Law provides reparations to GM, Chrysler auto dealers

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Governor signs bill that will give dealers the right to reopen franchises or demand them back

Gov. Bill Ritter signed a bill into law this week that gives Chrysler and General Motors dealers who were closed during the automakers’ bankruptcies a right of first refusal if the companies reopen an area franchise, or a right to demand the franchise back if it has been reassigned.

House Bill 1049, sponsored by Reps. Joe Rice, D-Littleton, and Marsha Looper, R-Calhan, is expected to spur immediate action by some Chrysler dealers that were shut down for political reasons only to see their franchises given to someone else up the street.

Supporters have said they also believe it could bring about a lawsuit from Chrysler, though a spokeswoman for the company said Monday that no lawsuits are planned in regard to the bill.

HB 1049 passed the House with a 60-5 vote and 35-0 in the Senate.

Several dealers ousted by the two companies broke down in tears while telling of their plights, so Sen. Shawn Mitchell, R-Broomfield, said during a press conference that he wanted the legislation to hit Chrysler and GM hard.

But supporters said they are just happy it is now law.

“We’ve been working this for a long time,” Rice said. “We’re glad that we got it through the system as quickly as we could, because from this moment on, a lot of dealers will have protections they didn’t have before.”

HB 1049 gives the 39 Chrysler and GM dealers in Colorado who had franchises revoked last year a right of first refusal if the auto makers decide to reopen a franchise within five miles of theirs in the next five years.

It also requires Chrysler or GM to refund a large portion of the money that the terminated dealers put into capital upgrades of their facilities in the past five years.

Another provision allows dealers who already have seen their franchise given to another dealership to go back to the automakers and demand that the dealership either be returned to them or that they receive payments for their closing — a choice belonging to the dealers. Those payments, approved by the Legislature in 2009, include the good-will value of a dealership on the date of its termination and one year’s worth of rent for the building.

GM officials stopped fighting the bill this month after the time for the right of first refusal was cut in half and the percentage of capital improvements needing repayment was reduced.

Chrysler, meanwhile, has filed a legal action against four other states that have passed similar but less comprehensive laws, arguing that the bills interfere with a decision by a federal bankruptcy court allowing Chrysler to terminate a number of dealers.

While Chrysler spokeswoman Eileen Wunderlich said her company fought HB 1049 because it believes state-by-state legislation gets in the way of the federally approved bankruptcy plan, it has no plans to extend the lawsuit to include the Colorado law at the moment.

Melissa Kuipers, vice president of government relations and communication for the Colorado Automobile Dealers Association, said she does not know how quickly some ousted dealers will turn around and demand the return of their franchise that was given to someone else. But she said that she is glad the bill finally levels the playing field between auto manufacturers and dealers in this state.

Kuipers said the law gives Colorado dealers the voice they haven’t had since this downsizing began.