Chapter 227
2009 -- S 0853 SUBSTITUTE A
Enacted 11/09/09
A N A C T
RELATING TO
MOTOR AND OTHER VEHICLES -- REGULATION OF BUSINESS PRACTICES AMONG MOTOR
VEHICLE MANUFACTURERS, DISTRIBUTORS, AND DEALERS
Introduced By: Senators Ruggerio, Maselli, DaPonte, Doyle, and Ciccone
Date Introduced: April 22, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Sections 31-5.1-1, 31-5.1-2, 31-5.1-3, 31-5.1-4
and 31-5.1-21 of the
General Laws in Chapter
31-5.1 entitled "Regulation of Business Practices Among
Motor
Vehicle Manufacturers,
Distributors, and Dealers" are hereby amended to read as follows:
31-5.1-1.
Definitions. -- The following words and phrases,
for the purposes of this
chapter, have the following meanings:
(1) "Designated
family member" means the spouse, child, grandchild, parent, brother, or
sister of the owner of a new motor vehicle dealership who,
in the case of the owner's death, is
entitled to inherit the ownership interest in the new motor
vehicle dealership under the terms of
the owner's will, or who has been nominated in any other
written instrument, or who, in the case
of an incapacitated owner of a new motor vehicle
dealership, has been appointed by a court as the
legal representative of the new motor vehicle dealer's
property.
(2)
"Distributor" means any person, firm, association, corporation, or
trust, resident or
nonresident, who in whole or in part offers for sale, sells, or
distributes any new motor vehicle to
new motor vehicle dealers, who maintains factory
representatives or who controls any person,
firm, association, corporation or trust, resident or
nonresident, who in whole or in part offers for
sale, sells or distributes any new motor vehicle to new motor
vehicle dealers.
(3) "Established
place of business" means a permanent, commercial building located
within this state, easily accessible and open to the public
at all reasonable times, and at which the
business of a new motor vehicle dealer, including the display
and repair of vehicles, may be
lawfully carried on in accordance with the terms of all
applicable building codes, zoning, and
other land-use regulatory ordinances.
(4) "Factory
branch" means a branch office maintained by a manufacturer for the
purpose of selling, or offering for sale, vehicles to a
distributor or new motor vehicle dealer, or
for directing or supervising in whole or in part factory
or distributor representatives.
(5)
"Franchise" means the agreement or contract between any new motor
vehicle
manufacturer, written or otherwise, and any new motor vehicle
dealer which purports to fix the
legal rights and liabilities of the parties to that
agreement or contract, and pursuant to which the
dealer purchases and resells the franchise product or leases
or rents the dealership premises.
(6) "Fraud"
includes, in addition to its normal legal connotation, the following: a
misrepresentation in any manner, whether intentionally false or due to
gross negligence, of a
material fact; a promise or representation not made honestly
and in good faith; and an intentional
failure to disclose a material fact.
(7) "Good
faith" means honesty in fact and the observation of reasonable commercial
standards of fair dealing in the trade as defined and
interpreted in section 6A-2-103(1)(b).
(8)
"Manufacturer" means any person, partnership, firm, association,
corporation, or
trust, resident or nonresident, who manufactures or
assembles new motor vehicles, or imports for
distribution through distributors of motor vehicles, or any
partnership, firm, association, joint
venture, corporation, or trust, resident or nonresident,
which is controlled by the manufacturer.
(9) "Motor
vehicle" means every vehicle intended primarily for use and operation on
the
public highways which is self-propelled, not including farm
tractors and other machines and tools
used in the production, harvesting, and care of farm
products.
(10) "New motor
vehicle" means a vehicle which has been sold to a new motor vehicle
dealer and which has not been used for other than
demonstration purposes and on which the
original title has not been issued from the new motor vehicle
dealer. The term “motor vehicle”
also includes any engine, transmission, or rear axle,
regardless of whether it is attached to a
vehicle chassis, that is manufactured for installation in any
motor-driven vehicle with a gross
vehicle weight rating of more than sixteen thousand (16,000)
pounds that is required to be
registered.
(11) "New motor
vehicle dealer" means any person engaged in the business of selling,
offering to sell, soliciting, or advertising the sale of new
motor vehicles and who holds, or held at
the time a cause of action under this chapter accrued, a
valid sales and service agreement,
franchise, or contract, granted by the manufacturer or
distributor for the retail sale of that
manufacturer's or distributor's new motor vehicles.
(12) "Person"
means a natural person, corporation, partnership, trust, or other entity, and,
in case of an entity, it includes any other entity in
which it has a majority interest or effectively
controls, as well as the individual officers, directors, and
other persons in active control of the
activities of that entity.
(13) "Relevant
market area" means the area within a radius of twenty (20) miles around
an existing dealer or the area of responsibility defined
in the franchise, whichever is greater.
31-5.1-2.
Application of chapter. -- Any person who engages
directly or indirectly in
purposeful contacts within this state in connection with the
offering or advertising for sale of, or
has business dealings with respect to, a motor vehicle
within the state shall be subject to the
provisions of this chapter and shall be subject to the
jurisdiction of the courts of this state, upon
service of process in accordance with the provisions of the
general laws.
31-5.1-3.
Unlawful acts and practices. -- (a) Unfair methods
of competition, and unfair
or deceptive acts or practices, as defined in this
chapter, are declared to be unlawful.
(b) In construing
subsection (a) of this section, the courts may be guided by the
interpretations of section 45 of the Federal Trade Commission Act (15
U.S.C. section 45), as
from time to time amended.
(c) The department of
revenue (hereinafter in this chapter, the “department”) may make
rules and regulations interpreting the provisions of subsection
(a) of this section. The rules and
regulations shall not be inconsistent with the rules,
regulations, and decisions of the Federal Trade
Commission and the federal courts interpreting the
provisions of the Federal Trade Commission
Act (15 U.S.C. section 45), as from time to time
amended.
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 of a manufacturer 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 for them, 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 of the vehicle.
(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
subdivision 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.
This subdivision 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 in
connection with the transfer or voluntary termination of a
franchise, or 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
the department of revenue 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.
(c) It shall be deemed
a violation of this chapter for a manufacturer, or officer, agent, or
other representative:
(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
motor vehicles covered by the franchise or contract,
specifically publicly advertised by the
manufacturer to be available for immediate delivery. 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 its agent,
shall have no control.
(ii) (A) (2)
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.
(B)(3) 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)(4) To
coerce, or attempt to coerce, any motor vehicle dealer to enter into any
agreement with the manufacturer, or its their officer
officers, agent agents, or other representative
representatives, 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. 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)(5) 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.
(4) (i)(6) 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. The
provisions of this paragraph shall not apply to sales to a new
motor vehicle dealer for resale to
any unit of the
manufacturer may not reduce the price of a motor vehicle charged
to a dealer or provide different
financing terms to a dealer in exchange for the dealer’s
agreement to:
(i) Maintain an exclusive sales or service facility;
(ii) Build or alter a
sales or service facility; or
(iii) Participate in
a floor plan or other financing.
(ii)(7)
To sell or lease any new motor vehicle to any person, except a manufacturer's
employee, at a lower actual price 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. The provisions of this paragraph shall
not apply to sales to a new motor
vehicle dealer for resale to any unit of the
political subdivisions.
(iii)(8)
To offer in connection with the sale of any new motor vehicle or 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. The provisions of this
paragraph shall not apply to sales to a
new motor vehicle dealer for resale to any unit of the
any of its political subdivisions.
(9) To use or
consider the performance of a motor vehicle dealer relating to the sale of
the manufacturer’s vehicles or the motor vehicle dealer’s
ability to satisfy any minimum sales or
market share quota or responsibility relating to the sale of
the manufacturer’s new vehicles in
determining:
(i)
The motor vehicle dealer’s eligibility to purchase program, certified, or other
used
motor vehicles from the manufacturer;
(ii) The volume,
type, or model of program, certified, or other used motor vehicles that a
motor vehicle dealer is eligible to purchase from the
manufacturer;
(iii) The price of
any program, certified, or other used motor vehicle that the dealer is
eligible to purchase from the manufacturer; or
(iv)
The availability or amount of any discount, credit, rebate, or
sales incentive that the
dealer is eligible to receive from the manufacturer for the
purchase of any program, certified, or
other used motor vehicle offered for sale by the
manufacturer.
(5)(10)
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 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. In those cases where new motor vehicle
dealers operate or serve as
wholesalers of parts and accessories to retail outlets, these
provisions shall be construed to prevent
a manufacturer, or its their agent
agents, from selling to a new motor vehicle dealer who operates
and services as a wholesaler of parts and accessories,
any parts and accessories that 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)(11)
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. However, the new motor
vehicle dealer shall at all times meet any reasonable capital
standards agreed to between the
dealership and the manufacturer, provided that 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)(12)
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 without the consent of the
manufacturer, except that the consent shall not be unreasonably
withheld.
(8)(13)
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 that benefit is
promptly accounted for and transmitted to the new motor
vehicle dealer.
(9)(14)
To compete with a new motor vehicle dealer operating under an agreement or
franchise from the manufacturer in the state of
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. 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 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 this
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 within
a reasonable period of
time.
(10)(15)
To refuse to disclose to any new motor vehicle dealer, handling the same line
or
make, the manner and mode of distribution of that line or
make within the relevant market area.
(11)(16)
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; (ii)
revaluation of the
(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)(17)
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)(18)
To unfairly discriminate among its new motor vehicle dealers with respect to
warranty reimbursement, or any program that provides
assistance to its dealers, including Internet
listings; sales leads; warranty policy adjustments; marketing
programs; and dealer recognition
programs.
(14)(19)
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)(20)
To fail to respond in writing to a request for consent as specified in
subdivision
(14) (19)
of this subsection 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. A manufacturer may not impose a condition on the
approval of a sale, transfer, or
exchange of the franchise if the condition would violate the
provisions of this chapter if imposed
on an existing dealer.
(16)(21)
To unfairly prevent a new motor vehicle dealer from receiving fair and
reasonable compensation for the value of the new motor vehicle
dealership.
(17)(22)
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 or make. In no instance
shall the term of any franchise agreement be of a duration
of less than three (3) years.
(18)(23)
To require that a new motor vehicle dealer provide exclusive facilities,
personnel, or display space taking into consideration
changing market conditions, or that a dealer
execute a site control agreement giving a manufacturer
control over the dealer’s facilities.
(19)(24)
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)(25)
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 five
hundred (500) yards of the present location.
(21)(26)
To engage in any predatory practice against a new motor vehicle dealer.
(d) (1) 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:
(2)(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 subdivision
(5) of this subsection;
(ii)
Has good cause for the cancellation, termination, or nonrenewal;
(iii) Has not committed
any violations set forth in subsection (b) of this section; and
(iv)
Has acted in good faith as defined in this chapter and has complied with
all
provisions of this chapter.
(3)(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, as provided in paragraph (i)
of this
subdivision, 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 The notification stated that notice was provided of
failure of performance
pursuant to paragraph (i) of this
subdivision;
(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.
(4)(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.
(5) 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 paragraph (ii) of this subdivision; and
(B) Not fewer than
ninety (90) days prior to the effective date of the termination,
cancellation, or nonrenewal; or
(C) Not fewer than
fifteen (15) days prior to the effective date of the termination,
cancellation, or nonrenewal for any of the following reasons:
(I) 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;
(II) 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;
(III) Final conviction
of the new motor vehicle dealer, or any owner or operator of the
dealership, of a crime which is associated with or related to
the operation of the dealership;
(IV) Revocation of any
license which the new motor vehicle dealer is required to have to
operate a dealership; or
(D) Not fewer 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;
(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.
(6) Payments.
(i)(iii) 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.
(A) The new motor
vehicle dealer’s cost, less allowances paid by the manufacturer, of
each new, undamaged, unsold and unaltered, except for
dealer installed manufacturer-authorized
accessories, motor vehicle, regardless of model year purchased
from the manufacturer or another
dealer of the same line-make in the ordinary course of
business within twenty-four (24) months of
termination, having five hundred (500) or fewer miles recorded on
the odometer that is in the new
motor vehicle dealer’s inventory at the time of
termination, nonrenewal, or cancellation.
(B) The new motor
vehicle dealer’s cost of each new, unused, undamaged, and unsold
part or accessory that is in the current parts catalogue
or is identical to a part or accessory in the
current parts catalogue except for the number assigned to the
part or accessory due to a change in
the number after the purchase of the part or accessory,
and that is still in the original, resalable
merchandising package and in an unbroken lot, except that, in the
case of sheet metal, a
comparable substitute for the original package may be used.
(C) The fair market
value of each undamaged sign, normal wear and tear excepted,
owned by the dealer that bears a trademark or trade name
used or claimed by the manufacturer
that were purchased as a requirement of the manufacturer.
(D) The fair market
value of all special tools, and automotive services equipment owned
by the dealer that: (I) Were recommended in writing and
designated as special tools and
equipment; (II) Were purchased as a requirement of the
manufacturer; and (III) Are in usable and
good condition except for reasonable wear and tear.
(E) The cost of
transporting, handling, packing, storing, and loading any property that is
subject to repurchase under this section.
(F) The payments
above are due within sixty (60) days from the date the dealer submits
an accounting to the manufacturer of the vehicle
inventory subject to repurchase, and for other
items within sixty (60) days from the date the dealer
submits an accounting of the other items
subject to repurchase, provided, the new motor vehicle dealer
has clear title (or will have clear
title upon using the repurchase funds to obtain clear
title) to the inventory and other items and is
in a position to convey that title to the manufacturer.
If the inventory or other items are subject to
a security interest, the manufacturer, wholesaler, or
franchisor may make payment jointly to the
dealer and the holder of the security interest. In no event
shall the payments be made later than
ninety (90) days of the effective date of the termination,
cancellation, or nonrenewal.
(ii)(iv) In the event the termination, cancellation or
nonrenewal is involuntary and not
pursuant to subsection (3)(i)(C) of
this section, and:
(A) 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
two (2) year's rent, whichever is less; or
(B) 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
two (2) years year;
if:
(I) The
new motor vehicle dealer is unable to reasonably utilize the facilities for
another
purpose;
(II) The new motor vehicle
dealer, or the manufacturer acting as his its 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 is unable to
sell dealer owned facilities, and
(III) 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)(v)
In addition to any injunctive relief and any other damages allowable by this
chapter, if the manufacturer is discontinuing the product
line or 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.
In addition to the
other compensation described in paragraphs (iii) and (iv)
above and in
this section, the manufacturer shall also reimburse the
dealer for any costs incurred for facility
upgrades or alterations required by the manufacturer within
two (2) years of the effective date of
the termination.
(vi)
If a manufacturer is discontinuing the product line and thus as a
result a franchise for
the sale of motor vehicles is subject to termination,
cancellation, or nonrenewal, the manufacturer
shall:
(A) Authorize the
dealer at the dealer’s option, that remains a franchised dealer of the
manufacturer regardless of the discontinuation of a product line,
to continue servicing and
supplying parts (without prejudice to the right of the
manufacturer to also authorize other
franchised dealers to provide service and parts for a
discontinued produce line), including
services and parts pursuant to a warranty issued by the
manufacturer for any goods or services
marketed by the dealer pursuant to the motor vehicle franchise
for a period of not less than five
(5) years from the effective
date of the termination, cancellation, or nonrenewal;
(B) Continue to
reimburse the dealer that remains a franchised dealer of the manufacturer
regardless of the discontinuation of a product line or another
franchised dealer of the
manufacturer in the area for warranty parts and service in an
amount and on terms not less
favorable than those in effect prior to the termination,
cancellation, or nonrenewal;
(C) The manufacturer
shall continue to supply the dealer that remains a franchised dealer
of the manufacturer regardless of the discontinuation of
a product line or another franchised
dealer of the manufacturer in the area with replacement
parts for any goods or services marketed
by the dealer pursuant to the franchise agreement for a period
of not less than five (5) years from
the effective date of the termination, cancellation, or
nonrenewal, at a price and on terms not less
favorable than those in effect prior to the termination,
cancellation, or nonrenewal;
(vii) The requirements
of this section do not apply to a termination, cancellation or
nonrenewal due to the sale of the assets or stock of the motor
vehicle dealer.
(D) To be entitled to
facilities assistance from the manufacturer as described above, the
dealer shall have the obligation to mitigate damages by
listing the dealership facilities for lease or
sublease with a licensed real estate agent within thirty (30)
days after the effective date of the
termination of the franchise and thereafter be reasonably cooperating
with such real estate agent
in the performance of the agent’s duties and
responsibilities. If the dealer is able to lease or
sublease the dealership facilities on terms that are
consistent with local zoning requirements to
preserve the right to sell motor vehicles from the dealership
facilities and the terms of the dealer’s
lease, the dealer shall be obligated to pay the
manufacturer the net revenue received from such
mitigation, but only following receipt of facilities assistance
payments pursuant to this chapter,
and only up to the total amount of facilities assistance
payments that the dealer has received.
(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. 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.
31-5.1-21.
Promotional activities. -- (a) Upon
filing of a claim, a manufacturer, factory
branch, or distributor
shall compensate a dealer for any incentive or reimbursement program
sponsored by the manufacturer, factory branch, or
distributor, under the terms of which the dealer
is eligible for compensation.
(b) (1) A claim filed under this section shall be:
(i)
In the manner and form prescribed by the manufacturer, factory branch, or
distributor;
and
(ii) Approved or
disapproved within thirty (30) days of receipt.
(2) A claim not
approved or disapproved within thirty (30) days of receipt shall be
deemed approved.
(3) Payment of a claim
filed under this section shall be made within thirty (30) days of
approval.
(c) (1) If a claim filed
under this section is shown by the manufacturer, factory branch, or
distributor to be false or unsubstantiated, the manufacturer,
factory branch, or distributor may
charge back the claim within twenty-four (24) months one
year from the date the claim was paid
or credit issued or one year from the end of a manufacturer
program that does not exceed one year
in length, whichever is later.
(2) This paragraph does
not limit the right of a manufacturer, factory branch, or
distributor to charge back for any claim that is proven
fraudulent.
SECTION 2. This act shall take effect upon passage.
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LC02393/SUB A/2
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