George McGuire, the owner of Shakopee Chevrolet, fought for his dealership in arbitration with GM. It was a long and expensive process.
NEW YORK (CNNMoney.com) -- When Chrysler and GM filed for bankruptcy in 2009 they planned to shutter thousands of dealerships across the country. Fewer than one third of the dealers who hoped to stay in business are in the running for a comeback.
Dealers facing closure were hopeful about holding onto their businesses after President Obama signed a law last summer that allowed them to plead their case through arbitration.
Yet only about 800 of the 2,800 axed businesses are on track for a second life, according to preliminary data from GM and Chrysler.
The majority of those getting another chance were invited back if they met certain manufacturer requirements, such as access to financing, adequate cash reserves, an approved location, and an acceptable shop.
Many were bought out by the automakers in lieu of arbitrating. Of the 170 dealerships that arbitrated only one third won.
GM dealers fight back: George McGuire, owner of Shakopee Chevrolet, in Shakopee, Minn., is one of the few dealers that prevailed through arbitration. McGuire, who'd managed the dealership since 1996, bought it in 2000.
Last year he was told that GM wanted to cut his dealership.
"It was panic -- this is my entire life," said McGuire, a father of three. "I don't have another dealership, I don't have another business."
McGuire has 35 employees, many of whom are long time union technicians. "They can't just unplug and go get a job somewhere else," said McGuire. "I had paid all their pensions up to that time. What would happen to their retirement? It was a really frightening situation." McGuire arbitrated, but it was a lot of work and it was "massively expensive."
Two weeks following arbitration McGuire got a letter giving him the good news. Although he said his ordeal was overwhelming, none of his employees ditched him during the tough times. Rather, he noticed they were working even harder. "I am still in awe of that today. It is a very humbling thing as an owner," said McGuire.
There are 725 GM dealers with a chance to win their dealership back. But being invited back doesn't guarantee reinstatement. Many are currently working to meet GM's conditions. GM said it expects the majority of those being brought back will meet necessary conditions.
The automaker said that its slimmer dealer network will result in more traffic and more profit for each dealer. GM will have a final dealer tally on Nov. 1.
Chrysler dealers run into trouble: Chrysler brought down the ax hard and fast. When 789 dealers got termination notices, they had just 30 days before they had to stop selling new Chryslers. Many were able to stay in business selling used cars, or new cars by other manufacturers.
418 of the terminated dealers wanted to be reinstated. Today, only a little bit over 60 have a chance of being brought back into the fold. It's now been over a year since they were selling new Chryslers.
To come back as a new franchise, Chrysler dealers have to meet manufacturer requirements. But some Chrysler dealers, even those that have won their arbitration cases, have had a hard time meeting those conditions.
Just last week, three dealerships that won their arbitration filed a lawsuit in New York against Chrysler for "unduly onerous" conditions imposed by the automaker. "Chrysler's letter of intent is not a customary and usual letter of intent but is drafted solely to defeat the reinstatement of plaintiffs to the Chrysler dealer network," the lawsuit says.
Chrysler says that it has complied fully with the federal dealer arbitration law.
Chrysler says that trimming its dealer headcount is better for the remaining dealers.
Some Chrysler dealers found the legal fees prohibitively expensive. Yale King was one of three partners in a dual GM and Chrysler dealership in Longmont, Colo., that got hit by both manufacturers.
King was a charter member of the Committee to Restore Dealer Rights, which led the effort to get the legislation passed that allowed dealers to arbitrate.
Although King planned to arbitrate with Chrysler, he never got his chance. The Jeep franchise he was fighting for was awarded to a nearby dealership. "We never made it to arbitration because what do you arbitrate? They had awarded the franchise to the dealer down the street."
King tried to fight for his dealership, but after a protracted battle that got all the way to the State Senate, his attorneys warned him the litigation was going to drag on for years and cost hundreds of thousands of dollars more in fees.
"I couldn't compete anymore with a company propped up by the US government. I am a little guy," said King. 
How does a florist sell more in this economy? We changed our business to designing weddings and events only, as the everyday flowers are not selling. We had to throw out too much product at the end of the week -- flowers are perishable! More
| Overnight Avg Rate | Latest | Change | Last Week |
|---|---|---|---|
| 30 yr fixed | 3.80% | 3.88% | |
| 15 yr fixed | 3.20% | 3.23% | |
| 5/1 ARM | 3.84% | 3.88% | |
| 30 yr refi | 3.82% | 3.93% | |
| 15 yr refi | 3.20% | 3.23% |
Today's featured rates:
|
Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More |
Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More |
Honda and General Motors are creating a new generation of fully autonomous vehicles. More |
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More |
Whether you hedge inflation or look for a return that outpaces inflation, here's how to prepare. More |
