Tuesday, June 30, 2009

GM bankruptcy and Franchising Law

Another potential problem from the GM bankruptcy (and actually any franchisor's bankruptcy) gets point out in PA Joins 36 States With Objections in GM Bankruptcy Case

Additionally, Corbett said that there are serious concerns regarding the methods being used in the termination of dealer franchises, along with the terms that continuing dealers are being forced to accept.

“Pennsylvania law specifically prohibits manufacturers from coercing dealers and allows dealers to formally protest any substantial modifications to their franchise agreements,” Corbett said. “Our community-based businesses are being asked to sign away important protections they have under state laws.”
Problem I see is this: bankruptcy law being federal law trumps state law and the coercion and modification claims may go nowhere.