New Jersey Lemon Law Lawyer Blog

It is not uncommon that there is absolutely no disclosure to the sales staff and they are not even given what is commonly known as a deal recap or some sort of washout sheet. It is not uncommon that the sales staff is completely left in the dark pertaining to how their commissions are calculated, what the costs are, what the charge backs are and other reductions. There is a natural tendency upon the sales staff to doubt the costs associated with the sale of the automobiles. If the pack is only $500, why did an apparent $3,000 profit vanish overnight and turn into a $100 flat fee?

This is an area of heated and ongoing litigation between sales staff and dealership management. How exactly are the gross commission on profits calculated, charge accounted for and disclosed to the sales staff? It is not uncommon that there is absolutely no disclosure to the sales staff and they are not even given what is commonly known as a [tail recap] or some sort of washout sheet. It is not uncommon that the sales staff is completely left in the dark pertaining to how their commissions are calculated, what the costs are, what the charge backs are and other reductions in the gross commissionable proceeds.

The same laws that apply to contracts apply to agreements between sales staff and their management team. There is an obligation of good faith and fair dealings and there is an obligation pertaining to full disclosure. I have discovered that it is not uncommon that there are various “extras” that the dealership management feels obligated to put into the costs of the vehicle for which a sales staff member might be upset.

The auto sales business is a major tax source for all states, including New Jersey. In this regard, many states have hundreds, if not thousands of dealerships, which generate billions of dollars in tax revenue for the state coffers. All these dealerships rely upon the skills of sales people to sell cars in order to benefit themselves as well as the state economy. It is an ongoing battle between the sales persons and management pertaining to the issuance and calculation of gross commissionable proceeds upon which sales people are paid.

Generally, there are two areas of profit to the dealership,

the front end and the back end. The front end is associated with the profit on the sale of the car and of itself. The back end profit pertains to and relates to the profit on financing, after sale items, pre-delivery services and other items, such as lo-jack. Car dealerships operate differently, however; generally, the sales people get paid on the front end and the managers and the upper management get paid on the back end of the transaction. On occasion, a car dealership does provide a certain amount of computation to the sales staff based on the total profit of the dealership, which would naturally include the back end or the reserve part of the transaction.