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Dealers Protest Polaris Practices

Robin stumbles into the middle of something that looks like real news. This is getting interesting!

Shades of Woodward and Bernstein . . . somehow despite my best efforts to lose my journalistic roots since escaping, uh graduating from the University of Redlands, I stumbled into the middle of something that looks like real news. No, not the fact that the Chinese are teaming with Wal-Mart to take over the world scooter market—everybody already knows that! This time it is some dealers protesting Polaris and the unfair treatment of its franchise holders.

Not since I left the bullpen as a beat reporter at the Fallbrook Enterprise in 1984 to become the ATV roadtest editor at Off-Road magazine have I been privy to such skulduggery, murder and mayhem (okay, so I took a little journalistic license with that murder bit, but it does look like fair business practices are being killed!).

First, a dealer friend requested complete anonymity in a clandestine meeting in the bowels of a darkened parking structure before tipping me to the David versus Goliath fight being waged by Team Bozeman Motorsports against Polaris. Then he shared some confidential numbers of his own to show that the posting at www.team-bozeman.com had real merit rather than just being the rant of an isolated and disgruntled dealer. (See this month’s Soapbox for a more detailed rundown of Team Bozeman’s Class Action request.)

In addition to warning me about plumbers crack at Watergate, my version of “Deep Throat” then leaked that the Texas Department of Transportation was also getting in on the act. “According to the dealer who told me, the hearing is set for September 28,” he whispered. This rumor was confirmed by another dealer source in Texas, so I asked Team Bozeman’s GM to explain what the Texas stuff means in the big picture.

“I already have copies of the Texas petition—the hearing is set for September 28th,” says Curt Lance. “The Texas DOT has already done their investigation . . . it appears that they are going through the formality of presenting the case to an administrative law judge who will determine the length and breadth of the violation. The law provides for fines of $1,000 to $10,000 per incident, per day, so the potential fines against Polaris could be in the millions. Then, based on the findings, individual dealers in the state could also sue Polaris for unfair business practices using the findings of the Texas DOT hearing as a slam dunk . . . The issue here is that Texas law is not the same in other states. So, while it is great news for dealers in Texas, the majority of the nation’s dealers only have our Class Action in their favor.”

Lance does note that there is a similar case pending in Maine as well. “Maine dealers have filed suit which is allowed without arbitration under their state laws . . . So the whole thing is a bit diluted and convoluted by the respective state laws.”

Hence the need for this matter to be addressed as a Class Action rather than on an individual dealership or even brought forth by state dealer associations. “Our class action is the one step for the majority,” insists Lance.

Of course there are two sides to every story and I’m sure that Polaris perceives their practices to be within the law. However, I don’t have any sort of statement to that fact since this story broke while Polaris was hosting its annual dealer meeting in Orlando. Oddly enough I wasn’t invited . . . something to hide? Probably not, many OEMs don’t invite the media to their dealer meetings as a matter of course, but it can certainly be used to fuel the conspiracy theory fire for those with suspicious minds!

Speaking of conspiring, Polaris’ plans to buy out KTM at the end of a two-year honeymoon period came to a crashing halt the Friday right before the dealer meeting. Here’s the official statement that went out on the newswires: “Polaris and KTM today jointly announced that they will continue their strategic partnership at an operational and technical level, but that they no longer anticipate that Polaris will acquire a majority equity interest in KTM.”

Polaris CEO Tom Tiller added, “When we structured Polaris’ path toward complete ownership of KTM as a two-staged process, we recognized that this was a possible outcome. Polaris continues to own a 25% equity interest in KTM, and we continue to have confidence in the KTM management team and their ability to execute the KTM operational plan.” Not surprisingly, Wall Street took a dim view of this, and Polaris stock plummeted at the opening bell. Polaris Industries Inc. trades on the New York Stock Exchange and Pacific Stock Exchange under the symbol “PII” and is included in the S&P Small-Cap 600 stock price index, so you can do a little investigative reporting of your own to see how far the stock has been able to rebound.

Wall Street, corporate attorneys, class action lawsuits . . . pity the poor Polaris dealers stuck on the front lines having to contend with all this while they were figuring out their 2007 orders at the dealer meeting. As of press time, I still haven’t heard an official statement from the OEM regarding the perceived improprieties in Polaris business practices, but I’ll report back when I do . . . now where is that old reporter’s note pad I “liberated” from the Enterprise on my last day? This is getting interesting!

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