It is enacted by the General Assembly as follows:

SECTION 1. Section 31-5.1-4 of the General Laws in Chapter 31-5.1 entitled "Regulation of Business Practices Among Motor Vehicle Manufacturers, Distributors and Dealers" is hereby amended to read as follows:

31-5.1-4. Violations -- (a) It shall be deemed a violation of this chapter for any manufacturer, or motor vehicle dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of the parties involved or to the public.

(b) It shall be deemed a violation of this chapter for a manufacturer, or officer, agent, or other representative thereof, to coerce, or attempt to coerce, any motor vehicle dealer:

(1) To order or accept delivery of any motor vehicle or vehicles, equipment, parts, or accessories therefor, or any other commodity or commodities which the motor vehicle dealer has not voluntarily ordered.

(2) To order or accept delivery of any motor vehicle with special features, accessories, or equipment not included in the list price of that motor vehicle as publicly advertised by the manufacturer thereof.

(3) To participate monetarily in an advertising campaign or contest, or to purchase any promotional materials, or training materials, showroom or other display decorations or materials at the expense of the new motor vehicle dealership.

(4) To enter into any agreement with the manufacturer or to do any other act prejudicial to the new motor vehicle dealer by threatening to terminate or cancel a franchise or any contractual agreement existing between the dealer and the manufacturer; except that this subsection is not intended to preclude the manufacturer or distributor from insisting on compliance with the reasonable terms or provisions of the franchise or other contractual agreement, and notice in good faith to any new motor vehicle dealer of the new motor vehicle dealer's violation of those terms or provisions shall not constitute a violation of the chapter.

(5) To refrain from participation in the management of, investment in, or acquisition of any other line of new motor vehicle or related products; provided, however, that this subsection does not apply unless the new motor vehicle dealer maintains a reasonable line of credit for each make or line of new motor vehicle, the new motor vehicle dealer remains in compliance with any reasonable facilities requirements of the manufacturer, and no change is made in the principal management of the new motor vehicle dealer.

(6) To prospectively assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from the liability to be imposed by this law or to require any controversy between a new motor vehicle dealer and a manufacturer, distributor, or representative to be referred to any person other than the duly constituted courts of this state or of the United States of America, or to the department of administration of this state, if that referral would be binding upon the new motor vehicle dealer.

(7) To order for any person any parts, accessories, equipment, machinery, tools or any commodities whatsoever.

(c) It shall be deemed a violation of this chapter for a manufacturer, or officer, agent, or other representative thereof:

(1) (i) To refuse to deliver in reasonable quantities and within a reasonable time after receipt of the dealer's order, to any motor vehicle dealer having a franchise or contractual arrangement for the retail sale of new motor vehicles sold or distributed by the manufacturer, any such motor vehicles as are covered by the franchise or contract, specifically publicly advertised by the manufacturer to be available for immediate delivery; provided, however, the failure to deliver any motor vehicle shall not be considered a violation of this chapter if that failure is due to an act of God, work stoppage or delay due to a strike or labor difficulty, shortage of materials, a freight embargo, or other cause over which the manufacturer, distributor, or wholesaler, or any agent thereof, shall have no control.

(ii) To refuse to deliver or otherwise deny to any motor vehicle dealer having a franchise or contractual arrangement for the retail sale of new motor vehicles sold or distributed by the manufacturer any particular new motor vehicle model made or distributed by the manufacturer under the name of the division of the manufacturer of which the dealer is an authorized franchise.

It shall be deemed a prima facie violation of this chapter for any automotive vehicle division manufacturer to require any separate franchise or contractual arrangement with any new motor vehicle dealer already a party to a franchise or contractual arrangement with that automotive vehicle division for the retail sale of any particular new motor vehicle model made or distributed by that division.

(2) To coerce, or attempt to coerce, any motor vehicle dealer to enter into any agreement with the manufacturer, or any officer, agent, or other representative thereof, or to do any other act prejudicial to the dealer, by threatening to cancel any franchise or any contractual agreement existing between the manufacturer and the dealer; provided, however, that notice in good faith to any motor vehicle dealer of the dealer's violation of any terms or provisions of the franchise or contractual agreement shall not constitute a violation of this chapter.

(3) To resort to or use any false or misleading advertisement in connection with his or her business as a manufacturer, an officer, agent, or other representative thereof.

(4) (i) To sell or lease any new motor vehicle to, or through, any new motor vehicle dealer at a lower actual price therefore than the actual price offered to any other new motor vehicle dealer for the same model vehicle similarly equipped or to utilize any device, including, but not limited to sales promotion plans or programs, which result in a lesser actual price; provided, however, that the provisions of this paragraph shall not apply to sales to a new motor vehicle dealer for resale to any unit of the United States government, or to the state or any of its political subdivisions.

(ii) To sell or lease any new motor vehicle to any person, except a manufacturer's employee, at a lower actual price therefor than the actual price offered and charged to a new motor vehicle dealer for the same model vehicle similarly equipped or to utilize any device which results in a lesser actual price; provided, however, that the provisions of this paragraph shall not apply to sales to a new motor vehicle dealer for resale to any unit of the United States government, or to the state or any of its political subdivisions.

(iii) To offer in connection with the sale of any new motor vehicle or new motor vehicles directly or indirectly to a fleet purchaser within or without this state terms, discounts, refunds, or other similar types of inducements to that purchaser without making the same offer or offers available to all of its new motor vehicles dealers in this state. No manufacturer may impose or enforce any restrictions against new motor vehicle dealers in this state or their leasing, rental, or fleet divisions or subsidiaries that are not imposed or enforced against any other direct or indirect purchaser from the manufacturer, provided, however, that the provisions of this paragraph shall not apply to sales to a new motor vehicle dealer for resale to any unit of the United States government, or to the state or any of its political subdivisions.

(5) To offer to sell or to sell parts or accessories to any new motor vehicle dealer for use in the dealer's own business for the purpose of repairing or replacing the same parts or accessories or a comparable part or accessory, at a lower actual price therefor than the actual price charged to any other new motor vehicle dealer for similar parts or accessories to use in the dealer's own business; provided, however, in those cases where new motor vehicle dealers operate or serve as wholesalers of parts and accessories to retail outlets nothing herein contained shall be construed to prevent a manufacturer, or any agent thereof, from selling to a new motor vehicle dealer who operates and services as a wholesaler of parts and accessories, such parts and accessories as may be ordered by that new motor vehicle dealer for resale to retail outlets, at a lower actual price than the actual price charged a new motor vehicle dealer who does not operate or serve as a wholesaler of parts and accessories.

(6) To prevent or attempt to prevent by contract or otherwise any new motor vehicle dealer from changing the capital structure of his or her dealership or the means by which or through which the dealer finances the operation of his or her dealership, provided the new motor vehicle dealer at all times meets any reasonable capital standards agreed to between the dealership and the manufacturer, and provided any change in the capital structure by the new motor vehicle dealer does not result in a change in the executive management control of the dealership.

(7) To prevent or attempt to prevent by contract or otherwise any new motor vehicle dealer or any officer, partner, or stockholder of any new motor vehicle dealer from selling or transferring any part of the interest of any of them to any other person or persons or party or parties; provided, however, that no dealer, officer, partner, or stockholder shall have the right to sell, transfer or assign the franchise or power of management or control thereunder without the consent of the manufacturer, except that that consent shall not be unreasonably withheld.

(8) To obtain money, goods, services, anything of value, or any other benefit from any other person with whom the new motor vehicle dealer does business, on account of or in relation to the transactions between the dealer and that other person, unless such benefit is promptly accounted for and transmitted to the new motor vehicle dealer.

(9) To compete with a new motor vehicle dealer operating under an agreement or franchise from the manufacturer in the relevant market area, that area to be determined exclusively by equitable principles; in the state of Rhode Island, through the ownership, operation, or control of any new motor vehicle dealers in this state or by participation in the ownership, operation, or control of any new motor vehicle dealer in this state; provided, however, that a manufacturer shall not be deemed to be competing when operating, controlling, or owning a dealership either temporarily for a reasonable period in any case not to exceed one year, which one (1) year period may be extended for a one-time additional period of up to six (6) months upon application to and approval by the motor vehicle dealers license and hearing board, which approval shall be subject to the manufacturer demonstrating the need for said extension, and with other new motor vehicle dealers of the same line making being given notice and an opportunity to be heard in connection with said application, or in a bona fide relationship in which an independent person had made a significant investment subject to loss in the dealership and can reasonably expect to acquire full ownership of the dealership on reasonable terms and conditions.

(10) To refuse to disclose to any new motor vehicle dealer, handling the same line make, the manner and mode of distribution of that line make within the relevant market area.

(11) To increase prices of new motor vehicles which the new motor vehicle dealer had ordered for private retail consumers prior to the new motor vehicle dealer's receipt of the written official price increase notification. A sales contract signed by a private retail consumer shall constitute evidence of an order provided that the vehicle is in fact delivered to that customer. In the event of manufacturer price reductions or cash rebates paid to the new motor vehicle dealer, the amount of any reduction or rebate received by a new motor vehicle dealer shall be passed on to the private retail consumer by the new motor vehicle dealer. Price reductions shall apply to all vehicles in the dealer's inventory which were subject to the price reduction. Price differences applicable to new model or series motor vehicles at the time of the introduction of new models or series shall not be considered a price increase or price decrease. Price changes caused by either:

(i) The addition to a motor vehicle of required or optional equipment; or

(ii) Revaluation of the United States dollar, in the case of foreign-make vehicles or components; or

(iii) An increase in transportation charges due to increased rates imposed by common carriers shall not be subject to the provisions of this subdivision.

(12) To release to any outside party, except under subpoena or as otherwise required by law or in an administrative, judicial, or arbitration proceeding involving the manufacturer or new motor vehicle dealer, any business, financial, or personal information which may be from time to time provided by the new motor vehicle dealer to the manufacturer, without the express written consent of the new motor vehicle dealer.

(13) To unfairly discriminate among its new motor vehicle dealers with respect to warranty reimbursement.

(14) To unreasonably withhold consent to the sale, transfer, or exchange of the franchise to a qualified buyer capable of being licensed as a new motor vehicle dealer in this state.

(15) To fail to respond in writing to a request for consent as specified in subsection (c)(14) above within sixty (60) days of the receipt of a written request on the forms, if any, generally utilized by the manufacturer or distributor for those purposes and containing the information required therein. The failure to respond shall be deemed to be a consent to the request.

(16) To unfairly prevent a new motor vehicle dealer from receiving fair and reasonable compensation for the value of the new motor vehicle dealership.

(17) To require that a new motor vehicle dealer execute a written franchise agreement that does not contain substantially the same provisions as the franchise agreement being offered to other new motor vehicle dealers handling the same line make. In no instance shall the term of any franchise agreement be of a duration of less than three (3) years.

(18) To require that a new motor vehicle dealer provide exclusive facilities, personnel, or display space.

(19) To require that a dealer expand facilities without a guarantee of a sufficient supply of new motor vehicles to justify that expansion or to require that a dealer expand facilities to a greater degree than is necessary to sell and service the number of vehicles that the dealer sold and serviced in the most recent calendar year.

(20) To prevent a dealer from adjusting his or her facilities to permit a relocation of office space, showroom space, and service facilities so long as the relocation is within 500 yards of the present location.

(21) To engage in any predatory practice against a new motor vehicle dealer.

(d) It shall be a violation of this chapter for a manufacturer to terminate, cancel, or fail to renew the franchise of a new motor vehicle dealer except as provided in this subsection:

(1) Notwithstanding the terms, provisions, or conditions of any franchise, whether entered into before or after the enactment of this chapter or any of its provisions, or notwithstanding the terms or provisions of any waiver, whether entered into before or after the enactment of this chapter or any of its provisions, no manufacturer shall cancel, terminate, or fail to renew any franchise with a licensed new motor vehicle dealer unless the manufacturer has:

(i) Satisfied the notice requirement of subsection (d)(4) herein; and

(ii) Has good cause for the cancellation, termination, or nonrenewal; and has not committed any violations set forth in subsection B of this section; and

(iii) Has acted in good faith as defined in this chapter and has complied with all provisions of this chapter.

(2) Notwithstanding the terms, provisions, or conditions of any franchise or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation, or nonrenewal when:

(i) There is a failure by the new motor vehicle dealer to comply with a provision of the franchise which provision is both reasonable and of material significance to the franchise relationship, provided that the dealer has been notified in writing of the failure within one hundred eighty (180) days after the manufacturer first acquired knowledge of that failure;

(ii) If the failure by the new motor vehicle dealer, defined in [subdivision] (i) hereinabove, relates to the performance of the new motor vehicle dealer in sales or service, then good cause shall be defined as the failure of the new motor vehicle dealer to comply with reasonable performance criteria established by the manufacturer if the new motor vehicle dealer was apprised by the manufacturer in writing of that failure; and

(A) This notification stated that notice was provided of failure of performance pursuant to subsection (d)(2)(i); and

(B) The new motor vehicle dealer was afforded a reasonable opportunity, for a period of not less than six (6) months, to comply with those criteria; and

(C) The new motor vehicle dealer did not demonstrate substantial progress towards compliance with the manufacturer's performance criteria during that period.

(3) The manufacturer shall have the burden of proof for showing that the notice requirements have been complied with, that there was good cause for the franchise termination, cancellation or nonrenewal, and that the manufacturer has acted in good faith.

(4) Notification of termination, cancellation, and nonrenewal.

(i) Notwithstanding the terms, provisions, or conditions of any franchise, prior to the termination, cancellation, or nonrenewal of any franchise, the manufacturer shall furnish notification of the termination, cancellation, or nonrenewal to the new motor vehicle dealer as follows:

(A) In the manner described in subsection (d)(4)(ii); and

(B) Not less than ninety (90) days prior to the effective date of the termination, cancellation, or nonrenewal; or

(C) Not less than fifteen (15) days prior to the effective date of such termination, cancellation, or nonrenewal for any of the following reasons;

(aa) Insolvency of the new motor vehicle dealer, or the filing of any petition by or against the new motor vehicle dealer under any bankruptcy or receivership law;

(bb) Failure of the new motor vehicle dealer to conduct his customary sales and service operations during his or her customary business hours for seven (7) consecutive business days;

(cc) Final conviction of the new motor vehicle dealer, or any owner or operator thereof, of a crime which is associated with or related to the operation of the dealership;

(dd) Revocation of any license which the new motor vehicle dealer is required to have to operate a dealership; or

(D) Not less than one hundred eighty (180) days prior to the effective date of the termination or cancellation where the manufacturer or distributor is discontinuing the sale of the product line.

(ii) Notification under this subsection shall be in writing, shall be by certified mail or personally delivered to the new motor vehicle dealer, and shall contain:

(A) A statement of intention to terminate, cancel, or not to renew the franchise; and

(B) A statement of the reasons for the termination, cancellation, or nonrenewal; and

(C) The date on which the termination, cancellation, or nonrenewal shall take effect.

(5) Payments.

(i) Upon the involuntary or voluntary termination, nonrenewal, or cancellation of any franchise, by either the manufacturer or the new motor vehicle dealer, notwithstanding the terms of any franchise whether entered into before or after the enactment of this chapter or any of its provisions, the new motor vehicle dealer shall be allowed fair and reasonable compensation by the manufacturer for the following:

(A) New motor vehicle inventory which has been acquired from the manufacturer;

(B) Supplies and parts which have been acquired from the manufacturer;

(C) Equipment and furnishings, provided the new motor vehicle dealer purchased them from the manufacturer or its approved sources; and

(D) Special tools.

The fair and reasonable compensation for the above shall in no instance be less than the acquisition price and shall be paid by the manufacturer within ninety (90) days of the effective date of the termination, cancellation, or nonrenewal, provided the new motor vehicle dealer has clear title to the inventory and other items and is in a position to convey that title to the manufacturer.

(ii) In the event the termination, cancellation or nonrenewal is involuntary and:

(1) The new motor vehicle dealer is leasing the dealership facilities from a lessor other than the manufacturer, the manufacturer shall pay the new motor vehicle dealer a sum equivalent to the rent for the unexpired term of the lease or one year's rent, whichever is less; or

(2) If the new motor vehicle dealer owns the facilities, the manufacturer shall pay the new motor vehicle dealer a sum equivalent to the reasonable rental value of the facilities for one year; if:

(3) The new motor vehicle dealer is unable to reasonably utilize the facilities for another purpose; and

(4) The new motor vehicle dealer, or the manufacturer acting as his agent, is unable to make arrangements for the cancellation or assumption of its lease obligations by another party in the case of leased facilities, or sell owned facilities, and

(5) Only to the extent those facilities were required as a condition of the franchise and used to conduct sales and service operations related to the franchise product.

(iii) In addition to any injunctive relief and any other damages allowable by this chapter, if the manufacturer fails to prove that there was good cause for the termination, cancellation, or nonrenewal or if the manufacturer fails to prove that the manufacturer acted in good faith, then the manufacturer shall pay the new motor vehicle dealer fair and reasonable compensation for the value of the dealership as an ongoing business.

(e) It shall be deemed a violation of this chapter for a motor vehicle dealer:

(1) To require a purchaser of a new motor vehicle, as a condition of the sale and delivery thereof, to also purchase special features, equipment, parts, or accessories not desired or requested by the purchaser; provided, however, that this prohibition shall not apply as to special features, equipment, parts, or accessories which are already installed on the car before sale by the dealer.

(2) To represent and sell as a new motor vehicle any motor vehicle which is a used motor vehicle.

(3) To resort to or use any false or misleading advertisement in connection with his or her business as a motor vehicle dealer.

(4) To engage in any deception or fraudulent practice in the repair of motor vehicles.

SECTION 2. This act shall take effect upon passage.