HB 2410
Initials JB Page 1 Senate Engrossed
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-sixth Legislature
Second Regular Session
House: TI DPA 10-0-0-1 | 3
rd
Read 49-8-2-0-1
Senate: FICO DPA 5-0-2-0 | 3
rd
Read 25-2-3-0
HB 2410: motor vehicle dealers; franchises
Sponsor: Representative Cook, LD 7
Senate Engrossed
Overview
Outlines an indemnification process for motor vehicle dealer franchisees against vehicle
manufacturers, importers, distributors, factory branches or franchisors and establishes
various other requirements and restrictions for vehicle manufacturers, importers,
distributors, factory branches or franchisors relating to motor vehicle dealers.
History
A manufacturer of new motor vehicles, factory branch, distributor, distributor branch, field
representative, officer or agent of these entities is prohibited from coercing or attempting to
coerce a new motor vehicle dealer to:
1) accept delivery of a new motor vehicle or vehicles, parts or accessories for the vehicle
or vehicles or any other commodities that the dealer has not ordered;
2) enter into an agreement with the manufacturer, factory branch, distributor or
distributor branch;
3) do any other act unfair to the dealer by threatening to cancel or not renew a franchise
existing between the manufacturer, factory branch, distributor or distributor branch;
4) construct, renovate or make substantial alterations to the dealer's facilities unless the
manufacturer, factory branch, distributor or distributor branch demonstrate that the
changes are reasonable and justifiable or unless the alteration is reasonably required
to effectively display and service a vehicle based on its technology;
5) enter a real property use or site control agreement as a condition of awarding a
franchise, adding a line-make or dealer agreement to an existing new motor vehicle
dealer, renewing a dealer agreement, approving the sale or transfer of the ownership
of a dealership or approving the relocation of a dealership; or
6) in connection with the sale of a used motor vehicle, other than a used vehicle sold
under a factory's certified pre-owned program, require the use of only parts and
accessories manufactured by the manufacturer, factory branch, distributor,
distributor branch or importer (A.R.S. § 28-4458).
A factory is prohibited from directly or indirectly competing with or unfairly discriminating
amongst its dealers. Statute outlines what consists of competition or unfair discrimination
(A.R.S. § 28-4460).
Provisions
Franchisee Indemnification
1. Prohibits a licensed manufacturer, importer, distributor, distributor branch, factory
branch or franchisor from failing or refusing to indemnify an existing or former franchisee
or franchisee's successors if a franchisee demands indemnification. (Sec. 1) HB 2410
Initials JB Page 2 Senate Engrossed
2. Assigns any sustained damages, attorney fees and other expenses reasonably incurred by
a franchisee to a licensed manufacturer, importer, distributor, distributor branch, factory
branch or franchisor if the damages result from a claim made by a third party against the
franchisee that result from:
a) the condition, characteristic, manufacture, assembly or design of any vehicle, parts or
accessories, tools or equipment or the selection or combination of components or parts
that are manufactured or distributed by the manufacturer, importer, distributor,
distributor branch, factory branch or franchisor;
b) service systems, procedures or methods that the manufacturer, importer, distributor,
distributor branch, factory branch or franchisor requires the franchisee to use if the
franchisee properly used the system, procedure or method;
c) the improper use or disclosure by a manufacturer, importer, distributor, distributor
branch, factory branch or franchisor of nonpublic personal information obtained from
a franchisee relating to a consumer, customer or employee of the franchisee;
d) an act or omission of the manufacturer, importer, distributor, distributor branch,
factory branch or franchisor for which the franchisee would have a claim for
contribution or indemnity under law or the franchise, notwithstanding any prior
termination or expiration of the franchise; or
e) an act or omission of the franchisee that results from the franchisee's use of a service
provided by a digital vendor required by the manufacturer, importer, distributor,
distributor branch, factory branch or franchisor if the use of the service violates state
or federal law. (Sec. 1)
Direct Current Fast Charging Stations
3. Prohibits a manufacturer of new motor vehicles, factory branch, distributor, distributor
branch, field representative, office or agent or any representative of these entities from
coercing or attempting to coerce a new motor vehicle dealer to install a customer facing
electric vehicle charging station accessible to the general public on the dealer's dealership
premises. (Sec. 2)
Competition and Unfair Discrimination
4. Declares that a factory is competing with or discriminating against its dealers if the
factory implements or modifies a vehicle reservation system for the sale or lease of motor
vehicles unless:
a) the vehicle reservation system uses customer dealer selection or other objective
criteria to allocate the vehicles; and
b) at least 30 days before implementing the vehicle reservation system a factory makes
available to its dealers a description of the reservation program rules and
requirements through the system. Notice of a change to the rules and requirements
must be provided by the factory to its dealers at least 30 days before the change
becomes effective. (Sec. 4)
5. Prohibits a factory from selling or offering to sell, lease or provide to any retail consumer
or lead a subscription service for a motor vehicle feature that uses components and
hardware that is already installed on the motor vehicle at the time of purchase or lease
and would function after activation without ongoing cost to or support by the dealer,
manufacturer, factory, distributor or third-party service provider. (Sec. 4)
6. Clarifies that the previous provision does not prohibit a factory from renewing or charging
any subscription or connection fees for any in-vehicle electronic wireless communication,
information or entertainment systems such as navigation system updates, satellite radio, HB 2410
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roadside assistance, software-dependent driver assistance or driver automation features
and vehicle-connected services that rely on cellular or other data networks for continued
operation. (Sec. 4)
Miscellaneous
7. Specifies that a manufacturer, importer or distributor cannot adopt, change, establish or
implement a plan or system for the allocation, scheduling or delivery of new motor
vehicles, parts or accessories to its motor vehicle dealers that is not fair, reasonable or
equitable to dealers of the manufacturer's, importer's or distributor's line-make. (Sec. 2)
8. States that a manufacturer, importer or distributor is not required to make available or
pay incentives or other benefits to a dealer that has not met the eligibility requirements
on the same terms that are applied uniformly and equitably to all dealers of the same
line-make in this state. (Sec. 2)
9. Prohibits a manufacturer or distributor from using or threatening to use the exercise of
the right of first refusal in bad faith. (Sec. 3)
10. Contains an applicability clause that exempts a manufacturer that does not and has never
used franchised new motor vehicle dealers to offer, sell or service new motor vehicles
manufactured or distributed by a franchisor, manufacturer, importer or distributor from
statute regulating motor vehicle dealer franchises. (Sec. 5)
11. Defines terms. (Sec. 1, 2, 4)
12. Makes technical and conforming changes. (Sec. 1, 3, 4)
Senate Amendments
1. Specifies that a licensed manufacturer, importer, distributor, distributor branch, factory
branch or franchisor does not have to indemnify a franchisee for a claim made by a third
party against the franchisee if the claim arises out of the willful misconduct of the
franchisee or the franchisee's employee.
2. Prohibits a factory from updating a vehicle or product, service or financing to any retail
consumer or lead unless they go through the factory's dealers.
3. Clarifies that a factory must issue a 30-day notice of a material change to the rules and
requirements of a vehicle reservation system.
4. Modifies the definition of coerce.