JLRNA’S Business Builder Bonus Program

By: Andrew G. Thomas, Esq.

Jaguar and Land Rover dealers are familiar with JLRNA’s Business Builder Bonus Program (the “Program”), as it has been around for years. The Program provides incentive monies to dealers who comply with identified prerequisites and satisfy requirements for the various individual components. 

However, aspects of the current iteration of the Program are problematic, and may violate state franchise laws. As a prerequisite for participation in the program, JLRNA requires that dealers have an “approved facility” or an “approved facility plan.” Our understanding is that JLRNA is still evaluating dealers under the Program even if they do not meet this prerequisite, but that it retains the ability to suspend payments based on failure to meet the prerequisite.  Many state’s franchise laws prohibit two-tier pricing schemes, such as those based on facility requirements, and limit when incentives can be tied to facility improvements. Accordingly, JLRNA may be prohibited from suspending or otherwise refusing to provide dealer payments based on facility requirements.

One of the components relates to In-Territory Sales (“ITS”). Under this component, retailers must meet or exceed a certain threshold of sales within their assigned AOR or DMA to qualify for incentive monies. This component effectively punishes dealers for aggressively representing the JLRNA brand by making sales outside of their assigned territory, and depending on the dealership location, may violate state franchise laws which prohibit the conditioning of incentives on sales within a dealer’s assigned territory.

In August, JLRNA also made an announcement which purported to retroactively reduce certain incentive amounts under the Program. Attempting to retroactively reduce incentive payouts is not only incredibly unfair to dealers, but may also be a breach of the dealer agreement and/or amount to an adverse modification of the dealer agreement under state franchise laws.

JLR has had a rough time this year, between tariff issues and a cyberattack suffered in August. However, dealers should still be aware of their rights and the legal obligations of manufacturers under their state franchise laws.

This article is not intended to provide legal advice.  If you have any questions related to this article, please contact Andrew G. Thomas for more information.