Dealer says 2 franchises on GM hit list

After unsuccessfully battling Chrysler’s dealer terminations for three weeks, Washington-area auto dealers are now fighting not just General Motors’ franchise rejections but the terms both automakers are offering to the dealers they are keeping.

“They’re master-slave agreements, they’re not franchise agreements,” dealership owner Jack Fitzgerald said of GM’s terms for participating dealers.

“I got two kiss-off letters and one ‘We want you to be our slave’ letters,” he said. “Chrysler dealers, too, have to sign their rights away.”

Mr. Fitzgerald, owner of 13 Fitzgerald Auto Malls, lost Chrysler agreements at three locations and is resisting GM’s planned termination of two of his other franchises - a Buick/GMC/Pontiac store in Rockville and a Cadillac dealership in Annapolis.

No other area GM dealers have admitted receiving rejection letters, fearing a loss of business.

At least one other area Cadillac dealer in the Maryland suburbs received a rejection letter, auto dealer association officials said. The owner and his attorney did not return phone calls seeking confirmation.

Don Hall, president of the Virginia Automobile Dealers Association, said that continuing GM dealers who sell competing brands were given until Dec. 31 to stop selling the other brands.

“You have to take whatever inventory they ship you, whether your market can accept it or not. They’re saying, ‘Accept this or we’ll put you in bankruptcy,’ ” he said.

Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said GM is asking participating dealers to “waive all rights under state [franchise] law, and sign by [Friday].”

Both GM and Chrysler have used bankruptcy re-organization to break franchise agreements that otherwise would be very difficult to end without a compelling reason.

“Cadillac was pulled from every smaller market,” Mr. Hall said.

A bill introduced this week, co-sponsored by powerful Democrats including House Majority Leader Steny H. Hoyer of Maryland, would establish in federal law that GM and Chrysler are required to go through established procedures under state franchise laws in order to terminate dealers. The dealer rejections are easier in bankruptcy because a federal judge’s authority supersedes state law.

GM mailed out 1,100 termination letters last month and followed those up last week with a second wave of letters to every GM dealer. Dealers received either a continuation or a wind-down letter, Mr. Hall said.

Those being terminated will be allowed to continue selling GM cars until October 2010. Chrysler gave its rejected dealers just three weeks to sell their inventory.

Mr. Fitzgerald believes he has a chance to successfully appeal his GM terminations because he is in good markets with convenient locations. He knows three other rejected dealers who fit the same description.

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