For these seven operations, noncompliance is not an option. What sets them apart from the rest is the ability of their F&I departments to succeed under the strictest of guidelines, as they have successfully found the fine balance between being customer-centric and aggressive. One of them will appear on the cover of next month’s issue as the 2011 F&I Dealer of the Year. The following profiles offer a peak into these operations and the people who lead them.

Ralph Larson, Dick Hannah Dealerships

Ralph Larson, Dick Hannah Dealerships

Dick Hannah Dealerships

Background Check: Founded in 1949, Vancouver, Wash.-based Dick Hannah Dealerships is a 13-rooftop, 19-brand operation. The dealer group is currently operated by Richard Hannah, president, and vice presidents Jason and Jennifer Hannah.

The Numbers: The dealer group’s profit per vehicle retailed sits just north of $1,000 after increasing by $350 since March 2007. In the same span, the dealer group’s charge-back rate fell from 20 percent to 9 percent.

Secret Weapon: The group’s F&I director, Ralph Larson, a former general agent. Since joining Dick Hannah in March 2007, he has put the group through sales training and helped reorganize its F&I department.

Larson also standardized the processes by which his department operates. He implemented a new selling approach that sells and discloses all of the F&I products throughout the buying process. The menu is used to confirm that the customer is committed to the product. Building value, he says, is key.

“We try to get the customers familiar with the features and benefits of the F&I products and their associated costs upfront, even before the formal F&I process even begins,” he says. “No one likes to be sold anything, but people like to buy stuff.”

Compliance Check: Located in a state famous for its active attorneys general, Dick Hannah has a zero-tolerance policy when it comes to noncompliance. The group records all F&I interactions via Innovative Aftermarket System’s SmartEye video and audio recording system.

Larson also instituted fixed profit models for F&I products. The group also invested in Compli’s compliance and HR software to automate its employee training program. The dealership also employs MenuVantage’s selling system to verify disclosures and ensure that its pricing model is followed by all producers. The dealer group also is an Association of Finance and Insurance Professionals (AFIP) Industry Partner.

Industry Involvement: Dealer principal served as past president of the Washington State Automobile Dealers Association, and currently sits on the board of the Oregon Automobile Dealers Association.

Giving Back: Among its many community outreach activities, Dick Hannah plants a tree for every vehicle sold in support of the Arbor Day Foundation. The dealer group also partners with organizations such as the Boys and Girls Clubs of Southwest Washington, Southwest Washington Medical Center and the United Way.

Fremont Motors

Background Check: This Lander, Wyo.-based dealer group was founded in 1938 by Clyde Guschewsky. Today, the 13-store operation represents the largest dealer group in the state under the leadership of Charles Guschewsky.

The Numbers: F&I gross so far this year is 151 percent ahead of 2010. Total retail is up 132 percent.

Secret Weapon: Understanding the importance of relationships. Twice a year, the dealer group invites all of its lender reps and buyers to meet with management and its F&I team. The event serves as both a relationship builder and a chance for reps to provide feedback.

“The relationship we have with buyers played a huge role in our ability to navigate the downturn,” says Robert Laird, director of finance for Fremont Motors.

F&I producers are taught a no-pressure approach to F&I sales. Three years ago, the group installed MenuVantage’s F&I selling system. Laird likes the system because it allows him to monitor his team.

“When we present product, we want to make sure we’re making it clear to customers how our products will benefit them. And we present them as options, show them how they work and then leave it the customer to decide,” he says.

Laird adds that sales managers are paid the same amount on F&I income as F&I managers, which he says has created a real team atmosphere between the two departments. It also has led to better F&I performance.

Compliance Check: For Fremont, there’s just no option when it comes to compliance. “All our stores are in small markets, which means we need to be able to sell to a couple of generations of customers,” Laird says. “We don’t survive if we don’t have repeat customers.”

The dealership also is active in the Wyoming Automobile Dealer Association, from which it sources most of its compliance policies and procedures. It also sources information from the AFIP. Laird also conducts quarterly audits of customer files.

Industry Involvement and Trophy Room: The operation’s president and CEO, Charles Guschewsky, sits on the board of directors for the Wyoming Automobile Dealers Association. The group’s Ford store earned Blue Oval certification, and its Toyota store is a four-time winner of the Toyota President’s Award. Its Chrysler/Dodge dealership also was awarded Chrysler’s Five Star distinction.

Giving Back: The dealership provides $400,000 in annual support to local causes throughout Wyoming and Nebraska.[PAGEBREAK]

Chris Cochran, Haddad Dealerships

Chris Cochran, Haddad Dealerships

Haddad Dealerships

Background Check: Haddad Dealerships, which operates a Subaru, Toyota and Hyundai store, has served the Pittsfield, Bennington and North Adams areas of Massachusetts for more than 80 years.

The Numbers: Managed by Chris Cochran, finance director, Haddad’s seven-person F&I team is already 10 to 12 percent ahead of last year in terms of profit per retail unit. Acceptance rates are up 20 percent.

Secret Weapon: A pay plan that rewards for overall acceptance rates, not for product-specific penetrations. The group currently employs the menu systems offered by DealerTrack and Team One Research and Training.

Cochran says his team’s approach to F&I product sales is what has made the biggest difference. “Without getting into specifics, instead of us selling, our method lends itself to customers having to choose which option works for them,” he says.

Compliance Check: Compliance has really come into focus for Haddad in recent years, as the group really put a high price on customer satisfaction. That’s why Cochran has made CSI a big part of his team’s pay plans.

Cochran also conducts spot checks on deals to ensure compliance, a process implemented by F&I Resources, a New England-based general agency. As for training, Cochran leads weekly meetings and is in charge of new-hire training. Additional F&I training is provided by F&I Resources.

“For me and my guys, [being an F&I Pacesetter] validates all of the work we put in,” Cochran says. “This recognition also speaks to our leadership here at Haddad.”

Trophy Room: Has won the Toyota President’s Award every year since 2008.

Giving Back: Haddad supports the local Big Brothers Big Sisters of America affiliate. The dealer group also sponsors multiple youth sports teams, and supports the annual Boys & Girls Club Golf Tournament.

International Auto, Orland Park

Background Check: Operated under the AutoNation banner until 2009. Today, the Tinley Park, Ill.-based dealership operates under the 16-store International Autos Group, which operates stores throughout Illinois and Wisconsin.

The Numbers: Service-contract acceptance rates are up 25 percent, while profit per vehicle retailed is up 10 percent.

Secret Weapon: Consistency. F&I Director Paul Bednarz attributes International’s success to the product-based pay plan he installed for his four-person F&I team. Commission levels increase as producers hit certain acceptance rate targets. The structure, he says, keeps his team aggressive without having to resort to high-pressure selling.

Compliance Check: The store completely revamped its compliance policies and procedures after it was acquired by International Autos Group. Much of its compliance rulebook was sourced from its product provider, JM&A Group.

Deals are reviewed monthly for compliance and the F&I managers are graded by customers through the dealership’s CSI survey. The company also has set prices for all of its F&I products. “We want consistency,” says Bednarz. “We’d rather have three products at $200 dollars profit instead of one product at $1,000.”

Most F&I managers at the store are holdovers from the dealership’s AutoNation days, so most have been trained and tested by the AFIP.

Trophy Room: Won several manufacturer-based CSI Recognition Awards.

Giving Back: Every dealership under the group’s banner is inovlved in community support programs.[PAGEBREAK]

Angelia Butts, Jenkins & Wynne

Angelia Butts, Jenkins & Wynne

Jenkins & Wynne

Background Check: Founded in December 1953 by Vernon Jenkins and his partner, Briz Wynne, the Clarksville, Tenn.-based, single-rooftop Ford, Lincoln and Honda store is a two-time Time magazine Dealer of the Year winner. The store is currently operated by the founder’s son, Don Jenkins.

The Numbers: The F&I department is running 10 to 15 percent ahead of last year. Sixty percent of the group’s sales are to repeat customers.

Secret Weapon: According to Angelia Butts, who manages a five-person F&I team, the organization’s secret to success lies with the group’s active dealer. He sets the tone for everything that goes on, she says. “No one in this dealership is of any less importance,” she says. “There’s definitely a culture here.”

The F&I process, which employs Team One Research and Training’s  F&I menu-selling system, starts with a thorough review of a customer’s credit standing. The focus is on getting them the best finance deal possible before products are ever introduced. Butts adds that payments are never quoted on the show floor.

Each F&I staffer is given specific goals and growth plans. The store’s management team also is active in monthly performance reviews.

Compliance Check: Setting the tone for the dealership’s compliance efforts is its motto: “Our obsession is your satisfaction.” That’s why regular meetings are held among the operation’s management team to review and update compliance policies. Bulletins published by the state and national dealer associations are required reading for F&I team members.

The dealership also sources its compliance material and training from the The Plateau Group, its F&I product rep and income-development company. Completed deals also are routinely audited for compliance, and monthly reviews of the dealership’s sales and F&I processes are conducted. CSI for the Ford segment is 90; for Honda, 97.

Trophy Room: Won the Ford and Honda presidents’ awards the last seven and six years, respectively. Named Time magazine’s Dealer of the Year in 1984 and 2010, and Clarksville residents have voted the dealership as the “Best Place to Buy a Vehicle” for 10 years running.

Giving Back: Among its many community support activities, Jenkins and Wynne is an active supporter of the Fort Campbell military base, runs a Soldier of Month program,  and supports the United Way and local school athletics programs.

Lithia Motors Inc.

Background Check: The group was founded by Walt Deboer in 1946 as a Chrysler Plymouth Dodge franchise in Ashland, Ore. In 1996, the 85-rooftop operation became one of the nation’s largest publicly traded dealer groups.

The Numbers: Revenue in the second quarter was up 30 percent year over year, the highest second quarter earnings for the company since 2006. Revenue generated from F&I increased 32.3 percent, with average gross profit per retail unit up 8.9 percent to $1,000.

Secret Weapon: The sheer scale of this operation is its main advantage. Its size and resources have allowed Lithia to have a department, led by Steve Justice, devoted to monitoring, training and keeping performance levels up among the group’s 145 F&I producers.

Justice and his four-person support team review all of the group’s deals, which are scanned and emailed to him by each store. They track the performance of producers and customize training to address specific needs. The team also manages new-hire training and runs the group’s annual weeklong training event.

As for F&I product sales, the group employs what Justice describes as a hybrid between step and menu selling. The process starts with a features and benefits review of the dealer group’s four core F&I products. The goal is to build value in the product before the F&I manager presents a customized package option of the group’s core products.

Compliance Check: When Justice and his team aren’t training, they’re performing regular deal audits to ensure compliance. The group also hosts a weeklong training course that all F&I producers are required to attend.

Industry Involvement: Member of the National Automobile Dealers Association.

Giving Back: Every dealership under the Lithia banner is involved in community support programs. At the corporate level, Lithia is involved in YMCA and Kids Unlimited. It also hosts an annual golf tournament to support Oregon colleges. [PAGEBREAK]

(L-R): Steve Veldkamp, Jodi Nicholson, Raymond Borg and Gary Allgeier on one of The Suburban Collection’s lots.

(L-R): Steve Veldkamp, Jodi Nicholson, Raymond Borg and Gary Allgeier on one of The Suburban Collection’s lots.

The Suburban Collection

Background Check: The dealer group was founded more than 60 years ago as a single-point Oldsmobile dealership in Birmingham, Mich. Today, it operates 21 locations throughout Michigan and South Florida.

The Numbers: Managed by Gary Allgeier, director of finance, and Jodi Nicholson, financial services support manager, the group’s 45 F&I producers set an all-time record in August for financial services income. The department is averaging well north of one product per deal, but they’re striving to achieve a consistent two products per deal.

Secret Weapon: The group’s ability to go from a 30,000-foot view of its operation down to street level with one click. The operation invested in a technology platform that pulls data from all five of the group’s dealer management systems. It allows Allgeier to monitor production at each location and respond to any trends with training or other tools.

That was the case when Allgeier created his group’s lender matrix last year. With lenders still guarded, the matrix helped producers quickly match customers with the right finance source. Today, the matrix is the reason the department is successful at getting 90 percent of finance customers approved.

Allgeier also attributes his team’s success to Intravision’s F&I video recording system, which the group began installing in every F&I office in April 2009. Compliance was one of the factors considered, but the main motivation for adding the system was to help drive production the right way, as it serves as an invaluable training tool.

Compliance Check: When the platform was introduced, Allgeier asked programmers to equip the system with triggers that notify him by text when a process is skipped. “We basically took the compliance regulations in our 101-page manual and automated the follow up,” he says.

He also requires a menu on every deal, as it serves as the trigger point for many of the group’s automated compliance activities. “We tried to automate all non-revenue generating activities,” Allgeier says.

Trophy Room: Named the 2010 F&I Dealer of the Year and a 2009 F&I Pacesetter.

Giving Back: The group is involved in more than 80 charities, including the American Cancer Society, American Red Cross and the Boys and Girls Club of Southeast Michigan.