Car dealers losing franchises can go to arbitration

Small-town car dealerships that lost their franchises as a result of the recession, manufacturer downsizing and federal bailouts can take their cases to arbitration, under a provision Congress included in a catch-all appropriations bill last month. A reminder of that comes from the National Newspaper Association, the lobbying group for community newspapers, which have a major economic interest in the survival of rural dealerships.

The NNA release says "The arbitrator shall balance the economic interest of the covered dealership, the economic interest of the covered manufacturer, and the economic interest of the public at large and shall decide, based on that balancing, whether or not the covered dealership should be added to the dealer network of the covered manufacturer. The factors considered by the arbitrator shall include (1) the covered dealership's profitability in 2006, 2007, 2008, and 2009, (2) the covered manufacturer's overall business plan, (3) the covered dealership's current economic viability, (4) the covered dealership's satisfaction of the performance objectives established pursuant to the applicable franchise agreement, (5) the demographic and geographic characteristics of the covered dealership's market territory, (6) the covered dealership's performance in relation to the criteria used by the covered manufacturer to terminate, not renew, not assume or not assign the covered dealership's franchise agreement, and (7) the length of experience of the covered dealership."

The release also notes the economic and convenience benefits of having a dealer in your town. "One of our members recently noted that now citizens in his small Minnesota town must drive 30 miles or more to buy a car," said NNA President Cheryl Kaechele, publisher of the Allegan County News in Michigan. "They also must go that far for service from the dealers. That is one massive towing fee imposed upon rural America when the family car breaks down. We are hearing reports like this from across the nation." (Read more)