GM Keeps Franchise Clause After Protests

A franchise-agreement clause, which some Oldsmobile dealers used in damage suits against General Motors, is being retained in franchise renewals now being negotiated.

The clause states that GM furnishes “each dealer the opportunity to achieve a reasonable return on investment.”

At first deleted from new 5-year franchise contracts presented to dealers, the clause was reinserted after a request by the National Automoibile Dealers Assn.

The clause, seemingly innocuous, was cited in legal bills of complaint from several Olds dealers who had invested in new or modernized showrooms just before the brand's elimination was announced in December of 2001.

GM spokesman Dee Allen says GM dealers who construed the clause as a guarantee were under a false impression. “No one can guarantee a return on investment,” he says.

But GM relented when dealers and NADA felt the clause “had some significance as a part of the agreement,” he says.

Another clause dropped because of dealer objections would have required dealers to offer customers GM-branded vehicle service contracts.