WASHINGTON - Manufacturers and dealers are talking a lot these days about becoming better friends, but at a Senate hearing last week they differed sharply over a proposed ban on mandatory binding arbitration in franchise agreements.
Dealers want a ban passed. Carmakers oppose it.
Gene Fondren, president of the Texas Automobile Dealers Association, told a Senate subcommittee a carmaker has all of the leverage in a franchise agreement.
And a manufacturer 'may impose mandatory binding arbitration on an unwitting or unwilling dealer (to) circumvent state and federal law designed specifically to regulate the relationship,' he said.
Jill Lajdziak, vice president of sales, service and marketing for Saturn Corp., countered that Saturn and its retailers favor binding arbitration because they decided jointly 'to have problems resolved within the family' rather than in government agencies or the courts.
Members of Congress are getting more interested in the issue because of mounting complaints from constituents about mandatory binding arbitration clauses in financial and employment contracts.
The growing interest will cut both ways. A broader bill dealing with more than dealer franchise agreements would likely attract more support from lawmakers, especially Democrats. But it also would attract more lobbying opposition, especially from other types of businesses.
Tom Greene, COO for legislative affairs of the National Automobile Dealers Association, said after last week's hearing that the banking industry would deploy 'a large army of lobbyists' against a bill that would cover credit contracts.
NADA is on record saying it would not oppose a broader ban on mandatory binding arbitration, but it prefers its own bill on franchise agreements. Greene said he is cautiously optimistic Congress will act on the NADA-backed bill.