Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Elizabeth W. McArthur, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Petitioner’s Withdrawal of Notice of Establishment and Motion to Dismiss, 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 Mitsubishi Motors North America, Inc. and HMWP, Inc. d/b/a Winter Park Mitsubishi to sell automobiles of the line-make Mitsubishi (MITS) at 1970 Semoran Boulevard, Winter Park (Seminole County), Florida 32792. Filed October 14, 2010 8:00 AM Division of Administrative Hearings. DONE AND ORDERED this La day of October, 2010, in Tallahassee, Leon County, Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Florida. Filed with the Clerk of the Division of Motor Vehicles this day of October, 2010. 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: J. Andrew Bertron, Esquire Nelson Mullins Riley & Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 John W. Forehand, Esquire Kurkin, Forehand, Brandes, LLP 800 North Calhoun Street, Suite 1B Tallahassee, Florida 32303 Juliette E. Holler-Rogers HMWP, Inc. 1011 North Wymore Road Winter Park, Florida 32789 Elizabeth W. McArthur Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by R. Bruce McK.ibben, an Administrative Law Judge of the Division of Administrative Hearings, 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. Said Order Closing file was predicated upon Respondent's Notice of Voluntary Dismissal. Accordingly, it is hereby ORDERED that the Dealer Agreement between Qlink, LP and Mega Power Sports, Corporation is terminated. DONE AND ORDERED this z/.ayofOctober, 2009, in Tallahassee, Leon County, Florida. Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed October 15, 2009 3:41 PM Division of Administrative Hearings. Filed with the Clerk of the Division of Motor Vehicles this day of October, 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: Mark L. Ornstein, Esquire Killgore, Pearlman, Stamp, Ornstein & Squires, P.A. Post Office Box 1913 Orlando, Florida 32802 David Levison Mega Power Sports, Corp. 921 West International Speedway Boulevard Daytona Beach, Florida 32114 R. Bruce McKibben Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Michael J. Alderman, Esquire Assistant General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Rm. A-432-02 Tallahassee, Florida 32399-0504 Florida Administrative Law Reports Post Office Box 385 Gainesville, Florida 32602 Nalini Vinayak Dealer License .Section
The Issue Whether Respondent, Department of Highway Safety and Motor Vehicles, should grant Petitioners', Willis S. Brigham and Michael Wayne Hampton, application for a motor vehicle dealer license under Section 320.642, Florida Statutes (1979), on the ground that existing Kawasaki motorcycle dealers are providing inadequate representation in the territory or community involved.
Findings Of Fact Based upon the evidence presented at hearing, the following findings of fact are determined: Applicant, Protestant, and Kawasaki APPLICANT applied to the DEPARTMENT for a motor vehicle dealer license authorizing it to operate a KAWASAKI franchise motorcycle dealership in DeLand, Volusia County, at 1645 East New York Avenue. (P.E. 2.) PROTESTANT owns and operates an existing KAWASAKI franchise motorcycle dealership in Daytona Beach, Volusia County, at 700 Ballough Road, and protests licensing of APPLICANT on the ground that the existing KAWASAKI dealer(s) are providing adequate representation in the DeLand area. PROTESTANT also owns two Honda motorcycle dealerships in the county, and the sole Suzuki dealership. (Testimony of Russell, Warfel, Prehearing Stipulation.) KAWASAKI is the national distributor for Kawasaki brand motorcycles, parts, and accessories. PROTESTANT is the only existing KAWASAKI franchise dealer in Volusia County; Kawasaki has determined that a second franchised dealership should be located in DeLand, and has executed a franchise agreement with APPLICANT toward that end. (Testimony of Sutton; P.E. 1, 2, 5, 6.) KAWASAKI and its franchised dealers, including APPLICANT and PROTESTANT, operate under agreements which grant dealers a non-exclusive right to sell and service KAWASAKI products within an "area of primary responsibility"--defined as territory falling within a five-mile radius from the dealer's location. The dealer agrees to aggressively develop and promote the sale of Kawasaki products and maintain a specified level of market penetration in his area of primary responsibility. However, the dealer is free to promote and sell KAWASAKI products outside that five-mile area, and KAWASAKI expressly reserves the right to sell its products to other dealers or persons, whether inside or outside the dealer's area of primary responsibility. In this case, the PROTESTANT's area of primary responsibility includes Daytona Beach, Daytona Beach Shores, South Daytona Beach, Holly Hill, and Ormond Beach, with an approximate population of 90,000. APPLICANT's proposed area of responsibility includes DeLand, Lake Helen, and part of Orange City, with an approximate population of 16,700. (Testimony of Sutton; P.E. 1, 2, 5, 6.) Territory Involved Volusia County is a large county, over 33 miles wide and 42 miles in length, with a population of approximately 241,786. Daytona Beach, its largest city with 50,830 people, is located among a chain of interconnecting communities in the county's eastern coastal region: Ormond Beach, Holly Hill, Daytona Beach Shores, South Daytona, Port Orange, Ponce Inlet, New Smyrna Beach, and Edgewater. The county's population is split between these eastern coastal communities, and a group of communities located in the western part of the county: principally DeLand, Orange City, and Deltona. DeLand is the largest western community, with a population of 14,090. Both Daytona Beach and DeLand have experienced rapid population growth between 1970 and 1980: Daytona Beach, with a 12.1 percent increase, DeLand with a 21 percent increase. The eastern and western parts are separated by a broad, sparsely populated, central area. The eastern and western halves of the county are connected by two major federal highways, Interstate 4 and U.S. 92. The distance by car between PROTESTANT's existing dealership in Daytona Beach, and APPLICANT's proposed dealership in DeLand is 23 miles, and takes approximately 30 minutes to travel. Long distance telephone rates apply to telephone calls between the two cities. (Testimony of Warfel; P.E. 4, 6.) Largely because of wide geographic separation between the population located in the eastern and western parts of the county, each part has developed distinct, and identifiable marketing areas for general retail businesses. General retail shopping patterns establish that the DeLand area has a retail business market separate and apart from Daytona Beach. Numerous motor vehicle manufacturers and distributors have self-sustaining franchise dealerships in DeLand, including Chrysler-AMC, Volkswagen, Chevrolet-Cadillac, Oldsmobile, Pontiac-Buick, Ford, and Chrysler. These manufacturers also maintain separate franchise dealerships in Daytona Beach. In addition, DeLand supports numerous franchised businesses unrelated to motor vehicles. (Testimony of Ritchey; P.E. 5, 6.) PROTESTANT has aggressively and diligently developed and promoted the sale of Kawasaki products within its five-mile area of primary responsibility. In 1980, in numbers of motorcycles purchased from KAWASAKI for retail sale, PROTESTANT was in the top 15 of 200 Southern Region dealerships. Notwithstanding its geographical disadvantage, PROTESTANT has also actively promoted and sold products in the DeLand area, where it advertises by radio and telephone book yellow pages. Six franchise motorcycle dealerships are located in the eastern part of the county: Honda (2), Yamaha (2), Suzuki (1), and Kawasaki (1), while none are located in the DeLand, or western part, of the county. (Testimony of Sutton, Russell, Warfel; P.E. 5, 6.) Initially, PROTESTANT agreed with KAWASAKI that a KAWASAKI dealership was needed in the DeLand area, and asked for the first opportunity to open one. Later, PROTESTANT concluded that a DeLand dealership would not be economically successful, and changed its position. (Testimony of Sutton, Russell, Warfel; P.E. 1.) Kawasaki Representation and Market Penetration Market penetration relative to competitors is a standard tool for measuring the adequacy and performance of a motor vehicle dealership. In KAWASAKI franchise agreements, the parties agree that KAWASAKI may "expect" from the dealer a market penetration in its five-mile area of primary responsibility at least equal to KAWASAKI's national market penetration. Market penetration is ordinarily determined by use of R. L. Polk and Co., motor vehicle statistics based on new vehicle registrations categorized by zip code designation. (Testimony of Sutton, Warfel, Russell; P.E. 1, 2, 3, Tr. 30.) The four largest selling motorcycles in the United States are Honda, Yamaha, Kawasaki, and Suzuki. The relative penetration of KAWASAKI during 1979 in comparable market areas is: AREA of C0MPARISON HONDA YAMAHA KAWASAKI SUZUKI United States 39.20 33.82 14.94 13.34 Florida . . . . . . 17.03 . . . Volusia County 38.43 20.47 17.04 7.98 Daytona Beach 38.48 19.34 20.31 0.40 DeLand 38.89 20.47 13.19 13.89 (Testimony of Sutton, Warfel, Russell; P.E. 3.) R. L. Polk statistical surveys, based on new motorcycle registrations by post office town, show that KAWASAKI holds approximately a 20 percent share of the market in the PROTESTANT's primary area of responsibility (territory within five-mile radius) as compared to an approximate 12 percent share of the DeLand-Orange City area market. KAWASAKI's market share is less in the DeLand area than the Daytona Beach area, while its competitors' shares are greater. PROTESTANT admits that it would not be doing an adequate job in the Daytona Beach area if the KAWASAKI market share fell from 20 percent to 12 percent-- KAWASAKI's share of the DeLand area market: [Counsel for Applicant] Q: "If your market share in Daytona went down from 20 percent in the Daytona Beach area, close by home, if it went down from 20 percent to 12 percent this year, would you think that you were doing an adequate job within Daytona? [Robert Warfel] A: No, sir." (Tr. 106.) The population of the DeLand area, defined by a five-mile radius from the proposed dealership, is approximately 27 percent of the population of the comparable Daytona Beach area; however, PROTESTANT's sales in the DeLand area account for only 8 percent of its sales within its area of primary responsibility and 10 percent of its total sales. (Testimony of Warfel, Sutton; P.E. 3.) As a general rule, KAWASAKI dealers make 80 percent of their sales within their five-mile radius areas of primary responsibility. This is attributable to the shopping habits of customers: people prefer to purchase motorcycles from dealers which are convenient, close by, and readily accessible. In this case, PROTESTANT's sales experience is consistent with this customer preference--65 percent of its sales occur within its area of primary responsibility. In 1979, PROTESTANT sold 160 motorcycles within its Daytona Beach area of primary responsibility, and 19--10 percent of its sales--within the DeLand-Orange City area. Six additional sales were made by other KAWASAKI dealers to residents of Orange City residing outside of APPLICANT's proposed five-mile area of responsibility. If APPLICANT's proposed Kawasaki dealership is located in DeLand, KAWASAKI's representation and share of the DeLand area market would improve considerably. Even with a new dealership in DeLand, PROTESTANT expects to continue making substantial sales in that area. (Testimony of Sutton, Warfel; P.E. 5, 6.) Economic Viability of New Dealership in DeLand The APPLICANT now operates a profitable motorcycle service and repair shop in DeLand, although it sells only accessories. If its existing business was supplemented by sales of a major brand motorcycle--such as KAWASAKI--it is reasonable to expect that its business would increase and continue to flourish. (Testimony of Sutton, Russell.) Adoption and Rejection of Parties' Proposed Findings of Fact The parties' proposed findings of fact which are incorporated herein are adopted; in addition, PROTESTANT's proposed findings of fact Nos. 6, 7, 9, 10, 12, and 16 are adopted as supported by the evidence. However, PROTESTANT'S proposed finding of fact No. 11 is rejected as unsupported by the evidence. KAWASAKI presented evidence: (1) that the proposed dealership must make 50 motorcycle sales per year to operate profitably, assuming no income is received from other business operations (Tr. 57); (2) that sale of 65 percent of the units within the Proposed dealership's primary area of responsibility converts to 37.5 motorcycles per year, equivalent to a 26 percent market share of the total motorcycles (144 units) of all brands purchased in DeLand during 1979 (Tr. 58-61); and (3) that KAWASAKI has enjoyed market shares in excess of 26 percent in several urban areas: Jacksonville, 27 to 30 percent, and Tampa, 27 to 35 percent (Tr. 62). This constitutes substantial evidence that KAWASAKI has favorably evaluated the sales potential of the proposed new dealership in DeLand. Proposed finding of fact No. 13 is also rejected, as inconsistent with the evidence, infra, and finding of fact No. 13.
Conclusions Petitioners have sustained their burden of proof by demonstrating that existing Kawasaki motorcycle dealers are not providing adequate representation in the territory or community involved. Therefore, the application for license should be granted. Background On June 3, 1980, Petitioners, Willis S. Brigham and Michael Wayne Hampton, d/b/a Kawasaki of DeLand (hereinafter "APPLICANT") applied to the Respondent, Department of Highway Safety and Motor Vehicles (hereinafter "DEPARTMENT"), for a motor vehicle dealer's license authorizing it to operate a Kawasaki motorcycle dealership in DeLand, Florida. On June 30, 1980, Respondent, Daytona Sports Center, Inc. (hereinafter "PROTESTANT"), an existing Kawasaki dealership in Daytona Beach, Florida, protested licensing the proposed DeLand dealership, asserting that Petitioner, Kawasaki Motors Corp., U.S.A. (hereinafter "KAWASAKI"), was already adequately represented in the community or territory involved. PROTESTANT requested a hearing if the DEPARTMENT did not share its view, or was in doubt on this issue. On July 7, 1980, the DEPARTMENT forwarded this case to the Division of Administrative Hearings for the purpose of conducting the requested hearing. Hearing was thereafter set for September 19, 1980. On motion of the Petitioners, and without objection of the other parties, the hearing was continued, and reset for October 13, 1980. At final hearing, the Petitioners, APPLICANT and KAWASAKI, called as their witnesses: Dahlon G. Ritchey and Merrill Sutton, and offered Petitioners' Exhibits 1/ 1 through 11 into evidence, each of which was received. PROTESTANT called Robert R. Warfel and David B. Russell as its witnesses, and offered Respondent's Exhibits 1/ 1 through 3 into evidence, each of which was received. At close of hearing, the parties requested and were granted the opportunity to file proposed findings of fact and conclusions of law within 14 days from filing of the hearing transcript. It was also agreed that the 30-day period for submittal of the recommended order would begin when their proposed findings were filed. On November 10, 1980, the parties timely submitted their posthearing filings.
Recommendation Based upon the foregoing findings of fact and conclusions of law it is RECOMMENDED: That the application of Willis S. Brigham and Michael Wayne Hampton d/b/a Kawasaki of DeLand be GRANTED. DONE and ENTERED this 10th day of December, 1980, in Tallahassee, Florida. R. L. CALEEN, JR. Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of December, 1980.
Findings Of Fact By stipulation, Jones & Dabney, Inc. has standing. Jones & Dabney, Inc. does business as Tri City Honda Suzuki (Tri City). Tri City sells Honda and Suzuki motorcycles at a dealership located at 14996 US Rte. 19 North. The location, which is in the south-central part of Pinellas County, is east of Largo, southeast of Clearwater, and northwest of St. Petersburg. Tri City formerly sold and serviced only Honda motorcycles. American Suzuki Motor Corporation (American Suzuki) approved Tri City's application for a Suzuki franchise on April 1, 1991. Tri City used its existing Honda location for the Suzuki dealership. Tri City spent $3000 in non-resale items, with nearly half of that amount for special Suzuki tools. Tri City also spent about $12,500 for parts. The initial non-vehicle expenditure of about $15,500 is about $3000 less than usual because American Suzuki allowed Tri City to use existing Honda equipment, such as video equipment, where possible. At the time of the application and approval process, Mr. Jones of Tri City and representatives of American Suzuki discussed the fact that American Suzuki would need a dealer for Pasco and north Pinellas counties. Mr. Jones said that he might be interested in moving his dealership into north Pinellas County. American Suzuki representatives indicated that they would listen to any proposal that Mr. Jones might like to make. However, he never raised the issue after he was awarded the Suzuki franchise. American Suzuki is represented presently in the area of Pinellas, Hillsborough, and Pasco counties by Tri City, a multiline dealer in Tampa (handling Suzuki, Honda, and Kawaski) and a multiline dealer in Zephyrhills, which is in eastern Pasco County (handling Suzuki and Kawaski). Previously, Suzukis were sold and serviced in south Pinellas County by a long-term dealer in Pinellas Park about 4.3 miles south of Tri City's location. The Pinellas Park dealer retired and sold the business, which shortly thereafter failed on January 2, 1991. American Suzuki was also represented in Pasco County and north Pinellas County by a dealer located in Holiday. The Holiday dealership was on US Rte. 19 about one-quarter mile north of the Pasco-Pinellas county line. At one time the fourth largest single-line Suzuki dealer in Florida, the Holiday dealer diversified, lost interest in the Suzuki motorcycle line, and closed the Suzuki dealership on March 2, 1990. The application to which Tri City objects was made more than one year following the closing of the Holiday dealership, so Tri City has a right to protest the establishment of the new dealer. The present case involves the decision of American Suzuki to award a Suzuki franchise to Cycle Springs, Inc. Cycle Springs, is currently a Yamaha dealer located at 37182 US Rte. 19, Palm Harbor. The location is in north Pinellas County just south of Tarpon Springs. Cycle Springs is located about 4 miles south of the former Holiday dealer. The distance between the Cycle Springs and Tri City locations is about 13 miles. It takes about 30 minutes to drive the distance during rush hour. American Suzuki's market share has been slipping in Pasco and Pinellas counties. In 1987, American Suzuki's market share in the national, Florida, Pasco County, and Pinellas County markets was, respectively, 11.57 percent, 12.75 percent, 21.66 percent, and 15.59 percent. By 1990, the manufacturer's market shares had risen to 14.65 percent nationally and remained about the same in Florida at 12.78 percent. But the shares for Pasco and Pinellas counties had fallen to 9.52 percent and 9.91 percent, respectively. In 1991, American Suzuki's market shares climbed in the country to 16.34 percent, in the state to 14.3 percent, and in Pasco County to 13.82 percent. The market share for Pinellas County remained roughly unchanged at 9.88 percent. In 1992, slight changes in market share for the country and Florida (to 15.92 percent and 14.62 percent, respectively) were accompanied by a decline of market share in Pasco County (to 12.2 percent) and an increase in market share in Pinellas County (to 14.44 percent). Market penetration in Pinellas County has improved compared to market penetration in Pasco County, which remains only 56 percent of what it was in 1987. However, even in Pinellas County market penetration is slightly less than it should be. It is about 1.5 percentage points less than it was in 1987 and almost three percentage points less than the average market penetration for American Suzuki in comparable Florida urban markets. Market penetration is based on motorcycle registrations, which, in Florida, exclude a large number of motorcross-type dirt and racing motorcycles and almost all all- terrain vehicles. Market penetration reflects the county in which vehicles are registered, not the location of dealers making sales. Thus, market penetration figures do not precisely reflect actual sales by dealers. However, the sales figures also indicate that Pinellas and Pasco counties are underperforming in terms of Suzuki sales. For 1992, for example, American Suzuki sold only 35 percent of expected sales in Pasco County and Pinellas County. By contrast, in 1988, American Suzuki sold 98 percent of expected sales in Pasco County, but only 39 percent of expected sales in Pinellas County, which suggests that the expected sales in Pasco County is realistic, but the expected sales in Pinellas County--due to demographic reasons-- is not realistic. American Suzuki has given Tri City a reasonable opportunity to increase Suzuki market share in the area. Tri City's initial order of vehicles has been sold except for one 250 cc dirt bike and one 350 cc dirt bike, which Mr. Jones chose to order with guidance from an American Suzuki representative, and two 80 cc motorcycles, which Mr. Jones ordered at the request of the American Suzuki representative in order to obtain these small, relatively inexpensive bikes for another dealer, who unfortunately reneged on his agreement to buy the bikes from Tri City. As of May 3, 1993, a total of 12 vehicles in Tri City's 55-vehicle inventory remain from 1991 orders, including the four described in the preceding paragraph. Except for three vehicles ordered in 1993, the rest of the inventory was purchased in 1992. From May, 1992, to April, 1993, Tri City has worked down its inventory of Suzukis from 90 to 55 vehicles. This corresponds to Tri City's initial order of 58 vehicles. In reducing its inventory during 1992, when Tri City took 77 vehicles from Suzuki, Tri City took only 27 vehicles in 1993, including only 18 of the 31 motorcycles allocated to it. American Suzuki has given Tri City a reasonable opportunity to increase market share and sales. Tri City has generally not been out of the better-selling Suzukis, but apparently has elected to reduce inventory, rather than try to increase sales, in order to sustain a more comfortable ratio of inventory to vehicles than the ratio that prevailed in 1992. At present, Tri City does not appear well-situated to increase sales in Pinellas County or Pasco County, and the failure to do so, especially in Pasco County where American Suzuki has lost considerable sales and market share, tends to demonstrate inadequate representation. Tri City and Cycle Springs are about eight miles, or 38 percent, closer than the former Holiday and Pinellas Park Suzuki dealers. While greater geographic spread might be optimal, American Suzuki attempted to fill the Pasco County location for some time without success. Due to the reduced profitability of motorcycle dealerships, when compared to many automobile dealerships, it is often necessary to obtain an existing dealer or to convert a small retail operation, such as a lawnmower store. In this case, American Suzuki investigated the available possibilities and Cycle Springs appears to have emerged as the lone suitable applicant that was interested in taking on the Suzuki line. Analysis of recent Suzuki sales by Tri City, recent Yamaha sales by Cycle Springs, and older Suzuki sales by the former Holiday dealer discloses that Tri City would not likely lose Suzuki sales to Cycle Springs. Tri City sales will likely concentrate in north-central Pinellas County, and Cycle Springs sales will predominate in Pasco and north Pinellas counties. The availability of another Suzuki dealer for sales and service may increase Tri City's Suzuki sales as potential customers perceive competitive advantages in the pricing and availability of products and service. For the reasons set forth above, American Suzuki has proved that Suzuki is inadequately represented in the relevant market and that the establishment of Cycle Springs as a new Suzuki dealer is justified. There is no evidence that Tri City's investment in American Suzuki products is excessive. American Suzuki has not denied Tri City the opportunity for reasonable growth and market expansion. There is no evidence that the establishment of the new dealership would seriously jeopardize the investment in Suzuki products and equipment already made by Tri City. The availability of another Suzuki sales and service location may enhance sales and service for both dealers and will favorably impact consumers and the public interest.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order dismissing the protest of Jones & Dabney, Inc. to the proposed establishment by American Suzuki Motor Corporation of a Suzuki dealership at Cycle Springs, Inc., 37182 US Rte. 19 North, Palm Harbor, Florida. ENTERED on May 19, 1993, in Tallahassee, Florida. ROBERT E. MEALE 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 on May 19, 1993. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Dean Bunch Cabaniss, Burke & Wagner 851 East Park Ave. Tallahassee, Florida 32301 Philip L. Jones Jones & Dabney, Inc. 14996 US Rte. 19 North Clearwater, Florida 34624
Findings Of Fact American Isuzu is the licensed distributor of Isuzu motorcars and trucks in the United States. American Isuzu licenses franchise dealers to market Isuzu cars and trucks to the consuming public. Isuzu products are manufactured in Japan. American Isuzu began marketing Isuzu products in the United States in March, 1981. Isuzu products compete primarily with other compact imported cars and trucks such as Datsun, Toyota, Volkswagen and others. American Isuzu supports the application of Hollywood Isuzu for licensure to market Isuzu products in Hollywood, Florida. Isuzu of North Miami is owned by David Zinn. Isuzu of North Miami is currently under contract with American Isuzu and duly licensed to market Isuzu products at a location in northwestern Dade County, Florida. Zinn is a capable automobile dealer. He operates a successful Datsun dealership in Stuart, Florida, and a successful Toyota dealership in north Dade County, Florida. Zinn's was the first Toyota dealership in Florida. He has been involved in automobile sales for most of his life. His stature as a successful dealer has been recognized. At the time of the hearing, he was serving as Chairman-Elect of the Board for the American International Automotive Dealership Association, an organization which advances the interests of imported-automobile dealers. Zinn is fully qualified to operate an Isuzu dealership. Isuzu of North Miami is located on U.S. Highway 441 in northern Dade County. The facility is directly across the street from Zinn's Toyota dealership. He has constructed a complete sales and service facility in order to effectively market and service Isuzu automobiles. He has invested approximately $850,000 in the Isuzu dealership. At the time of the hearing, construction on the facility had not been entirely finished, but it was sufficiently completed so that sales and service functions were under way. Hollywood Isuzu is owned by George Nassief. Nassief has been involved in automobile sales for the past thirty years. He currently owns and operates three automobile dealerships in Ohio. He has won dealer awards from Ford, Pontiac, Toyota and Honda. Nassief has been interested in developing an automobile dealership in south Florida. American Isuzu has granted Hollywood Isuzu a franchise contract to operate an Isuzu dealership at 1321 North Sixtieth Avenue, Hollywood, Florida. Sixtieth Avenue is also known as U.S. Highway 441. The Isuzu of North Miami facility is less than five miles from the proposed Hollywood Isuzu location on the same roadway. In order to sell and service Isuzu products, Nassief proposes to construct a complete sales and service facility. He has already purchased land, hired an architect and begun preparation of the site. He plans to invest approximately $700,000 in the venture. Nassief is fully qualified to operate an Isuzu dealership. American Isuzu has developed marketing concepts or strategies to advance its entry into the American automotive market. For initial penetration, American Isuzu chose several market areas primarily in the western and southeastern United States. Florida is a well-recognized imported automobile market, and south Florida is the major Florida market. American Isuzu targeted south Florida as a primary zone for its initial efforts. Initial plans were to locate four dealerships in Broward County and three in Dade County. A decision was made to select dealers from individuals who had demonstrated themselves as successful dealers of other products. American Isuzu decided to establish average-sized dealerships rather than "size-of-market" dealers. Ultimately, American Isuzu desires to have each of its dealers be average in size. Voluntary trade restrictions that have been imposed upon automobiles imported from Japan have interfered somewhat with American Isuzu's initial plans. However, three Broward County and two Dade County dealerships have been established. One Broward dealership is located on U.S. Highway 441 in Plantation, Florida, approximately six miles north of the location proposed by Hollywood Isuzu. The other two Broward County Isuzu dealerships are located in the northern and central portions of the county, along U.S. Highway 1 in the City of Fort Lauderdale. These locations are to the east of the Plantation location, the proposed Hollywood location and Isuzu of North Miami. During the time that Zinn was negotiating with American Isuzu for an Isuzu franchise, he proposed to locate in western Broward County near the presently proposed Hollywood Isuzu location. The then District Manager of American Isuzu, Mr. Mike Bonamy, declined to approve that location, and instead insisted upon the north Miami location. Bonamy suggested that Zinn would be able to serve the west Hollywood market from the northern Dade County location. Zinn was led to believe that a Hollywood location would be approved, but that it would be located along U.S. Highway 1, rather than on the same highway as his dealership. Isuzu of North Miami does not oppose the creation of a fourth Isuzu dealership in Broward County, but rather opposes the location of it on U.S. Highway 441, rather than U.S. Highway 1. American Isuzu has not delineated specific market areas for its dealerships. American Isuzu is seeking to penetrate the broad south Florida market by the introduction of various dealerships. A primary source of customers within this area is located in the western portions of Broward and Dade Counties. Through existing dealerships, Isuzu has obtained a market penetration reflected as a percentage of total import sales which equals its penetration statewide in Florida. American Isuzu's entry into the American market would be facilitated by strongly penetrating certain market areas, then expanding from that base. American Isuzu has sought to accomplish this strategy by locating numerous dealers in south Florida. Despite the emphasis, American Isuzu has not penetrated south Florida more pervasively than it has the state, generally. American Isuzu is clearly capable of marketing additional automobiles in south Florida. In order to accomplish that in harmony with its policy of maintaining average-sized dealerships, it is necessary that American Isuzu establish an additional Broward County dealership. The western portion of Hollywood, where Hollywood Isuzu proposes to locate, is a logical choice for the additional dealership. Numerous clusters of dealerships have been established along U.S. Highway 441 in northern Dade County and western Broward County. In close proximity to Isuzu of North Miami, there are Toyota, Mazda and Volkswagen dealerships. In close proximity to the proposed Hollywood Isuzu location, there are Toyota, Honda and Datsun dealerships. In close proximity to the Plantation Isuzu dealership, there are Mazda, Toyota and Datsun dealerships. Such "clusters" of competing dealerships tend to stimulate sales. Location of an Isuzu dealership at the proposed Hollywood location should not operate to reduce sales on the part of Isuzu of North Miami. Rather, the dealership should aid Isuzu in further penetrating the Broward and Dade County markets. By increasing the visibility of Isuzu generally, the additional facility should also serve to stimulate Isuzu sales. While Isuzu of North Miami can offer Isuzu automobiles to potential customers in the west Hollywood area, it cannot stimulate such sales as well as a specific dealership in that location could. American Isuzu has charged that Isuzu of North Miami has not complied with certain provisions of its licensing agreement. These allegations are not supported by the evidence. Isuzu of North Miami originally proposed to appoint David Zinn's son Craig to manage the Isuzu of North Miami facility. Craig Zinn has, however, decided to pursue another opportunity. It does not appear that the absence of Craig Zinn from the Isuzu of North Miami picture renders Isuzu of North Miami unable to adequately sell and service Isuzu automobiles. Indeed, it appears that Isuzu of North Miami has personnel who are fully capable of operating a successful dealership. American Isuzu has alleged that Isuzu of North Miami does not have a sufficient number of trained service personnel and has not purchased sufficient tools. These allegations are not sustained by the evidence. It does appear that Isuzu of North Miami has at least two trained and qualified Isuzu mechanics and has purchased tools with which it can properly service Isuzu automobiles.
The Issue The Petitioner, P & M Transit Company, Inc., d/b/a Jim Walker's Yamaha (hereinafter "Walker") filed an application to relocate its Yamaha dealership. A protest to the application was filed by the Respondent, Suzuki of Hamilton, Inc., d/b/a Daytona Yamaha, U.S.A. (hereinafter "Hamilton"). The basic issue in this case is whether the Walker application should be denied. Underlying issues are (a) whether Section 320.642, Florida Statutes (1987), applies to relocations of existing dealerships and, if so, (b) whether the existing dealers ". . . are providing adequate representation in the community or territory. . . ." (The parties stipulated that there is no issue in this case regarding breach of the dealer agreement by a dealer.) At the hearing, Yamaha Motor Corporation, U.S.A. (hereinafter "Yamaha"), presented the testimony of John Donaldson, an expert in the area of motorcycle dealer network analysis, and offered exhibits 1 through 21, all of which were received into evidence. Hamilton presented the testimony of Alec Mobbs and offered into evidence exhibits A through G. The transcript of the hearing was filed on January 4, 1989, and thereafter Yamaha and Hamilton filed timely proposed recommended orders containing proposed findings of fact and conclusions of law. The parties' proposals have been carefully considered during the formulation of this recommended order. All findings of fact proposed by the parties are specifically addressed in the attached appendix.
Findings Of Fact Based on the evidence received at the hearing, I make the following findings of fact: Petitioner Walker filed an application seeking to relocate its Yamaha motorcycle dealership from 1147 "B" North Dixie Freeway, New Smyrna Beach, Florida 32069, to the location of its Honda-Suzuki Store at 2385 South Ridgewood Avenue, South Daytona, Florida 32019. The new Yamaha location would be approximately nine miles north of the original location and within six miles of Respondent Hamilton's existing dealership. The traffic in the six miles between the proposed new Walker location and the existing Hamilton location is much more dense than the traffic in the nine miles south of the proposed location. The population of Volusia County is separated from the surrounding counties on the north and south, such as to constitute it as a separate community or territory. For purposes of the applicable statutory provisions, the geographic boundaries of the subject "territory or community" are the same as the geographic boundaries of Volusia County. The proposed relocation of Walker is from one point in a territory or community in which he is presently located to another point in that same territory or community. The motorcycle industry is in a decline. Florida currently ranks eighth in the nation in motorcycle sales, which is down from its previous ranking of sixth. Hamilton, the protesting dealer, has owned and operated a successful Yamaha dealership at 324 Eleventh Street, Holly Hill, Florida 32017, since 1983. The dealership is well marked and easily accessible. Although the majority of Hamilton's sales are made to customers who live within five miles of the dealership location, Hamilton considers its market area to be Volusia County. Eleven motorcycle dealerships are currently located in the county. Volusia County's population in 1982-83 was 281,512. In 1987-88 the total was 337,909, for a growth rate of 20 percent. This growth rate is significantly less than Florida as a whole. The typical motorcycle purchaser is aged eighteen to thirty-four. The population of eighteen to thirty-four year olds in Volusia County grew only 16 percent between 1982 and 1988, and, as a percentage of the total population, that age group declined from 25 percent to 24 percent. Hamilton has actively cultivated all of Volusia County as a sales market area since 1983. It spends an average of $17,500 a year advertising on the radio, in newspapers, yellow pages, and participating in various exhibits and mall shows. Hamilton's efforts have been successful. The dealership was a financial disaster when purchased by Hamilton in 1983. But after its first year of operation the dealership showed a profit. The dealership continues to show a profit in the face of a declining industry and a declining market population. Hamilton has over $100,000 invested in his business. Hamilton's store consists of 10,000 square feet in which only Yamaha products are marketed. This is approximately 4,000 square feet larger than the average store. The dealer employs two sales people and three mechanics. Walker has 10,000 square feet for two brands, Honda and Suzuki. If the relocation is permitted, three brands would be housed in the same amount of space Hamilton has for Yamaha alone. Since 1983, Hamilton has probably accounted for the majority of Yamaha sales in Volusia County. In 1983 it sold 163. In 1984 it sold 207. In 1985 it sold 186. In 1986 it sold 139 and in 1987 it sold 122. By the beginning of December 1988, with ten more selling days remaining it had already sold the same as last year's total. Eighty-four percent of all of Hamilton's sales during the last five years were made to customers who lived within a five mile radius of the dealership. In the last two years, 86 percent of total sales were made in the same area. If another dealer were permitted to locate within that radius, the number of sales that Hamilton could reasonably expect to make would probably significantly decrease. Walker's proposed relocation is in the center of the southern half of the majority of Hamilton's sales. Hamilton is an award winning dealer. Yamaha introduced its pacesetter awards program in 1985. There are separate awards for service, parts and accessories, and sales. A dealer receiving all three awards in the same year is named a pacesetter. In 1985, Hamilton won the pacesetter award. In 1986, 1987, and 1988 it won the parts and accessories, and service awards. Hamilton won the service award in spite of intense competition from 20 motorcycle businesses in the Volusia County area. Yamaha has requested Hamilton to perform service warranty work on machines sold by Walker. Hamilton is 17 points above national average in customer service, and at 155 percent of the target sales figures for parts and accessories. Hamilton was chosen by Yamaha as one of only ten dealers in the United States to test market a line of Yamaha clothing. Yamaha attempts to measure the adequacy of sales performance by determining market penetration. Market penetration is determined by adding the total number of motorcycle registrations to the total number of scooter registrations and dividing that total into the total number of Yamaha motorcycle registrations plus the total registrations of Yamaha scooters. All terrain vehicles, ATVs, and motorcross (off road competition dirt) bikes are not included in Yamaha's computation because they are not registered with Florida's Department of Highway Safety and Motor Vehicles. The registration data that Yamaha relies on is compiled by the R.L. Polk Company. Polk purchases the data with which to compile the reports from various state motor vehicle agencies. Polk's reports are based only on vehicle registrations. Therefore the data is not an accurate reflection of sales performance in Florida because ATVs and motorcross bikes are not registered with the State. In addition, registrations reflect only where the motorcycle purchaser lives, not where the unit was purchased. In other words, if a person who lives in Orlando bought a Yamaha in Daytona, that motorcycle registration would show up in a Polk report as an Orlando registration. It is difficult, if not impossible, to accurately evaluate a dealer's sales performance, or representation of its manufacturer, using the Polk data. It is unreasonable to judge Hamilton's representation of Yamaha on a formula based solely on motorcycles and scooters because unregistered vehicles are a large part of Hamilton's sales. Use of registration data also sometimes yields absurd results. For example, Yamaha based their market share of Volusia County for 1985 on 181 vehicles. Hamilton alone sole 186 units that year. Yamaha dealers have had difficulty ordering and maintaining a sufficient supply of machines to sell. Yamaha allocates a certain number of units to each dealer. The allocations are small and made up of mixtures of units that are difficult to sell. On occasion Yamaha has not been able to fill even an allocated order. The manufacturer has also instituted package sales which place small single line dealers such as Hamilton at a distinct disadvantage in the market area. Because of this packaging system, Hamilton was unable to sell any competition machines, a segment of its beach market, in 1988. Overall, there are fewer Yamaha machines available for dealers to buy and retail. The evidence suggests that Florida's "Space Coast" does not purchase motorcycles at a rate commensurate with the rest of the state. In 1985, 1986, and 1987, the only years for which comparable data was introduced, the counties surrounding Volusia (Flagler, Seminole, St. Johns, Orange, Lake, and Putnam) had market percentages below the Florida and national average. Nevertheless, the Florida Yamaha average for 1987 (21.11 percent) was almost achieved in the zip code area in which Hamilton is located. In that area, Yamaha achieved 20.58 percent by registering 14 scooters and motorcycles out of 68 total. Yamaha has never expressed any dissatisfaction with Hamilton's sales performance or representation of the manufacturer. Hamilton was never told to make any changes in its business and never had any indication that it was providing less than adequate sales representation.
Recommendation For all of the foregoing reasons, it is recommended that the Department of Highway Safety and Motor Vehicles enter a final order in this case denying the application of P & M Transit Company, Inc. d/b/a Jim Walker's Yamaha, to relocate its dealership premises. DONE and ENTERED this 6th day of April 1989, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 April 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-3519 The following are my specific rulings on all proposed findings of fact submitted by the parties. Findings proposed by Petitioner, Hamilton: Paragraphs 1 through 10: Accepted. Paragraph 11: Accepted in substance. Paragraphs 12 through 16: Accepted. Paragraph 17: Rejected as constituting primarily argument rather than proposed findings of fact. Paragraphs 18 and 19: Rejected as admittedly inaccurate. Paragraph 20: Rejected as constituting inferences which are not warranted by the evidence; there is insufficient evidence in the record upon which to base the proposed opinion. Paragraphs 22 through 24: Accepted. Findings proposed by Respondent, Yamaha: Paragraphs 1 through 4: Accepted. Paragraphs 5 and 6: Rejected as constituting a discussion of statutory interpretation rather than proposed findings of fact. Paragraph 7: Accepted in substance. Paragraph 8: First sentence accepted. The remainder is rejected as subordinate and unnecessary details. Paragraph 9: Rejected as subordinate and unnecessary details. Paragraphs 10 and 11: Rejected in part as subordinate and unnecessary details and in part as constituting inferences not warranted by the evidence. Paragraphs 12 and 13: Rejected as subordinate and unnecessary details. Paragraph 14: Accepted in substance. Paragraphs 15 and 16: Accepted in substance. Paragraph 17 and 18: Rejected as subordinate and unnecessary details. Paragraphs 19 through 23. Rejected as based on inferences not warranted by the evidence; the Polk data standing alone is simply not a persuasive basis upon which to reach conclusions regarding the scope of the area within which the existing dealers enjoy a "geographic advantage." Paragraph 24: First four lines rejected as based on inferences not warranted by the evidence. Last three lines accepted in substance. Paragraphs 25 and 26: Rejected as contrary to the greater weight of the evidence and as not supported by persuasive competent substantial evidence. Paragraph 27: Rejected as constituting a statement of legal principles rather than proposed findings of fact. Paragraph 28: Rejected as constituting inferences not warranted by the evidence and not supported by competent substantial evidence. Paragraph 29: Rejected as subordinate and unnecessary details; also irrelevant. Paragraph 30: Rejected as constituting inferences not warranted by the evidence. Further, the reasonableness of the proposed standard, without more, is questionable in view of the fact that by simple logic half of the dealers nationwide are performing below the national average. Paragraph 31: Accepted in substance. Paragraph 32: First sentence rejected for same reason as rejection of Paragraph 30. Remainder rejected because the Polk data is not a persuasive basis upon which to draw conclusions regarding market penetration. Paragraphs 33 through 38: Rejected because the Polk data is not a persuasive basis upon which to draw conclusions regarding market penetration. Paragraph 39: First sentence is rejected as irrelevant. Last sentence is rejected as constituting an inference not warranted by the evidence and not supported by competent substantial evidence. Paragraph 40: First sentence is rejected as constituting a legal conclusion not warranted by the evidence. Last sentence rejected as redundant. Paragraph 41: Rejected as constituting argument rather than findings of fact. Paragraphs 42 through 48: Rejected as irrelevant. Paragraphs 49 and 50: Rejected as subordinate and unnecessary details. Paragraph 51: Rejected as constituting subordinate, unnecessary, and irrelevant details. Paragraph 52: Rejected as subordinate, unnecessary, and irrelevant details that are closer to argument than to proposed findings of fact. Paragraphs 53 through 56: Rejected as constituting argument about the evidence rather than proposed findings of fact. COPIES FURNISHED: Dean Bunch, Esquire Rumberger, Kirk, Caldwell, Cabaniss, Burke & Wechsler 101 North Monroe Street Suite 900 Tallahassee, Florida 32301 Linda McMullen, Esquire McFarlain, Sternstein, Wiley & Cassedy 600 First Florida Bank Bldg. Tallahassee, Florida 32301 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 Enoch J. Whitney, Esquire General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 Charles J. Brantley, Director Division of Motor Vehicles Room B-439, Neil Kirkman Bldg. Tallahassee, Florida 32399-0500 =================================================================
