“Governor Gary Locke has signed legislation amending auto dealer franchises. The legislation was hailed by the Washington State Auto Dealers Association as protecting consumers, ensuring fair competition and helping small town and rural economies. The legislation prohibits auto manufacturers from using elements of their franchise agreements with dealers to compete against the dealerships.. The legislation also prohibits manufacturers from using or sharing dealers’ proprietary data to compete with them. In a number of other states auto manufacturers have opened retail dealerships in competition with their own franchises. The association charges that factory-owned stores have an unfair advantage in the retail marketplace due to non-negotiable franchise agreements local dealers have to sign. Through the contracts, the association says, manufacturers gain access to dealers’ proprietary information, including customer records, financial statements, financing agreements and personnel records. Manufacturers, according to the association, have complete control over a local dealer’s inventory, distribution of car parts, and in some dealerships, financing options. There is also no alternative supplier for a local auto dealer, the association charges, with a dealer only able to get its automobiles and parts from that manufacturer. With that advantage, the association says factory-owned stores could drive local dealers out of business by giving preferential treatment to corporate-run dealerships, and then raise prices to consumers when competition is gone. Consumers in rural areas and small towns are the ones who could have been first to experience the results of manufacturer competition, the association says, though the impact of a loss of independent dealers would also have a large impact on local government. The association claims new-vehicle sales in 1998 accounted for 23.2 percent of total retail sales in Washington, generating more than $800 million in state and local sales tax revenues. In addition, the association says auto dealers provide employment for over 20,000 people statewide, with an average of 53 employees per dealership. The legislation was signed into law by the governor on March 29.”