British Mercedes-Benz dealers have won a partial victory in their fight against the termination of their franchise agreements, the Daily Telegraph reported in its online edition today.
DaimlerChrysler UK wants to reduce its Mercedes network from 138 stand-alone dealers to 35 regional centres and has issued notices terminating dealers’ franchises from December, the newspaper said.
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However, dealers claimed this broke a two-year notice period in their franchise agreement and began legal action.
Now, in what the Daily Telegraph says will be seen as a climb-down, D-C has agreed to let dealers stay in business until as late as June 2003 and will offer them a ‘territory release payment’ (read ‘compensation’) of one or two years’ profits, according to whether they stop trading in June 2002, December 2002 or June 2003.
The newspaper says dealers will also be able to choose to have their compensation based on last year’s profits or the previous year’s.
The Daily Telegraph added that the deal would mean DaimlerChrysler UK paying more for the key regional centres in London, Manchester and Birmingham and that its dealer restructuring would be delayed longer than planned.
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