Fiat Chrysler Automobiles wants to help aspiring dealer principals realize their dream of owning a dealership, and for the right candidates the automaker is willing to put its reputation on the line by co-signing a bank loan.
“Through our relationship they gain greater access to capital,” Bashar Cholagh, the head of FCA’s Market Representation and Dealer Network Diversity organization tells Automotive Buy Sell Report.
As dealership valuations rise, many general managers who aim to run their own store face a huge obstacle – obtaining enough financing to acquire a franchise. FCA recently launched a program to help those individuals get the funds needed for an acquisition and keep the dealership profits so they can grow the business.
Bashar Cholagh, Head of U.S. Market Representation, Dealer Network Diversity, Data Analytics and Technologies at FCA Fiat Chrysler
“First and foremost, we want our candidates to succeed,” says Cholagh. “We want to make sure they have the profits to reinvest in the business.”
General Managers of any OEM franchised dealership are eligible if they meet the requirements. FCA is consistently meeting prospective candidates through automotive conferences such as NADA and NAMAD, says Cholagh.
If the candidate is a general manager of an FCA franchise, “we request they get the permission of the dealer principal before we will consider them for the program,” he adds.
The Dealer Market Investment Program works like this: A qualified candidate is required to put a minimum of 15 percent of the total investment down, inclusive of goodwill. Real estate is funded separately. FCA will co-sign a loan for the remaining 85 percent. The dealer principal makes monthly principal and interest payments until the loan is paid off, with no prepayment penalty.
Chrysler Capital and Ally Financial are two lending partners who have currently agreed to the investment structure, says Cholagh.
This program is unique in how it is structured, he says, because FCA is not an equity partner with the candidate. “100 percent of profit goes into the candidate’s pocket,” he says.
FCA is especially interested in attracting minority candidates. It aims to do 10 such acquisitions of the next three years, with 50 percent involving minorities, including women, he says.
“We have a mission in our (dealer) network to promote and support diversity,” says Cholagh. “This program is a tool we have to support the candidates.”
First two new owners
To qualify, a candidate provides a plethora of information from the dealership he or she currently manages, including sales effectiveness figures, customer satisfaction scores, plus a “visible” sales and profit forecast and “comprehensive operating plan.”
They undergo a thorough background check. Community affiliations and awards, and “ethical” merchandising practices are necessary.
The first two successful candidates were chosen in June of 2018. Eddie Hall III and Kenny Thomas are now the owners of Northland Chrysler Jeep Dodge Ram in Oak Park, MI.
Hall is the son of Eddie Hall Jr., a pioneering African American dealer and owner of The Hall Automotive Group, which has two Ford and two Chrysler Dodge Jeep Ram franchises.
Kenny Thomas, who is also African American, is a graduate of FCA’s future dealer training program and was previously general manager of Champion Chrysler Dodge Jeep Ram in Lansing, MI.
They took over the underperforming Oak Park store on July 1, 2018, says Cholagh, and recorded a 76 percent on-year growth in July-December sales.
FCA is taking a controlled and responsible approach with regards to Market Investment candidate activation. “We want to make sure we are able to watch and measure” performance, he says. “The most important thing is to make sure our candidates are successful.”
The automaker has some 30 additional candidates in its database who have gone through the initial assessment, says Cholagh. They will now be put through more rigorous assessments.
The biggest challenge, he says, is matching the right candidate with the right investment opportunity. For example, a candidate might not have access to enough capital to make the initial down payment in a high-cost market such as California, but that candidate might not be interested in a dealership in a less expensive market.
“We are trying to match the right candidate to the right opportunity so it will be beneficial to dealer, community, and FCA,” says Cholagh.
2 Comments
Herschel Edwards
How do I apply as a minority
Alysha Webb
You would need to contact FCA. There should be information online about the program.