Stronger Franchise-Law Language Urged

Faced with the possibility GM may sell or terminate the Saturn, Saab and Hummer brands, potentially affected dealers have been advised by legal experts to press for stronger franchise-law language.

It's designed to guarantee “fair-market value” damages or an equivalent franchise as compensation.

New York State has pioneered in adopting such an amendment in its franchise law. In the aftermath of the Oldsmobile discontinuance, several other state associations also submitted such protective clauses to their legislatures.

The Olds termination cost GM about $1 billion. In the absence of fair-market value clauses, many dealers were forced to go to state courts in disputes over the amounts of compensation offered by GM.

Several proposals define fair-market value in ways that cover a facility upgrade or all-new building, as well as loss of future sales and profits.

Saturn dealers are particularly concerned about GM's avowed intention to peel 1,750 dealers from the U.S. total of 6,450 stores overall. Saturn has 425 dealerships owned by 211 principals and although GM has not yet handed the 25-year-old brand an Olds-like death sentence, its dealers are not encouraged by GM CEO Rick Wagoner's admission to Congress that “Saturn has not met our expectations.”