Profit sharing agreements between dealerships and Synergy are arrangements that define how the profits generated from the sale of extended service contracts or vehicle protection plans will be distributed between the two parties. Here are key aspects to consider:

• Profit Margin and Sale of Service Contracts: Dealerships sell service contracts to customers to provide extended coverage for vehicle repairs and maintenance. The profit margin for the dealership is the difference between the cost of obtaining the service contract from the provider and the price at which it is sold to the customer.
• Negotiation of Profit Sharing Terms: Profit sharing terms are typically negotiated between the dealership and the service contract provider. The agreement outlines the percentage or amount of the profits that will be shared between the two parties.
• Percentage Split: The profit sharing arrangement often involves a percentage split, where a portion of the profit goes to the dealership, and the remaining portion goes to the service contract provider. The specific percentage split can vary based on negotiations and industry standards.
• Incentives for Dealerships: Profit sharing serves as an incentive for dealerships to actively promote and sell service contracts. The more contracts sold, the greater the profits for both the dealership and the service contract provider. This arrangement aligns the interests of both parties.
• Performance-Based Agreements: Some profit sharing agreements may be structured to include performance-based criteria. For example, a dealership might receive higher profit shares if certain sales targets are met or exceeded. This encourages the dealership to focus on achieving specific sales goals.
• Transparency and Customer Communication: Dealerships are typically responsible for transparently communicating the terms and benefits of the service contracts to customers. It's important to provide clear information about what is covered, any exclusions, and the cost. Transparency builds trust with customers and helps ensure compliance with regulatory requirements.
• Regulatory Compliance: Dealerships must adhere to applicable laws and regulations governing the sale of service contracts. Compliance ensures fair business practices and protects consumers from misleading or deceptive practices.
• Legal and Financial Considerations: Before entering into a profit sharing agreement, dealerships should seek legal and financial advice. Understanding the legal implications and ensuring that the agreement is fair and compliant with relevant laws is crucial.
• Long-Term Relationship: Profit sharing agreements are often part of long-term relationships between dealerships and service contract providers. The success of such arrangements relies on effective collaboration, mutual benefit, and a commitment to delivering value to customers.

Dealerships should carefully review and negotiate the terms of profit sharing agreements to ensure that they align with their business goals, comply with regulations, and provide fair compensation for the services provided.