Brian Gordon, President of Dave Cantin Group, and Brian Baker, President of Automotive at Stream Companies, recently joined CBT News Inside M&A with Jim Fitzpatrick. Together, they discussed FTC dealership compliance and its growing impact on today’s dealership environment.
Their conversation focused on how regulatory enforcement is reshaping advertising practices. In addition, they explored how FTC dealership compliance expectations are changing the way dealership performance is evaluated in buy-sell activity.
“It’s real this time. The government is serious,” said Gordon. “They’re not just going to stop after one or two fines. This is something they want to make sure becomes a systemic change in the industry.”
Baker pointed out that financial exposure extends beyond dealerships themselves. For example, he noted that fines “can be in excess of $16,000 to $17,000 per instance, per day, per party.” Furthermore, affiliated vendors may also carry liability depending on their role in advertising execution. As a result, both executives emphasized that FTC dealership compliance is not a standalone function within a dealership.
“From the dealer principal down, it is their responsibility to make sure that they understand how their organization should be running and that everybody else is crystal clear on that, too.”
Baker also added that the current regulatory environment is forcing a structural shift. Specifically, dealerships are rethinking how they approach compliance from the ground up.
“Historically, they’ve always treated ad compliance as sort of an afterthought or a consequence,” Baker said. “This is an opportunity to treat compliance like a core department that you have in every other aspect of the dealership.”
FTC Dealership Compliance and Advertising Risk
Gordon explained that advertising practices are playing a larger role in dealership valuations. In fact, if revenue is generated in ways that are not fully compliant, buyers will often exclude it from earnings calculations. This, in turn, can lower the company’s valuation. Even small adjustments, such as reducing reported profit from $5 million to $4.5 million, can significantly affect the final sale price, because valuations are based on earnings multiples.
Gordon also pointed to transaction risk during the M&A process.
“If a buyer gets scared off because they’re seeing these things, or there’s too much contingent liability, or a fine comes in during the M&A process… none of this is good for trading a dealership and ultimately for protecting your value.”
On the other hand, strong FTC dealership compliance systems can improve buyer confidence. For instance, clear approval processes, accountability, and proper oversight help create certainty. As a result, executives said this can increase a dealership’s perceived value during a transaction.
“There is true value in certainty,” Baker said. “When you can show a defined approval workflow, someone who owns the process, a vendor vetting process… that level of certainty brings true value to the group itself.”
What Dealers Should Do Now to Stay FTC Compliant
- Build an approval workflow
First, establish a structured approval process for every marketing channel. Even a simple checklist can ensure consistency and FTC dealership compliance before launch. - Assign a final decision-maker
Next, designate a single point of authority. This person should confidently approve messaging and confirm that each ad is ready for market. - Educate your team regularly
Instead of quarterly updates, shift to weekly training. As Baker noted, “When a salesperson says they didn’t know what the ad was until they saw it online, that’s a breakdown in communication.” - Vet your vendors carefully
Finally, work only with partners who understand your market, state regulations, and OEM requirements. “You need confidence in their experience before handing over something that could become a liability,” Baker said.
Watch the full Inside M&A episode featuring Brian Gordon and Brian Baker on CBT News.