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RSSFormer Indiana Dealer Shares Frustration About Selling His Business
The February 11 Farm Equipment E-Watch featured an article on proposed manufacturer-dealer legislation in Oklahoma. The bill would determine what provisions may and may not be included in an agreement between a dealer and a manufacturer of agricultural, construction, utility, industrial, mining, outdoor power, forestry and lawn and garden equipment.
The story struck a chord with Mark Zeltwanger of Indiana, who says he had problems selling his ag equipment dealerships to buyers he had identified because the manufacturers interfered. Here's his story.
John Dobberstein, Associate Editor
Over three decades, Mark Zeltwanger says he sold hundreds of millions of dollars in agricultural equipment at his Indiana stores.
Zeltwanger and his father, Earl — a former vice president of engineering for White Farm Equipment — retailed John Deere equipment at farm centers in Plymouth and Warsaw. At their Wyatt Farm Center they sold New Holland, AGCO and Kubota products, along with shortlines like Hiniker, Great Plains, Land Pride and Woods.
But Mark Zeltwanger, who lives in Nappanee, Ind., said things became difficult several years ago when Deere started to push dealership consolidation and AGCO and Kubota made changes in their business dealings with him.
Deciding to invest their money elsewhere, the Zeltwangers sold their Deere stores Plymouth and Warsaw in 2002 to Gilisinger Inc. The buyers were brought to the family by Deere, Mark Zeltwanger said.
Five years later, after some protracted discussions with their suppliers, the Zeltwangers sold Wyatt Farm Center, with the AGCO and Kubota lines going to separate stores. Mark Zeltwanger says they were forced to sell even though Wyatt had over 50% market share selling small tractors, mini excavators and wheel loaders for Kubota.
Mark Zeltwanger said the buyers he and his father were in negotiations with to acquire Wyatt could not get AGCO or Kubota to sit down and give them a fair chance —even though the Zeltwangers had fought to find a family oriented group that enjoyed selling farm and construction equipment and would take care of the customers the Zeltwangers were handing them.
Mark Zeltwanger said the lack of control over whom he could sell his businesses to cost he and his father more than $1 million. The customer base the Zeltwangers built up over 30 years at their stores, which the family believed was valuable, was given away to the favored buyers, he added.
He says big manufacturers still have too much power over dealers when they go to sell their businesses. "No matter how well you represent the company or how much market share you have in a particular place, they don't care," Mark Zeltwanger said in a phone interview with Farm Equipment. "They will give the sales contract to who they want. There is no ability for a private dealer to sell their own business."
Zeltwanger also said it's important for dealers and trade associations to get behind proposed legislation in Oklahoma that might change the balance of power a bit.
The Journal Record of Oklahoma City reported that State Sen. Jay Paul Gumm, D-Durant recently introduced Senate Bill 276, a proposed law that would determine what provisions may and may not be included in an agreement between a dealer and a manufacturer of agricultural, construction, utility, industrial, mining, outdoor power, forestry and lawn and garden equipment.
The bill would give dealers more power over how they might sell their business or pass the dealership on to family members. The bill narrowly received a passing vote in the Senate Business and Labor Committee and will next be heard by the full state Senate.
Some Oklahoma lawmakers oppose the bill, saying it interferes with business operations.
Barry Nelson of Illinois-based Deere & Company told Oklahoma lawmakers this month that Deere's policy is to ensure that any "prospective buyer will have sufficient resources and will adequately represent the John Deere brand and product in the marketplace."
But Stan Jackson, a Reno, Nev. dealer consultant and former Deere manager, said that's not exactly correct. "John Deere controls who the business can be passed on to," Jackson said in an e-mail to Farm Equipment. "They actually tell a selling dealer who (he or she) can pass the dealer to. Deere says who the selling dealer can negotiate with, thus limiting severely the ability for the dealer to sell at market price.
"There is no market except the buyer John Deere provides."
Zeltwanger said he's been pushing the North American Equipment Dealers Assn. and Midwest Equipment Dealers Assn. to:
-Require manufacturers to conform to state and federal laws regarding buyback of products upon voluntary or involuntary rescission of a dealer agreement;
-Lobby to have manufacturers convert dealer sales and service agreements to franchises "so we can go from 'loanership to ownership' ";
-Require manufacturers to adopt acceptable criteria for dealers retiring or selling.
-Require manufacturers to have "arbitrated settlements" for the "fair value" of a dealership in good standing, if a manufacturer rescinds a contract.
Tag Webb, a regional manager for the Southwestern Assn., which represents the interests of dealers of industrial and farm equipment in the southwestern U.S., says laws similar to Senator Gumm's are on the books in 46 states.
Zeltwanger said current state laws have not been tested in court so manufacturers "tend to ignore these laws or make it very difficult for a small business owner to get his way."
But the new bill would clarify legal issues such as what constitutes coercion imposed by a manufacturer trying to prevent a dealer from carrying other brands.
Webb says the bill exempts Caterpillar, one of the world's largest manufacturers of construction equipment. Caterpillar's operations are so extensive drafters of SB 276 chose not to take on the company with the bill, The Journal Record reported.
