Change has come

[Gaspar]

Begin letter:


My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business.

We currently employ 50+ people and before the economic slowdown we employed over 70 local people. We are active in the community and the local chamber of commerce. We deal with several dozen local vendors on a day to day basis and many more during a month. All depend on our business for part of their livelihood. We are financially strong with great respect in the market place and community. We have strong local presence and stability.

I work every day the store is open, nine to ten hours a day. I know most of our customers and all our employees. Sunshine Dodge is my life.

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. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.

Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.

HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN?

THIS IS A PRIVATE BUSINESS NOT A GOVERNMENT ENTITY

This is beyond imagination! My business is being stolen from me through NO FAULT OF OUR OWN. We did NOTHING wrong.

This atrocity will most likely force my family into bankruptcy. This will also cause our 50+ employees to be unemployed. How will they provide for their families? This is a total economic disaster.

HOW CAN THIS HAPPEN IN A FREE MARKET ECONOMY IN THE UNITED STATES OF AMERICA?

I beseech your help, and look forward to your reply. Thank you.

Sincerely,

George C. Joseph
President & Owner
Sunshine Dodge-Isuzu

[waterboy]

I don't understand Gas. He signed contracts. He must have had lawyers explain his exposure and cpa's explain his chance to make profit or lose money. He mentions his potential losses like they are guaranteed and never mentions the larger profits he most likely made over those many years. When I worked for a large oil company we did the same thing to our retail outlets when we wanted them for QuikMarts. He bought a right to sell someone else's cars and is in a similar situation as a McDonalds franchisee who buys the right to sell that particular combination of cow and potatoes.

Now, like many other businesses he is getting screwed by a larger more predatory business. Isn't that how the food chain works? Capitalism at work? And what is the significance of exclaiming that he is a private business not a government entity? Would he have preferred the government to deny Chrysler the help that they asked for and have taken bankruptcy anyway? At least he had a shot and if he uses his years of experience may yet still succeed. I have seen more compelling stories passed off as whiners on this very forum.

Seriously, did I miss something here?

[Gaspar]

Not whining. 

Just thought it was a passionate letter and sign of the times. 

More to come.

[waterboy]

You're not whining, he was. But yes, seems like more of this on the way. I no longer hear the chants of "yeah, but Tulsa isn't getting hit so hard". We may be pulling our head slightly out of the sand. I have much compassion for, but little patience with, those who think somehow they didn't do anything wrong and bad people or politics ruined them. Taking responsibility and adapting is good business.

[Cats Cats Cats]

"yeah, but Tulsa isn't getting hit so hard".

Yeah,  the crap jobs around here take a while to get hit.  I do not believe closing some of the dealers was the governments idea.  I am not quite sure how having more dealers effects their profits but I believe it to be the car companies not the government making this decision.  Any company you do business can stop doing business with you if they do not have a contract to do so.  The part that makes this a crappy situation is the fact that in theory you were making them money and marketing their product.

[Gaspar]

Apparently this guy had a successful dealership and made some difficult decisions on staff and inventory when the market shrunk.  Of course we don't know the whole story.

I have always found that messing with free market systems always increases market dynamics and complexity, ultimately ending in the destruction of that market.  I hope that the government can find the will to pull back at some point, but I fear that is not in the cards.

Had Chrysler continued to show dismal numbers and poor sales with no promise of government bailout or warranty, dealers would have naturally expanded or weighed their offerings towards other product lines.  This guy may have had the option to increase his foreign inventory or scale back his Chrysler line.  Granted, if he was smart he would have made arrangements to liquidate his inventory and get out of his franchise agreement the moment he heard of government intervention, but that's hindsight and future precedent now.

Let me put it this way, if you own a Widget store and you hear that the Widget manufacturer is destined for bankruptcy, wouldn't you look into other business options?  If you hear that the government will be propping up the Widget company because it is IMPERATIVE, for the sake of the US economy, that the Widget industry survive, you would feel fairly secure in your Widget offering?

[waterboy]

You are anxious to direct this failure as the government's meddling in a market. The government props up a lot of industries either through grants, tax treatments, protectionism etc. Including his industry. This is the second time his franchisor was on the ropes and meddling last time worked, so it isn't as though he hadn't seen it before. He got suckerpunched. Happens.

I would think that just like the oil business or the construction trades, you save as much as possible during the good times and attempt to weather the bad times. And always have an escape plan ready.

[Conan71]

Yeah,  the crap jobs around here take a while to get hit.  I do not believe closing some of the dealers was the governments idea.  I am not quite sure how having more dealers effects their profits but I believe it to be the car companies not the government making this decision.  Any company you do business can stop doing business with you if they do not have a contract to do so.  The part that makes this a crappy situation is the fact that in theory you were making them money and marketing their product.

Bankruptcy court, which is a federal court does have a say in on-going operations in a bankruptcy proceeding.  I've not found anything yet to suggest that the government mandated these closings.  However, I do believe a bankruptcy judge would have the power to force closings if he deemed it in the best interest of creditors and the reorganization plan.

http://www.cnn.com/2009/LIVING/wayoflife/05/20/aa.dealer.closing.info/

Sen. Bob Corker of Tennessee seems to think the gov't is behind the closings:

http://www.timesnews.net/article.php?id=9013839

[Conan71]

Honestly, the original letter started out to read like one of those pigeon-drop letters from Nigeria: "Dear sirs I am Mrs. Mutimba Kimbe...."

Let's operate under the assumption that this dealership was still operating quite profitably.  This has been your life's work, you grew up in the business, have been a loyal franchisee over the years and have moved lots of product and parts.  Suddenly the rug is pulled out from under you in favor of transferring your inventory and business to a larger automotive group ten miles down the road and you have ZERO recourse.  This is not what people work their butts off for.  If this dealership was a constant money-drain or wasn't keeping up with covenants in their agreement with Chrysler, sure expect to be shut down and don't whine about it.  They did millions in Chrysler-mandated updates to their dealership which has left him holding a huge debt that it sounds like he can't re-pay without the cash-flow and profits of an on-going business.  It's kind of hard for me to accept: "Oh well, just another stupid capitalist, he should have known this day was coming."

We don't know the entire back-story of why this store was targeted for closure.  They may have been out of trust on their floorplan, might have had unusually high warranty-claims which would indicate fraud.  The guy might be a total drunken doosh, who knows?  My advice to him would be buck up, find a viable franchise opportunity with a domestic or foreign competitor of Chrysler and sell circles around them.

Putting some faces on it:

http://www.sunshinedodgeisuzu.com/staff.html

[guido911]

And here comes the inevitable lawsuits..

http://www.detnews.com/article/20090521/AUTO01/905210367

[TheTed]

Putting some faces on it:

http://www.sunshinedodgeisuzu.com/staff.html

Off topic, but I think Mr. Tiger Trainer is in the wrong line of work.

[custosnox]

just looked over the employee page, and just trying to figure out what an "architect pro" is at a car dealership.... I'm guessing a fancy way to say "the janitor"

[Gaspar]

I wonder how long it will take for the media to go all "Joe The Plumber" on these folks?

5. . .4. . .3. . .2. . .1

[guido911]

I wonder how long it will take for the media to go all "Joe The Plumber" on these folks?

5. . .4. . .3. . .2. . .1

I don't know about the media JTP-ing this guy, but it didn't take H2 long to start the process. Of course, I am just loving seeing these car folks, victims of careless car builders and the UAW, having their chickens coming home to roost.  These people are experiencing change they can believe in.

[waterboy]

I started a process? I'm so proud.

Listen, I just wanted to point out that he was a franchisee. It really isn't so important whether he was a good franchisee or a drunken lout. He purchased a right to sell someone else's cars. He is dispensable. When that franchisor decides he is either out of contract or the dealership would be better off as a bowling alley, based on their agreement, they have that right.

To go back to my original comparison with oil company practices, we terminated the contracts of jobbers/dealers who had been loyal to our brand, profitable and served their community for decades without so much as a thanks. Their thanks was the ability to sell name brand products, nationally advertised, refined and delivered at a profit for decades. We wanted to try a new marketing concept which turns out to have been the way most fuel is marketed today. If they didn't vacate their properties, which they had been responsible for upgrading and maintaining....then we cut off their product. It was easier with the corporate owned stations, for the others it was merciless but they always knew we could and would do so with little notice.

I do agree that the auto industry has been negligent. Government has been their enabler in many respects.