Session 3: Essentials of Dealer-Owned Warranty Companies (DOWCs)
Speakers:
Edvie Castro, DOWC
Andrew Weill, Weill & Mazer
Dealers are increasingly using or contemplating the latest evolution in F&I dealer participation programs, dealer-owned warranty companies (“DOWCs”). These involve forming a state-licensed entity owned by the dealer or affiliates as the actual obligor on F&I products. This technique has numerous features that are often a better match for individual dealer goals than other alternatives and can achieve wealth goals more effectively than other tools. Your dealer clients are likely to seek guidance from dealer counsel as they consider these programs. This presentation will introduce the basic legal basics involved in DOWCs: formation, licensing, compliance issues, tax, ownership. There will be a particular focus on the important roles that dealer counsel can play in advising the dealer in the evaluation of the option and operational issues. Unlike reinsurance companies, the DOWCs are state-licensed and it is important that the dealer’s local counsel have a basic understanding of this area. The presenters will candidly discuss situations where the DOWC is not the most suitable option; this is not a sales pitch.