Ask the Expert: How can I get out of my service plan now the dealer’s franchise has changed?

I am no longer eligible for an annual warranty renewal on my Toyota Verso since the dealer became a Kia franchise
'I am no longer eligible for an annual warranty renewal on my Toyota Verso since the dealer became a Kia franchise' - VDWI Automotive/Alamy Stock Photo

Dear Alex,

I purchased a service plan for my 2017 Toyota Verso from Hendy Toyota. However, Hendy has now told me it is no longer a Toyota main dealer, having switched to a Kia franchise. Emac, which underwrote the plan, told me it is not transferable, but that they would reimburse the unused premium for a £30 fee. I can then take out another service plan elsewhere, but this will be much more expensive. Hendy has told me categorically that it is not their problem, and that they will continue to service the car for me, but of course, this will mean I don’t get the annual renewal of my warranty, which requires a main dealer service. What recourse do I have?

– AS

Dear AS,

It sounds as though the service plan you took out was from Hendy itself, rather than from Toyota, which means your agreement was with the dealer rather than the manufacturer.

It’s worth being aware of this distinction when you enter into a service agreement, because the dealer is a different legal entity from the manufacturer. If the plan you enter into is with the latter, it will usually apply at any of the manufacturer’s franchised dealerships. However, if your agreement is with the dealer, it’s usually only valid at that dealership, or within the dealer group.

Even with a dealer-specific service plan, if the dealer changes franchise, it isn’t normally an issue, as it will continue to honour the service plan and service the car for you. So you won’t lose out, and if the car is still under warranty, block exemption regulations ensure that, if the dealer still uses original equipment specification parts, the manufacturer cannot invalidate the warranty.

In this case, however, Toyota’s up-to-10-year warranty offering gets around block exemption, because each year of warranty is granted for free with each service that’s carried out at the main dealer. So after the initial three-year warranty has expired, having the car serviced elsewhere doesn’t invalidate an existing warranty – it simply means you don’t get the free warranty extension that Toyota provides in the first place.

So it really does matter if your dealer changes franchise halfway through a service plan that’s specific to them, as you’ve discovered.

Fortunately, Emac has agreed that you can cancel the service plan and receive a reimbursement of the premium that hasn’t been used, which I think is only fair.

If I were you, it’s this course of action that I would follow. I’m afraid there isn’t much else to do.

I agree that Hendy’s attitude does sound pretty poor on this, but it can’t change Toyota’s policy, and as it’s no longer a Toyota main dealer, it has no power to issue that extra year’s warranty each year anymore, so complaining to them won’t yield much.

I would consider writing to Emac to take exception to the £30 fee, explaining that you didn’t want to have to cancel the policy but that you had no choice given Hendy had changed its franchise arrangements, and asking them to consider waiving the fee on this occasion as a goodwill gesture.

You’ll then need to shop around your local Toyota dealers’ service departments. Explain your situation and that you’re a loyal customer, and find out whether they would be willing to do you a deal on one of their service plans. It might not be as affordable as Hendy’s, but if it’s the only game in town, I’m afraid you’ve not got much other option.

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