a whole it is possible to establish what could be expected if the Comm/Terr were receiving adequate representation. By considering the segment analysis the process takes into account differences in consumer preferences between markets as to the popularity of segments, and thereby gives a more accurate measure of what Mazda's reasonably expected market penetration should be. Utilizing this segment analysis, the reasonably expected 1995 Mazda market share in the Staluppi/JSI PMA was 5.97%. The actual penetration for Mazda in this PMA was 3.81%. Similarly, in the Palm Beach Comm/Terr in 1995, Mazda's reasonably expected share in the segments was 6.21%. The actual penetration for Mazda in the Comm/Terr was 4.49%. Alternatively, adding Jupiter to the Palm Beach Comm/Terr, Mazda's reasonably expected market share in 1995 was 6.19%. The actual penetration in the Palm Beach Comm/Terr (adding Jupiter) was 4.65%. Thus, in each analysis Mazda performance fell short of its reasonably expected penetration. With a properly constructed dealer network, containing the appropriate number of dealerships in proper locations, it is reasonable to expect the dealer network in Palm Beach County to perform as well as the dealer network in Miami/Fort Lauderdale after adjusting for the local consumer patterns that make Palm Beach different from the other area. Net shortfall is the number of additional Mazdas that would have to be registered in order to equal the expected level based on average performance across an area. On the basis of the net shortfall in units, or units required to be registered in order to bring the Staluppi/JSI PMA up to the expected performance, the 1995 shortfall was 246 units. In reviewing the Palm Beach Comm/Terr as a whole over the three year period from 1993 to 1995, the efficiency has changed from 70.1% to 72.4%. For the Comm/Terr plus Jupiter, the efficiency has changed from 68.6% to 75.2% during the three years immediately following the insertion of Jupiter Dodge Mazda. Mazda was not receiving adequate representation from the standpoint of not achieving reasonably expected market share. That conclusion is the same whether the area under review is the Staluppi/JSI PMA, the larger Palm Beach Comm/Terr, or the Palm Beach Comm/Terr with Jupiter included. Increases in performance in 1996 (after the existing dealers knew an additional dealer was being sought for the Palm Beach Comm/Terr) while commendable do not negate the historical pattern of providing inadequate representation. The growth of population and households in Palm Beach County has been predominately to the west and central portions of the county and throughout the Delray Beach area. The proposed Staluppi/JSI PMA has also experienced rapid growth in households and population which is expected to continue. Among Mazda buyers, 28.5% thought that the location of the dealer was extremely important; 35.1% thought it was very important; 22.8% thought it was somewhat important; whereas only 8.7% thought it was not important, and 4.9% not important at all. The Military Trail auto mall into which JSI proposes to open the additional Mazda dealership, now contains Toyota, Jeep Eagle, Chrysler Plymouth, Nissan, Infiniti, Kia, GMC, Saturn, Ford and Isuzu. Other brands considered part of this cluster are on Okeechobee Boulevard. They are VW, Hyundai, Acura, Subaru, Volvo, Oldsmobile, Buick, Audi, BMW, Lexis, Lincoln Mercury, Chevrolet, Dodge, Mitsubishi and Mercedes Benz. Mazda would be required to have 3.2 dealerships in order to have the same share of the franchises in the Palm Beach Comm/Terr as it has in the Miami/Ft. Lauderdale area. Because Jupiter Dodge Mazda does not serve the Palm Beach Comm/Terr in a meaningful way, the Comm/Terr has two Mazda dealerships, and needs at least one more dealership to have a reasonable opportunity to receive adequate interbrand competition and gain expected market share. The likely cause of the current inadequacy of performance for the Palm Beach Comm/Terr is insufficient dealer count and poor dealer location. Without a dealer in the Staluppi/JSI PMA, consumers average 9.9 miles from the nearest Mazda dealer, which is higher than the major competitors located in the Staluppi/JSI PMA. With the addition of a Mazda dealer in the Staluppi/JSI PMA customers will be 7.2 miles, on average, to the nearest Mazda dealer a distance which should be more competitive with other brands such as Ford (3.9 miles), Chevrolet (4.7 miles), Nissan (7.2 miles), and Toyota (7.2 miles). Optimal location analysis also demonstrates that the proposed location would maximize customer convenience. If the J. S. Imports dealership is allowed to "float" in the Palm Beach Comm/Terr, while the other dealer locations are fixed, the location which would maximize customer convenience is near the proposed site. The proposed location is near the optimal location, and in the midst of a cluster of dealerships where approximately 30% of the sales of all Palm Beach County dealers are made. The proposed site is good in terms of solving the customer convenience problem in the area, and providing Mazda a presence in the cluster where many sales are made. The addition of a dealership will likely benefit consumers and the public interest. It will provide the growing population of the Staluppi/JSI PMA with a more convenient place to shop for Mazdas and more convenient Mazda service. It will take Mazda to a growing cluster of dealerships allowing customers a one stop opportunity to comparison shop Mazda and its competitors. Moreover, with increased interbrand and intrabrand competition Mazda and the existing dealers should be able to improve sales penetration and take advantage of the available market for Mazda products. Therefore, because of the large untapped opportunity for Mazda in the Palm Beach Comm/Terr as a whole, in the Comm/Terr plus Jupiter, and in the "identifiable plot" known as the Staluppi/JSI PMA, the addition of a new dealer should not cause a decrease in the existing Mazda dealers' sales over the long term. The addition should have a positive impact upon the overall sales opportunities for all the Mazda dealers. If you compute the total lost opportunity for sales in this market (941 units) and allocate a portion of sales to the Staluppi/JSI PMA (555), the remainder would be available to the existing dealers of the Comm/Terr. This remainder of the lost opportunity, (467 units utilizing the average penetration profile; 386 using the Jupiter profile), would be available for all Palm Beach Mazda dealers. Therefore, the proposed addition of a dealership can take place without taking any sales from existing Mazda dealers. The existing dealers should increase their sales because a large number of customers are now shopping in the Northlake and Okeechobee/Military Trail clusters, and could not previously consider Mazda conveniently because of the lack of a dealer. Having a dealer in the Okeechobee/Military Trail cluster should stimulate interest in Mazdas. All existing dealers have made substantial financial investments to perform their obligations under their dealers' agreements. In Stewart's case, the total investment is close to $5,000,000. Stewart's real estate and building are valued at approximately $3,000,000. Jupiter Dodge Mazda has about $1,000,000 invested in its dealership. Delray Mazda has approximately $3,500,000 invested in its dealership. All three existing dealerships should benefit from an increased Mazda presence in the market place. The reasonably expected market penetration for Mazda should improve with an additional dealership at the Staluppi auto mall. Mazda has not denied its existing dealers an opportunity for reasonable growth, expansion or relocation. In fact, Mazda urged Stewart to establish the dealership at the proposed location. Only when efforts with Stewart failed did Mazda go outside the existing dealers for an operator for the additional point. Mazda has not attempted to coerce the existing dealers into consenting to the additional dealership. In reaching this conclusion the single incident complained of by one existing dealer (that Mazda withdrew some advertising support) has been considered but is not persuasive that Mazda has acted improperly in its efforts to establish the new point. The distance travel time, considering traffic patterns and accessibility, between the proposed site and its nearest same line-make dealer (Stewart) is approximately ten minutes. While geographically closer than other dealers of same line-make vehicles, traffic and accessibility put the proposed site and Stewart at a reasonable distance. No evidence in this case supports a conclusion that consumers could have the same benefits offered by the proposed dealership from other changes. No evidence suggests the existing dealers are not in compliance with their dealer agreements. Intrabrand and interbrand competition should improve with the establishment of the new point. Service and sales facilities will be more convenient to customers. All existing dealers make sales into the area of the proposed site. With anticipated population growth and market availability, any sales lost to the new point should be offset by Mazda’s increased market presence, improved market penetration, and greater overall sales for all dealerships.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That the Department of Motor Vehicles and Highway Safety enter a final order approving the new point dealership sought by Mazda Motor of America on behalf of J.S. Imports, Inc. DONE AND ENTERED this 1st day of May, 1997, in Tallahassee, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1997. COPIES FURNISHED: Dean Bunch, Esquire Sutherland, Asbill & Brennan, L.L.P. 909 East Park Avenue Tallahassee, Florida 32301 James D. Adams, Esquire Adams & Quinton 7300 West Camino Real Camino Real Centre Boca Raton, Florida 33433 Douglas E. Thompson Post Office Box 16480 West Palm Beach, Florida 33416 Dean J. Rosenbach Lewis, Vegosen, Rosenbach & Silber, P.A. Post Office Box 4388 West Palm Beach, Florida 33402-4388 Michael J. Alderman, Esquire Division of Motor Vehicles Neil Kirkman Building, Room A-432 Tallahassee, Florida 32399-0504 Charles J. Brantley, Director Division of Motor Vehicles Neil Kirkman Building, Room B439 Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Division of Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issue in the case is whether an application for a new point franchise motor vehicle dealership filed by Keeway America, LLC, and Sunset Point Scooters, Inc. (Petitioners), should be approved.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order dismissing the protest filed by Retro in this case and granting the Petitioners' request to establish a new point franchise motor vehicle dealership for the sale of ZHQM motorcycles. DONE AND ENTERED this 23rd day of October, 2009, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 2009. COPIES FURNISHED: Gary Parr Sunset Point Scooters, Inc. 6481 27th Avenue North St. Petersburg, Florida 33710 Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Doug Vitello Sunset Point Scooters, Inc. 112 South Maywood Avenue Clearwater, Florida 33765 Zhong Zhuang Keeway America, LLC 2912 Skyway Circle, North Irving, Texas 75038 Edward Dreyer, Jr. Retro Unlimited, Inc. 3200 Dr. Martin Luther King, Jr. Street, North St. Petersburg, Florida 33704 Carl A. Ford, Director Division of Motor Vehicles Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
Findings Of Fact The Parties Petitioner, Duval Motor Company, is a holding company operating two Ford franchises, one exclusive Honda dealership, one Isuzu dealership in Jacksonville, and one Isuzu dealership in Tallahassee. Duval Motor Company was founded in 1916 and its president, Walter A. McRae, has been in the automobile business some 42 years. The Duval Honda dealership in Jacksonville has been in existence for ten years; and Petitioner is fully qualified, both financially and by experience, to successfully operate the dealership requested in Tampa, Florida. Petitioner has acquired a site for the proposed dealership, to be known as Tampa Honda Land, at 11024 North Florida Avenue, Tampa, Florida. This site comprises a tract of land 200 feet wide fronting on North Florida Avenue and is 500 feet deep. It is located in the North Florida Avenue automobile row. Honda is the exclusive distributor for Honda automobiles within the United States. It is responsible for the importation and allocation of Honda automobiles throughout the United States and for the creation and maintenance of an independent dealer network to retail and provide service facilities for these automobiles. Honda imports have increased dramatically in the United States, from 102,000 vehicles in 1975 to 375,000 vehicles in 1980. However, the demand for these vehicles during this period has exceeded the supply. This has resulted in a bonanza, as well as a frustration, to Honda dealers. The demand has been such that many of these automobiles are sold at prices exceeding the manufacturer's suggested retail price, resulting in higher profits for the dealer. Because of the finite number of Hondas imported, the dealers are allocated automobiles by Honda rather than being furnished all they request. The allocation system is similar to that used by other popular imports and the number of cars allocated to each dealer is determined by the dealer's rate of vehicle sales for the previous 44 days and his inventory. The more rapidly the dealer sells the cars he receives and thereby deplete's his inventory, the more cars he will get. Protestant Lindell Motors, Inc., d/b/a Lindell Honda, is located in the Dale Mabry auto row, 11 miles from Petitioner's proposed site. Lindell is the only Honda dealer in Hillsborough County and operates a dual Volkswagen-Honda dealership. In 1976 Lindell purchased the Honda dealership located in North Florida Avenue auto row and relocated it to his Volkswagen dealership site on Kennedy Avenue near Dale Mabry. Hondas sold by Lindell: 1977, 459; 1978, 609; 1979, 611; 1980, 597; and 1981, 672. Protestant Globe Honda operates an exclusive Honda dealership in Clearwater, Pinellas County, Florida, on U.S. 19 in an area in which numerous other dealerships are located. Globe is located some 28 miles from Petitioner's proposed site. Globe was a dual dealer until June 1980. Hondas sold by Globe: 1976, 166; 1977, 246; 1978, 392; 1979, 531; 1980, 729; and 1981, 1171. Globe received an additional allocation of 50 automobiles when it became an exclusive dealer in June 1980. Protestant Crown Honda is a dual dealer located at St. Petersburg, Pinellas County, Florida, and sells Pontiac, Datsun, Jaguar, Ferarri, Peugot, De Lorean, Fiat and Honda automobiles. Hondas sold by Crown: 1975, 212; 1976, 243; 1977, 292; 1978, 348; 1979, 375; 1980, 364; and 1981, 286. Gateway Motors is a dual dealer located in Port Richey, Pasco County, Florida, and sells Volkswagen and Honda automobiles. It is located some 33 miles from Petitioner's proposed site. Hondas sold by Gateway: 1979, 76; 1980, 365; and 1981, 300. Regal Honda is a dual dealer in Lakeland, Polk County, Florida, and sells Pontiac, Fiat and Honda automobiles. It is located some 31 miles from Petitioner's proposed site. Hondas sold by Regal: 1976, 42; 1977, 111; 1978, 114; 1979, 104; 1980, 127; and 1981, 157. All of these Protestants are members of an advertising group to which they contribute to pay for Honda radio and other advertising spots which are delivered to Hillsborough, Pinellas, Pasco, Polk and Manatee counties. Many of these dealers testified that because of their membership in this group and the advertising thereby generated in these five counties they considered these five counties their marketing area. The Territory Hillsborough County has a population in excess of 600,000 people and Pinellas County is of comparable population. The older section of Tampa comprises the city limits of Tampa south of Hillsborough Avenue (Interbay area) and constitutes a population center and marketing area served by the southern auto row on Dale Mabry Avenue. During the decade between 1970 and 1980 the population of the Interbay area decreased slightly from 242,369 to 225,476, while the northwest part of Hillsborough County grew from 135,587 to 233,686. While the population maps admitted into evidence do not indicate a separate population grouping in northwest Hillsborough County from the Interbay area in the sense that there is a green area of low population density between the Interbay area and northwest Hillsborough County, numerous shopping malls and residential communities have developed north of Hillsborough Avenue to serve the population in this area of Hillsborough County. In addition the University of South Florida, Busch Gardens, Busch Brewery, Schlitz Brewery, Pepsi Bottling Company, the V.A. Hospital, University Community Hospital, and other newly constructed establishments exist in northwest Hillsborough County which provide substantial employment and make it a prime retail area. The Hillsborough County Planning Commission recognizes northwest Hillsborough County as a distinct area, as does the Tampa Tribune which publishes a special newspaper supplement limited to news and advertising directed toward the northwest area. These factors have created a distinct marketing area in northwest Hillsborough County. East Hillsborough County may be described as that part of the county east of U.S. 301, which includes the communities of Brandon, Plant City and Thonotosassa. This area is much larger geographically than the northwest area of the county and the Interbay area combined, but contains less than 25 percent of the county's population. The population centers of Hillsborough and Pinellas counties are separated by Old Tampa Bay, which is crossed by three bridges and causeways. The southern two, Candy (U.S. 92) and Franklin (I-275), connect Tampa and St. Petersburg, while Courtney Campbell (S.R. 60) connects Tampa and Clearwater. The proximity of these cities to each other and the adequate connecting roads lead to a multiple market situation where people living in one city will frequently shop in another city in the Tampa Bay area. In many instances it is quicker to go from a facility near the I-275 in Tampa to a facility near the I- 275 in St. Petersburg than to go across Tampa or St. Petersburg. Representation Honda's market penetration, or share of the total import sales, in Hillsborough County in 1981 was 11.7 percent, which is 2 percent behind its penetration in the Southeast Zone of 13.7 percent. The Southeast Zone includes Florida, South Carolina, Georgia and Tennessee. It currently ranks third behind Toyota and Datsun in market penetration. Sales into a market area from outside that market area are called "pump-in" sales. In 1981 nearly 40 percent of the Hondas sold in Hillsborough County were "pump-in" sales. The average automobile dealer generates about 50 percent of his sales within six and one-half miles of his dealership and 75 percent of his sales within ten miles of his dealership. This "geographical advantage" is enjoyed by all dealers with respect to the potential sales close to the dealership. In 1980 Lindell registered 50 percent of its sales slightly more than six and one-half miles from its dealership location and 75 percent of its sales slightly more than ten miles from its location. Globe, the largest volume seller of Hondas in the Tampa Bay area, made 50 percent of its sales to people living less than 7.5 miles from its location and 75 percent of those sales to people living within ten miles. All of Globe's sales in Hillsborough County were more than ten miles from the location of its dealership. Customers for sales and services of new automobiles in Hillsborough County, exclusive of the east portion, are served primarily at two separate locations previously described as the North Florida Avenue auto row and the Dale Mabry auto row. There are approximately 30 automobile dealers in Hillsborough County, 24 of which are in the northwest county and Interbay area. Of these 24, 19 are located in one of these two auto rows. Location of an automobile dealership in an auto row is advantageous both to the dealer and to the customer. Presence within an auto row provides dealers with greater access to customers who come to one dealer then comparative shop at the adjacent showrooms. Such grouping is advantageous to the customers, as it facilitates their shopping for a new or used automobile by having the dealers concentrated in one area. The fact that many customers want to buy a car from a dealer reasonably close to residences or place of work to facilitate repairs and maintenance gives dealers so located a geographical advantage so far as that customer is concerned. This grouping of dealers in auto rows does not deprive them of the geographical advantage they have over dealers offering the same product because manufacturers do not generally allow two franchisees selling the same product in one auto row. Nor does the grouping of dealers materially affect the statistic that dealers sell 50 percent of their product within six and one-half miles and 75 percent within ten miles of the location of their dealership. Honda's principal competitors are Toyota, Datsun and Volkswagen. All of these manufacturers are represented by dealerships at both of these auto rows, while Honda is represented only by Lindell at the Dale Mabry auto row. In addition Ford, Chevrolet, American Motors and Dodge are represented by dealers on both auto rows. While Honda imports have increased some 350 percent, from 102,000 vehicles in 1975 to 375,000 in 1980, Lindell's sales increased approximately 30 percent in 1977 and 1978 and have remained flat since that time; Crown's sales increased 15-20 percent each year between 1975 and 1978, then slowed in 1979, and actually declined in 1980 and 1981; Gateway's sales increased some 20 percent between 1980 and 1981; and Regal's sales from 1977 to 1981 increased from 111 to 157, an increase of some 40 percent over the five-year period. Of the protesting dealers only Globe's sales showed an increase comparable to the increase of Honda imports, as Globe's percent increase over the previous year was 48 percent in 1977, 59 percent in 1978, 35 percent in 1979, 37 percent in 1980 and 60 percent in 1981. In 1981 75 percent of those sales were within ten miles of the location of its dealership in Clearwater. Although Honda sales in Hillsborough County increased from 606 in 1979 to 775 in 1980, its percent of the import market in Hillsborough County still remains two percentage points below the zone level of penetration. In 1981 Lindell sold nearly as many Hondas north of Hillsborough Avenue as it sold south of Hillsborough Avenue, yet 40 percent of the sales in northwest Hillsborough Avenue were pumped in from outside Hillsborough County. High "pump-in" sales are an indication of inadequate penetration by the dealers. Availability of Automobiles Protestants contend that the reason they do not sell more Honda automobiles is because Honda does not supply them with the vehicles they need and can sell. All offered to pay in advance for an additional number of Hondas each month into the foreseeable future. Furthermore, a voluntary import restriction has been imposed on all Japanese automobile imports commencing in 1981 and continuing until 1983. This will further restrict the availability of Honda autos and create less need for an additional dealer, as there will be less cars available to the United States market. Honda contends that the allocation system allows dealers to "earn" more vehicles by expeditiously selling those received and those that do so will continue to get an increasing supply of vehicles. Protestants' contention that Globe sold more vehicles because Globe obtained a one-time additional allocation when it became an exclusive dealer in mid-1980 overlooks the yearly increases in allocated vehicles received by Globe during the period 1976 through 1979 before going exclusive. During this period Globe went from 166 vehicles in 1976 to 531 in 1979. More aggressive selling by the other Protestants would have increased their allocation of vehicles and increased Honda's penetration of the Hillsborough County market. Honda of America manufacturing company, which is 80 percent owned by Honda of America and 20 percent by Honda, Ltd.; in Japan, will commence producing Honda automobiles in the United States in 1982. First production of 50 automobiles per day is expected to start in October or November of 1982, with full production of 600 units per day some 18 months thereafter. Thus, in 1984 production of 144,000 units is projected. Open Point in Hillsborough County Honda determined in the early 1970's that an additional open point existed in Hillsborough County. This point was not filled and, when Lindell acquired his dealership in 1976, he was told Honda did not plan to open a second point in Hillsborough County in the near future. Petitioner applied for a second dealership in Jacksonville when that point became open; however, the dealership was awarded to another applicant because Honda liked his proposal better and preferred the two points in Jacksonville be owned by different people to promote competition. Petitioner was then offered open points in St. Augustine, Florida, and Brunswick, Georgia, which he declined. When told that an open point existed in Tampa Petitioner expressed interest and submitted a proposal. Petitioner initially selected the site for the new dealership in the Dale Mabry auto row but when told by the Southeast Zone sales manager he would not recommend approval of a location that close to Lindell, Petitioner located a site in the North Florida Avenue row. In January 1981 Petitioner met with Honda officials in Los Angeles, California, and after presenting his proposal was told that he could have the open point in Hillsborough County. Acting upon this verbal approval, Petitioner acquired the property at 11024 North Florida Avenue and presented his formal application for the point. At about this time the voluntary moratorium on imports from Japan came into effect and Honda announced a moratorium on new points in the United States except for those already approved where applicants had expended funds in reliance upon the approval. Since Petitioner's application fitted into that category, Honda approved his franchise in Hillsborough County and his application was filed with the Department of Motor Vehicles for a license. Protestant Lindell, the closest dealer to the site of this application, acknowledges that someday Honda would be justified in opening a second point in Hillsborough County, but contends that a second point should not be opened until after the import restrictions are lifted and an adequate supply of vehicles is available for the dealers who are now selling into that market.
The Issue The issue is whether Petitioner's applications to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN), should be granted. PRELIMANARY STATEMENT In the Florida Administrative Weekly, Volume 34, Number 21, May 23, 2008, the Department of Highway Safety and Motor Vehicles (DHSMV) published two Notices of Publication for a New Point Franchise Motor Vehicle Dealer in a County of Less than 300,000 Population. Said notices advised that Petitioner Gator Moto, LLC and Gator Moto, LLC (Petitioner) intended to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN). On or about June 3, 2008, Respondent Austin Global Enterprises, LLC, d/b/a New Scooters 4 Less (Respondent) filed two complaints with DHSMV about the proposed new motorcycle dealerships. DHSMV referred both complaints to the Division of Administrative Hearings on June 10, 2008. On July 2, 2008, Respondent filed its Compliance with Initial Order. On July 7, 2008, Petitioner filed Petitioner's Compliance with Initial Order Division of Administrative Hearings (DOAH) Case Nos. 08-2735 and 08-2736. This is the only communication that DOAH has received from Petitioner. On July 23, 2008, Administrative Law Judge Barbara J. Staros entered an Order of Consolidation for DOAH Case Nos. 08-2735 and 08-2736. On July 24, 2008, Judge Staros issued a Notice of Hearing, scheduling a final hearing on December 4, 2008. On November 26, 2008, Respondent filed its Compliance with Pre-hearing Instructions. Petitioner did not respond to the Order of Pre-hearing Instructions. On December 1, 2008, Judge Staros issued an Amended Notice of Hearing. The amended notice only changed the commencement time for the hearing. DOAH subsequently transferred these consolidated cases to the undersigned. On the morning of the December 4, 2008, hearing, DHSMV advised the undersigned's office that DHSMV had failed to arrange for the appearance of a court reporter at the hearing. Accordingly, the undersigned issued an Order Granting Continuance and requiring the parties to confer and provide DOAH with mutually-agreeable dates for re-scheduling the hearing. On December 17, 2008, Respondent filed its unilateral Compliance with Order Granting Continuance. Respondent filed this pleading after an unsuccessful attempt to confer with Petitioner. On December 18, 2008, the undersigned issued a Notice of Hearing and Order of Pre-hearing Instruction. The notice scheduled the hearing for February 9, 2008. On February 3, 2007, Respondent filed its unilateral Compliance with Order of Pre-hearing Instructions. Petitioner did not file a response to the Order of Pre-hearing Instructions. When the hearing commenced, Petitioner did not make an appearance. Respondent made an appearance and presented the testimony of Colin Austin, Respondent's Managing Member. Respondent did not offer any exhibits. The hearing transcript was not filed with DOAH. Neither party filed proposed findings of fact and conclusions of law.
Findings Of Fact Respondent has standing to protest Petitioner's applications pursuant to Section 320.642(3)(a)2., Florida Statutes (2008). According to DHSMV's published notice, Petitioner intended to establish two new motorcycle dealerships at 2106 Northwest 67th Place, Suite 15, Gainesville, Florida, on or after May 9, 2008. This location is only 4.5 miles from Respondent's place of business. At some point in time, Petitioner relocated its business to 7065 Northwest 22nd Street, Suite A, Gainesville, Florida. This location is only 5.3 miles from Respondent's place of business. Petitioner's application indicated that Petitioner intended to establish itself as a dealer of SHEN and JMSTAR motorcycles. Currently, Respondent sells those motorcycles under License No. VF/1020597/1. Respondent currently supplies itself with SHEN and JMSTAR products from a United States distributor. Respondent has a good faith belief that Petitioner intends to import the motorcycles and related products directly from the Chinese manufacturers. In that case, Petitioner would be able to sell the products at a lower price than Respondent and thereby deny Respondent the opportunity for reasonable growth. Petitioner did not notify DOAH about a change of address. DOAH's notices and orders directed to Petitioner at its address of record have not been returned. Petitioner has not communicated with DOAH since filing a response to the Initial Order. Petitioner did not make an appearance at the hearing. Apparently, Petitioner has abandoned its applications to establish the new dealerships.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is ORDERED: That the Department of Highway Safety and Motor Vehicles enter a final order denying Petitioner's applications. DONE AND ENTERED this 16th day of February, 2009, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 2009. COPIES FURNISHED: Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Collin Austin Austin Global Enterprise, LLC 118 Northwest 14th Avenue, Suite D Gainesville, Florida 32601 Justin Jackrel Gator Moto, LLC 4337 Northwest 35th Terrace Gainesville, Florida 32605 Justin Jackrel Gator Moto, LLC 2106 Northwest 67th Place, Suite 15 Gainesville, Florida 32653 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
Conclusions This matter came before the Department for entry of a Final Order upon submission of a Recommended Order of Dismissal by Administrative Law Judge Jeff B. Clark, of the Division of Administrative Hearings, pursuant to non-compliance to the requirements set out in the Order to Show Cause-—for both parties to file responses no later than August 7, 2009 as to why this matter should not be closed based on lack of response to the Initial Order. The Department hereby adopts the Recommended Order of Dismissal as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED and no license will be issued to Galaxy Powersports, LLC d/b/a JCL International, LLC and Wild Hogs Scooters and Motorsports, LLC to sell motorcycles manufactured by Taizhou Zhongneng Motorcycle Co. Ltd. (ZHNG) at 3311 West Lake Mary Boulevard, Lake Mary (Seminole County), Florida 32746. DONE AND ORDERED this /7“ day of September, 2009, in Tallahassee, Leon County, Florida. L A. FORD, Direct Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division of Motor Vehicles this_/D#}) day of September, 2009. - Vinayak, Dealer Administrator 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. CAFivlg Copies furnished: Leo Su Galaxy Powersports, LLC d/b/a JCL International, LLC 2667 Northhaven Road Dallas, Texas 75229 Jason Rupp Wild Hogs Scooters and Motorsports, LLC 8181 Via Bonita Street Sanford, Florida 32771 James Sursely Action Orlando Motorsports 306 West Main Street Apopka, Florida 32712 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway, Room A432 Tallahassee, Florida 32399 Jeff B. Clark 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
The Issue Whether the application to relocate the Honda dealership owned by Bengal Motor Company, Ltd., d/b/a Miami Honda should be granted.
Findings Of Fact Bengal Motor Company, Ltd., d/b/a Miami Honda (Miami Honda) submitted its application to relocate its Honda dealership pursuant to Section 320.642, Florida Statutes. The requested relocation is from 3100 Northwest 36th Avenue, Miami, Florida, to a location that is 1350 feet west of the corner of Northwest 57th Avenue and Northwest 167th Street, Miami Lakes, Florida. The existing location is in the vicinity of the Miami International Airport. The proposed location is on the Palmetto Expressway. Miami Honda purchased the real estate for the proposed location without assistance from American Honda and has entered into an agreement with American Honda to relocate to that location if its relocation application is granted. Hollywood Imports, Ltd., Inc., d/b/a Hollywood Honda (Hollywood Honda) timely protested the relocation with the Department of Highway Safety and Motor Vehicles pursuant to the provisions of Section 320.642, Florida Statutes. The parties agree that the relocation is subject to protest and that Hollywood Honda has standing to bring this protest as it is within 12.5 straight line miles of the proposed location. See, Section 320.642(3)(b)1., Florida Statutes. American Honda has decided to relocate Miami Honda to the Miami Lakes area instead of adding a new dealer in Miami Lakes. Section 320.642, Florida Statutes, sets forth the criteria for relocation if a protest is filed. Section 320.642(2)(a), Florida Statutes, provides as follows: (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when: A timely protest is filed by a presently franchised motor vehicle dealer with standing to protest as defined by subsection (3); and The licensee fails to show that the existing franchised dealer or dealers who reg- ister new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establish- ing inadequate representation shall be on the licensee. Section 320.642(2)(b), Florida Statutes, sets forth factors 1/ which may be considered in determining the adequate representation issue, as follows: (2)(b) In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the comm- unity or territory for the line-make, the de- partment may consider evidence which may in- clude, but is not limited to: The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement. The reasonably expected market penetra- tion of the line-make motor vehicle for the community or territory involved, after con- sideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory. Any actions of the licensee in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, in- cluding the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated franchises of the same line-make in the community or territory. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line-make and the loca- tion of the proposed additional or relocated dealer. Whether benefits to consumers will likely occur from the establishment or relo- cation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make including the adequacy of sales and service facilities. Whether the establishment or relocation of the proposed dealership appears to be warr- anted and justified based on economic and mark- eting conditions pertinent to dealers compet- ing in the community or territory, including anticipated future changes. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership. THE COMMUNITY OR TERRITORY The area that constitutes the "community or territory" (community/territory) as that term is used in Section 320.642, Florida Statutes, is all of Dade and Broward Counties. This area is somewhat unique from a marketing standpoint because it is restricted on the West by the Everglades and on the East by the Atlantic Ocean. These geographic barriers create a concentration of population in a North/South corridor. This area will be referred to as the "Miami Metro", the term used by American Honda. There are presently nine Honda dealers in the Miami Metro. There are five Honda dealers in Dade County and four Honda dealers in Broward County. In comparison, there are five Toyota dealers in Dade County and five Toyota dealers in Broward County. An additional "open point", where a Honda dealer will be added at some undetermined time, has been identified for Plantation, Florida, which is in Broward County. This area has a significant amount of shortfall of Honda sales (compared to sales in other areas of the market area) that indicates that a new dealership would be justified. The relocation to Miami Lakes is not designed to recapture the lost opportunity that presently exists in Broward County. That lost opportunity is a separate problem. Honda considers Toyota and Nissan to be its primary competitors. Honda attempts to have a Honda dealer facing each Toyota dealer. Toyota outsells Honda at a greater percentage in Broward County than it does in Dade County. This discrepancy can be explained, in part, by the fact that Broward County is the home of Southeast Toyota, which is the distributor of Toyotas in the Southeastern United States, and by the fact that until the open point that American Honda has identified for Plantation is filled, Honda has one less dealer in Broward than does Toyota. Although American Honda has identified an open point in Plantation, Florida, and has included that open point in its marketing planning the additional dealership for Plantation is not being pursued by American Honda at this time. It is likely that the addition of a dealership would be subject to protest by existing dealers. It is not likely that a new dealership will exist in Plantation in the next five years. Expert witnesses for both Miami Honda and Hollywood Honda agree that Largo Honda, located in Key Largo, Monroe County, Florida, should be excluded from the Miami Metro. 2/ Data collected from new car registrations 3/ includes the name of the dealer selling the new vehicle and the street address of the purchaser. Retail registration data is analyzed to provide information as to each dealer's market area. The information produced by this analysis, referred to as cross- sale data, is used to determine whether the Miami Metro is one homogeneous, interconnected market or whether it consists of separate identifiable markets. In performing this analysis, each of the existing eight dealers and the proposed location is assigned a primary marketing area, referred to as a PMA. A PMA consists of census tracts 4/ within the Miami Metro and represents the geographical area in which an existing dealer or a proposed dealer would reasonably be expected to have a competitive advantage over competing same-line (Honda) dealers by virtue of its proximity to the customers within the PMA. The PMAs developed by the experts in this proceeding were based upon the exact proposed location of Miami Honda, rather than the existing location or any other hypothetical location. This methodology was reasonable and appropriate. The cross-sale data reflecting shopping patterns of Honda buyers in the Miami Metro demonstrates that customers residing in Dade County primarily purchase from Dade County dealers and that customers residing in Broward County primarily purchase from Broward County dealers. The exception to this is Hollywood Honda, which sells extensively to customers throughout the Miami Metro, including customers in Dade County. REASONABLY EXPECTED MARKET PENETRATION Market penetration is the traditional standard used to measure the performance of a dealer network in a given geographical area, such as a community/territory or a PMA. Market penetration is the percentage of all vehicles registered in a particular area that a particular brand achieves. Market penetration for any area is computed by analyzing all brand-line registrations in the area, without regard to the location of the selling dealer. To determine whether a particular PMA is being adequately represented, it is first necessary to select a standard against which the PMA will be measured. There was a dispute between the expert witnesses in this proceeding as to the appropriate standard against which to measure the PMA for the proposed relocation. The expert for Hollywood Honda used Honda's market penetration for Honda's Southeast Zone, consisting of six states, to determine what should be Honda's reasonably expected market penetration in the Miami Metro. The rationale that supports the use of this standard is not persuasive because of the unique nature of the Miami Metro and because there are many areas in the Southeast Zone within which Honda is not being adequately represented. The use of Dr. Matthews' standard will produce a mediocre target that does not accurately represent Honda's market potential in this unique area. Honda's expert analyzed sales within what he termed the "Balance of Dade" to determine Honda's reasonably expected market penetration in the Miami Metro. The Balance of Dade standard analyzed Honda's market penetration in Dade County with the exception of the PMA identified for the proposed relocation. The PMA for the proposed relocation was excluded from the analysis because it would be inappropriate to compare the area in question to itself. The Broward County portion of the Miami Metro was excluded because it was determined that American Honda is not adequately represented in many areas of Broward County. To develop a reasonable standard, the areas of comparison must be areas in which American Honda is adequately represented by its dealer network. There was extensive testimony by American Honda's expert as to the reasons this standard was used. Mr. Anderson, American Honda's expert, opined that the Balance of Dade standard produced a reasonable and appropriate standard by which to measure Honda's reasonable expected market penetration in this local market area. There was also extensive testimony by Hollywood Honda's expert as to why this standard should not be used. Dr. Matthews, Hollywood Honda's expert, believed that the use of the Balance of Dade standard produced an inappropriately high expectation of what should be Honda's reasonably expected market penetration. Dr. Matthews viewed sales in Dade County to be unreasonably high because of the sales into the market areas by Largo Honda and because of the number of new Honda vehicles sold into Dade County by Honda dealers in Broward County. This conflicting testimony is resolved by finding that the standard selected by American Honda's expert for determining reasonably expected marketing penetration, the so-called Balance of Dade standard, is a reasonable and appropriate standard to determine Honda's reasonably expected market penetration in this local market. By measuring and analyzing each car segment in which American Honda competes in the Balance of Dade, American Honda's expert determined that with a dealer operating at the site of the proposed relocation, its reasonably expected market penetration for the Miami Lakes PMA would be 20 percent of the retail segments in which Honda competes. 5/ ACTUAL PERFORMANCE COMPARED WITH EXPECTED PERFORMANCE Honda market penetration in the Miami Lakes PMA has consistently been below expected levels in 1992, 1993, 1994, and the first half of 1995. Comparing actual penetration with the reasonably expected penetration of 20 percent demonstrates that Honda market penetration in the Miami Lakes PMA has been between 87.2 percent and 90.1 percent effective. The additional new car sales that would have been required to bring the Miami PMA up to its reasonably expected market penetration level were 263 units in 1993, 149 in 1994, and 168 for the first half of 1995. American Honda established that it is not receiving adequate representation in the Miami Lakes PMA. ECONOMIC AND MARKETING CONDITIONS Since 1980, there has been a significant decline in the number of households in the area of Dade County near the airport where Miami Honda is presently located, and a significant increase in the number of households in the Miami Lakes area. Miami Lakes represents a densely populated area which presently has no Honda dealer to serve it. All other densely populated areas of the Miami Metro, with the exception of the Plantation area, have an existing Honda dealer. Demographic factors, such as household income, reflect that the Miami Lakes area is much more affluent than the area surrounding the present Miami Honda location. Current and projected demographic data indicate that Honda's inadequate representation in the Miami Lakes PMA is the result of substantial and continuing growth. The growth pattern in the Miami Lakes area is also typical of the growth pattern for the Hollywood Honda PMA. These growth patterns are expected to continue through the year 2000 so that the opportunities for car sales for Hollywood Honda as well as a dealer in Miami Lakes would be expected to increase as this growth continues. Miami Honda's current facility is located in an industrial area that is blocked on the west from further development by the airport. In the vicinity, there are trailer parks and other low income housing, a cemetery, and a truck depot. Also in the area is a highly industrialized area of the Miami River, where cargo vessels are anchored, and the former headquarters of Eastern Airlines and Pan American Airlines, both of which are empty or partially empty. The present location is not as well suited as the Miami Lakes area for the sale of new automobiles. There are Nissan, Mitsubishi, and Hyundai dealerships in the area where Miami Honda is currently located. These lines are also represented in the Miami Lakes area. Miami Honda is one of the top Honda dealers in the Miami Metro and usually one of the top twenty dealers in the United States. Miami Honda is profitable at its current location, having made a profit of $2.9 million in 1994. The existing sales and service facilities of Miami Honda meet Honda's established guide for minimum facilities requirements. However, these existing facilities are outdated and inefficient. These facilities need to be replaced for Miami Honda to remain competitive. The existing location does not justify the construction of a new facility. It takes approximately 28 minutes to drive from the current Miami Honda location to the Hollywood Honda location. It takes approximately 22 minutes to drive from the proposed Miami Honda location to the Hollywood Honda location. Miami Honda's proposed location is part of an auto row, with the other lines being Toyota, Lincoln/Mercury, Ford, Nissan, Pontiac, GMC, Mitsubishi, Chevrolet, Chrysler Plymouth, Jeep Eagle, and Hyundai. This auto row did not exist ten years ago. Hollywood Honda is located on a similar auto row, with virtually the same lines being represented. Without a representative on the Miami Lakes auto row, American Honda is at a competitive disadvantage in the Miami Lakes area to those competing lines with dealers on the Miami Lakes auto row. The present location of Miami Honda is too close to that of Brickell Honda. The population and household trends of the PMA occupied by Brickell Honda and the PMA presently occupied by Miami Honda shows declining sales opportunity for the two dealers and suggests the need for a relocation of one of the two dealers. Honda has established that it is currently under-represented in the Miami Lakes PMA and that the likely cause of the current under-representation is the absence of a Honda dealer in this PMA. Relocating the Miami Honda dealership to Miami Lakes would strengthen the Brickell Honda dealership and the Miami Honda dealership. The relocation would also be in the best interests of the consuming public because it would bring a Honda dealer into the Miami Lakes area. Honda's chances of achieving a reasonable, adequate level of representations are dependent on how well its dealer network keeps pace with expanding sales opportunities. The proposed relocation would maximize customer convenience in the Miami Metro because the distance the purchasers of new cars would have to drive to reach the nearest Honda dealership would be minimized. It is reasonable to expect that Hollywood Honda would lose sales in the Miami Lakes PMA if the relocation is approved because approximately 34 percent of the sales in the Miami Lakes PMA are presently made by Hollywood Honda. It is also reasonable to expect that these lost sales can be offset by Hollywood Honda concentrating on its marketing opportunities closer to its location. The expected marketing penetration in the market within two miles of the Hollywood Honda dealership is 19.3 percent while the actual penetration is 8.6 percent. While Hollywood Honda is one of American Honda's top dealerships, it is missing opportunity for sales in its immediate marketing area. It is reasonable to expect that the proposed relocation will provoke a competitive response by Hollywood Honda that would positively impact Hollywood Honda's sales. Without a competitive response by Hollywood Honda, it is likely that the relocation of Miami Honda would result in the loss of approximately 250 sales a year for Hollywood Honda, for an approximate monetary loss of $500,000. The decision of American Honda to relocate Miami Honda instead of adding a dealer in Miami Lakes provides the existing dealers, including Hollywood Honda, with the opportunity to take advantage of the growing market within the Miami Metro and the lost opportunity for sales that exist, especially in Broward County. Even when the impacts of the proposed relocation would have on Hollywood Honda are considered, it is concluded that approving the proposed relocation of Miami Honda would strengthen the American Honda dealer network in the Miami Metro and would serve the interests of the consuming public.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order that adopts the findings of fact and conclusions of law contained herein. It is further recommended that the final order approve Miami Honda's proposed relocation. DONE AND ENTERED this 6th day of June, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 6th day of June, 1996.
