Barack Obama signs legislation for rejected GM and Chrysler dealers

Article by Christian Andrei, on August 27, 2010

President Barack Obama recently approved a law that would provide rejected dealers of General Motors Co. and Chrysler Group with access to neutral arbitration if they want to be reinstated.

This legislation starts off a six-and-a-half months arbitration process. GM and Chrysler are compelled to send letters to all 2,150 rejected dealerships in 30 days to inform them of their rights under the new law.

The companies would also have to list the reasons for terminating the franchise agreements.

The eliminated dealerships now have 40 days to give notice that they intend to seek arbitration. Arbitration has to be completed within six months. Dealerships that win must receive a letter of intent from the automakers within another 14 business days.

The legislation, which Obama approved, was a $446 billion spending bill that contained the dealer-arbitration provisions spearheaded by Rep. Steny Hoyer, D-Md., the House majority leader, and Sen. Dick Durbin, D-Ill., the assistant Senate majority leader.

Just this month, Hoyer and Durbin acted after GM and Chrysler ended settlement talks and announced plans to create neutral arbitration applying the original criteria they used to mark dealerships for termination. 

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