General Motors Franchise Agreement


The law requires manufacturers to notify distributors in writing, at least 60 days before the amendment comes into effect, of significant adverse changes to their “agreements.” During this 60-day period, the merchant can file a complaint with the relevant authorities and ask to be heard as to whether there is a “good reason” to change them. During the oral procedure, the manufacturer must demonstrate that it has “good reasons” to modify them, including explaining the reasons for the proposed amendments. The trader must indicate how the changes have a significant and negative impact on the trader`s rights, investments or return on investment. However, bankruptcy rules can repeal these laws, allowing an automaker to quickly withdraw from a franchise agreement. This gives GM unusual powers for the coming months. GM`s new agreement contains some positive changes that may benefit distributors, for example: for dealers that GM drops, the automaker is offering up to $1 million to pay for day-to-day operations until the franchise expires in October 2011, according to a source who has seen several of the letters. GM also said it would buy back the rest of the inventory after the October 2010 deadline, mcEleney has several GM franchises in Clinton, Iowa, and is one of 3,600 GM dealers that will not be forced to close after the automaker`s bankruptcy. Sox insists that GM is “fully” aware that the removal of the ROI clause from the franchise agreement would not affect dealers. “I`ve been a dealer for 36 years and it`s a very one-sided and painful agreement,” said John McEleney, president of the National Automobile Dealers Association.

Car dealerships are independent companies that are normally protected by strict state franchise laws that limit what automakers can ask for and subject them to. But Bill Middlekauff, GM`s general manager for dealer network planning, says the company will continue to take dealer profits into account when making dealer decisions. According to him, the company did not repeal the clause in response to the lawsuits against Oldsmobile. The revised agreement could cause difficulties for restless brands and the traders who sell them, say several trade lawyers. In 2014, an administrative judge in the New York Department of Motor Vehicles rejected GM`s attempt to terminate Beck`s contract in parallel court proceedings.