Canadian Warranty Law between distributor and dealers
February 22, 2017 7:17 AM   Subscribe

Fair and Reasonable VS Established Rates for Shop Labor Refunds

I work in the warranty department for an American company that sells outdoor equipment. Most of our activities involve US dealer and a few international dealers. We have recently realized that your Canadian dealers have been submitting their shop labor hour amount in CAD for their warranties. Our system and accounting pays everything in USD. As a result we are "overpaying" the Canadian dealers since we are not converting their labor rate to USD. We are not trying to profit from this, only to pay the dealer the amount they charge to customer. We also are hoping to not create tons of additional work for our staff (me!).

If we were to convert every Canadian warranty it would create a large amount of extra work. Additional, it could led to input errors that don't exist now. We have been discussing the idea of just doing a set amount (based off their current shop labor rate and current conversion rates) but we know in the US that some states don't allow that.

Kansas, for example, states in KSA 16-120 "shall require the manufacturer to reimburse the dealer at an hourly labor rate which is the same as the hourly labor rate the dealer currently charges consumers for nonwarranty repair work." KSA 16-120
About 20 different state take this approach.

Colorado is the example of the opposite approach. CO RS states "A supplier shall provide a fair and reasonable warranty agreement on any new equipment that it sells and shall fairly compensate each dealer for parts and labor used in fulfilling such warranty agreement." CO RS 35-38-111

Some states have nothing to dictate what labor rate is paid on warranties.

Our company usually pays the exact shop rate in order to comply with all states laws. However, with our Canadian dealers we are hoping to use a current conversion to set their shop labor rate for warranty refund. We also are think of revisiting the conversion rate at any time the dealer requests us to. However, if we do that it would not meet the "same as the hourly labor rate the dealer currently charges consumer" type of the laws.

Is this legal to do in Canada? is this a province by province issues (like the US)? Am I stuck doing daily conversion rates?
posted by aetg to Law & Government (2 answers total)
Can you just ask/instruct your Canadian dealers to submit invoices in USD? You can ask for a separate accounting in CAD and the FX rate they are using to make sure it's an acceptable charge.

Just from a P&L standpoint, you probably don't want to give your dealers the option to request a re-set of the FX at any time--they'll only ask when the FX has moved against them. When it's in their favor (more expensive to you), you'll be overpaying.
posted by limagringo at 7:30 AM on February 22, 2017

Response by poster: The process isn't really submitting invoice for an dollar amount but them telling us how many hour they worked on a warranty item. It is that way to keep on eye on how long it takes to fix a part. We have dealers constantly claim two or three times the usually repair time for a given part. We also have dealer shop rates varying from $45 to $150+. We need the dealer to submit hours instead of $$ for those reasons.

Additionally, if we were to switch we would have to reprogram our parts program that warranties are submit thru.
posted by aetg at 8:28 AM on February 22, 2017

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