So if McDonalds decides that a franchisee isn’t selling enough burgers and refuses to renew their franchise agreement - is McDonald’s being cold-hearted or are they being smart business people?
Look at the numbers for dealership by dealership new car sales and you will probably agree that Chrysler had way too many franchises. A thinning of the herd was necessary.
The trouble is, from what I’ve seen, it is the franchises that are making money that are being closed and passed on to those which are not.
How is “thinning the herd” going to improve Chrysler’s financial condition?
The difference is that McDonalds franchises most likely don’t buy their inventory, and if they do, it becomes “obsolete” in a few days. And, the structure is usually maintained by the corporation, not the franchisee. This car dealer is now stuck with several million dollars in inventory that he is on the hook for, and has a debt to the mortgage company he was forced by Chrysler to incur (remodeling the dealership). If this is accurate, and it seems to be, Chrysler has just stuck this guy with 6-8 million dollars in obligations that it had essentially promised to cover (dealer support so he could dispose of inventory, and additional access to new cars to provide him with the revenue to cover the remodel).
The most important thing to remember is that these franchises are costing Chrysler virtually nothing. The franchises buy the cars from Chrysler at the time they are put on the lot. These franchise dealers are Chryslers customers for Pete's sake GM for years never billed the dealer until the car was sold to the end user.
Since when is the elimination of retail outlets as well as the halving of advertising a winning combination in business. Now Chrysler has less of a presence in the market and less advertising. This makes it that much easier for a customer to go to a Ford, Toyota, or Honda dealer that is closer to his home.
“Look at the numbers for dealership by dealership new car sales and you will probably agree that Chrysler had way too many franchises. A thinning of the herd was necessary.”
That may or may not be true. However, the selection of which dealerships stay open and which close seems to have nothing to do with performance. I have now heard of at least three highly successful dealerships that are losing their franchise, while others that were not performing well keep theirs. This is about the government dictating winners and losers.
By the way, dealerships do not cost Chrysler any money - they MAKE Chrysler money. Even the low volume dealerships make money for Chrysler from parts, marketing materials, etc. Obama is killing off the only profitable part of the system...
Why isn’t Ford closing dealerships? This is being mandated by Lord Obama!
There was a story the other day where one of the top selling dealerships was being shut down.
Bullsh*t Barry. If the guy wasn’t making any money he wouldn’t have made millions in renovations at the insistence of Chysler4...he wouldn’t have $300,000 in parts inventory and he wouldn’t have a lot full of cars that he can now not sell.
Necessary to who?
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.
They are not getting rid of the franchise -- they are giving it to another dealer.
So what’s your point? It’s ok if the federal government comes in and steals a man’s business because they decide Chysler has too many dealers? And don’t tell me Chrysler is making the decision to close these dealerships...this whole damned thing is being orchestrated by Rattner and obama. Whether or not his sales justify his continuing in business is something that should be decided in the marketplace. Not by government fiat. That’s something every conservative should know.
These guys own their dealerships, they either make profits or they sink. This guy is making it as many others who are being forced to shut down to satiate Il Duce
You’re missing the point..the only way this could have been done was by forcing Chrysler into bankruptcy..which allows them to petition the judge to abrogate the franchise agreement. However, the unions, with NO equity stake, got sweethe art deals out of it..it’s as though the bankruptcy laws and courts were turned upside down..
Stop making sense. It's way more fun to scream about how Obama's wrecking the economy by doing (in this particular case) exactly what a lot of people on this board said needed doing just a few months ago.
Ahhh, it is easy to tell the Bozo supporters, they always have the apology ready for his illegal and unconstitutional actions. Whether this guy was making money or not, he has money invested in this franchise, the company is supposed to buy it back from him if they shut it down. They are not buying back his inventory, if he was doing so bad why did they continue to sell him so many cars? He will lose millions and you think it is ok for Bozo to say "shut him down!".
Who did you vote for? Bozo? I thought so.
We need to put this country back in the hands of private enterprise and get the frickin' government out of business, period.
A person owning a McDonalds franchise, can easily revamp to another kind of fast food and probably make more money, they don't have the kind of money invested in this business as the auto dealer has.
These dealers have their lives invested in these dealership. The auto makers demand/tell the dealers how many cars they MUST TAKE (it is not an option) each year. The dealers HAS to put these cars on a Floor Plan with their local banks and pay the interest each month.
This dealer states he has $300000.00 in part inventory, which they won't buy back. This dealer invested in himself, his employees, and his community all to be swooped away from him and GIVEN FREE to some one, how is that fair?
What difference did it make if the dealer only sells 35 cars a month????? It is 35 more that the auto makers profited by, right?
I remember the Oil companies did this often times in past years. They would start a gas war, until the little man was forced to give up his service station. Then the Oil companies would come in and build their and as it was the only station they UPed the price of gas, no competition.
I'm certainly sympathetic to this man's greif as well as the hardship placed on his employees. But, the US car dealership business was hardly a "free market" to begin with. Many states, Florida included, had passed legislation that made it virtually impossible for Chrysler, or any other manufacturer to close a dealership without filing for bankruptsy.
Now, my problem with all of this really is with just two people - Bush & Obama. Bankruptcy was the right option for both GM and Chrysler last year. And, this is where these tough business decisions should have been made for a failed business and adjudicated in a court of law where all parties have access to due process.
But, with this prepackaged bankruptcy business, everyone is getting screwed except for the organized labor that is part and parcel of the DNC get-out-the-vote machine. Apparently due process isn't really all that important to our former "constitutional law scholar" turned President.
“Look at the numbers for dealership by dealership new car sales and you will probably agree that Chrysler had way too many franchises. A thinning of the herd was necessary.”
While I don’t disagree with you in theory...
These guys should not be left with millions of dollars of inventory, millions of dollars of forced debt and have their loyal customers just given to someone else without any sort of compensation.
That is just wrong on so many levels.
:(
I was waiting to see if someone posed that question.