GM Proposes New Dealer Sales and Service Agreement

General Motors has proposed a new Dealer Sales and Service Agreement to take the place of the current Agreement which expires on October 31, 2025.  There is one change in the proposed new Agreement which is raising concern.  GM is proposing to eliminate the dealer’s ability to nominate a successor Dealer Operator.  

The right to obtain approval of a successor Dealer Operator is extremely important for planning purposes.  Obtaining approval of a proposed successor, provide the Dealer Operator and dealership owners with a level of certainty that if current Dealer Operator was no longer able to perform those duties, someone is waiting in the wings to take over this critical role.  If GM does not approve of a proposed successor, the Dealer Operator has time to correct any deficiencies in work experience, etc. to ultimately allow the proposed successor to obtain approval.

Dealers who do not want to sign a new Dealer Sales and Service Agreement with the successor Dealer Operator provisions removed, should consult experienced franchise legal counsel to determine their rights under state law.  Most states do not allow the existing Dealer Sales and Service Agreement to expire under its own terms but instead require that the existing Agreement remain in force until GM and the dealership come to terms on a new Agreement.  While other states have a timeframe within which a dealership must protest any proposed change to the Dealer Agreement.