Profit Participation Programs
Flexible structures to maximize dealership underwriting profits
At Palm Dealer Solutions, we understand that every dealership has unique needs and objectives when it comes to profit participation programs. That’s why we offer a range of flexible structures that maximize profitability and mitigate risk. Our commitment is to help dealers thrive in today’s automotive industry landscape by providing tailored profit participation solutions that align with our dealer partners' short and long-term goals. Whether you’re a small independent dealer or a large multi-franchise group, we have the perfect structure to help you maximize the underwriting profits from the F&I products you offer.
Explore our comprehensive suite of Underwriting Profit Participation structures below:
Retrospective Profit Share (RETRO)
Administrator agrees to pay underwriting gains on the business, based on earned premiums less incurred claims. With a profit-sharing arrangement, dealerships gain exposure to contract underwriting profit without the risk of loss, making it an attractive option for those seeking to optimize their F&I returns.
Advantages:
- No additional entity needs to be formed
Disadvantages:
- No preferential tax treatment on profit-share payouts
- Taxed at the recipient’s ordinary income tax rate
Controlled Foreign Corporation (CFC)
Dealer principal forms and owns their own reinsurance company. CFC structures provide dealerships with tax advantages and asset protection while allowing them to fully share in underwriting profit and investment income from the F&I products sold and limited warranties provided by their dealerships. Ideal for most single point dealers and many dealer groups.
Advantages:
- Taxed only on investment income
- Long-term business strategy for dealers seeking more control in directing their investments
Disadvantages:
- CFC is expected to write business up to a premium of $2.85M in 2025
Dealer Owned Warranty Corporation (DOWC)
Dealer principal must organize their service contract provider under state law. DOWC's enable dealerships to establish their own warranty company, providing maximum control over their F&I program. With no limit on premiums ceded, potential for more access to cash, and an opportunity for reduced fees, DOWC's are ideal for larger dealer groups looking to optimize profitability.
Advantages:
- High potential for additional profit
- No taxes paid during NOL period
- Unearned premium releases available via the FIP program
Disadvantages:
- Requires service contract provider license
- Must form a C-Corp under state/federal laws and regulations
- Small learning curve to transition to retail cost accounting
- Initial investment/net worth requirement for some states
Super Controlled Foreign Corporation (Super CFC)
Dealer principal forms and owns their own reinsurance company just like a CFC Structure. Super CFC programs combine the benefits of CFC and DOWC structures, offering dealerships maximum flexibility, control, and scalability. With tailored solutions and ongoing monitoring, Super CFC's ensure that dealerships remain in the optimal structure to achieve business objectives.
Advantages:
- Ease of formation and speed to market over DOWC
- High potential for additional profit
- No need to apply for service contract provider license or regulatory approval
- No taxes paid during NOL period
- Unearned premium releases available via the FIP program
Disadvantages:
Small learning curve to transition to retail cost accounting
No hidden fees with complete transparency
Palm Dealer Solutions offers F&I programs with no hidden fees or unexpected costs. All of our products available for profit participation are offered to our dealer partners with complete transparency.
Our participation programs even include the following services at NO ADDITIONAL COST:
Administration
Claims Management
Claims Adjudication
Loss Prevention
Cession Statements
Pricing Reviews
F&I Reporting
Roadside Assistance
Executive Oversight
Example of fees Palm Dealer Solutions dealer partners NEVER PAY:
Cancellations Fees
Ceding Fees
CLIP Fees
Hidden Roadside Fees
Adjudication Fees
Management Fees
Most common questions
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