WHO SAYS COMPLIANCE IS EASY: ME!
2007 NIADA CONVENTION Keith Whann
Whann & Associates Go ahead. Take a good look at your dealership. It appears to be in good shape, but you know there are compliance problems. You just don’t know where. If only you could see what I see? What do you think it looks like from my perspective? First of all, you need to understand what “compliance” means to me. Compliance is having your dealership’s paperwork, practices and procedures all in accordance with the law. Compliance is an ongoing process that must be constantly monitored and managed – from the top down! How can you improve dealership compliance and avoid problems before they happen, while increasing customer satisfaction and overall dealership profitability at the same time? It can be done. Remember, I am the guy who says compliance can be easy! KEITH’S WAY TO MAKE DEALERSHIP COMPLIANCE EASY 1. MAKE PROBLEM AVOIDANCE AND PROBLEM RESOLUTION A PRIORITY Take action to prevent problems
Make problem resolution a priority; designate a point person, if necessary
Look at the entire deal - not just the potential problem
Consider all options before taking action (remember, doing nothing is taking action)
Review your insurance coverage
Check relevant third party contracts
Use advisors who understand the business 2. HAVE A PLAN FOR YOUR BUSINESS Selling or Leasing?
New or used vehicles?
Traditional retail, nonprime, buy here - pay here or related finance company financing?
The Service Department is for internal work or customer pay work?
“The problem with aiming at the wrong target is, sometimes you actually hit it!” - KW 3. CONDUCT A “WALK-THRU” OF YOUR DEALERSHIP Start at the front door and remember, there is a back door too.
Some of the things to look at are obvious (dealership licensing, paperwork and FTC Stickers) and some of the things are not (wastebaskets, copies and computers). 4. REVIEW DEALERSHIP PAPERWORK ANNUALLY AND WHENEVER CHANGES IN YOUR BUSINESS OCCUR Dealers should have their paperwork reviewed and, as necessary, updated on a yearly basis. Pay attention to not only legal and regulatory activity, but industry developments and changes in how you conduct business.
Having a relationship with a vendor who stays up to date and can keep you apprised of compliance issues as they develop will help streamline this process. You should limit who has authority to revise the paperwork and have procedures in place to ensure that employees do not use paperwork brought in from outside sources, such as the last Dealership where they worked. 5. UNDERSTAND F&I AS WELL AS YOU POSSIBLY CAN Establish solid relationships with your lenders.
Know about the products and services you offer, be able to explain them and answer questions and be sure to actually sell them to the consumer.
Terms like finance reserve, GAP, warranties, service contracts and satisfaction guarantees are not just words, they have a specific meaning.
Menu-selling may be good, but an F&I Purchase Confirmation is even better.
Remember the customer makes decision, and be sure to document what they decide. 6. AUDIT COMPLETED DEALS ON A QUARTERLY BASIS Make sure the right paperwork is being used all of the time.
Make sure the paperwork is completed properly.
Check to be sure that automated systems are functioning properly.
Do modifications need to be made to accommodate any changes in your business plan, the law or the industry to keep you current?
Are there any gaps in your deal or areas of misunderstanding where additional training is needed? 7. HAVE AN EFFECTIVE ADVERTISING STRATEGY Be familiar with the Federal and State Laws that regulate automobile advertising.
Review advertisement proofs for compliance with these Laws.
Remember, a statutorily imposed duty cannot be delegated to a third party.
Know what advertisement is going to run where, and when.
Material limitations or exclusions to offers must be stated in a clear and conspicuous manner.
Direct mailers and telephone solicitations or follow up calls are different and can raise a whole host of other issues. 8. KNOW WHAT THE INTERNET IS AND WHAT TYPE OF ACTIVITY YOU ARE DOING THERE Whether it is your own website or a third parties website, whenever you think of conducting business on the Internet, always ask yourself: What am I doing? Where am I doing it? How am I doing it? Who am I doing it with?
9. READ ALL CONTRACTS (INCLUDING LENDER AGREEMENTS) BEFORE SIGNING THEM AND KNOW WHAT THEY SAY
Dealers should make sure they have a copy of the dealer agreement for each lender and service provider with whom the Dealership does business. 10. BUILD A TEAM Invest in yourself and your employees: Stay current, and train your employees well! Use advisors, trainers and consultants that understand the business. Your work in the compliance area, is never done. Okay, now you have a glimpse of what I see when I look at your dealership. Your dealership is likely in pretty good shape, but I see various areas within the dealership that could use a closer look and a little fine-tuning. There is paperwork that needs to be updated and policies and procedures that need to be developed or revised along with ways to improve customer satisfaction, prevent mistakes and solve existing dealership problems, not to mention many unanswered Internet questions. If these issues are attended to and appropriate action is taken, it will result in a more efficiently run and profitable dealership. Accomplishing this must be very complicated, time consuming and expensive, right? It doesn’t have to be. In fact, you can do most of it yourself provided you know what to look for and where. If it were my dealership, I would start by checking out these websites when I get back to my dealership: www.KeithWhann.com - the Toolbox, Problem Solved! and Car Counselor sections. Take your time going over the Article Take A Good Look At Your Dealership: Do You See What I See? and obtain a copy of The Car Counselor's Guide To Conducting Your Own Dealership Compliance "Walk-Thru" if you want to give it a try. www.NIADA.tv - Video and audio presentations on a wide range of topics. Be sure to watch the segments from the 2006 NIADA Dealership Compliance and Profitability Expo. www.NIADA.com - various articles on related subjects in Used Car Dealer Magazine. www.IndependentDealer.com - information on this topic and related subjects along with links to regulatory agencies.
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