Shuttered Dealer Allowed to Keep GM Signage

Judge Allows Terminated Dealer to keep GM Signs Up  Photo/Parkway

QUEBEC, Montreal – After General Motors Canada shut down its sixty-year old top-performing dealership on the Trans-Canada Highway early this month, ordering it to take down its signs and change its business names, a judge ruled yesterday against GM. He stated that the Parkway Pontiac Buick dealership could keep its signage and brand affiliation. The written order will be available on Friday.

Richard Hoy, Parkway’s vice president and owner of the franchise, said unlike the first injunction on November 9, which they lost, GM-US out of Detroit filed the proceedings last week on the trademark issues. “The judge basically said our dealership has been in operation over 50 years, and in good faith we had made significant investments in our buildings. He felt that when our contract was ending, when the whole crisis was going on with GM, taking the signs down would be a devastating blow to us, but wouldn’t inconvenience GM. So, he ruled in our favor,” Hoy stated.

Osler, Hoskin & Harcourt, LLP, attorneys representing General Motors Canada did not return phone calls prior to publishing.

Hoy, son of founder Harry Hoy who started the company in 1948, said what happened in Canada was a reflection of what happened in the States. “But here we have a different situation. GM-Canada never went bankrupt, so a lot of the same processing decisions that happened in the States happened here,” he said.

He explained that in the US the dealers didn’t have anybody to sue because GM went bankrupt. “If dealers felt they were unjustly treated they could sue GM liquidation company. But they weren’t going to get anything out of that,” Hoy continued.  He said GM in Canada never went bankrupt, but they did the exact same process up here as they did in the States. He said you can see it in the TARP Report, Troubled Asset Relief Program, where much of it applies to their case in Canada.

When GM-Canada started its termination process of Parkway, the Hoy family owners never really understood why GM picked one of its top-performing dealership to close its doors, over its under-performing competitor Plaza Buick Hummer Cadillac at the same location.

When transport trucks arrived on November 15, George Iny of the Automobile Protection Agency was there. As he watched Parkway’s entire inventory being hauled away, he told television reporters it was probably a no-brainer for GM to make that decision. “They actually still have a high profile dealership operating out of the same location, so it was an easy decision.”

Iny also thinks the cross-Canada closings are symptoms of a bigger problem. “What these closings show is the general lack of franchisee protection in Quebec, and it is also a Canada-wide problem. If you are a franchisee you are often at the mercy of the whim of your franchisor.”

While cars and trucks were being loaded onto transport racks, employees and customers looked on in disbelief. As reporters and television crews descending on Parkway’s premises, Hoy stated in front of cameras, “We will fight this to the end.”  He said they had no intentions of going away, that they have too much at stake.

Diane Hoy, daughter of the founders and now Parkway’s president, sat in one of the reclaimed vehicles staging her version of a sit-in. Shown in a video, Ms. Hoy refused to get out until she got answers from GM as to why they were being shut down. “I’m not getting out. They will have to forcibly take me out of here,” she exclaimed.

Ms. Hoy said GM has been acting in a very bullish way and they are trying to make an example of them. “They are using pressure tactics and most people would have folded by now, that’s usually what they do,” she stated. But she said they are trying to stay optimistic until their lawyers can get the cars back into their lot.

Both proud Hoys reminded that their father Harry Hoy was once featured in Time magazine as “Car Dealer of the Year” and Parkway has sold over 200,000 cars and trucks for GM over the years. It had also been named the No. 1 dealership in Canada for 15 years, not just in GM but all brands.  Parkway has 89 employees, some who have been with them for over 25 years.

History of the Closing

At the height of the recession in mid-2009, when facing bankruptcy, GM notified Parkway Pontiac that it was on its “non-retained dealer” list, about to be terminated. The dealership then received a Dealer Wind-Down Agreement on May 20, 2009, offering them a settlement.

In turning down the auto manufacturer’s offer, Parkway told GM “not all dealerships are the same and many factors are specific to each case.” They wrote, “We feel that GM’s decision to classify Parkway . . . is not necessarily in GM’s best interest in its attempt to restructure and position itself for long term viability.”

Jason Easton, GM-Canada’s corporate communications manager, confirmed that GM did offer Parkway a settlement, but they turned it down. He told The Gazette last week that their decision to shut down Parkway was based on several criteria, among them profitability, geographic coverage and protected sales volume. The fact that the Pontiac line—stronger in Canada than in the US--has been discontinued also was taken into account.

Of the 240 Canadian dealerships designated for franchise “wind-down” closures back in May of 2009, when GM was on the verge of bankruptcy, more than 85 per cent accepted the initial terms. Easton said, "Without that high rate of acceptance, we couldn't have successfully restructured.”

When GM went public several days after it picked up Parkway’s fleet of vehicles, many who opposed the government bailout have referred to GM as “Government Motors” and that is a label it would like to lose, according to a money blog.  The company went on the New York Stock Exchange and the Toronto Stock Exchange, under its old symbol GM. In its offering, GM will be selling $100 million in new common stock and $100 million in preferred stock.

Not only did GM reclaim their 120 new vehicles, leaving Parkway with a small number of demos and used autos, it also shut down its computer systems and eliminated the Parkway dealership location from its GM website. When a crew was ordered by corporate to take down the Parkway signage, they were sent away for not obtaining a court order to do so.

Richard Hoy said people wonder how Parkway can continue operating when it isn’t allowed to sell cars under GM. But he said they can still broker deals with other manufacturers to put customers into cars, and they can use certain suppliers to get their parts for maintenance.

So how can a car manufacturer come in and take away all of a dealer’s assets?

Hoy said GM sells the dealer the cars. The dealership finances the cars through Ally Bank, the finance institution, formerly under GMAC. Hoy said as part of their dealer agreement, GM has the obligation to take back inventory if they terminate or the dealer agreement ends. Ally Bank basically has a security, the rights to that buy-back agreement, and hold cash as security, and in their case, personal guarantees and collateral mortgages. “So GM is very very well protected,” Hoy said.

“Basically, they came up to us and said, ‘Your agreement with GM is over. You can either write a check for all the inventory or we take everything from you.’ So we said, ‘Okay, we’ll hand it back to you, but under protest.’”

Hoy said the assets were Parkway’s until they were returned. “Now those vehicles belong to GM. What they actually did was they picked them up from our place on Nov 15 and took them to the rail yard, 5 kilometers from here. Then they delivered them to the other dealer on Friday Nov. 19.” Hoy said as of today, the vehicles are still parked at Plaza dealership with Parkway’s window stickers on them.

“The are saying Plaza is the retained Buick GMC dealer, but from everything we can see, GM didn’t take our franchise away,” Hoy said.

So, does Parkway still have its franchise?

Hoy said with the Arthur Wishart Act, GM has to give a dealer two weeks notice before changing the dealer agreement. “GM didn’t give that to us in May 2009. They can’t just let your dealer agreement end for no particular reason. The laws of Ontario, which govern our dealer agreement, basically require GM to deal with us in utmost good faith, and they have an obligation of fair dealing, which they have not done. Literally, GM gave our franchise to the other dealer, the Buick GMC franchise, before they ever resolved the situation with Parkway.

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