State laws prevent manufacturers from closing a dealership without the dealer's permission unless they pay back the entire franchise fee, which forces GM to keep manufacturing unprofitable lines (like Pontiac) because stopping production would trigger massive franchise-fee repayments to dealers nationwide.

causalpending

Speaker

Michael Munger

Evidence Quote

suppose your General Motors and you have Plymouth or Pontiac a line that's not doing very well you can't close it you have to keep manufacturing at a loss

Source

Michael Munger on Franchising, Vertical Integration, and the Auto Industry 06/22/2009EconTalk
Created: 6/17/2026, 10:31:26 AM

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