Prime in August said it had resolved its disputes with both Toyota and Subaru of New England. The retailer wouldn’t disclose whether the settlements will require Prime and GPB to sell any of its five Toyota or three Subaru of New England dealerships or whether the agreements include appointing Skelton, a former AutoNation Inc. executive, as dealer principal of the stores.
Toyota, Subaru of New England and other automakers pushed for Prime to sell certain stores after GPB fired former Prime CEO David Rosenberg in September 2019.
GPB, an alternative asset management firm, faces numerous investor lawsuits and is the target of federal and state investigations on potential violations of securities law.
Some automakers were upset about Rosenberg’s dismissal and said alleged contract breaches by GPB were grounds for franchise termination.
Toyota, which had extended Prime’s dealer agreements until Aug. 3., and Subaru of New England, the distributor for Subaru in six states, declined to comment on the settlement agreements.
Resolutions of threatened franchise terminations that are performance related may include items such as requiring an operator to change management and maintain certain sales and service levels to avoid being fired by the automaker, said Mark Johnson, president of dealership buy-sell firm MD Johnson Inc. in Enum-claw, Wash. Agreements typically include language that a retailer agrees not to protest a termination or sue should it commit infractions again, he said.
And if such resolutions require stores to be sold, automakers often give dealers nine to 12 months to do so, Johnson said.
It appears at least one of Prime’s New England Subaru stores will be sold — and to Rosenberg.
Rosenberg said he is buying White River Subaru in White River Junction, Vt., with a closing slated for mid-October.
Subaru of New England allows operators just two stores in its distribution area, and Prime has three after acquiring a dealership in Hyannis, Mass., two years ago, Rosenberg said.
Rosenberg, who last year sued GPB and others and alleged that GPB failed to make the proper payments after he exercised an option to sell his stake in Prime, also is dealer principal of Ira Jack Chevrolet-Cadillac in Saco, Maine. He bought that store last year.
Rosenberg said he currently is not bidding on any other Prime dealerships. But he is “actively” shopping for stores and said he’d like to have eight to 10 dealerships and will give general managers ownership stakes. He noted that the coronavirus pandemic and the outcome of the presidential election, however, could play a role in how quickly he makes acquisitions.
“If it’s not a good time to buy, I’m patient,” Rosenberg said.