Dealer principals should make an annual habit of reviewing wills, succession plans, and dealership agreements
Every March, around tax time, I pull out my personal plans and documents and review them to ensure that they are still relevant and up to date.
It’s all too easy to place these documents in the drawer or a safety deposit box and let them sit for several years. When that happens, they often stop reflecting real life. You’d be surprised how quickly things change.
Wills and final care plans should be reviewed annually. That doesn’t mean you have to go to a lawyer or other professional every year, but it does mean that you should read them over to make sure that the key elements are still relevant and applicable.
Things like executors and powers of attorney are cornerstones that may have shifted over time. In my situation, Trish and I had both appointed powers of attorney over property and personal care to someone who later moved out of province. We felt uncomfortable placing that burden upon her, given the distance and complexity involved. So, we made a change.
Many dealer principals have some sort of business and ownership succession plan. Closely tied to those plans is your dealership sales and services agreement.
Life moves on for all of us. Documents are drafted at a point in time. Lease agreements, dealer sales and service agreements, employment contracts, key employee compensation plans, partnership agreements, shareholders’ agreements, life insurance contracts, to name a few, all need to be reviewed from time to time.
Many of us have adult children, nieces and nephews in the business. Some form part of the long-term dealership ownership plan, and others do not. Grandchildren arrive, marriages happen, so do marriage breakdowns and other life events that might have an impact on your plans and documents. There are no guarantees that what once was will always be.
Many dealer principals have some sort of business and ownership succession plan. Closely tied to those plans is your dealership sales and services agreement.
I have seen many situations where the succession plans and wills run contrary to the provisions of the executed dealership sales and services agreement.
An annual refresher review of your DSSA would be prudent if you plan to implement certain elements of your plan. For example, transferring shares to a family trust. This might require brand approval. Oftentimes, certain elements of your overall plans may have already been executed, only to find out after the fact that there are issues. The fixes can be costly and time-consuming.
Another matter that often happens is your belief that you have a verbal understanding or agreement with the current management of the brand you represent.
These should all be in writing and not left to the interpersonal relationship with a specific individual, even with an individual with high authority. All too often, the individuals who work or lead for the brand are transferred and move on to another department or even another country.
Their replacement might not have the same attitude or understanding as you do. As you attempt to execute on some of your perceived agreed-upon decisions, you find that the new management and leadership are not in support.
We are living in very uncertain times. With the current state of geopolitical uncertainty and the potential implications for our businesses and customers, it’s now more important than ever to ensure that our business affairs are in order.
Don’t leave anything to assumption. If you don’t have a documented business succession plan, you should look into this quickly. Regardless of your age, having a plan is really important.
If you’re young, the plan might be quite simple, perhaps just a simple will and life insurance. However, as you grow older and your family and business interests expand, plans become more detailed and complicated, and are subject to regular updates due to normal life events.
I suggest that you make reviewing your critical documents a recurring annual event. Pick a time to do this annually. For me, it’s tax time; for you, it might be a birthday, the end of a fiscal year or some other trigger point.
The message here is simple: do this regularly and don’t wait until a life event backs you into a corner, limiting your options.
Be prepared and up to date.
