ChIcago and Illinois Car Dealer Attorneys

Leaving Money on the Service Drive: How Illinois Dealers Get Paid Retail for Warranty Parts and Labor

May 24, 2026 | Peter S. Lubin and James V. DiTommaso

The warranty rate has been the same for so long that nobody in the store questions it anymore. The service department books warranty labor at a number the factory set years ago, posts parts at the manufacturer’s cost-plus formula, and moves on to the next repair order. Customer-pay work runs at the dealer’s real retail rate, the one the market actually supports, and warranty work runs at something lower because that is simply how it has always been done. Across a busy fixed-operations department, the gap between those two numbers, repeated over thousands of repair orders a year, is not a rounding error. It is a six-figure subsidy the dealer is handing the manufacturer without realizing it.

Illinois law does not require dealers to provide that subsidy. The Illinois Motor Vehicle Franchise Act, at 815 ILCS 710/6, says the opposite. It requires manufacturers to compensate dealers for warranty parts and labor at the dealer’s retail rate, gives the dealer a defined process to establish that rate, and forbids the factory from clawing the increase back through surcharges. Most dealers have the right. Far fewer have exercised it. The store that understands the statute can convert a long-running giveaway into recurring gross profit, and the conversion is built into the law.

Start with the rule itself, because it is broader than most service managers assume. Section 6 provides that adequate and fair compensation requires the manufacturer to pay each dealer no less than the amount the retail customer pays for the same services, with regard to both rate and time. That single sentence covers two distinct fights, the labor rate and the labor time, and it ties both to what real customers actually pay rather than to what the factory prefers. The statute reinforces the point at the back end by adding that in no event shall compensation for labor times and labor rates be less than the rates the dealer charges retail customers for like nonwarranty service.

On labor, the statute is specific about how the rate is set. The manufacturer must pay the dealer the same effective labor rate the dealer earns on customer-pay work, calculated from 100 sequential repair orders chosen and submitted by the dealer, less simple maintenance repair orders. Excluding routine maintenance from the sample matters, because oil changes and tire rotations drag the effective rate down, and the law lets the dealer leave them out. The statute also closes the usual factory escape hatches. It requires full compensation for diagnostic work, and it requires that time allowances for warranty work be no less than what is charged to retail customers for the same work. Where no time guide has been agreed for a warranty repair, the manufacturer’s time guide applies multiplied by 1.5. And if a technician has to call a technical assistance center, engineering, or another manufacturer source to complete a warranty repair, the manufacturer must pay for that time, including time on hold.

On parts, the statute defines the markup the dealer is owed and the method to prove it. The dealer is entitled to the prevailing retail price it charges for the same parts, which the Act defines as the dealer’s cost, including shipping, multiplied by one plus the dealer’s average percentage markup. To establish that markup, the dealer submits 100 sequential customer-paid repair orders, or 90 days of customer-paid repair orders, whichever is less, covering repairs made within the prior 180 days, and declares the average percentage markup. The declared markup takes effect 30 days later, subject to the manufacturer’s right to audit the submitted orders within those 30 days and adjust based on the audit. Only retail sales count toward the calculation, not warranty work or routine maintenance parts, and the manufacturer cannot force the dealer into an unduly burdensome part-by-part methodology. There are limits on frequency. A dealer may request a warranty labor rate increase once per calendar year and may seek to change the parts markup no more than twice per calendar year.

The statute also protects the increase once the dealer earns it. Manufacturers are not permitted to impose any cost-recovery fee or surcharge against the dealer for payments made under Section 6. That provision is the difference between a real rate increase and a shell game, because without it a factory could grant the higher warranty rate with one hand and take it back through a parity surcharge with the other. Illinois forecloses that move. The statute likewise bars reductions based on preestablished market norms or averages, and it prohibits manufacturers from limiting customer repair frequency through failure-rate indexes or national averages.

Two related protections are worth keeping in the same conversation, because they put money in the dealer’s pocket on the same ledger. When a manufacturer imposes a recall or stop sale on a new vehicle in the dealer’s inventory that prevents its sale, the Act requires the factory to compensate the dealer for interest and storage until the vehicle is repaired and made ready for sale. And on the audit side, the statute bars any debit reduction or chargeback of an item on a warranty repair order absent a finding of fraud or illegal conduct by the dealer, while limiting the factory’s audit window to one year from the date the claim was paid or the credit issued. A dealer pursuing a rate increase should expect a closer look at claims, and should know that the look has legal boundaries. Continue reading ›

A Judge’s Eye View of Your Case: How James DiTommaso’s Appellate Externship Shapes Business Litigation Strategy

February 15, 2026 | Peter S. Lubin and James V. DiTommaso

Clients call us when they are in a sticky situation. That is usually not the first time something went wrong. The problem has been building. The partner stopped being transparent. The manager started siphoning business. The competitor started poaching customers. The contract got ignored. Then one day it becomes urgent. There is a hearing coming. There is a TRO on the table. There is a demand letter that cannot be ignored. The business owner suddenly needs answers that are both fast and correct.

In those moments, the lawyer who understands how judges think has a real advantage.

Before joining DiTommaso Lubin, P.C., James V. DiTommaso served as a judicial extern to Justice Thomas E. Hoffman of the Illinois Appellate Court, First District, Sixth Division. During that externship, he assisted in drafting opinions and bench memorandums. That experience is not just a resume line. It is a perspective shift. It teaches you what arguments actually move the needle inside chambers and what arguments sound good only to the lawyer making them.

Here is the reality most clients do not see. Judges are not looking for drama. They are looking for a principled reason to rule. They want clarity. They want credibility. They want to understand what the law allows them to do, and they want to do it without creating a mess.

When you have worked inside the appellate process, you learn quickly that the record is the case.

A business dispute can feel like a thousand moving pieces. But the court is going to rule based on what is properly presented, properly supported, and properly framed. That is why James’s externship experience matters in everyday business litigation. It pushes the case toward what courts value: organized facts, clean legal theories, and a timeline that makes sense.

A judge’s view of a contract dispute is not “who is angry.” It is “what does the contract say, what was performed, what was breached, and what remedy is available.” A judge’s view of a fiduciary duty case is not “who feels betrayed.” It is “who owed duties, what conduct crossed the line, what damages resulted, and what evidence proves it.”

That is the difference between storytelling and proof.

James applies that discipline to the cases he litigates. When a client is facing an emergency situation, the goal is not to file something fast and hope. The goal is to file something strong and specific. A motion for emergency injunctive relief only works if the facts are tight, the law is clear, and the harm is real. Judges can smell exaggeration. They see it every day.

The same is true in partner disputes and business ownership divorces. One side often tries to freeze out the other side by controlling information. That is not just unfair. It is a litigation tactic. The best response is not to yell about fairness. The best response is to use the legal tools available and build a record that shows the court what is happening in concrete terms.

A lawyer with appellate experience understands how orders are written and why that matters. The wording of an injunction can decide the next six months of the case. The language of a discovery order can determine whether you actually get the documents you need or you spend months arguing about loopholes. The framing of an issue can decide whether you win a key motion or you lose momentum. Continue reading ›

Breaking Up is Hard to Do: Resolving Partner Disputes in Closely Held Dealerships

February 14, 2026 | Peter S. Lubin and James V. DiTommaso

Most dealership groups are built by partners. One person has the operational instincts, another has the capital, another brings relationships, and the business grows. That partnership model works until it does not. When the relationship fractures, the dealership cannot hit pause. Cars still have to be sold. Service lanes still have to run. The factory still expects performance. Every day of internal conflict quietly drains value.

We call these cases business divorces because the pattern is familiar. Trust breaks down. Financial transparency disappears. Meetings turn into ambushes. The majority starts treating the minority like an employee instead of an owner. Then the real damage starts: money moves through related entities, opportunities are steered to other stores, and the partner who helped build the business is told to take a discounted buyout or be frozen out.

Valuation deadlocks and why dealerships are harder than most businesses to price. A dealership is not a simple earnings multiple. You are dealing with multiple profit centers: new vehicle, used vehicle, finance and insurance, parts, service, and often separate real estate and management companies. Blue sky is real, but it has to be grounded in facts, not ego. We see partners deadlock over basic issues like whether rent paid to a related real estate company should be normalized, whether “management fees” are legitimate or a profit siphon, how to value used vehicle inventory, and how to treat manufacturer incentive programs that fluctuate year to year. Without a defined valuation process, the loudest voice often wins, and that is how disputes become lawsuits.

Manufacturer Pushback? How the Illinois Motor Vehicle Franchise Act Protects Your Investment

February 14, 2026 | Peter S. Lubin and James V. DiTommaso

Dealers invest millions of dollars in facilities, inventory, people, and goodwill. Yet when a manufacturer pushes back on a transfer, a succession plan, or even the renewal of a franchise, it can feel like the factory is the real owner and the dealer is just renting the right to do business.

Illinois law does not accept that premise. The Illinois Motor Vehicle Franchise Act sets rules for how manufacturers can behave, and it gives dealers procedural and substantive protections that can be the difference between keeping your store and losing it. The Act is not a magic shield, but it is a set of tools. The dealer who understands those tools is not negotiating from a position of weakness.

Transfer approval is not supposed to be a black box. In a sale or ownership transfer, the manufacturer often acts like it holds absolute veto power. Illinois law pushes back. The Act contemplates a process and timelines for approval decisions once a dealer submits the manufacturer’s completed application materials along with the agreements for the proposed transaction. If a manufacturer refuses approval, it is expected to state the grounds and the criteria used to evaluate the proposed transferee, and the dealer has a path to protest. Just as importantly, a timely protest can stop the manufacturer from treating a refusal as final while the dispute is still being heard.

The 5 Critical Clauses Every Illinois Dealer Needs in a Buy Sell Agreement

February 14, 2026 | Peter S. Lubin and James V. DiTommaso

A dealership sale is not the same thing as selling a dental practice or a trucking company. In most deals, the buyer and seller sign a contract, the lender funds, and the keys change hands. In a franchised dealership deal, the real gatekeeper is the factory. Add floor plan lenders, real estate entities, parts and service operations, and the Illinois Motor Vehicle Franchise Act, and you quickly see why a generic purchase agreement can unravel in the final mile.

When we review buy sell agreements for Illinois dealers, we see the same pattern. The contract is drafted like a standard business sale, and then dealership reality shows up. The manufacturer wants more time or more information. Someone mentions the manufacturer’s right of first refusal. The floor plan lender needs a payoff package and a VIN schedule that no one prepared. The parties start arguing about how much of the price is blue sky versus hard assets. Meanwhile the rumor mill kicks up, employees get nervous, and the parties lose control of the timeline.

Five clauses matter most. They do not make a deal complicated. They make it honest. And when they are drafted correctly, they keep the buyer and seller in charge instead of letting the factory, the lenders, or a surprise tax issue take the wheel.