Tire Industry Experts Discuss Alleged Breach of Exclusive Distribution Agreement

Case Overview

This case involve a dispute between a domestic tire distributor in Minnesota and its Canadian competitor. The two parties had an exclusive distributorship agreement whereby the domestic company distributed a particular brand of tire for the Canadian company. It was alleged that the Canadian company breached the exclusive distributorship. As a result, both companies have filed a lawsuit and countersuit against one another.

Questions to the Engineering expert and their responses

Please describe your experience in the tire distribution industry.

I have over 40 years of experience in the automotive industry, including 11 years in senior executive roles with a major tire manufacturer. From 2003 until 2012, I was the SVP of Purchasing for that company. I am very familiar with exclusive distributorship agreements and the problems they cause when businesses don't abide by them. I have dealt with these disputes in my prior roles - I can recall situations where we would enter an agreement with a distributor who then sold the rights to another distributor, for example. I am knowledgeable of the reasons why a firm would enter an exclusive agreement and the possible pitfalls that come from such relationships. I am also absolutely familiar with the economics, including payment terms, discounts, volume rebates, and signing bonuses. There are also accounting rules that have to be followed when tracking these deals.

How prevalent are exclusive distributorship agreements in this market?

I am very familiar with exclusive distributorship agreements and the problems they cause when businesses don't abide by them.

What restrictions do these agreements typically feature?

I am knowledgeable of the reasons why a firm would enter an exclusive agreement and the possible pitfalls that come from such relationships. I am also absolutely familiar with the economics, including payment terms, discounts, volume rebates, and signing bonuses. There are also accounting rules that have to be followed when tracking these deals.

About the expert

This automotive aftermarket executive entered the industry in the 1970s and eventually served as an executive for TBC Corporation. He previously served as the Vice President of Commercial Installer Sales & Purchasing for Pepboys and then as the Vice President of Wholesale Sales for Midas before becoming the Senior Vice President of Purchasing at TBC Retail Group in 2003. He held this position until 2013, also acting as the COO of the SpeeDee Oil Change & Tune-Up franchise chain for one year during that span. From 2013 until 2014, he worked as the Senior Vice President of Training and reported directly to TBC Corporation's CEO. He now runs a small independent automotive industry rep agency. The expert is a member of the Specialty Equipment Manufacturer Association and the Automotive Aftermarket Industry Association; he is also a board member of the Automotive Aftermarket Foundation.

E-083053

Specialties:

Engineering