CHRYSLER Dealers to Fight Closings
May 18, 2009 by Sean Kelly
Filed under Business
According to the Unhappy Franchisee post CHRYSLER: Dealers to Fight Back, the Chrysler National Dealer Council has said that Chrysler dealers will soon launch their legal opposition to the company’s plan to revoke 789 franchise agreements.
Chrysler dealers to fight back
Chrysler is seeking the court’s permission to revoke 789 dealers’ franchises as part of its Chapter 11 restructuring. Chrysler is seeking to revoke dealer agreements on June 9, and to emerge within 6 weeks as a “new” Chrysler alliance with Italy’s Fiat.
According CHRYSLER: Dealers to Fight Back, “Car dealers have long assumed that they are protected by the state franchise laws, many drawn up with the help of the dealers themselves… But Chrysler has asked the court to rule that the US bankruptcy code takes precedence over the state laws.”
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
Photo credit: Larry He’s So Fine License: Creative Commons
These dealerships are individually owned local businesses not Chrysler operations. These guys should be culled through economic attrition as is the American way, not notified they have to shut down in less than 30 days.
At least GM right now is winding down, not immediately terminating franchise agreements and they are also offering an appeal process to prove a dealer could stay by doing X,Y or Z. If a guy can operate his business with enough profit to satisfy himself, pay his bills, pay his taxes, pay his employees and support other local businesses and vendors, why should some company who should be more worried about cutting down their own operation expenses and restructuring their own debt tell him what he can and can’t do?
Dealers are not the reason Chrysler filed Bankruptcy sales dropping across the country by more than 46% is. So, limiting access to Chrysler products is not going to magically make them more desirable by the American public and make surviving dealers more profitable or competitive. Building better autos and improving consumer confidence will. This has nothing to do with dealers selling your product. It’s not even going to save them money in the long run because distribution costs to these dealers is minimal.
Further, why should some guy who has bought a Dodge truck want to travel out of his way to get it serviced or why would some guy want to drive out of his way just to purchase a Dodge truck? First thought will be if Chrysler is not loyal to its dealers, why would they be loyal to me. Second, thought is Joe Blow Ford is close to me now and they now support my little league team. More likely he will just switch products and purchase a Ford or GM made truck especially if the dealer is in his neighborhood or close to his office.
In this scenario, nothing will be gained in the short term for either Chrysler or GM to close dealers as market share will more than likely be lost to Ford. Chrysler’s ploy is a shell game to make the American public think they have done something constructive through their bankruptcy filing in order to validate receiving bailout money. It wouldn’t be the first time that some administration thought a policy was good and it later backfired.
Finally, do you think all franchise business owners in these great United States should be subjected to the possibility of their franchise agreements being cut because a manufacturer or producer has filed for bankruptcy, and suffer the same fate as being told they have less than 30 days to shut down their businesses or find another procuct to sell? This is not just about the automobile industry.
Judy:
Posted your comment here:
http://www.bizzia.com/franchisepick/chrysler-closings-a-shell-game-to-deceive/
Judy says it all —-and conversely, she must know that the contracts of those dealers who have NOT been terminated will be be valid and enforceable while the franchisor is reorganized in bankruptcy. If a dealer becomes insolvent, can he reorganice in bankruptcy? Or, is the contract with the franchisor immediately terminated?
The double standard is at work here, isn’t it?