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Dealer Seeks Return of Chrysler Franchise

A Chevy at a California Barbeque, photo by Thomas Hawk
A Chevy at a California barbeque diner, photo: Thomas Hawk

A terminated car franchisee in Billings, Montana seeks to use state auto franchise laws to get its franchise back. That's almost inconceivable in other franchise sectors.

It is possible because independent-minded auto dealers long ago somehow found the will to band together to form local and national associations that pushed to enact state and federal laws against franchising abuse, despite efforts of powerful car makers to stop them. Franchise owners back then in the newly budding sectors of restaurant, hotel, retail and services watched. As a result of those efforts, automobile franchises for decades have had protections by law from encroachment, termination and their ability to renew their franchise agreements.

Automobile franchisees have become one of the top lobbying forces in America.

An exception to dealership protection was the rare bankruptcy of car makers in 2009. Car makers successfully argued to the government that their car franchises had become too numerous and that they now belatedly realize that the sheer quantity of their own dealers actually hurt their brand's systemwide sales and profits. Car makers were allowed this once to circumvent current laws to terminate thousands of dealers.

One dealer in Montana wants back.

Rimrock appealed the loss of its franchises and won a federal arbitration in June 2010. However, a state law allows existing dealerships to protest the addition of a matching franchise in the same market. The law says a new automobile franchise cannot be established in a community in which the same line-make is already represented, unless there is good cause for an additional franchised dealership and it is in the public interest.

...Byerts, of Bass Sox Mercer in Tallahassee, Fla., added that "protection for the dealers consists of the opportunity to contest the manufacturer's decision to add a dealership" and to protect the manufacturer from terminating the existing dealer without good cause.[via CBS News]

Montana's attorney general is expected to decide on the fate of the franchise by October 12, the Associated Press reports.


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