The treatment of auto dealers like this doesn’t seem right, but as for the nullification of the franchise contracts by the bankruptcy court, I think it’s reasonably common practice for bankrupt companies to be released from contractual obligations.
On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as “new,” nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler’s insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?
THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY
This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.
However, even from this admittedly plaintive email, it’s not hard to point out that the man is incorrect. He did do something wrong. He put his business in debt because another party told him to. If the facility renovations were so important to Chrysler, then Chrysler should have funded them. If they weren’t willing to take the risk of doing so, the dealer should have known better than to take the risk for them.
Everyone makes mistakes. I’ve made some humdingers. But, in general, going into debt in order to do something of benefit to another party is an inexcusable one. No doubt his justification was that Chrysler might have threatened to pull the franchise. Well, if that’s the sort of business partner you have, you’re better off without them. Now he’s in pretty much the same situation he would have been if he’d told Chrysler to take a hike, but with the addition of millions in debt to pay off.