104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB1939 Introduced 2/6/2025, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED: 815 ILCS 710/2 from Ch. 121 1/2, par. 752815 ILCS 710/4 from Ch. 121 1/2, par. 754815 ILCS 710/6 from Ch. 121 1/2, par. 756 Amends the Motor Vehicle Franchise Act. Provides that it shall be deemed a violation for a manufacturer, a distributor, a wholesaler, or other specified entity to distribute new motor vehicles directly to consumers or to circumvent franchise distribution obligations under the Act. Provides that it shall be deemed a violation for any manufacturer with an established franchise dealer network in the State to engage in the sale, lease, or servicing of new motor vehicles in a manner that bypasses or competes with the manufacturer's existing franchisee network. Makes conforming and other changes. Defines terms. LRB104 12083 SPS 22180 b A BILL FOR 104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB1939 Introduced 2/6/2025, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED: 815 ILCS 710/2 from Ch. 121 1/2, par. 752815 ILCS 710/4 from Ch. 121 1/2, par. 754815 ILCS 710/6 from Ch. 121 1/2, par. 756 815 ILCS 710/2 from Ch. 121 1/2, par. 752 815 ILCS 710/4 from Ch. 121 1/2, par. 754 815 ILCS 710/6 from Ch. 121 1/2, par. 756 Amends the Motor Vehicle Franchise Act. Provides that it shall be deemed a violation for a manufacturer, a distributor, a wholesaler, or other specified entity to distribute new motor vehicles directly to consumers or to circumvent franchise distribution obligations under the Act. Provides that it shall be deemed a violation for any manufacturer with an established franchise dealer network in the State to engage in the sale, lease, or servicing of new motor vehicles in a manner that bypasses or competes with the manufacturer's existing franchisee network. Makes conforming and other changes. Defines terms. LRB104 12083 SPS 22180 b LRB104 12083 SPS 22180 b A BILL FOR
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB1939 Introduced 2/6/2025, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED:
815 ILCS 710/2 from Ch. 121 1/2, par. 752815 ILCS 710/4 from Ch. 121 1/2, par. 754815 ILCS 710/6 from Ch. 121 1/2, par. 756 815 ILCS 710/2 from Ch. 121 1/2, par. 752 815 ILCS 710/4 from Ch. 121 1/2, par. 754 815 ILCS 710/6 from Ch. 121 1/2, par. 756
815 ILCS 710/2 from Ch. 121 1/2, par. 752
815 ILCS 710/4 from Ch. 121 1/2, par. 754
815 ILCS 710/6 from Ch. 121 1/2, par. 756
Amends the Motor Vehicle Franchise Act. Provides that it shall be deemed a violation for a manufacturer, a distributor, a wholesaler, or other specified entity to distribute new motor vehicles directly to consumers or to circumvent franchise distribution obligations under the Act. Provides that it shall be deemed a violation for any manufacturer with an established franchise dealer network in the State to engage in the sale, lease, or servicing of new motor vehicles in a manner that bypasses or competes with the manufacturer's existing franchisee network. Makes conforming and other changes. Defines terms.
LRB104 12083 SPS 22180 b LRB104 12083 SPS 22180 b
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A BILL FOR
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1 AN ACT concerning business.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Motor Vehicle Franchise Act is amended by
5 changing Sections 2, 4, and 6 as follows:
6 (815 ILCS 710/2) (from Ch. 121 1/2, par. 752)
7 Sec. 2. Definitions. As used in this Act, the following
8 words shall, unless the context otherwise requires, have the
9 following meanings:
10 (a) "Motor vehicle", any motor driven vehicle required to
11 be registered under "The Illinois Vehicle Code". Beginning
12 January 1, 2010, the term "motor vehicle" also includes any
13 engine, transmission, or rear axle, regardless of whether it
14 is attached to a vehicle chassis, that is manufactured for
15 installation in any motor-driven vehicle with a gross vehicle
16 weight rating of more than 16,000 pounds that is required to be
17 registered under the Illinois Vehicle Code.
18 (b) "Manufacturer", any person engaged in the business of
19 manufacturing or assembling new and unused motor vehicles.
20 "Manufacturer" includes a factory branch, distributor, and
21 distributor branch, any parent, subsidiary, affiliate, or
22 common entity of the manufacturer, regardless of the legal or
23 operational separation between the manufacturer and the
104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026 SB1939 Introduced 2/6/2025, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED:
815 ILCS 710/2 from Ch. 121 1/2, par. 752815 ILCS 710/4 from Ch. 121 1/2, par. 754815 ILCS 710/6 from Ch. 121 1/2, par. 756 815 ILCS 710/2 from Ch. 121 1/2, par. 752 815 ILCS 710/4 from Ch. 121 1/2, par. 754 815 ILCS 710/6 from Ch. 121 1/2, par. 756
815 ILCS 710/2 from Ch. 121 1/2, par. 752
815 ILCS 710/4 from Ch. 121 1/2, par. 754
815 ILCS 710/6 from Ch. 121 1/2, par. 756
Amends the Motor Vehicle Franchise Act. Provides that it shall be deemed a violation for a manufacturer, a distributor, a wholesaler, or other specified entity to distribute new motor vehicles directly to consumers or to circumvent franchise distribution obligations under the Act. Provides that it shall be deemed a violation for any manufacturer with an established franchise dealer network in the State to engage in the sale, lease, or servicing of new motor vehicles in a manner that bypasses or competes with the manufacturer's existing franchisee network. Makes conforming and other changes. Defines terms.
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LRB104 12083 SPS 22180 b
A BILL FOR
815 ILCS 710/2 from Ch. 121 1/2, par. 752
815 ILCS 710/4 from Ch. 121 1/2, par. 754
815 ILCS 710/6 from Ch. 121 1/2, par. 756
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1 entity, if the parent, subsidiary, affiliate, or common entity
2 engages in activities enforceable under this Act or is
3 involved in the direct or indirect control, distribution, or
4 servicing of motor vehicles.
5 (c) "Factory branch", a branch office maintained by a
6 manufacturer which manufactures or assembles motor vehicles
7 for sale to distributors or motor vehicle dealers or which is
8 maintained for directing and supervising the representatives
9 of the manufacturer.
10 (d) "Distributor branch", a branch office maintained by a
11 distributor or wholesaler who or which sells or distributes
12 new or used motor vehicles to motor vehicle dealers.
13 (e) "Factory representative", a representative employed by
14 a manufacturer or employed by a factory branch for the purpose
15 of making or promoting the sale of motor vehicles or for
16 contracting with, supervising, servicing or instructing motor
17 vehicle dealers or prospective motor vehicle dealers.
18 (f) "Distributor representative", a representative
19 employed by a distributor branch, distributor or wholesaler.
20 (g) "Distributor" or "wholesaler", any person who sells or
21 distributes new or used motor vehicles to motor vehicle
22 dealers or who maintains distributor representatives within
23 the State.
24 (h) "Motor vehicle dealer", any person who, in the
25 ordinary course of business, is engaged in the business of
26 selling new or used motor vehicles to consumers or other end
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1 users.
2 (i) "Franchise", an oral or written arrangement for a
3 definite or indefinite period in which a manufacturer,
4 distributor or wholesaler grants to a motor vehicle dealer a
5 license to use a trade name, service mark, or related
6 characteristic, and in which there is a community of interest
7 in the marketing of motor vehicles or services related thereto
8 at wholesale, retail, leasing or otherwise.
9 (j) "Franchiser", a manufacturer, distributor or
10 wholesaler who grants a franchise to a motor vehicle dealer.
11 (k) "Franchisee", a motor vehicle dealer to whom a
12 franchise is offered or granted.
13 (l) "Sale", shall include the issuance, transfer,
14 agreement for transfer, exchange, pledge, hypothecation,
15 mortgage in any form, whether by transfer in trust or
16 otherwise, of any motor vehicle or interest therein or of any
17 franchise related thereto; and any option, subscription or
18 other contract or solicitation, looking to a sale, or offer or
19 attempt to sell in any form, whether oral or written. A gift or
20 delivery of any motor vehicle or franchise with respect
21 thereto with or as a bonus on account of the sale of anything
22 shall be deemed a sale of such motor vehicle or franchise.
23 (m) "Fraud", shall include, in addition to its normal
24 legal connotation, the following: a misrepresentation in any
25 manner, whether intentionally false or due to reckless
26 disregard for truth or falsity, of a material fact; a promise
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1 or representation not made honestly and in good faith; and an
2 intentional failure to disclose a material fact.
3 (n) "Person", a natural person, corporation, partnership,
4 trust or other entity, and in case of an entity, it shall
5 include any other entity in which it has a majority interest or
6 which it effectively controls as well as the individual
7 officers, directors and other persons in active control of the
8 activities of each such entity.
9 (o) "New motor vehicle", a motor vehicle which has not
10 been previously sold to any person except a distributor or
11 wholesaler or motor vehicle dealer for resale.
12 (p) "Market Area", the franchisee's area of primary
13 responsibility as defined in its franchise.
14 (q) "Relevant Market Area", the area within a radius of 10
15 miles from the principal location of a franchise or dealership
16 if said principal location is in a county having a population
17 of more than 300,000 persons; if the principal location of a
18 franchise or dealership is in a county having a population of
19 less than 300,000 persons, then "relevant market area" shall
20 mean the area within a radius of 15 miles from the principal
21 location of said franchise or dealership.
22 (r) "Late model vehicle" means a vehicle of the current
23 model year and one, 2, or 3 preceding model years for which the
24 motor vehicle dealer holds an existing franchise from the
25 manufacturer for that same line make.
26 (s) "Factory repurchase vehicle" means a motor vehicle of
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1 the current model year or a late model vehicle reacquired by
2 the manufacturer under an existing agreement or otherwise from
3 a fleet, lease or daily rental company or under any State or
4 federal law or program relating to allegedly defective new
5 motor vehicles, and offered for sale and resold by the
6 manufacturer directly or at a factory authorized or sponsored
7 auction.
8 (t) "Board" means the Motor Vehicle Review Board created
9 under this Act.
10 (u) "Secretary of State" means the Secretary of State of
11 Illinois.
12 (v) "Good cause" means facts establishing commercial
13 reasonableness in lawful or privileged competition and
14 business practices as defined at common law.
15 (w) "Common entity," means any person who:
16 (1) is directly or indirectly controlled by, or has
17 equity interests owned, beneficially or of record, through
18 any form of ownership structure, by a manufacturer,
19 importer, distributor, or an affiliate thereof; or
20 (2) shares common management, directors, officers, or
21 significant contractual relationships with a manufacturer,
22 importer, distributor, or an affiliate thereof, where the
23 relationships create substantial alignment of interests or
24 operational control.
25 (Source: P.A. 100-308, eff. 8-24-17.)
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1 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
2 Sec. 4. Unfair competition and practices.
3 (a) The unfair methods of competition and unfair and
4 deceptive acts or practices listed in this Section are hereby
5 declared to be unlawful. In construing the provisions of this
6 Section, the courts may be guided by the interpretations of
7 the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
8 from time to time amended.
9 (b) It shall be deemed a violation for any manufacturer,
10 factory branch, factory representative, distributor or
11 wholesaler, distributor branch, distributor representative, or
12 any parent, subsidiary, affiliate, agent, or person under
13 common ownership or control of the manufacturer, or any
14 employee thereof, or motor vehicle dealer to engage in any
15 action with respect to a franchise which is arbitrary, in bad
16 faith or unconscionable and which causes damage to any of the
17 parties or to the public, including directly or indirectly
18 competing with their franchisees in the sale, lease, or
19 warranty service of new motor vehicles.
20 (c) It shall be deemed a violation for a manufacturer, a
21 distributor, a wholesaler, a distributor branch or division, a
22 factory branch or division, or a wholesale branch or division,
23 or officer, agent, any parent, subsidiary, affiliate, or agent
24 of the manufacturer, or any person under common ownership or
25 control of the manufacturer, or other representative thereof,
26 to coerce, or attempt to coerce, any motor vehicle dealer:
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1 (1) to accept, buy or order any motor vehicle or
2 vehicles, appliances, equipment, parts or accessories
3 therefor, or any other commodity or commodities or service
4 or services which such motor vehicle dealer has not
5 voluntarily ordered or requested except items required by
6 applicable local, state or federal law; or to require a
7 motor vehicle dealer to accept, buy, order or purchase
8 such items in order to obtain any motor vehicle or
9 vehicles or any other commodity or commodities which have
10 been ordered or requested by such motor vehicle dealer;
11 (2) to order or accept delivery of any motor vehicle
12 with special features, appliances, accessories or
13 equipment not included in the list price of the motor
14 vehicles as publicly advertised by the manufacturer
15 thereof, except items required by applicable law; or
16 (3) to order for anyone any parts, accessories,
17 equipment, machinery, tools, appliances or any commodity
18 whatsoever, except items required by applicable law.
19 (c-5) A manufacturer, a distributor, a wholesaler, a
20 distributor branch or division, a factory branch or division,
21 or a wholesale branch or division, or officer, agent, or other
22 representative thereof may not:
23 (1) require a motor vehicle dealer to offer a
24 secondary product; or
25 (2) prohibit a motor vehicle dealer from offering a
26 secondary product, including, but not limited to:
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1 (A) service contracts;
2 (B) maintenance agreements;
3 (C) extended warranties;
4 (D) protection product guarantees;
5 (E) guaranteed asset protection waivers;
6 (F) insurance;
7 (G) replacement parts;
8 (H) vehicle accessories;
9 (I) oil; or
10 (J) supplies.
11 It is not a violation of this subsection to offer an
12 incentive program to motor vehicle dealers to encourage them
13 to sell or offer to sell a secondary product approved,
14 endorsed, sponsored, or offered by the manufacturer,
15 distributor, wholesaler, distributor branch or division,
16 factory branch or division, wholesale branch or division, or
17 officer, agent, or other representative thereof, provided the
18 program does not provide vehicle sales or service incentives.
19 It is not a violation of this subsection to prohibit a
20 motor vehicle dealer from using secondary products for any
21 repair work paid for under the terms of a warranty, recall,
22 service contract, extended warranty, maintenance plan, or
23 certified pre-owned vehicle program established or offered by
24 the manufacturer, distributor, wholesaler, distributor branch
25 or division, factory branch or division, or wholesale branch
26 or division, or officer, agent, or other representative
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1 thereof.
2 As used in this subsection, "secondary product" means all
3 products that are not new motor vehicles or original equipment
4 manufacturer parts.
5 (d) It shall be deemed a violation for a manufacturer, any
6 parent, subsidiary, affiliate, agent, or entity under common
7 ownership or control of the manufacturer, a distributor, a
8 wholesaler, a distributor branch or division, or officer,
9 agent or other representative thereof:
10 (1) to adopt, change, establish or implement a plan or
11 system for the allocation and distribution of new motor
12 vehicles to motor vehicle dealers which is arbitrary or
13 capricious or to modify an existing plan so as to cause the
14 same to be arbitrary or capricious;
15 (2) to fail or refuse to advise or disclose to any
16 motor vehicle dealer having a franchise or selling
17 agreement, upon written request therefor, the basis upon
18 which new motor vehicles of the same line make are
19 allocated or distributed to motor vehicle dealers in the
20 State and the basis upon which the current allocation or
21 distribution is being made or will be made to such motor
22 vehicle dealer;
23 (3) to refuse to deliver in reasonable quantities and
24 within a reasonable time after receipt of dealer's order,
25 to any motor vehicle dealer having a franchise or selling
26 agreement for the retail sale of new motor vehicles sold
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1 or distributed by such manufacturer, distributor,
2 wholesaler, distributor branch or division, factory branch
3 or division or wholesale branch or division, any such
4 motor vehicles as are covered by such franchise or selling
5 agreement specifically publicly advertised in the State by
6 such manufacturer, distributor, wholesaler, distributor
7 branch or division, factory branch or division, or
8 wholesale branch or division to be available for immediate
9 delivery. However, the failure to deliver any motor
10 vehicle shall not be considered a violation of this Act if
11 such failure is due to an act of God, a work stoppage or
12 delay due to a strike or labor difficulty, a shortage of
13 materials, a lack of manufacturing capacity, a freight
14 embargo or other cause over which the manufacturer,
15 distributor, or wholesaler, or any agent thereof has no
16 control;
17 (4) to coerce, or attempt to coerce, any motor vehicle
18 dealer to enter into any agreement with such manufacturer,
19 distributor, wholesaler, distributor branch or division,
20 factory branch or division, or wholesale branch or
21 division, or officer, agent or other representative
22 thereof, or to do any other act prejudicial to the dealer
23 by threatening to reduce his allocation of motor vehicles
24 or cancel any franchise or any selling agreement existing
25 between such manufacturer, distributor, wholesaler,
26 distributor branch or division, or factory branch or
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1 division, or wholesale branch or division, and the dealer.
2 However, notice in good faith to any motor vehicle dealer
3 of the dealer's violation of any terms or provisions of
4 such franchise or selling agreement or of any law or
5 regulation applicable to the conduct of a motor vehicle
6 dealer shall not constitute a violation of this Act;
7 (5) to require a franchisee to participate in an
8 advertising campaign or contest or any promotional
9 campaign, or to purchase or lease any promotional
10 materials, training materials, show room or other display
11 decorations or materials at the expense of the franchisee;
12 (6) to cancel or terminate the franchise or selling
13 agreement of a motor vehicle dealer without good cause and
14 without giving notice as hereinafter provided; to fail or
15 refuse to extend the franchise or selling agreement of a
16 motor vehicle dealer upon its expiration without good
17 cause and without giving notice as hereinafter provided;
18 or, to offer a renewal, replacement or succeeding
19 franchise or selling agreement containing terms and
20 provisions the effect of which is to substantially change
21 or modify the sales and service obligations or capital
22 requirements of the motor vehicle dealer arbitrarily and
23 without good cause and without giving notice as
24 hereinafter provided notwithstanding any term or provision
25 of a franchise or selling agreement.
26 (A) If a manufacturer, distributor, wholesaler,
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1 distributor branch or division, factory branch or
2 division or wholesale branch or division intends to
3 cancel or terminate a franchise or selling agreement
4 or intends not to extend or renew a franchise or
5 selling agreement on its expiration, it shall send a
6 letter by certified mail, return receipt requested, to
7 the affected franchisee at least 60 days before the
8 effective date of the proposed action, or not later
9 than 10 days before the proposed action when the
10 reason for the action is based upon either of the
11 following:
12 (i) the business operations of the franchisee
13 have been abandoned or the franchisee has failed
14 to conduct customary sales and service operations
15 during customary business hours for at least 7
16 consecutive business days unless such closing is
17 due to an act of God, strike or labor difficulty or
18 other cause over which the franchisee has no
19 control; or
20 (ii) the conviction of or plea of nolo
21 contendere by the motor vehicle dealer or any
22 operator thereof in a court of competent
23 jurisdiction to an offense punishable by
24 imprisonment for more than two years.
25 Each notice of proposed action shall include a
26 detailed statement setting forth the specific grounds
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1 for the proposed cancellation, termination, or refusal
2 to extend or renew and shall state that the dealer has
3 only 30 days from receipt of the notice to file with
4 the Motor Vehicle Review Board a written protest
5 against the proposed action.
6 (B) If a manufacturer, distributor, wholesaler,
7 distributor branch or division, factory branch or
8 division or wholesale branch or division intends to
9 change substantially or modify the sales and service
10 obligations or capital requirements of a motor vehicle
11 dealer as a condition to extending or renewing the
12 existing franchise or selling agreement of such motor
13 vehicle dealer, it shall send a letter by certified
14 mail, return receipt requested, to the affected
15 franchisee at least 60 days before the date of
16 expiration of the franchise or selling agreement. Each
17 notice of proposed action shall include a detailed
18 statement setting forth the specific grounds for the
19 proposed action and shall state that the dealer has
20 only 30 days from receipt of the notice to file with
21 the Motor Vehicle Review Board a written protest
22 against the proposed action.
23 (C) Within 30 days from receipt of the notice
24 under subparagraphs (A) and (B), the franchisee may
25 file with the Board a written protest against the
26 proposed action.
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1 When the protest has been timely filed, the Board
2 shall enter an order, fixing a date (within 60 days of
3 the date of the order), time, and place of a hearing on
4 the protest required under Sections 12 and 29 of this
5 Act, and send by certified mail, return receipt
6 requested, a copy of the order to the manufacturer
7 that filed the notice of intention of the proposed
8 action and to the protesting dealer or franchisee.
9 The manufacturer shall have the burden of proof to
10 establish that good cause exists to cancel or
11 terminate, or fail to extend or renew the franchise or
12 selling agreement of a motor vehicle dealer or
13 franchisee, and to change substantially or modify the
14 sales and service obligations or capital requirements
15 of a motor vehicle dealer as a condition to extending
16 or renewing the existing franchise or selling
17 agreement. The determination whether good cause exists
18 to cancel, terminate, or refuse to renew or extend the
19 franchise or selling agreement, or to change or modify
20 the obligations of the dealer as a condition to offer
21 renewal, replacement, or succession shall be made by
22 the Board under subsection (d) of Section 12 of this
23 Act.
24 (D) Notwithstanding the terms, conditions, or
25 provisions of a franchise or selling agreement, the
26 following shall not constitute good cause for
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1 cancelling or terminating or failing to extend or
2 renew the franchise or selling agreement: (i) the
3 change of ownership or executive management of the
4 franchisee's dealership; or (ii) the fact that the
5 franchisee or owner of an interest in the franchise
6 owns, has an investment in, participates in the
7 management of, or holds a license for the sale of the
8 same or any other line make of new motor vehicles.
9 (E) The manufacturer may not cancel or terminate,
10 or fail to extend or renew a franchise or selling
11 agreement or change or modify the obligations of the
12 franchisee as a condition to offering a renewal,
13 replacement, or succeeding franchise or selling
14 agreement before the hearing process is concluded as
15 prescribed by this Act, and thereafter, if the Board
16 determines that the manufacturer has failed to meet
17 its burden of proof and that good cause does not exist
18 to allow the proposed action;
19 (7) notwithstanding the terms of any franchise
20 agreement, to fail to indemnify and hold harmless its
21 franchised dealers against any judgment or settlement for
22 damages, including, but not limited to, court costs,
23 expert witness fees, reasonable attorneys' fees of the new
24 motor vehicle dealer, and other expenses incurred in the
25 litigation, so long as such fees and costs are reasonable,
26 arising out of complaints, claims, or lawsuits, including,
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1 but not limited to, strict liability, negligence,
2 misrepresentation, warranty (express or implied), or
3 rescission of the sale as defined in Section 2-608 of the
4 Uniform Commercial Code, to the extent that the judgment
5 or settlement relates to the alleged defective or
6 negligent manufacture, assembly or design of new motor
7 vehicles, parts or accessories or other functions by the
8 manufacturer, beyond the control of the dealer; provided
9 that, in order to provide an adequate defense, the
10 manufacturer receives notice of the filing of a complaint,
11 claim, or lawsuit within 60 days after the filing;
12 (8) to require or otherwise coerce a motor vehicle
13 dealer to underutilize the motor vehicle dealer's
14 facilities by requiring or otherwise coercing the motor
15 vehicle dealer to exclude or remove from the motor vehicle
16 dealer's facilities operations for selling or servicing of
17 any vehicles for which the motor vehicle dealer has a
18 franchise agreement with another manufacturer,
19 distributor, wholesaler, distribution branch or division,
20 or officer, agent, or other representative thereof;
21 provided, however, that, in light of all existing
22 circumstances, (i) the motor vehicle dealer maintains a
23 reasonable line of credit for each make or line of new
24 motor vehicle, (ii) the new motor vehicle dealer remains
25 in compliance with any reasonable facilities requirements
26 of the manufacturer, (iii) no change is made in the
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1 principal management of the new motor vehicle dealer, and
2 (iv) the addition of the make or line of new motor vehicles
3 would be reasonable. The reasonable facilities requirement
4 set forth in item (ii) of subsection (d)(8) shall not
5 include any requirement that a franchisee establish or
6 maintain exclusive facilities, personnel, or display
7 space. Any decision by a motor vehicle dealer to sell
8 additional makes or lines at the motor vehicle dealer's
9 facility shall be presumed to be reasonable, and the
10 manufacturer shall have the burden to overcome that
11 presumption. A motor vehicle dealer must provide a written
12 notification of its intent to add a make or line of new
13 motor vehicles to the manufacturer. If the manufacturer
14 does not respond to the motor vehicle dealer, in writing,
15 objecting to the addition of the make or line within 60
16 days after the date that the motor vehicle dealer sends
17 the written notification, then the manufacturer shall be
18 deemed to have approved the addition of the make or line;
19 (9) to use or consider the performance of a motor
20 vehicle dealer relating to the sale of the manufacturer's,
21 distributor's, or wholesaler's vehicles or the motor
22 vehicle dealer's ability to satisfy any minimum sales or
23 market share quota or responsibility relating to the sale
24 of the manufacturer's, distributor's, or wholesaler's new
25 vehicles in determining:
26 (A) the motor vehicle dealer's eligibility to
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1 purchase program, certified, or other used motor
2 vehicles from the manufacturer, distributor, or
3 wholesaler;
4 (B) the volume, type, or model of program,
5 certified, or other used motor vehicles that a motor
6 vehicle dealer is eligible to purchase from the
7 manufacturer, distributor, or wholesaler;
8 (C) the price of any program, certified, or other
9 used motor vehicle that the dealer is eligible to
10 purchase from the manufacturer, distributor, or
11 wholesaler; or
12 (D) the availability or amount of any discount,
13 credit, rebate, or sales incentive that the dealer is
14 eligible to receive from the manufacturer,
15 distributor, or wholesaler for the purchase of any
16 program, certified, or other used motor vehicle
17 offered for sale by the manufacturer, distributor, or
18 wholesaler;
19 (10) to take any adverse action against a dealer
20 pursuant to an export or sale-for-resale prohibition
21 because the dealer sold or leased a vehicle to a customer
22 who either exported the vehicle to a foreign country or
23 resold the vehicle in violation of the prohibition, unless
24 the export or sale-for-resale prohibition policy was
25 provided to the dealer in writing either electronically or
26 on paper, prior to the sale or lease, and the dealer knew
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1 or reasonably should have known of the customer's intent
2 to export or resell the vehicle in violation of the
3 prohibition at the time of the sale or lease. If the dealer
4 causes the vehicle to be registered and titled in this or
5 any other state, and collects or causes to be collected
6 any applicable sales or use tax to this State, a
7 rebuttable presumption is established that the dealer did
8 not have reason to know of the customer's intent to resell
9 the vehicle;
10 (11) to coerce or require any dealer to construct
11 improvements to his or her facilities or to install new
12 signs or other franchiser image elements that replace or
13 substantially alter those improvements, signs, or
14 franchiser image elements completed within the past 10
15 years that were required and approved by the manufacturer
16 or one of its affiliates. The 10-year period under this
17 paragraph (11) begins to run for a dealer, including that
18 dealer's successors and assigns, on the date that the
19 manufacturer gives final written approval of the facility
20 improvements or installation of signs or other franchiser
21 image elements or the date that the dealer receives a
22 certificate of occupancy, whichever is later. For the
23 purpose of this paragraph (11), the term "substantially
24 alter" does not include routine maintenance, including,
25 but not limited to, interior painting, that is reasonably
26 necessary to keep a dealer facility in attractive
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1 condition; or
2 (12) to require a dealer to purchase goods or services
3 to make improvements to the dealer's facilities from a
4 vendor selected, identified, or designated by a
5 manufacturer or one of its affiliates by agreement,
6 program, incentive provision, or otherwise without making
7 available to the dealer the option to obtain the goods or
8 services of substantially similar quality and overall
9 design from a vendor chosen by the dealer and approved by
10 the manufacturer; however, approval by the manufacturer
11 shall not be unreasonably withheld, and the dealer's
12 option to select a vendor shall not be available if the
13 manufacturer provides substantial reimbursement for the
14 goods or services offered. "Substantial reimbursement"
15 means an amount equal to or greater than the cost savings
16 that would result if the dealer were to utilize a vendor of
17 the dealer's own selection instead of using the vendor
18 identified by the manufacturer. For the purpose of this
19 paragraph (12), the term "goods" does not include movable
20 displays, brochures, and promotional materials containing
21 material subject to the intellectual property rights of a
22 manufacturer. If signs, other than signs containing the
23 manufacturer's brand or logo or free-standing signs that
24 are not directly attached to a building, or other
25 franchiser image or design elements or trade dress are to
26 be leased to the dealer by a vendor selected, identified,
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1 or designated by the manufacturer, the dealer has the
2 right to purchase the signs or other franchiser image or
3 design elements or trade dress of substantially similar
4 quality and design from a vendor selected by the dealer if
5 the signs, franchiser image or design elements, or trade
6 dress are approved by the manufacturer. Approval by the
7 manufacturer shall not be unreasonably withheld. This
8 paragraph (12) shall not be construed to allow a dealer or
9 vendor to impair, infringe upon, or eliminate, directly or
10 indirectly, the intellectual property rights of the
11 manufacturer, including, but not limited to, the
12 manufacturer's intellectual property rights in any
13 trademarks or trade dress, or other intellectual property
14 interests owned or controlled by the manufacturer. This
15 paragraph (12) shall not be construed to permit a dealer
16 to erect or maintain signs that do not conform to the
17 manufacturer's intellectual property rights or trademark
18 or trade dress usage guidelines.
19 (13) to establish or utilize any common entity,
20 affiliate, or spin-off company to sell, lease, or
21 otherwise distribute new motor vehicles directly to
22 consumers or to circumvent franchise distribution
23 obligations under this Act, where the manufacturer,
24 including any common entities, subsidiaries, or
25 affiliates, currently or previously maintained a franchise
26 agreement for the retail sale of motor vehicles in this
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1 State.
2 (e) It shall be deemed a violation for a manufacturer, any
3 parent, subsidiary, affiliate, agent, or entity under common
4 ownership or control of the manufacturer, a distributor, a
5 wholesaler, a distributor branch or division or officer, agent
6 or other representative thereof:
7 (1) to resort to or use any false or misleading
8 advertisement in connection with his business as such
9 manufacturer, distributor, wholesaler, distributor branch
10 or division or officer, agent or other representative
11 thereof;
12 (2) to offer to sell or lease, or to sell or lease, any
13 new motor vehicle to any motor vehicle dealer at a lower
14 actual price therefor than the actual price offered to any
15 other motor vehicle dealer for the same model vehicle
16 similarly equipped or to utilize any device including, but
17 not limited to, sales promotion plans or programs which
18 result in such lesser actual price or fail to make
19 available to any motor vehicle dealer any preferential
20 pricing, incentive, rebate, finance rate, or low interest
21 loan program offered to competing motor vehicle dealers in
22 other contiguous states. However, the provisions of this
23 paragraph shall not apply to sales to a motor vehicle
24 dealer for resale to any unit of the United States
25 Government, the State or any of its political
26 subdivisions;
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1 (3) to offer to sell or lease, or to sell or lease, any
2 new motor vehicle to any person, except a wholesaler,
3 distributor or manufacturer's employees at a lower actual
4 price therefor than the actual price offered and charged
5 to a motor vehicle dealer for the same model vehicle
6 similarly equipped or to utilize any device which results
7 in such lesser actual price. However, the provisions of
8 this paragraph shall not apply to sales to a motor vehicle
9 dealer for resale to any unit of the United States
10 Government, the State or any of its political
11 subdivisions;
12 (4) to prevent or attempt to prevent by contract or
13 otherwise any motor vehicle dealer or franchisee from
14 changing the executive management control of the motor
15 vehicle dealer or franchisee unless the franchiser, having
16 the burden of proof, proves that such change of executive
17 management will result in executive management control by
18 a person or persons who are not of good moral character or
19 who do not meet the franchiser's existing and, with
20 consideration given to the volume of sales and service of
21 the dealership, uniformly applied minimum business
22 experience standards in the market area. However, where
23 the manufacturer rejects a proposed change in executive
24 management control, the manufacturer shall give written
25 notice of his reasons to the dealer within 60 days of
26 notice to the manufacturer by the dealer of the proposed
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1 change. If the manufacturer does not send a letter to the
2 franchisee by certified mail, return receipt requested,
3 within 60 days from receipt by the manufacturer of the
4 proposed change, then the change of the executive
5 management control of the franchisee shall be deemed
6 accepted as proposed by the franchisee, and the
7 manufacturer shall give immediate effect to such change;
8 (5) to prevent or attempt to prevent by contract or
9 otherwise any motor vehicle dealer from establishing or
10 changing the capital structure of his dealership or the
11 means by or through which he finances the operation
12 thereof; provided the dealer meets any reasonable capital
13 standards agreed to between the dealer and the
14 manufacturer, distributor or wholesaler, who may require
15 that the sources, method and manner by which the dealer
16 finances or intends to finance its operation, equipment or
17 facilities be fully disclosed;
18 (6) to refuse to give effect to or prevent or attempt
19 to prevent by contract or otherwise any motor vehicle
20 dealer or any officer, partner or stockholder of any motor
21 vehicle dealer from selling or transferring any part of
22 the interest of any of them to any other person or persons
23 or party or parties unless such sale or transfer is to a
24 transferee who would not otherwise qualify for a new motor
25 vehicle dealers license under the Illinois Vehicle Code or
26 unless the franchiser, having the burden of proof, proves
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1 that such sale or transfer is to a person or party who is
2 not of good moral character or does not meet the
3 franchiser's existing and reasonable capital standards
4 and, with consideration given to the volume of sales and
5 service of the dealership, uniformly applied minimum
6 business experience standards in the market area. However,
7 nothing herein shall be construed to prevent a franchiser
8 from implementing affirmative action programs providing
9 business opportunities for minorities or from complying
10 with applicable federal, State or local law:
11 (A) If the manufacturer intends to refuse to
12 approve the sale or transfer of all or a part of the
13 interest, then it shall, within 60 days from receipt
14 of the completed application forms generally utilized
15 by a manufacturer to conduct its review and a copy of
16 all agreements regarding the proposed transfer, send a
17 letter by certified mail, return receipt requested,
18 advising the franchisee of any refusal to approve the
19 sale or transfer of all or part of the interest and
20 shall state that the dealer only has 30 days from the
21 receipt of the notice to file with the Motor Vehicle
22 Review Board a written protest against the proposed
23 action. The notice shall set forth specific criteria
24 used to evaluate the prospective transferee and the
25 grounds for refusing to approve the sale or transfer
26 to that transferee. Within 30 days from the
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1 franchisee's receipt of the manufacturer's notice, the
2 franchisee may file with the Board a written protest
3 against the proposed action.
4 When a protest has been timely filed, the Board
5 shall enter an order, fixing the date (within 60 days
6 of the date of such order), time, and place of a
7 hearing on the protest, required under Sections 12 and
8 29 of this Act, and send by certified mail, return
9 receipt requested, a copy of the order to the
10 manufacturer that filed notice of intention of the
11 proposed action and to the protesting franchisee.
12 The manufacturer shall have the burden of proof to
13 establish that good cause exists to refuse to approve
14 the sale or transfer to the transferee. The
15 determination whether good cause exists to refuse to
16 approve the sale or transfer shall be made by the Board
17 under subdivisions (6)(B). The manufacturer shall not
18 refuse to approve the sale or transfer by a dealer or
19 an officer, partner, or stockholder of a franchise or
20 any part of the interest to any person or persons
21 before the hearing process is concluded as prescribed
22 by this Act, and thereafter if the Board determines
23 that the manufacturer has failed to meet its burden of
24 proof and that good cause does not exist to refuse to
25 approve the sale or transfer to the transferee.
26 (B) Good cause to refuse to approve such sale or
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1 transfer under this Section is established when such
2 sale or transfer is to a transferee who would not
3 otherwise qualify for a new motor vehicle dealers
4 license under the Illinois Vehicle Code or such sale
5 or transfer is to a person or party who is not of good
6 moral character or does not meet the franchiser's
7 existing and reasonable capital standards and, with
8 consideration given to the volume of sales and service
9 of the dealership, uniformly applied minimum business
10 experience standards in the market area.
11 (7) to obtain money, goods, services, anything of
12 value, or any other benefit from any other person with
13 whom the motor vehicle dealer does business, on account of
14 or in relation to the transactions between the dealer and
15 the other person as compensation, except for services
16 actually rendered, unless such benefit is promptly
17 accounted for and transmitted to the motor vehicle dealer;
18 (8) to grant an additional franchise in the relevant
19 market area of an existing franchise of the same line make
20 or to relocate an existing motor vehicle dealership within
21 or into a relevant market area of an existing franchise of
22 the same line make. However, if the manufacturer wishes to
23 grant such an additional franchise to an independent
24 person in a bona fide relationship in which such person is
25 prepared to make a significant investment subject to loss
26 in such a dealership, or if the manufacturer wishes to
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1 relocate an existing motor vehicle dealership, then the
2 manufacturer shall send a letter by certified mail, return
3 receipt requested, to each existing dealer or dealers of
4 the same line make whose relevant market area includes the
5 proposed location of the additional or relocated franchise
6 at least 60 days before the manufacturer grants an
7 additional franchise or relocates an existing franchise of
8 the same line make within or into the relevant market area
9 of an existing franchisee of the same line make. Each
10 notice shall set forth the specific grounds for the
11 proposed grant of an additional or relocation of an
12 existing franchise and shall state that the dealer has
13 only 30 days from the date of receipt of the notice to file
14 with the Motor Vehicle Review Board a written protest
15 against the proposed action. Unless the parties agree upon
16 the grant or establishment of the additional or relocated
17 franchise within 30 days from the date the notice was
18 received by the existing franchisee of the same line make
19 or any person entitled to receive such notice, the
20 franchisee or other person may file with the Board a
21 written protest against the grant or establishment of the
22 proposed additional or relocated franchise.
23 When a protest has been timely filed, the Board shall
24 enter an order fixing a date (within 60 days of the date of
25 the order), time, and place of a hearing on the protest,
26 required under Sections 12 and 29 of this Act, and send by
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1 certified or registered mail, return receipt requested, a
2 copy of the order to the manufacturer that filed the
3 notice of intention to grant or establish the proposed
4 additional or relocated franchise and to the protesting
5 dealer or dealers of the same line make whose relevant
6 market area includes the proposed location of the
7 additional or relocated franchise.
8 When more than one protest is filed against the grant
9 or establishment of the additional or relocated franchise
10 of the same line make, the Board may consolidate the
11 hearings to expedite disposition of the matter. The
12 manufacturer shall have the burden of proof to establish
13 that good cause exists to allow the grant or establishment
14 of the additional or relocated franchise. The manufacturer
15 may not grant or establish the additional franchise or
16 relocate the existing franchise before the hearing process
17 is concluded as prescribed by this Act, and thereafter if
18 the Board determines that the manufacturer has failed to
19 meet its burden of proof and that good cause does not exist
20 to allow the grant or establishment of the additional
21 franchise or relocation of the existing franchise.
22 The determination whether good cause exists for
23 allowing the grant or establishment of an additional
24 franchise or relocated existing franchise, shall be made
25 by the Board under subsection (c) of Section 12 of this
26 Act. If the manufacturer seeks to enter into a contract,
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1 agreement or other arrangement with any person,
2 establishing any additional motor vehicle dealership or
3 other facility, limited to the sale of factory repurchase
4 vehicles or late model vehicles, then the manufacturer
5 shall follow the notice procedures set forth in this
6 Section and the determination whether good cause exists
7 for allowing the proposed agreement shall be made by the
8 Board under subsection (c) of Section 12, with the
9 manufacturer having the burden of proof.
10 A. (Blank).
11 B. For the purposes of this Section, appointment
12 of a successor motor vehicle dealer at the same
13 location as its predecessor, or within 2 miles of such
14 location, or the relocation of an existing dealer or
15 franchise within 2 miles of the relocating dealer's or
16 franchisee's existing location, shall not be construed
17 as a grant, establishment or the entering into of an
18 additional franchise or selling agreement, or a
19 relocation of an existing franchise. The reopening of
20 a motor vehicle dealership that has not been in
21 operation for 18 months or more shall be deemed the
22 grant of an additional franchise or selling agreement.
23 C. This Section does not apply to the relocation
24 of an existing dealership or franchise in a county
25 having a population of more than 300,000 persons when
26 the new location is within the dealer's current
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1 relevant market area, provided the new location is
2 more than 7 miles from the nearest dealer of the same
3 line make. This Section does not apply to the
4 relocation of an existing dealership or franchise in a
5 county having a population of less than 300,000
6 persons when the new location is within the dealer's
7 current relevant market area, provided the new
8 location is more than 12 miles from the nearest dealer
9 of the same line make. A dealer that would be farther
10 away from the new location of an existing dealership
11 or franchise of the same line make after a relocation
12 may not file a written protest against the relocation
13 with the Motor Vehicle Review Board.
14 D. Nothing in this Section shall be construed to
15 prevent a franchiser from implementing affirmative
16 action programs providing business opportunities for
17 minorities or from complying with applicable federal,
18 State or local law;
19 (9) to require a motor vehicle dealer to assent to a
20 release, assignment, novation, waiver or estoppel which
21 would relieve any person from liability imposed by this
22 Act;
23 (10) to prevent or refuse to give effect to the
24 succession to the ownership or management control of a
25 dealership by any legatee under the will of a dealer or to
26 an heir under the laws of descent and distribution of this
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1 State unless the franchisee has designated a successor to
2 the ownership or management control under the succession
3 provisions of the franchise. Unless the franchiser, having
4 the burden of proof, proves that the successor is a person
5 who is not of good moral character or does not meet the
6 franchiser's existing and reasonable capital standards
7 and, with consideration given to the volume of sales and
8 service of the dealership, uniformly applied minimum
9 business experience standards in the market area, any
10 designated successor of a dealer or franchisee may succeed
11 to the ownership or management control of a dealership
12 under the existing franchise if:
13 (i) The designated successor gives the
14 franchiser written notice by certified mail,
15 return receipt requested, of his or her intention
16 to succeed to the ownership of the dealer within
17 60 days of the dealer's death or incapacity; and
18 (ii) The designated successor agrees to be
19 bound by all the terms and conditions of the
20 existing franchise.
21 Notwithstanding the foregoing, in the event the motor
22 vehicle dealer or franchisee and manufacturer have duly
23 executed an agreement concerning succession rights prior
24 to the dealer's death or incapacitation, the agreement
25 shall be observed.
26 (A) If the franchiser intends to refuse to honor
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1 the successor to the ownership of a deceased or
2 incapacitated dealer or franchisee under an existing
3 franchise agreement, the franchiser shall send a
4 letter by certified mail, return receipt requested, to
5 the designated successor within 60 days from receipt
6 of a proposal advising of its intent to refuse to honor
7 the succession and to discontinue the existing
8 franchise agreement and shall state that the
9 designated successor only has 30 days from the receipt
10 of the notice to file with the Motor Vehicle Review
11 Board a written protest against the proposed action.
12 The notice shall set forth the specific grounds for
13 the refusal to honor the succession and discontinue
14 the existing franchise agreement.
15 If notice of refusal is not timely served upon the
16 designated successor, the franchise agreement shall
17 continue in effect subject to termination only as
18 otherwise permitted by paragraph (6) of subsection (d)
19 of Section 4 of this Act.
20 Within 30 days from the date the notice was
21 received by the designated successor or any other
22 person entitled to notice, the designee or other
23 person may file with the Board a written protest
24 against the proposed action.
25 When a protest has been timely filed, the Board
26 shall enter an order, fixing a date (within 60 days of
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1 the date of the order), time, and place of a hearing on
2 the protest, required under Sections 12 and 29 of this
3 Act, and send by certified mail, return receipt
4 requested, a copy of the order to the franchiser that
5 filed the notice of intention of the proposed action
6 and to the protesting designee or such other person.
7 The manufacturer shall have the burden of proof to
8 establish that good cause exists to refuse to honor
9 the succession and discontinue the existing franchise
10 agreement. The determination whether good cause exists
11 to refuse to honor the succession shall be made by the
12 Board under subdivision (B) of this paragraph (10).
13 The manufacturer shall not refuse to honor the
14 succession or discontinue the existing franchise
15 agreement before the hearing process is concluded as
16 prescribed by this Act, and thereafter if the Board
17 determines that it has failed to meet its burden of
18 proof and that good cause does not exist to refuse to
19 honor the succession and discontinue the existing
20 franchise agreement.
21 (B) No manufacturer shall impose any conditions
22 upon honoring the succession and continuing the
23 existing franchise agreement with the designated
24 successor other than that the franchisee has
25 designated a successor to the ownership or management
26 control under the succession provisions of the
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1 franchise, or that the designated successor is of good
2 moral character or meets the reasonable capital
3 standards and, with consideration given to the volume
4 of sales and service of the dealership, uniformly
5 applied minimum business experience standards in the
6 market area;
7 (11) to prevent or refuse to approve a proposal to
8 establish a successor franchise at a location previously
9 approved by the franchiser when submitted with the
10 voluntary termination by the existing franchisee unless
11 the successor franchisee would not otherwise qualify for a
12 new motor vehicle dealer's license under the Illinois
13 Vehicle Code or unless the franchiser, having the burden
14 of proof, proves that such proposed successor is not of
15 good moral character or does not meet the franchiser's
16 existing and reasonable capital standards and, with
17 consideration given to the volume of sales and service of
18 the dealership, uniformly applied minimum business
19 experience standards in the market area. However, when
20 such a rejection of a proposal is made, the manufacturer
21 shall give written notice of its reasons to the franchisee
22 within 60 days of receipt by the manufacturer of the
23 proposal. However, nothing herein shall be construed to
24 prevent a franchiser from implementing affirmative action
25 programs providing business opportunities for minorities,
26 or from complying with applicable federal, State or local
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1 law;
2 (12) to prevent or refuse to grant a franchise to a
3 person because such person owns, has investment in or
4 participates in the management of or holds a franchise for
5 the sale of another make or line of motor vehicles within 7
6 miles of the proposed franchise location in a county
7 having a population of more than 300,000 persons, or
8 within 12 miles of the proposed franchise location in a
9 county having a population of less than 300,000 persons;
10 (13) to prevent or attempt to prevent any new motor
11 vehicle dealer from establishing any additional motor
12 vehicle dealership or other facility limited to the sale
13 of factory repurchase vehicles or late model vehicles or
14 otherwise offering for sale factory repurchase vehicles of
15 the same line make at an existing franchise by failing to
16 make available any contract, agreement or other
17 arrangement which is made available or otherwise offered
18 to any person; or
19 (14) to exercise a right of first refusal or other
20 right to acquire a franchise from a dealer, unless the
21 manufacturer: (i) notifies the dealer in writing that it
22 intends to exercise a right of first refusal no later than
23 60 days after the manufacturer receives a notice of the
24 proposed transfer from the dealer; and (ii) having the
25 burden of proof, proves that the dealer's proposed
26 transferee is a person who is not of good moral character
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1 or does not meet the manufacturer's existing and
2 reasonable capital standards, and with consideration given
3 to the volume of sales and service of the dealership,
4 uniformly applied minimum business experience standards in
5 the market area.
6 Nothing in this paragraph shall be construed to
7 prevent a manufacturer from exercising the right of first
8 refusal for the purpose of implementing an affirmative
9 action program or providing business opportunities for
10 minorities, or from complying with applicable federal,
11 State or local law, provided: (i) the manufacturer has a
12 formal written program for increasing minority
13 representation in its dealer network; (ii) the right of
14 first refusal ensures that a minority dealer will acquire
15 at least 51% ownership and control of the dealership's
16 assets after the transfer; and (iii) the manufacturer
17 fulfills this obligation in good faith and does not
18 subsequently rescind, assign, or abandon the affirmative
19 action-based transfer.
20 If a manufacturer satisfies the requirements of this
21 paragraph and exercises a right of first refusal, the
22 manufacturer shall:
23 (A) notify notifies the dealer in writing that it
24 intends to exercise its right to acquire the franchise
25 not later than 60 days after the manufacturer's or
26 distributor's receipt of a notice of the proposed
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1 transfer from the dealer and all information and
2 documents reasonably and customarily required by the
3 manufacturer or distributor supporting the proposed
4 transfer;
5 (B) pay pays to the dealer the same or greater
6 consideration as the dealer has contracted to receive
7 in connection with the proposed transfer or sale of
8 all or substantially all of the dealership assets,
9 stock, or other ownership interest, including the
10 purchase or lease of all real property, leasehold, or
11 improvements related to the transfer or sale of the
12 dealership. Upon exercise of the right of first
13 refusal or such other right, the manufacturer or
14 distributor shall have the right to assign the lease
15 or to convey the real property;
16 (C) assume assumes all of the duties, obligations,
17 and liabilities contained in the agreements that were
18 to be assumed by the proposed transferee and with
19 respect to which the manufacturer or distributor
20 exercised the right of first refusal or other right to
21 acquire the franchise;
22 (D) reimburse reimburses the proposed transferee
23 for all reasonable expenses incurred in evaluating,
24 investigating, and negotiating the transfer of the
25 dealership prior to the manufacturer's or
26 distributor's exercise of its right of first refusal
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1 or other right to acquire the dealership. For purposes
2 of this paragraph, "reasonable expenses" includes the
3 usual and customary legal and accounting fees charged
4 for similar work, as well as expenses associated with
5 the evaluation and investigation of any real property
6 on which the dealership is operated. The proposed
7 transferee shall submit an itemized list of its
8 expenses to the manufacturer or distributor not later
9 than 30 days after the manufacturer's or distributor's
10 exercise of the right of first refusal or other right
11 to acquire the motor vehicle franchise. The
12 manufacturer or distributor shall reimburse the
13 proposed transferee for its expenses not later than 90
14 days after receipt of the itemized list. A
15 manufacturer or distributor may request to be provided
16 with the itemized list of expenses before exercising
17 the manufacturer's or distributor's right of first
18 refusal.
19 Except as provided in this paragraph (14), neither the
20 selling dealer nor the manufacturer or distributor shall
21 have any liability to any person as a result of a
22 manufacturer or distributor exercising its right of first
23 refusal.
24 For the purpose of this paragraph, "proposed
25 transferee" means the person to whom the franchise would
26 have been transferred to, or was proposed to be
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1 transferred to, had the right of first refusal or other
2 right to acquire the franchise not been exercised by the
3 manufacturer or distributor.
4 (f) It is deemed a violation for a manufacturer, any
5 parent company, subsidiary, affiliate, or agent of the
6 manufacturer, any person under common ownership or control,
7 any employee of the manufacturer, and any person holding 1% or
8 more of the shares of any class of securities or other
9 ownership interest in the manufacturer, broker, shareholder,
10 except a shareholder of 1% or less of the outstanding shares of
11 any class of securities of a manufacturer, a distributor, a
12 wholesaler, a distributor branch or division, a factory branch
13 or division, or a wholesale branch or division, or officer,
14 agent, broker, shareholder, except a shareholder of 1% or less
15 of the outstanding shares of any class of securities of a
16 manufacturer, distributor, or wholesaler which is a publicly
17 traded corporation, or other representative, directly or
18 indirectly, to own or operate a place of business as a motor
19 vehicle franchisee or motor vehicle financing affiliate. ,
20 except that, this subsection shall not prohibit
21 A manufacturer, common entity, distributor, or any
22 affiliated entity, including subsidiaries or entities under
23 common ownership or control, shall not own, operate, or
24 directly sell vehicles in this State, nor shall such entities
25 be eligible for a motor vehicle dealer license under the
26 Illinois Vehicle Code, regardless of the entity's branding as
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1 separate or independent of the controlling manufacturer.
2 This subsection does not prohibit:
3 (1) the ownership or operation of a place of business
4 by a manufacturer, distributor, or wholesaler for a
5 period, not to exceed 18 months, during the transition
6 from one motor vehicle franchisee to another;
7 (2) the investment in a motor vehicle franchisee by a
8 manufacturer, distributor, or wholesaler if the investment
9 is for the sole purpose of enabling a partner or
10 shareholder in that motor vehicle franchisee to acquire an
11 interest in that motor vehicle franchisee and that partner
12 or shareholder is not otherwise employed by or associated
13 with the manufacturer, distributor, or wholesaler and
14 would not otherwise have the requisite capital investment
15 funds to invest in the motor vehicle franchisee, and has
16 the right to purchase the entire equity interest of the
17 manufacturer, distributor, or wholesaler in the motor
18 vehicle franchisee within a reasonable period of time not
19 to exceed 5 years; or
20 (3) the ownership or operation of a place of business
21 by a manufacturer that manufactures only diesel engines
22 for installation in trucks having a gross vehicle weight
23 rating of more than 16,000 pounds that are required to be
24 registered under the Illinois Vehicle Code, provided that:
25 (A) the manufacturer does not otherwise
26 manufacture, distribute, or sell motor vehicles as
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1 defined under Section 1-217 of the Illinois Vehicle
2 Code;
3 (B) the manufacturer owned a place of business and
4 it was in operation as of January 1, 2016;
5 (C) the manufacturer complies with all obligations
6 owed to dealers that are not owned, operated, or
7 controlled by the manufacturer, including, but not
8 limited to those obligations arising pursuant to
9 Section 6;
10 (D) to further avoid any acts or practices, the
11 effect of which may be to lessen or eliminate
12 competition, the manufacturer provides to dealers on
13 substantially equal terms access to all support for
14 completing repairs, including, but not limited to,
15 parts and assemblies, training, and technical service
16 bulletins, and other information concerning repairs
17 that the manufacturer provides to facilities that are
18 owned, operated, or controlled by the manufacturer;
19 and
20 (E) the manufacturer does not require that
21 warranty repair work be performed by a
22 manufacturer-owned repair facility and the
23 manufacturer provides any dealer that has an agreement
24 with the manufacturer to sell and perform warranty
25 repairs on the manufacturer's engines the opportunity
26 to perform warranty repairs on those engines,
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1 regardless of whether the dealer sold the truck into
2 which the engine was installed.
3 (g) Notwithstanding the terms, provisions, or conditions
4 of any agreement or waiver, it shall be deemed a violation for
5 a manufacturer, a distributor, a wholesaler, a distributor
6 branch or division, a factory branch or division, or a
7 wholesale branch or division, or officer, agent, any parent,
8 subsidiary, affiliate, or agent of the manufacturer, any
9 person under common ownership or control, any employee of the
10 manufacturer, and any person holding 1% or more of the shares
11 of any class of securities or other ownership interest in the
12 manufacturer, or other representative thereof, to directly or
13 indirectly condition the awarding of a franchise to a
14 prospective new motor vehicle dealer, the addition of a line
15 make or franchise to an existing dealer, the renewal of a
16 franchise of an existing dealer, the approval of the
17 relocation of an existing dealer's facility, or the approval
18 of the sale or transfer of the ownership of a franchise on the
19 willingness of a dealer, proposed new dealer, or owner of an
20 interest in the dealership facility to enter into a site
21 control agreement or exclusive use agreement unless separate
22 and reasonable consideration was offered and accepted for that
23 agreement.
24 For purposes of this subsection (g), the terms "site
25 control agreement" and "exclusive use agreement" include any
26 agreement that has the effect of either (i) requiring that the
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1 dealer establish or maintain exclusive dealership facilities;
2 or (ii) restricting the ability of the dealer, or the ability
3 of the dealer's lessor in the event the dealership facility is
4 being leased, to transfer, sell, lease, or change the use of
5 the dealership premises, whether by sublease, lease,
6 collateral pledge of lease, or other similar agreement. "Site
7 control agreement" and "exclusive use agreement" also include
8 a manufacturer restricting the ability of a dealer to
9 transfer, sell, or lease the dealership premises by right of
10 first refusal to purchase or lease, option to purchase, or
11 option to lease if the transfer, sale, or lease of the
12 dealership premises is to a person who is an immediate family
13 member of the dealer. For the purposes of this subsection (g),
14 "immediate family member" means a spouse, parent, son,
15 daughter, son-in-law, daughter-in-law, brother, and sister.
16 If a manufacturer exercises any right of first refusal to
17 purchase or lease or option to purchase or lease with regard to
18 a transfer, sale, or lease of the dealership premises to a
19 person who is not an immediate family member of the dealer,
20 then (1) within 60 days from the receipt of the completed
21 application forms generally utilized by a manufacturer to
22 conduct its review and a copy of all agreements regarding the
23 proposed transfer, the manufacturer must notify the dealer of
24 its intent to exercise the right of first refusal to purchase
25 or lease or option to purchase or lease and (2) the exercise of
26 the right of first refusal to purchase or lease or option to
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1 purchase or lease must result in the dealer receiving
2 consideration, terms, and conditions that either are the same
3 as or greater than that which they have contracted to receive
4 in connection with the proposed transfer, sale, or lease of
5 the dealership premises.
6 Any provision contained in any agreement entered into on
7 or after November 25, 2009 (the effective date of Public Act
8 96-824) that is inconsistent with the provisions of this
9 subsection (g) shall be voidable at the election of the
10 affected dealer, prospective dealer, or owner of an interest
11 in the dealership facility.
12 (h) For purposes of this subsection:
13 "Successor manufacturer" means any motor vehicle
14 manufacturer that, on or after January 1, 2009, acquires,
15 succeeds to, or assumes any part of the business of another
16 manufacturer, referred to as the "predecessor manufacturer",
17 as the result of any of the following:
18 (i) A change in ownership, operation, or control of
19 the predecessor manufacturer by sale or transfer of
20 assets, corporate stock or other equity interest,
21 assignment, merger, consolidation, combination, joint
22 venture, redemption, court-approved sale, operation of law
23 or otherwise.
24 (ii) The termination, suspension, or cessation of a
25 part or all of the business operations of the predecessor
26 manufacturer.
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1 (iii) The discontinuance of the sale of the product
2 line.
3 (iv) A change in distribution system by the
4 predecessor manufacturer, whether through a change in
5 distributor or the predecessor manufacturer's decision to
6 cease conducting business through a distributor
7 altogether.
8 "Former Franchisee" means a new motor vehicle dealer that
9 has entered into a franchise with a predecessor manufacturer
10 and that has either:
11 (i) entered into a termination agreement or deferred
12 termination agreement with a predecessor or successor
13 manufacturer related to such franchise; or
14 (ii) has had such franchise canceled, terminated,
15 nonrenewed, noncontinued, rejected, nonassumed, or
16 otherwise ended.
17 For a period of 3 years from: (i) the date that a successor
18 manufacturer acquires, succeeds to, or assumes any part of the
19 business of a predecessor manufacturer; (ii) the last day that
20 a former franchisee is authorized to remain in business as a
21 franchised dealer with respect to a particular franchise under
22 a termination agreement or deferred termination agreement with
23 a predecessor or successor manufacturer; (iii) the last day
24 that a former franchisee that was cancelled, terminated,
25 nonrenewed, noncontinued, rejected, nonassumed, or otherwise
26 ended by a predecessor or successor manufacturer is authorized
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1 to remain in business as a franchised dealer with respect to a
2 particular franchise; or (iv) November 25, 2009 (the effective
3 date of Public Act 96-824), whichever is latest, it shall be
4 unlawful for such successor manufacturer to enter into a same
5 line make franchise with any person or to permit the
6 relocation of any existing same line make franchise, for a
7 line make of the predecessor manufacturer that would be
8 located or relocated within the relevant market area of a
9 former franchisee who owned or leased a dealership facility in
10 that relevant market area without first offering the
11 additional or relocated franchise to the former franchisee, or
12 the designated successor of such former franchisee in the
13 event the former franchisee is deceased or a person with a
14 disability, at no cost and without any requirements or
15 restrictions other than those imposed generally on the
16 manufacturer's other franchisees at that time, unless one of
17 the following applies:
18 (1) As a result of the former franchisee's
19 cancellation, termination, noncontinuance, or nonrenewal
20 of the franchise, the predecessor manufacturer had
21 consolidated the line make with another of its line makes
22 for which the predecessor manufacturer had a franchisee
23 with a then-existing dealership facility located within
24 that relevant market area.
25 (2) The successor manufacturer has paid the former
26 franchisee, or the designated successor of such former
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1 franchisee in the event the former franchisee is deceased
2 or a person with a disability, the fair market value of the
3 former franchisee's franchise on (i) the date the
4 franchiser announces the action which results in the
5 termination, cancellation, or nonrenewal; or (ii) the date
6 the action which results in termination, cancellation, or
7 nonrenewal first became general knowledge; or (iii) the
8 day 12 months prior to the date on which the notice of
9 termination, cancellation, or nonrenewal is issued,
10 whichever amount is higher. Payment is due within 90 days
11 of the effective date of the termination, cancellation, or
12 nonrenewal. If the termination, cancellation, or
13 nonrenewal is due to a manufacturer's change in
14 distributors, the manufacturer may avoid paying fair
15 market value to the dealer if the new distributor or the
16 manufacturer offers the dealer a franchise agreement with
17 terms acceptable to the dealer.
18 (3) The successor manufacturer proves that it would
19 have had good cause to terminate the franchise agreement
20 of the former franchisee, or the successor of the former
21 franchisee under item (e)(10) in the event that the former
22 franchisee is deceased or a person with a disability. The
23 determination of whether the successor manufacturer would
24 have had good cause to terminate the franchise agreement
25 of the former franchisee, or the successor of the former
26 franchisee, shall be made by the Board under subsection
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1 (d) of Section 12. A successor manufacturer that seeks to
2 assert that it would have had good cause to terminate a
3 former franchisee, or the successor of the former
4 franchisee, must file a petition seeking a hearing on this
5 issue before the Board and shall have the burden of
6 proving that it would have had good cause to terminate the
7 former franchisee or the successor of the former
8 franchisee. No successor dealer, other than the former
9 franchisee, may be appointed or franchised by the
10 successor manufacturer within the relevant market area of
11 the former franchisee until the Board has held a hearing
12 and rendered a determination on the issue of whether the
13 successor manufacturer would have had good cause to
14 terminate the former franchisee.
15 In the event that a successor manufacturer attempts to
16 enter into a same line make franchise with any person or to
17 permit the relocation of any existing line make franchise
18 under this subsection (h) at a location that is within the
19 relevant market area of 2 or more former franchisees, then the
20 successor manufacturer may not offer it to any person other
21 than one of those former franchisees unless the successor
22 manufacturer can prove that at least one of the 3 exceptions in
23 items (1), (2), and (3) of this subsection (h) applies to each
24 of those former franchisees.
25 (i) It shall be deemed a violation of this Section for any
26 manufacturer with an established franchise dealer network in
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1 this State, either directly or indirectly, through any parent,
2 subsidiary, affiliate, or agent of the manufacturer, any
3 person under common ownership or control, or common entity, to
4 engage in the sale, lease, or servicing of new motor vehicles
5 in a manner that bypasses or competes with the manufacturer's
6 existing franchisee network, including, but not limited to:
7 (1) engaging in practices intended to circumvent,
8 evade, or undermine the rights, obligations, or
9 protections afforded to franchisees under this Act; or
10 (2) establishing or using newly branded entities,
11 spin-offs, or affiliated or subsidiary entities to conduct
12 retail operations outside the franchise system.
13 (j) A manufacturer or distributor shall not engage in the
14 sale of new motor vehicles directly to the general public in
15 this State unless the manufacturer or distributor was lawfully
16 licensed to sell new motor vehicles directly to consumers in
17 this State before January 1, 2022.
18 (Source: P.A. 102-433, eff. 1-1-22.)
19 (815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
20 Sec. 6. Warranty agreements; claims; approval; payment;
21 written disapproval.
22 (a) Every manufacturer, distributor, wholesaler,
23 distributor branch or division, factory branch or division, or
24 wholesale branch or division shall properly fulfill any
25 warranty agreement and adequately and fairly compensate each
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1 of its motor vehicle dealers for labor and parts.
2 (b) Adequate and fair compensation requires the
3 manufacturer to pay each dealer no less than the amount the
4 retail customer pays for the same services with regard to rate
5 and time.
6 Any time guide previously agreed to by the manufacturer
7 and the dealer for extended warranty repairs may be used in
8 lieu of actual time expended. In the event that a time guide
9 has not been agreed to for warranty repairs, or said time guide
10 does not define time for an applicable warranty repair, the
11 manufacturer's time guide shall be used, multiplied by 1.5.
12 In no event shall such compensation fail to include full
13 compensation for diagnostic work, as well as repair service,
14 labor, and parts. Time allowances for the diagnosis and
15 performance of warranty work and service shall be no less than
16 charged to retail customers for the same work to be performed.
17 No warranty or factory compensated repairs shall be
18 excluded from this requirement, including recalls or other
19 voluntary stop-sell repairs required by the manufacturer. If a
20 manufacturer is required to issue a recall, the dealer will be
21 compensated for labor time as above stated.
22 Furthermore, manufacturers shall pay the dealer the same
23 effective labor rate (using the 100 sequential repair orders
24 chosen and submitted by the dealer less simple maintenance
25 repair orders) that the dealer receives for customer-pay
26 repairs. This requirement includes vehicle diagnostic times
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1 for all warranty repairs. Additionally, if a technician is
2 required to communicate with a Technical Assistance
3 Center/Engineering/or some external manufacturer source in
4 order to provide a warranty repair, the manufacturer shall pay
5 for the time from start of communications (including hold
6 time) until the communication is complete.
7 The dealer may submit a request to the manufacturer for
8 warranty labor rate increases a maximum of once per calendar
9 year; provided that if the manufacturer denies any request for
10 warranty labor rate increase the dealer may resubmit a new
11 request in the same calendar year.
12 A claim made by a franchised motor vehicle dealer for
13 compensation under this Section shall be either approved or
14 disapproved within 30 days after the claim is submitted to the
15 manufacturer in the manner and on the forms the manufacturer
16 reasonably prescribes. An approved claim shall be paid within
17 30 days after its approval. If a claim is not specifically
18 disapproved in writing or by electronic transmission within 30
19 days after the date on which the manufacturer receives it, the
20 claim shall be considered to be approved and payment shall
21 follow within 30 days.
22 In no event shall compensation to a motor vehicle dealer
23 for labor times and labor rates be less than the rates charged
24 by such dealer for like service to retail customers for
25 nonwarranty service and repairs. Additionally, the
26 manufacturer shall reimburse the dealer for any parts provided
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1 in satisfaction of a warranty at the prevailing retail price
2 charged by that dealer for the same parts when not provided in
3 satisfaction of a warranty; provided that such dealer's
4 prevailing retail price is not unreasonable when compared with
5 that of the holders of motor vehicle franchises from the same
6 manufacturer for identical parts in the geographic area in
7 which the dealer is engaged in business.
8 There shall be no reduction in payments due to
9 preestablished market norms or market averages. Manufacturers
10 are prohibited from establishing restrictions or limitations
11 of customer repair frequency due to failure rate indexes or
12 national failure averages.
13 No debit reduction or charge back of any item on a warranty
14 repair order may be made absent a finding of fraud or illegal
15 actions by the dealer.
16 A warranty claim timely made shall not be deemed invalid
17 solely because unavailable parts cause additional use and
18 mileage on the vehicle.
19 If a manufacturer imposes a recall or stop sale on any new
20 vehicle in a dealer's inventory that prevents the sale of the
21 vehicle, the manufacturer shall compensate the dealer for any
22 interest and storage until the vehicle is repaired and made
23 ready for sale.
24 Manufacturers are not permitted to impose any form of cost
25 recovery fees or surcharges against a franchised auto
26 dealership for payments made in accordance with this Section.
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1 All claims, either original or resubmitted, made by motor
2 vehicle dealers hereunder and under Section 5 for such labor
3 and parts shall be either approved or disapproved within 30
4 days following their submission. All approved claims shall be
5 paid within 30 days following their approval. The motor
6 vehicle dealer who submits a claim which is disapproved shall
7 be notified in writing of the disapproval within the same
8 period, and each such notice shall state the specific grounds
9 upon which the disapproval is based. The motor vehicle dealer
10 shall be permitted to correct and resubmit such disapproved
11 claims within 30 days of receipt of disapproval. Any claims
12 not specifically disapproved in writing within 30 days from
13 their submission shall be deemed approved and payment shall
14 follow within 30 days. The manufacturer or franchiser shall
15 have the right to require reasonable documentation for claims
16 and to audit such claims within a one year period from the date
17 the claim was paid or credit issued by the manufacturer or
18 franchiser, and to charge back any false or unsubstantiated
19 claims. The audit and charge back provisions of this Section
20 also apply to all other incentive and reimbursement programs
21 for a period of one year after the date the claim was paid or
22 credit issued by the manufacturer or franchiser. However, the
23 manufacturer retains the right to charge back any fraudulent
24 claim if the manufacturer establishes in a court of competent
25 jurisdiction in this State that the claim is fraudulent.
26 (c) The motor vehicle franchiser shall not, by agreement,
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1 by restrictions upon reimbursement, or otherwise, restrict the
2 nature and extent of services to be rendered or parts to be
3 provided so that such restriction prevents the motor vehicle
4 franchisee from satisfying the warranty by rendering services
5 in a good and workmanlike manner and providing parts which are
6 required in accordance with generally accepted standards. Any
7 such restriction shall constitute a prohibited practice.
8 (d) For the purposes of this Section, the "prevailing
9 retail price charged by that dealer for the same parts" means
10 the price paid by the motor vehicle franchisee for parts,
11 including all shipping and other charges, multiplied by the
12 sum of 1.0 and the franchisee's average percentage markup over
13 the price paid by the motor vehicle franchisee for parts
14 purchased by the motor vehicle franchisee from the motor
15 vehicle franchiser and sold at retail. The motor vehicle
16 franchisee may establish average percentage markup under this
17 Section by submitting to the motor vehicle franchiser 100
18 sequential customer paid service repair orders or 90 days of
19 customer paid service repair orders, whichever is less,
20 covering repairs made no more than 180 days before the
21 submission, and declaring what the average percentage markup
22 is. The average percentage markup so declared shall go into
23 effect 30 days following the declaration, subject to audit of
24 the submitted repair orders by the motor vehicle franchiser
25 and adjustment of the average percentage markup based on that
26 audit. Any audit must be conducted within 30 days following
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1 the declaration. Only retail sales not involving warranty
2 repairs, parts covered by subsection (e) of this Section, or
3 parts supplied for routine vehicle maintenance, shall be
4 considered in calculating average percentage markup. For the
5 purpose of this subsection, "routine maintenance" includes,
6 but is not limited to: (i) the replacement of oil or other
7 fluids, filters, batteries for internal combustion engine
8 vehicles, bulbs, brake pads, rotors, nuts, bolts, or
9 fasteners; (ii) the replacement of or work on tires or wheels,
10 including wheel alignments and tire and wheel rotations; and
11 (iii) the installation of an accessory. No motor vehicle
12 franchiser shall require a motor vehicle franchisee to
13 establish average percentage markup by a methodology, or by
14 requiring information, that is unduly burdensome or time
15 consuming to provide, including, but not limited to, part by
16 part or transaction by transaction calculations. A motor
17 vehicle franchisee shall not request a change in the average
18 percentage markup more than twice in one calendar year;
19 provided that, for any request that is not approved, a dealer
20 may resubmit an additional request for a change in the average
21 percentage markup.
22 (e) If a motor vehicle franchiser supplies a part or parts
23 for use in a repair rendered under a warranty other than by
24 sale of that part or parts to the motor vehicle franchisee, the
25 motor vehicle franchisee shall be entitled to compensation
26 equivalent to the motor vehicle franchisee's average
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