Cada Agreement

CADA Agreement: Everything You Need to Know

For anyone who is new to the world of auto dealership, the term CADA agreement may sound a bit unfamiliar. However, understanding what it is and how it works can be crucial for anyone who is looking to start a career in auto dealership or is looking to open their own dealership. In this article, we will discuss everything you need to know about CADA agreements.

What is a CADA Agreement?

CADA stands for Canadian Automobile Dealers Association. A CADA agreement is a contract between a car dealership and a manufacturer that outlines the terms and conditions of their business relationship. It is essentially a legal document that details the rights and obligations of both parties.

The agreement generally covers a range of topics, including but not limited to:

– Pricing and incentives

– Advertising

– Warranty terms and conditions

– Dealer termination

– Non-compete clauses

– Quality control

Each manufacturer’s CADA agreement may vary in terms of what is included and how it is structured.

Why are CADA Agreements Important?

A CADA agreement is important for both the manufacturer and the car dealership for several reasons:

1. Protects the interests of both parties: A CADA agreement ensures that both parties are on the same page regarding the terms and conditions of their business relationship. This protects both the manufacturer and the dealership from any misunderstandings or disputes that may arise in the future.

2. Provides consistency: A CADA agreement provides consistency across all dealerships that sell a particular manufacturer’s vehicles. This means that customers can expect the same quality of service and pricing at any dealership selling that manufacturer’s cars.

3. Helps maintain the manufacturer’s brand image: A CADA agreement ensures that all dealerships selling a particular manufacturer’s vehicles are adhering to the same quality standards. This helps maintain the manufacturer’s brand image and ensures that customers receive a consistent experience regardless of where they purchase their vehicle.

4. Allows for streamlined communication: A CADA agreement provides a framework for communication between the manufacturer and the dealership. This ensures that both parties are aware of any changes or updates regarding pricing, incentives, or other matters that may affect their business relationship.

What are the Pitfalls of CADA Agreements?

While CADA agreements are generally beneficial for both parties, there are some potential pitfalls to be aware of:

1. Restrictions on pricing: CADA agreements can restrict a dealership from offering promotions or discounts below a certain price point. This can limit a dealership’s ability to compete with other dealerships in the area.

2. Non-compete clauses: CADA agreements may include non-compete clauses that restrict a dealership from selling other brands of vehicles. This can limit a dealership’s ability to diversify their inventory and may put them at a disadvantage compared to competitors.

3. Limited negotiating power: CADA agreements are often non-negotiable. This means that a dealership may be stuck with terms that they find unfavorable.


In conclusion, a CADA agreement is an essential part of the business relationship between a manufacturer and a car dealership. It provides a framework for communication, sets expectations for both parties, and helps maintain consistency across all dealerships selling a particular manufacturer’s vehicles. However, there are some potential pitfalls to be aware of, such as restrictions on pricing and limited negotiating power. It is important for dealerships to carefully review and understand the terms of any CADA agreement they enter into.