Section 747 · Reference · TFR-2026-03

Section 747: who qualified, what the clock was, and what winning was worth

First published 2026-08-05 · Last substantively revised 2026-08-05

Congress did not restore the dealerships that General Motors and Chrysler cut in 2009. It gave a defined set of them a hearing. Section 747 of the Consolidated Appropriations Act, 2010 made 2,789 dealerships eligible to demand binding arbitration. 1,575 filed, 166 reached a written determination, and 55 of those went the dealership’s way. A dealership that won received a letter of intent, not a franchise, and the statute forbade the arbitrator from awarding money to anybody. The program opened and closed inside seven months; the litigation over what a win was worth ran another fourteen years.

¶Section 747 is not long. It occupies four pages of the Statutes at Large — 123 Stat. 3219 to 3222 — inside a $1.1 trillion appropriations act, in seven lettered subsections.1 Nearly everything said about it in general circulation can be checked against those four pages in an afternoon, and much of it does not survive the check.

¶What follows is the section read subsection by subsection, with the numbers the program produced set beside it. The bills that would have restored the franchise agreements themselves — S. 1304 and H.R. 2743 — died in committee. This is what passed instead.

§1 Who was covered: subsection (a)

¶Subsection (a) decides who could use the section, in two definitions.

¶A covered manufacturer is an automobile manufacturer in which the United States government held an ownership interest, or to which the government had provided financial assistance under Title I of the Emergency Economic Stabilization Act of 2008. Then comes the clause that made the section work at all: it also means an automobile manufacturer “which acquired more than half of the assets of an automobile manufacturer” in that first category.1 The entities that had terminated the dealerships were the old General Motors and the old Chrysler; the entities still selling cars in December 2009 were the buyers. Without the acquirer clause the section would have run against two estates in bankruptcy and reached nobody who could reinstate anyone.

¶A covered dealership is one that held a franchise agreement with such a manufacturer “in effect as of October 3, 2008” — the day the Emergency Economic Stabilization Act was signed — where that agreement was terminated, not assigned in its October 3, 2008 form, not renewed, or not continued during the period beginning October 3, 2008 and ending December 31, 2010.1

¶The anchor date is doing something specific. It is not the date of either bankruptcy filing; it is the date the bailout statute was signed, which ties eligibility to the moment federal money entered the industry rather than to the moment any particular franchise ended. A dealership that lost its franchise in 2007, for any reason, was outside the section, and so was one terminated after December 31, 2010.

§2 What the right actually was: subsection (b)

¶Subsection (b) is the operative grant. It is one sentence with a condition in front of it: a covered dealership “that was not lawfully terminated under applicable State law on or before April 29, 2009, shall have the right to seek, through binding arbitration, continuation, or reinstatement of a franchise agreement, or to be added as a franchisee to the dealer network of the covered manufacturer in the geographical area where the covered dealership was located when its franchise agreement was terminated.”1

¶Three limits are visible before any procedure starts. The right is a right to seek, not to receive. It is exercised through arbitration and nowhere else. And it is geographically fixed: a dealership could ask to be put back where it had been, not somewhere better.

¶The April 29, 2009 cutoff excludes dealerships already lawfully terminated under state franchise law before Chrysler filed for Chapter 11 on April 30. A second sentence limits any continuation, reinstatement or addition to brands the manufacturer still owned and manufactured when the arbitration commenced, and only where the dealership had carried that brand at termination — which left dealerships in the discontinued brands seeking the right to sell cars that had stopped existing.

§3 The clock: subsections (c) and (d)

¶Every deadline in Section 747 runs from enactment, December 16, 2009. There are four, and together they are why the program finished so quickly.

¶Thirty days for the manufacturer to give each covered dealership a summary of the rights the section conferred and “the specific criteria pursuant to which such dealer was terminated, was not renewed, or was not assumed and assigned to a covered manufacturer.”1 That duty, in subsection (c), is the most demanding thing the section asked of anyone: each manufacturer had to state in writing, dealership by dealership, the basis on which it had cut that dealership — roughly a year after the fact.

¶Forty days for the dealership to elect arbitration. The Special Inspector General for the Troubled Asset Relief Program records the election deadline as January 25, 2010; a dealership that missed it lost the right.3

¶One hundred and eighty days for the case to be submitted to the arbitrator, with authority for the arbitrator to extend the periods in the subsection by up to 30 days for good cause.1 SIGTARP records the submission deadline as June 15, 2010 and notes that it was extended the full 30 days, to July 15, 2010.3 The chronology appended to the AAA’s report gives June 14 and July 14; neither document explains the one-day difference.2

¶Seven business days after the arbitrator determined that a case had been fully submitted, for the written determination to issue. The statute specified what had to be in it: a description of the dealership, a clear statement of whether the franchise agreement was to be renewed, continued, assigned or assumed, the key facts relied on, and an explanation of how the balance of economic interests supported the result.1

¶The AAA reports the first determinations rendered in mid-April 2010, four months after enactment, and all 1,575 cases completed by July 23, 2010.2

§4 What the arbitrator had to weigh: subsection (d)

¶Subsection (d) sets the standard, and it is not the good-cause standard state franchise statutes use. The arbitrator was directed to “balance the economic interest of the covered dealership, the economic interest of the covered manufacturer, and the economic interest of the public at large” and to decide, on that balance, whether the dealership should be added to the manufacturer’s network.1

¶Seven factors were mandatory, and the list is a floor rather than a ceiling: the factors considered “shall include” them.

The statutory factors, P.L. 111-117 §747(d)

#	Factor
1	The dealership’s profitability in 2006, 2007, 2008 and 2009.
2	The covered manufacturer’s overall business plan.
3	The dealership’s current economic viability.
4	Its satisfaction of the performance objectives established under the franchise agreement.
5	The demographic and geographic characteristics of its market territory.
6	“The covered dealership’s performance in relation to the criteria used by the covered manufacturer to terminate, not renew, not assume or not assign the covered dealership’s franchise agreement.”
7	The length of experience of the dealership.

¶Factor six is the hinge between subsection (c) and the hearing: the manufacturer had to disclose the criteria it used, and the arbitrator then had to weigh the dealership’s performance against them.

¶“The covered manufacturer’s overall business plan” and “the economic interest of the public at large” sit in the same balance as the dealership’s own profitability. A dealership could therefore be profitable, experienced, well sited and in compliance with its performance objectives and still lose, if the arbitrator concluded the network plan and the public interest weighed the other way. That is a materially different question from whether the manufacturer had good cause to terminate it, which is what state franchise statutes ask.

§5 The limits: subsection (e)

¶Subsection (e) is where the section stops being what most summaries say it is. It is a single paragraph carrying five restrictions.

¶No money, to anybody, in any case.

The arbitrator shall not award compensatory, punitive, or exemplary damages to any party. P.L. 111-117 §747(e), 123 Stat. 3221

¶No exception, no threshold, no bad-faith carve-out. However a termination had been handled, the arbitrator had no authority to put a price on it.

¶The remedy for winning is a letter. If the arbitrator found for a dealership, the manufacturer had to provide, no later than seven business days after receiving the determination, “a customary and usual letter of intent to enter into a sales and service agreement.” Not an agreement: a letter of intent to enter into one, conditioned on completing the operational prerequisites set out in it.1

¶A winner had to hand the termination money back. After executing the agreement and completing those prerequisites, the dealership “shall return to the covered manufacturer any financial compensation” it had received for the original termination. General Motors had paid $587 million in wind-down compensation across its network;3 a dealership that won and reopened gave its share back.

¶No depositions, and documentary discovery only. “There will be no depositions in the proceedings, and discovery shall be limited to requests for documents specific to the covered dealership.”1 A dealership could not depose the people who built the termination lists, nor compel the comparative data showing how others in its region had been treated — the evidence factor six invites and the proceeding could not produce.

¶The parties split the cost of the forum. Each side bore its own expenses, fees and costs, and the parties “shall share equally all other costs associated with the arbitration, such as arbitrator fees, meeting room charges, and administrative costs.”1 A single-store dealership paid half the arbitrator’s bill against a manufacturer’s counsel; the AAA reports 18 percent of dealerships appeared without attorneys.2

¶Subsection (e) also fixes the forum: arbitrators came from the AAA regional list, by mutual agreement or by the AAA if the parties could not agree, and the hearing was held in the dealership’s own state. The AAA reports mobilizing nearly 350 arbitrators.2

§6 The two subsections at the end: (f) and (g)

¶Subsection (f) provides that a legally binding agreement resulting from a voluntary negotiation between manufacturer and dealership is not inconsistent with the section, and that a dealership party to such an agreement “shall forfeit the right to arbitration established by this provision.”1 Settlement was therefore final and statutorily blessed, which is why the settlement figure below is not a footnote to the outcome. It is most of the outcome.

¶Subsection (g) is one sentence, and it gives the whole section its shape.

Notwithstanding the requirements of this provision, nothing herein shall prevent a covered manufacturer from lawfully terminating a covered dealership in accordance with applicable State law. P.L. 111-117 §747(g), 123 Stat. 3222

¶Section 747 restored no franchise and changed no state franchise law going forward. It created a one-time federal proceeding to reconsider a defined set of past terminations, and left the ordinary state-law route to termination where it found it.

§7 The three-subsections problem

¶Set the operative subsections beside each other and they describe different things.

What each subsection says the proceeding is about

Subsection	What it names
(b)	a right to seek “continuation, or reinstatement of a franchise agreement, or to be added as a franchisee”
(d)	the arbitrator “shall decide … whether or not the covered dealership should be added to the dealer network of the covered manufacturer”
(d)	the written determination shall state “whether the franchise agreement at issue is to be renewed, continued, assigned or assumed by the covered manufacturer”
(e)	the manufacturer shall provide “a customary and usual letter of intent to enter into a sales and service agreement”

¶The promise is reinstatement of an agreement. The question put to the arbitrator is addition to a network. The determination must state whether an agreement is renewed or assumed. What a winner receives is a letter of intent. Four formulations in one section, and nothing in it reconciling them.

¶That gap was litigated to the Sixth Circuit, which in Chrysler Group LLC v. Fox Hills Motor Sales, Inc. resolved it against the dealerships on the central point.

▪ Decided · 776 F.3d 411 · 6th Cir. · Nos. 13-2117/2118/2119 · 2015-01-16

The district court properly concluded that § 747 does not entitle prevailing dealers to unconditional “reinstatement,” but requires only that Chrysler issue the typical letter of intent, legally enforceable as a contract entered into in good faith. Chrysler Grp. LLC v. Fox Hills Motor Sales, Inc., 776 F.3d 411 (6th Cir. 2015)4

¶The court read subsections (b) and (d) as implying only “that the remedy should meaningfully facilitate incorporation of prevailing dealerships back into the network,” and held the letter of intent to be “the sole remedy provided for a prevailing dealer under § 747.”4 It did not leave manufacturers free to draft that letter however they liked: a genuine letter of intent “may not contain provisions that are unreasonably onerous or that grant Chrysler broad discretion to back out.” On that ground the court reversed as to one provision in one letter, a site-approval clause letting the manufacturer veto the location a dealership had already been operating from profitably, which could render the promise of a dealership “merely illusory.”4

¶The same opinion held that Michigan’s and Nevada’s dealer protest laws — state statutes letting established dealers object to a new dealership nearby — “frustrate Congress’s purpose in enacting § 747 because they permit state officials to delay and possibly nullify the effect of federal arbitration,” and were preempted.4 State dealer-protection law had been preempted in 2009 so a manufacturer could shed 789 dealer agreements in bankruptcy; in 2015 it was preempted again, in the opposite direction, so arbitration winners could get back in over their neighbors’ objections. Same doctrine, opposite beneficiaries, six years apart.

§8 What the program produced

¶The AAA administered the program and reported to Congress on it in November 2010. Its final tally:

Automobile Industry Special Binding Arbitration Program: final dispositions, AAA report to Congress, November 2010

Disposition	Cases	Share of filings
Eligible dealerships	2,789	—
Cases filed	1,575	100%
Settled	803	50.9%
Withdrawn	493	31.3%
Administratively closed	113	7.2%
Arbitral determinations	166	10.5%
— for the manufacturer	111	7.0%
— for the dealership	55	3.5%

¶The 2,789 eligible dealerships were 2,000 from General Motors’ network and 789 from Chrysler’s; the 1,575 filings were 1,180 and 395 respectively, from 48 states. Fifty-five determinations for dealerships is 3.5 percent of the cases filed and 2.0 percent of everyone Congress made eligible.2

§9 Two counterweights the record supports

¶Settlement was the design, not the failure. Subsection (f) gave voluntary agreements binding force and extinguished the arbitration claim on signature, and the AAA’s account is that the credible prospect of a binding determination is what produced the settlements. 803 of them is more than half of everything filed, so reading 55 as the program’s entire output understates it — and nobody outside the parties knows by how much, because the terms are not public. The AAA says so itself.

The Association is unable to quantify exactly how many dealerships were reinstated as a result of all phases of the program. While the AAA does have access to the arbitral decisions, it did not have authority to require parties to disclose the details of any settlements. AAA, Report to Congress, November 2010, p. 182

¶And 1,214 eligible dealerships never filed at all. That is 44 percent of everyone the section covered, declining a proceeding that would cost them half an arbitrator’s fee and could award them nothing. Another 493 filed and withdrew. No source located for this page explains either group, and the AAA states plainly that it cannot explain the second: parties need not give a reason for withdrawing, so “the Association is unable to provide data or analyze withdrawals in any detail.”2 Why 1,707 covered dealerships did not see the program through is, on the public record, unknown.

¶A third route out sat outside the determinations altogether, and the two accounts of it do not match. SIGTARP records that General Motors announced letters of intent to 666 dealerships that had filed on March 5, 2010, and that Chrysler offered 50 on March 26; the AAA’s chronology, labelled as adapted from the Associated Press, gives 661 and 80 for the same two dates.32 Both are recorded here because neither can be checked against the other.

§10 Still open

¶Nothing in Section 747 is open to a dealership in 2026. The election window closed on January 25, 2010, every case filed was completed by July 23, 2010, and the section created no continuing mechanism and no successor program.2 A reader who arrives here to find out whether a dealership terminated in 2009 can still claim something under this statute has a plain answer, and it is no.

¶What remains open is the meaning of what the section did. Section 747 has never been repealed and courts are still construing it. Fourteen years after the arbitrations, a dispute traceable directly to one of them was still in an appellate court: a dealership won its Section 747 arbitration in June 2010, received its letter of intent on October 1, 2010, drew a protest from a competing dealership that December, and the Ohio Ninth District Court of Appeals decided the resulting appeal and cross-appeal on September 4, 2024.5

▪ Decided · 2024-Ohio-3394 · Ohio Ct. App., 9th Dist. · C.A. Nos. 30624, 30643 · 2024-09-04

¶A seven-month federal program has produced fourteen years of litigation about what its remedy was worth, which is a fair measure of what those four pages left undone.

¶The larger question the section did not touch is the one still being litigated. Section 747 reconsidered terminations that had already happened, and subsection (g) preserved the ordinary state-law route to ending a franchise. The live fight in 2026 is not about ending franchises at all but about manufacturers selling around them, which is a question for state franchise statutes and not for anything in Public Law 111-117.

The documents

Endnotes

1. Consolidated Appropriations Act, 2010, Pub. L. No. 111-117, § 747, 123 Stat. 3219–3222 (Dec. 16, 2009), as enrolled. All quotations of the statute on this page are from this text. govinfo.gov
2. American Arbitration Association, A Report to Congress on the Automobile Industry Special Binding Arbitration Program, November 2010 — case counts at the executive summary (p. 6) and Appendix II; filings by network and state at p. 15; arbitrator numbers, self-representation and program completion at pp. 13–18; chronology at p. 22. icdr.org
3. Office of the Special Inspector General for the Troubled Asset Relief Program, Factors Affecting the Decisions of General Motors and Chrysler to Reduce Their Dealership Networks, SIGTARP-10-008, July 19, 2010 — arbitration deadlines, filing counts and the March 2010 reinstatement offers at pp. 23–24; wind-down compensation at p. 21. The sigtarp.gov site is offline; this is an archived copy of the original PDF. web.archive.org
4. Chrysler Group LLC v. Fox Hills Motor Sales, Inc., 776 F.3d 411 (6th Cir. Jan. 16, 2015), Nos. 13-2117/2118/2119 — the letter-of-intent holding at slip op. 13–14, preemption of the Michigan and Nevada protest laws at 14–16, and the letter-of-intent terms and the site-approval provision at 26–27. opn.ca6.uscourts.gov
5. Spitzer Autoworld Akron, L.L.C. v. Fred Martin Motor Co., 2024-Ohio-3394 (Ohio Ct. App., 9th Dist., Sept. 4, 2024), C.A. Nos. 30624 and 30643, ¶¶ 11–16 — the arbitration, the October 1, 2010 letter of intent and the December 2010 protest. supremecourt.ohio.gov

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