Failed “Ford Retail Network” 15 Years Ago Stopped Tesla Today From Selling Direct In Texas
Tesla and the Texas Automotive Dealer Association recently had a protracted battle over whether not the California maker of the Model S could sell direct in the Lone Star State.
And while Tesla won the right to sell direct in many states…Tesla lost in Texas. And the failed Ford Retail Network from the late 90s is the reason why.
Selling direct is not a new concept, and it is certainly one the major automakers would like to re-visit, especially considering the proliferation of the internet.
Even back in 1998, Ford tried to bring its own lineup of factory owned stores to Texas. However, the then head of the Texas Dealer Association Gene Fondren (now deceased), who was also a noted legislator and lobbyist was right there to fight them.
In a report filed by Amy Wilson of the Automotive News, apparently Fondren did such a good job re-writing the legislative code that he stopped Tesla 15 years later. In speaking with the publication, Elon Musk called Mr. Fondren “a tough dude.”
“He worded it six ways to Sunday. Like Green Eggs and Ham, you know. If you’re a manufacturer, you cannot sell it any which way, no matter what. You can’t sell it in a house, can’t sell it in a mouse, can’t sell it in a grouse. It’s like, OK, wow. You can’t sell it.”
The Ford Retail Network continued to exist in some form or other until April of 2002 when the company sold off the last nine stores in the greater Oklahoma City area to 10 existing dealers…including a couple of the largest dealers in Texas. But the air-tight legislative language to stop them, and future would-be direct sellers remains today.
Shortly after the FRN closed shop Mr. Fondren also stepped down as head of the association, but left behind his hand-picked team of lawyers who drafted the state rules to thwart direct selling in the state to fight on.
“We get a lot of calls from other (association’s) people saying, ‘Send me the language for this part of your statute,” said Bill Wolters, who succeeded Fondren as president in 2004.
The Virginia Dealers Association was one of those who patterned their language on direct OEM selling practises after Texas defeated a challenge from Ford to change Texas state franchise laws. Tesla’s other most recent setback unsurprisingly came in Virginia.
Texas dealer association President Wolters credits two people specifically for what the group has been able to accomplish in framing the Texas’ franchise statue – Tom Blanton, who is COO of legislative affairs, and Karen Phillips, who is executive VP and general counsel. The two combine for over 60 years with the association.
“They did a tremendous amount of work in the background, and then Gene would go get the bill passed,” said Wolters in praising of the two.
Tesla probably thinks of them, and the late Mr. Fondren another way.
Automotive News (sub)