Chrysler dealers fire back at proposed franchise rejections

Just a couple weeks into the nascent Fiat-Chrysler partnership, trouble is already brewing. The American carmaker's 3,188 dealers, upon hearing that 789 of their number will be let go by June 6, banded together to prepare for a legal fight.

The dealers are contesting Chrysler's incredibly short notice - just under a month - in closing down so many franchises. In most states, the company would have to give enough time for the dealers to properly wind down their business and close out their obligations. But Chrysler is arguing that due to its bankruptcy, it need not comply with those rules, reports the Detroit Free Press.

The decision to cut back its dealer network is a necessary one if Chrysler is to bring its retail presence in line with its newly-shrunken market presence and the smaller overall market itself. Obviously dealers don't like the news, but the reality of Chrysler's situation has already cost thousands of jobs.

To protect the dealer interests, however, a committee was formed and in cooperation with the National Automobile Dealers Association (NADA), the group sent a letter to all Chrysler dealers asking them to pitch in $4,000 each to generate a legal fund. If every dealer were to contribute, that would total $12.75 million. All protests to the list of rejected dealers must be made by May 26, with court arguments to start up June 3.

The preliminary list of dealers to be cut and kept was revealed last Thursday as part of the ongoing bankruptcy proceedings. That list is only a tentative list, however. Final word won't come until June, once the new company is formed and Fiat makes the ultimate decision on which dealers will stay and which will join the new Fiat-Chrysler alliance.