Not long ago, a colleague in the media emailed to ask if I'd heard that dealers were using Buy-Back laws to return inventory during the current downturn in the equipment industry. The idea — floated by a concerned shortline manufacturer — was that some dealers were terminating contracts just to generate cash. The manufacturer feared that this behavior would violate the spirit of the law and create financial strain for OEMs already feeling the impact of slowing sales.

In my 30 years in this industry, I’ve seen countless business strategies — but that kind of behavior? It’s rare. Extremely rare. And, as someone who has worked closely with dealers for decades, I would never advise using repurchase laws that way.

Still, the question remains: Are Buy-Back laws good or bad for the industry?

Without hesitation, I say they are good. These laws were never intended to be weapons — they are tools. And over the long term, they’ve helped create a stronger, more resilient dealer network and a healthier industry overall.

Why These Laws Exist

In the past, dealers often bore the financial burden when manufacturers changed product lines or discontinued models. If a contract was terminated, dealers were left with obsolete equipment and parts — sometimes worth hundreds of thousands of dollars — with no recourse.

That changed in the 1960s and 1970s when dealer associations successfully advocated for repurchase laws in various U.S. states and Canadian provinces. These laws required manufacturers to buy-back unused inventory and parts when a dealer agreement ended. Dealers were no longer left holding the bag when the relationship changed.

A Win for Dealers — and Manufacturers

For dealers, these laws created peace of mind. While specifics vary, many laws require manufacturers to:

• Repurchase new, unsold equipment at 100% of the original invoice price
• Repurchase new, salable parts at 85–100% of the current net price
• Pay for the original freight costs and of returns

Some jurisdictions even include demonstrator equipment, signage, special tools, and diagnostic equipment in the buy-back provisions.

These protections enable dealers to manage their inventory with greater confidence. They also make it easier to consider new product lines, keep a healthy parts inventory, and plan for succession or exit strategies — all key components of a viable business.

Manufacturers — particularly shortline and international OEMs — have sometimes viewed these laws with skepticism. But many have come to recognize the upside: clearer expectations, stronger partnerships and healthier dealer networks. With exit provisions in place, it’s easier to build trust, negotiate contracts and maintain loyalty — especially in rural communities where dealers are often the backbone of the local economy.

Advice to Short Line OEMs

I once had a blunt conversation with a shortline manufacturer who was frustrated that a dealer wasn’t promoting their brand. “What do I have to do to get this dealer to pay attention?” he asked.

My response: You have to treat them better than their major OEM does.

That means offering protected trade territories, opportunities for fair margins, solid aftermarket support, warranty reimbursement at advertised shop rates, inventory financing options, and incentives such as early order and volume discounts. And perhaps most importantly, don’t undermine your dealers by placing competitors in their territory. Loyalty is earned, not mandated.

Dealers rarely take on a product line just to let it sit. They evaluate the market fit, customer demand, and the potential to grow their business. When they sign on, it’s because they believe in the opportunity.

Many short line manufacturers understand this, and some excel. NAEDA’s annual Dealer-Manufacturer Relations Survey consistently highlights the OEMs who get it right. For many, that survey is a valuable roadmap for building stronger partnerships.

Legislation as a Last Resort — But a Necessary One

During my time with various dealer associations, I often emphasized that legislation should always be a last resort. For 19 years, I participated in an industry relations task force that met regularly with OEMs and their associations. The goal was dialogue — not litigation. The hope was that open communication could prevent the need for new laws.

But let’s be honest: much of that dialogue was only possible because protections were already on the books. Without that foundation, the balance of power would remain one-sided.

There’s no question that the dealer network today is stronger than it was 30 or 40 years ago. OEMs — especially the majors — are demanding more from their dealers than ever before.

But even with recent sales declines, dealerships are managing to survive. We’re not seeing the widespread failures that occurred in the 1980s or early 2000s. Ownership may be consolidating, but the number of locations remains somewhat stable. 

The truth is simple: OEMs need strong, financially healthy dealers to retail their products. Dealers, in turn, need fair and transparent relationships with manufacturers. Buy-Back laws help ensure that balance exists.

Looking Ahead

Not all states and provinces have these laws yet. That’s why dealer associations continue to advocate for consistent protections across jurisdictions. For those regions that do have them, Buy-Back laws have moved from being seen as burdensome to being recognized as essential pillars of a well-functioning industry.

These laws don’t stifle innovation. They don’t punish manufacturers. What they do is foster trust, stability and mutual accountability.

In the end, Buy-Back laws didn’t just protect dealers — they strengthened the entire equipment industry.