![Quicken Home & Business 2009](http://www.bluemaumau.org/ads/www/delivery/ck.php?oaparams=2__bannerid=49__zoneid=5__cb=59db5b76da__maxdest=http://quicken.intuit.com/small-business-finance/home-business.jhtml?priorityCode=3969702399&kbid=8136&img=quickenaugbanners/9241-r1_q_hb_06_ws.jpg⊂=" "Quicken Home & Business 2009")
VIDEO: Many Auto Dealerships Should Go
Submitted by Mr. Blue MauMau on Sun, 2008/11/23 - 19:26.
NBC: Paul Ingrassia of the Wall Street Journal suggests on “Meet the Press" Sunday that General Motors' salvation is to unbind itself from its current 7,000 franchise obligations down to a more manageable 1,500 car dealerships by filing bankruptcy.
NBC: Paul Ingrassia of the Wall Street Journal suggests on “Meet the Press" Sunday that General Motors' salvation is to unbind itself from its current 7,000 franchise obligations down to a more manageable 1,500 car dealerships by filing bankruptcy.
Too many franchise outlets?
I understand that a conglomerate may need to get rid of this brand and that brand in order to focus on their strengths.
There is another question tucked away in this interview. How can a franchise owner/franchisor/management consultant know that the franchisor has bitten off more than they can chew with franchised units?
In other words, how does one tell a GM, Quiznos or even a Cuppy's that they have 68.4% more franchises than they can handle? How does one determine how many to eject, even though a franchisor would naturally think of the missed opportunity in royalties?
The auto industry allocation will be outrageously excessive
This week’s debate is whether to bail out the auto industry. People are dwelling on the obvious instead of attacking the problem. We all already know that the situation is as it is because of management failure. Stop talking about it. Did labor have a hand in it? Sure. We know that too. Stop talking about that also.
All three of the US companies are loaded with fat. Waggoner of GM boasts that he burns $ 75,000,000 a day. He also says he isn’t leaving and that if his departure is a condition of funding a bailout, forget about it. The arrogance defies comment. But that is a great depiction of what brought the industry to today. It isn’t any different at Ford or Chrysler. They also brag that they are four deep in every management position. They have almost as many planes as the military. They live as though they were competent. It is outrageous on the present facts.
One debate is whether they should file for bankruptcy before funding is provided. The answer to that is a resounding YES. There is no other fast way to their weight loss. Bankruptcy will enable what cannot be done otherwise. Bankruptcy will not adversely affect their prospects. Nothing could more drastically and adversely affect their prospects than what they have already done to themselves. Their business relationships will not change, except for what needs to go anyway. Bankruptcy will actually make their prospects better and enable their recovery on far less taxpayer money. Since management at all the companies is incompetent, oversight is necessary, and replacement of the head bozos would be preferable. There is far too much bad business doctrine at work in this industry, and it all comes from management inbreeding.
They will not willingly bring in any outside resources unless the resources agree with them. That is not a positive prospect. Nourishing the disease never cures the patient.
It is too bad that Barney Frank doesn’t understand the benefits of bankruptcy. He hasn’t even a clue. If his ignorance is the guiding light to remediation, don’t expect this to work out soon or efficiently. Do expect it to cost as much as possible.
--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
Car Dealers
I wonder how the car makers' franchisees (dealers) will handle the non-bail out or bail-out? I understand that auto dealers employ a lot of people.
Bailout fallout
To the extent that the proposed bailout ends up propping up their struggling service departments, the unfairness of such a policy to others in the automotive repair aftermarket cannot be overlooked.
Failure to pass the right to repair act coupled with an enormous uncalled for and undeserved financial shot in the arm places all of the automobile dealership service department's competitors at an even greater disadvantage and creates a playing field less level than ever before. Obviously, the contributions of the big 3 to political campaigns was money well spent.
The inability and unwillingness of automotive dealers to provide quality service at a competitive price has certainly played a role in creating their financial distress---it's too bad that mismanagement, greed and monopolistic tendencies are about to be rewarded in the form of a government subsidy.
If GM, Chrysler and Ford cannot pay their bills, they should do what every other business enterprise must do when faced with expenses that far outweigh revenues...declare bankruptcy.
If President-elect Obama truly is to be a champion of the "middle-class", he must direct our country into a new era of accountability and responsibility for our actions, starting at the corporate level.
Any financial bail-out of any industry is a repudiation of the prinicipals of a capitalistic society and sends the wrong message to America that fiscal irresponsibility, mismanagement and greed not only can go unpunished, but that the United States government can be counted on to rescue such irresponsible behavior. Intervention in the name of economic stabilization is a mistake, regardless of the motives or admirable intentions.
After the automobile industry the only question is what industry will be next in line in Washington with arms extended and hands out?
Small business owners, regardless of their industry, are about to face one of the most potentially toxic legislative sessions in American history. Between the Fair Choice Act, Lily-Ledbetter, Arbitration Fairness, minimum wage, and mandated health care and sick leave, the prospect for the next Congress to effectively maim small business owners is as real as it is frightening. To those of us in the business of repairing automobiles, the proposed government bailout is simply adding insult to the impending injury.
The Fat Company Syndrome
Last week I posited that GM Ford and Chrysler should be made to go through bankruptcy as a pre condition for funding assistance.
This past week, the head fat cats flew to Washington in their private jets and insisted that they be spoon fed with taxpayer money and allowed to remain fat – in business models that are no longer viable. The jets are not the real issue - but they are a very bold statement of attitude.
While the car business is down for everyone, these morons are the only ones in imminent failure mode. Isn’t it obvious that the over bloated business model that did well in the 1950s doesn’t work today? Hello! Are you awake?
Bankruptcy will not close one plant that the economy won’t close anyway. If they refuse to make reliable products that are competitive, that is the disease. Allowing that to persist and allowing the over bloated company models to persist would mean that any money provided will not remediate the situation. It will simply be wasted in companies that remain out of touch.
The crisis of the big three auto makers of America can’t be cured with feeding the fat model more sugar. The model has to be changed if the prospects are going to have a hope of positive change. Even if you gave them money, they won’t make it on what they intend to do.
If the CEOs won’t give up their perks and insist on business as usual, that is proof beyond a reasonable doubt that they are incompetent to deal with today’s business climate in their industry. No one inside their companies would ever be allowed to say that and keep his job. Only outside intervention will have a prayer of saving these companies from their absurd “leadership”.
The people who work there need someone to make the model configuration corrections or they will not have jobs anyway. The model configuration corrections can only be made in bankruptcy. It could have been accomplished without bankruptcy if the process had started years ago, but that was rejected out of hand and still is.
Without restructuring of these obese models, the fat lady will start singing. You don’t giver critical organ transplants to people who are about to die anyway. It’s the same with putting more money into a dead business model.
--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
GM Drops Tiger Woods Sponsorship
The downturn of not only the economy but now of the auto industry is affecting sports marketing in a big way. Take a look at this:
That means no more commercials like the one below.
Tiger Woods commercial about GM's Buick Enclave.
Capitalist countries
Can anyone list what country in the world strictly adheres to capitalism?
The U.S. is a mixed economy. So we can eliminate it from the list.
Does any place come to mind?
We also break up families if a spouse is waiting for an
immigration hearin to confirm a bona fide marriage to a US citizen, and the US citizen spouse dies unexpectedly. The surviving spouse is rounded up and deported. If there is a child not born in the US, the child is also deported. If the child was born here, its mother only is deported. Dozens of these pathetic cases are on appeal. Where a federal court enjoins the deportation, the INS appeals to an appeals court.
You can't claim to be a Christian nation focused on family values if this is how you treat people. This is just inhuman. Hopefully this insanity will end on January 20th when President Obama is inaugurated.
--
Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School
The closest is:
"Second Life"
Wow...what an awesome post by mufflerman
My only additional comment is in relation to:
Any financial bail-out of any industry is a repudiation of the prinicipals of a capitalistic society and sends the wrong message to America that fiscal irresponsibility, mismanagement and greed not only can go unpunished, but that the United States government can be counted on to rescue such irresponsible behavior. Intervention in the name of economic stabilization is a mistake, regardless of the motives or admirable intentions.
I'll add that industry bailouts are eerily similar to the wrong message sent to the individual for decades. We subsidize housing, health care, food, and education. the message for decades has been no matter how many children, no mater how fiscally irresponsible you are, your Government will bail you out. Look at the college loan programs, they punished those who actually work and go to school.
This country needs healthy rebirth of rugged individualism. Death should be preferable to dishonor. It is simply a cultural attribute that could gain prominence once and should gain prominence again.
FuwaFuwaUsagi
Bankers are smarter than politicians
What does the banking/credit industry do in response to getting government bailouts?
Does it loosen credit? Pass along real assistance to the American consumer in the form of lower interest rates or principal reductions? Reinvest in America? How about:
They jack up the fees and rates while tightening credit limits on 20% of their client's accounts (the same clients who can't afford to pay the minimums, forcing them deeper into a hole and more likely closer to bankruptcy (probably what they want considering it is easier to add the new deadbeats to the new "bad bank" balance sheet. This is done at the same time they get $700B or, in Citi's case, $20B direct.
They DELAYED home foreclosures without any commitment to actually FIXING them to be reflective of economic reality. I'll gladly pay you Tuesday for a hamburger today. Then why bother? Because it makes all of you poor underwater slobs feel like you have a chance and won't start shooting the bankers and politicians in your towns when they come home for the holidays.
They buy other banks or increase investment in foreign entities with the money. Why? Because the politicians left the door wide open by not demanding real controls and threatening Contempt of Congress Felony charges for abuse of the funds.
This is all credit and cash flow 101.
You are all sheep and the people you voted in to negotiate with these smart bankers are mostly morons. Have a great day at work.
Re: Bailout Fallout
In Australia we have our Trade Practice Act which is at best a work in progress but it does forbid dealers from denying customers a choice as long as the dealer conditions of quality and adherence to service schedules is followed.
It is designed, in theory, to ensure competition, and not just in automotive, so that consumers [and small business] don't get ripped off by anyone. It is effective to a degree and they are working on fixing some areas where a bigger party can still abuse their power over consumers and small business [e.g. franchising]. I wondered if something like this was in place in the US but obviously it isn't.
As you said, these bailouts are unfair. We see automotive businesses failing regularly but no one props them up. We even see franchises failing through no fault of their own and no one props them up.
Any business that fails because of mismanagement or greed or even bad luck should have to wear the outcome just as everyone else in business has to. But it sounds like it would need a major perspective/culture change for government to turn around a propensity to baby big business at the expense of taxpayers and healthy competition.