Burkhalter, Michaels, Kessler & George LLP
a d v o c a t e D E A L E R S F A L L 2 0 0 6 V O L . 3 , I S S U E 4
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Automotive Dealers Newsletter for Legal Resources
Ford Dealership Closures -- One Reason You Should Review Your Dealer Agreement
In September of this year, Ford announced it would slash approximately 600 U.S. dealerships from its 2005 total of 4,396. Ford has now revised that plan and announced its closures will be broader than originally anticipated. Although, Ford has declined to pinpoint the exact number of targeted dealerships, it has remarked that cuts will be made from a greater number of markets than the original 18 that Ford set in its sites back in September. Ford has confirmed that dealerships in Detroit, Chicago, New York, Philadelphia, Pittsburg, St Louis, Los Angeles and San Francisco are among those selected for closure. Perhaps the broader cuts should come as no surprise since Ford also disclosed that it bled
In This Issue
Advertise in Compliance with the Law page 2
Review Your Lemon Law Coverage page 3
a $5.8 billion dollar loss in this year’s third quarter.
Although it’s not clear why Ford chose to publicize its plan to “right size” its dealership family, it would not be surprising to see other manufacturers also contemplating the slashing of their expenses in a similar manner. All businesses understand the concept of belt-tightening in tough economic times. Although Ford has been quite vocal that the closures will be voluntary, it’s irrefutable that if a manufacturer seeks a certain result and is unable to obtain it peacefully, it has a fair amount of leverage at its disposal. In such situations it is crucial for dealers to understand they have options. Dealerships must prepare themselves well in advance if they hope to take an aggressive position against a manufacturer.
Time after time in showdowns with various manufacturers, BMKG attorneys have observed a common theme -- dealerships
that are in strict compliance with their Dealer Agreement have a phenomenally greater chance of success than those who are not. By remaining in compliance, targeted dealerships can take an aggressive and offensive position if they find themselves in a hostile situation with their manufacturer.
There is no indication that Ford, or any other manufacturer, intends to unfairly coerce dealerships into abandoning their franchises. But such coercion is not without precedent. In fact, BMKG saw this type of unfair manipulation a few years ago when General Motors purchased the Hummer name and dealer
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Complying With "The Single Document Rule"
California’s New Standing Requirement For Unfair Competition Claims Applies to Pending Cases
The Automobile Sales Finance Act is a frequently used tool for lawyers targeting dealerships with consumer fraud cases. A charge these lawyers often pursue after
reviewing customer’s sales documents is that the dealership violated the Act’s “Single Document Rule.” The best protection against these claims is for you to understand what
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