Sy Reene

The dealer agreements are indeed a mystery unless there's one floating around we can all read. And to somehow know they're all identical seems to mean you either have worked at, or continue to work for Specialized? If not, how do you know they're all identical?

As to the 400 bikes, then you're saying the letter is a flat out misrepresentation when it says as per the below? Mikes did not have an order in with Specialized that equaled at least 400 bikes that in turn their customers had prepaid for?


There are lots of shops that represent multiple brands that compete against one another. A change in the ownership of a shop that otherwise isn't changing how it operates, you all seem to think contractually required Specialized to do what it did. All I'm saying is that I don't believe that's self-evident, simply because I haven't seen the contract/agreement that was in place.

Mojo31

It's a fair assumption that all of the dealer agreements are the same. Large companies tend to use standardized contract forms as it enables them to standardize and manage risk. I would be very surprised if there are any material differences from one dealer to another.

The statement that Mike's presold its allotment is also likely true. The statement you highlighted was likely written by someone other than a lawyer. Non-lawyers tend to write in a way that ignores the legal nuances of a situation which is what that statement appears to do.

Let's not forget that Mike's Bikes' assets were most likely sold to another company created by PON (because that's how it's done in the sale of a small business like Mike's - if you can get your hands on the LOI or contract, you will likely see references to something like "Newco, Inc."). One of those assets is the name, "Mike's Bikes." After closing, the original Mike's Bikes would be required to change it's name to something dissimilar such as "ABC, Inc." As a result, the dealer agreement with Specialized likely stayed with "ABC, Inc. formerly known as Mike's Bikes." Since that company was no longer in business, that likely ended the dealer agreement with Specialized. Specialized would not have a dealer agreement with the new Mike's Bikes.

Sy Reene

The last section sounds reasonable, imagining the contract was written with eg. XYZ d/b/a Mike's, changing to ABC d/b/a Mike's perhaps.
As a larger than most(?) entity though, with 12 stores, I would think that could produce more leverage to write in non-'standard' flexibility, assurances, protections that one-off shops might not be able to secure.

I've seen it bandied about for example, that if you represent Specialized, you can't sell Trek. That's evidently not true.. This shop fairly nearby reps Specialized, Trek and Cervelo. Indeed they're all hanging up almost side by side in the store. https://www.strictlybicycles.com/col...y=best-selling

Mojo31

That is SOP. "Mike's Bikes, Inc." signs a contract to sell its assets (including intangibles such as name, goodwill, and IP) to "PON or its assigns." PON then forms a subsidiary, "Newco, Inc.", to be the actual purchaser. At closing, "Mike's Bikes, Inc." changes its name to "Retired Old Fart, Inc.", and "Newco, Inc." changes its name to "Mike's Bikes, Inc." or simply files an assumed name filing for the name "Mike's Bikes." Newco, Inc. then continues the business.

Outside of the realm of publicly trades companies and companies in certain industries where the company is purchased in order to acquire a license or permit, virtually all sales of privately owned businesses involve a sale of the company's assets and not a sale of the company's equity (stock, partnership interests, etc.).

As for special terms, maybe, but most likely not. Companies of the scale of Specialized want standardization. It enables them to better manage risk, cash flow, and other matters.

There are lots of stores that sell Trek and Specialized. The last time I bought bikes, we bought one of each from the same store on the same day.

njkayaker

???

Mike's is owned by a competing brand.

njkayaker

Would you be able to buy a Specialized bike from a Trek store?

Mike's is (now), basically, a company store (like Trek).

Sy Reene

Mike's is now owned by a holding company that owns competing brands, plus about 70 other brands in various industries. A couple of these brands were already being sold at Mike's before the sale. Equating Pon to Trek is a bit of a stretch. Money is money, Specialized would still be charging the same unit price to Mike's post-sale vs pre-sale. Will Orbea, Salsa, BMC also be canceling its orders and relationship with Mike's? I'm honestly curious about this.

Mojo31

Maybe the new Mike's Bikes refused to sign a dealer agreement with Specialized. Or maybe Specialized doesn't want to do business with PON (including its subsidiaries). Nobody here knows the behind the scenes facts, so it's all just speculation.

It's not always about "money is money." There are lots of reasons why one business will not do business with another, and those decisions are made every day.

Sy Reene

Understood. All I am suggesting is that there may well have been no real reason that Mike's couldn't continue to sell Specialized, if Specialized didn't have an issue with this. Certainly, I don't think the next-day urgency/cancellations were mandatory and that workarounds could have been made if both parties had the will to do so.

njkayaker

The "other brands" isn't relevant. This is the thing that is the likely base of issue.

Not really. The Mike's case certainly isn't one like Specialized dropping support for an independent shop.

Short term money might be worth less than long term money.

Given that, at the moment, Specialized may be able to sell every bike them make, they might not really be losing money (short term).

What's different about these brands?

Atlas Shrugged

Established business cannot be reduced down to “Money is Money” as that would be a quick way into bankruptcy, this is a long game. Still curious on how Specialized are being branded as the bad guys here when Mikes is the company which breached their dealer agreement as well as undermining the LBS model. Mikes also took deposits on 400 bikes which they knew they would not be able to fulfill once they sold to Pons. The fact that Specialized would rather direct sales to their existing loyal dealer network is a sign of commitment to the LBS model as well as established dealer distribution model.

chaadster

That has been my contention from the get-go, yes. I straight up said they’re lying, and you can know their lying because they say Spesh first “terminated their relationship with Mike’s,” and then “they later notified us” of the order cancellations. C’mon…if the relationship was terminated, how in the world could Mike’s have thought they were going to get bikes directly from Specialized? The whole statement is a lie, designed to do nothing more than retain as much of the preorder money as possible by badmouthing Specialized to their customers in hopes they abandon their desire for a Specialized, and converting those preorder dollars to Pon brands buys.

chaadster

Of course where there’s a will there is a way, but that’s really irrelevant, isn’t it? What provides the will for Pon to facilitate Specialized bike sales after Pon just ponied up a bunch of cash to buy a top-ten, 16 store retail chain in the nation’s best state for bike for retail bike sales? Do you seriously think Pon, a brand manufacturer, is looking to line their pockets off dealer margins on non-Pon brands? It sure seems most likely to me that Pon bought Mike’s to put Pon brands front-and-center, and that Pon has no good reason whatsoever to sell Specialized bikes.

DBT

They are brionging in non Pon brands though. Giant and Scott bikes are being 2 brands I have already heard. Other clothing and accessory brands are supposedly in the works, but I haven't heard specifics.

chaadster

I was speaking within the context of negotiating a deal with Specialized; Specialized wanted things that perhaps Pon couldn’t agree to, or it could have been the other way around. Perhaps and Giant and Scott were more willing to meet Pon’s terms…who knows. My point was that failing to find dealer terms for Specialized may not have been due to Spesh acting in a spiteful way towards Mike’s.

DBT

I see where you are coming from now. I was focusing on the Pon lining their pockets with non Pon brands.

Sy Reene

Not sure I understand the question. These are brands that Mike's sells, that also aren't owned by Pon. Eg. like Specialized, albeit likely lower unit sales

njkayaker

This is kind of obvious but some people still miss it.

Specialized might consider that selling bikes through a shop without this conflict of interest to be better long term.

Mike's might have tried to shift some of those 400 orders from Specialized anyway.

njkayaker

Likely, much lower unit sales.

Don't you think this might explain why what happened with Specialized didn't happen in their cases?

They might not really have a choice (and we don't know what they'd prefer or what they will do in the future).