UNOFFICIAL COPY 23 RS BR 242
Page 1 of 26
XXXX 2/7/2023 11:24 AM Jacketed
AN ACT relating to motor vehicle dealers. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 190.010 is amended to read as follows: 3
As used in this chapter: 4
(1) "Manufacturer" means any person, partnership, firm, association, corporation, or 5
trust, resident or nonresident, who manufactures or assembles new motor vehicles, 6
or imports for distribution through distributors of new motor vehicles, or any 7
partnership, firm, association, joint venture, corporation, or trust, resident or 8
nonresident, which is controlled by the manufacturer. Additionally, the term 9
"manufacturer" shall include the following terms: 10
(a) "Distributor" which means any person, firm, association, corporation, or trust, 11
resident or nonresident, who in whole or in part offers for sale, sells, or 12
distributes any new motor vehicle to new motor vehicle dealers, or who 13
maintains factory representatives, or who controls any person, firm, 14
association, corporation, or trust, resident or nonresident, who in whole or in 15
part offers for sale, sells, or distributes any new motor vehicle to new motor 16
vehicle dealers; 17
(b) "Factory branch" which means a branch office maintained by a manufacturer 18
for the purpose of selling, or offering for sale, new motor vehicles to a 19
distributor, wholesaler, or new motor vehicle dealer, or for directing or 20
supervising, in whole or in part, factory or distributor representatives, and 21
shall further include any sales promotion organization, whether the same be a 22
person, firm, or corporation, which is engaged in promoting the sale of new 23
motor vehicles in this state of a particular brand or make to new motor vehicle 24
dealers; 25
(c) "Factory representative" which means a representative employed by a 26
manufacturer, distributor, or factory branch for the purpose of making or 27 UNOFFICIAL COPY 23 RS BR 242
Page 2 of 26
XXXX 2/7/2023 11:24 AM Jacketed
promoting for the sale of his or her, its, or their new motor vehicles, or for 1
supervising or contracting with his or her, its, or their dealers, or prospective 2
dealers; 3
(d) "Distributor branch" which means a branch office similarly maintained by a 4
distributor or wholesaler for the same purposes; and 5
(e) "Distributor representative" which means a representative similarly employed 6
by a distributor, distributor branch, or wholesaler; 7
(2) "Motor vehicle dealer" means any person not excluded by subsection (3) of this 8
section, engaged in the business of selling, offering to sell, soliciting, or advertising 9
the same, of new or used motor vehicles, or possessing motor vehicles for the 10
purpose of resale, either on his or her own account, or on behalf of another, either 11
as his or her primary business or incidental thereto; 12
(3) The term "motor vehicle dealer" shall not include: 13
(a) Receivers, trustees, administrators, executors, guardians, or other persons 14
appointed by or acting under the judgment or order of any court, and any 15
bank, trust company, or lending institution that is subject to state or federal 16
regulation, with regard to its disposition of repossessed motor vehicles; 17
(b) Public officers while performing their official duties; or 18
(c) Employees of persons enumerated in paragraphs (a) and (b) of this subsection, 19
when engaged in the specific performance of their duties as employees; 20
(4) "New motor vehicle dealer" means a vehicle dealer who holds a valid sales and 21
service agreement, franchise, or contract, granted by the manufacturer, distributor, 22
or wholesaler for the sale of the manufacturer's new motor vehicles; 23
(5) "New motor vehicle dealership facility" means an established place of business 24
which is being used or will be used primarily for the purpose of selling, buying, 25
displaying, repairing, and servicing motor vehicles; 26
(6) "Used motor vehicle dealer" means any person engaged in the business of selling at 27 UNOFFICIAL COPY 23 RS BR 242
Page 3 of 26
XXXX 2/7/2023 11:24 AM Jacketed
retail, displaying, offering for sale, or dealing in used motor vehicles or autocycles 1
as defined in KRS 186.010, but shall not mean any person engaged in the business 2
of dismantling, salvaging, or rebuilding motor vehicles by means of using used 3
parts, or any public officer performing his or her official duties; 4
(7) "Motor vehicle leasing dealer" means any person engaged in the business of 5
regularly making available, offering to make available, or arranging for another 6
person to use a motor vehicle pursuant to a bailment, lease, or other contractual 7
arrangement under which a charge is made for its use at a periodic rate for at least a 8
monthly term, and title to the motor vehicle is in a person other than the user, but 9
shall not mean a manufacturer or its affiliate leasing to its employees or to dealers; 10
(8) "Restricted motor vehicle dealer" means a motor vehicle dealer who exclusively 11
sells, offers to sell, solicits, or advertises specialized motor vehicles including, but 12
not limited to, funeral coaches, emergency vehicles, and an automotive recycling 13
dealer engaged in the business of dismantling, salvaging, or recycling salvage 14
motor vehicles for the purpose of harvesting used parts, components, assemblies, 15
and recyclable materials for resale, reuse, or reclamation; 16
(9) "Motorcycle dealer" means a motor vehicle dealer who exclusively sells, offers to 17
sell, solicits, or advertises motorcycles, including alternative-speed motorcycles as 18
defined in KRS 186.010 and autocycles as defined in KRS 186.010. Motorcycles 19
shall not include mopeds as defined in this section; 20
(10) "Motor vehicle salesperson" means any person who is employed as a salesperson by 21
a motor vehicle dealer to sell motor vehicles, or who is employed as an auctioneer 22
by a motor vehicle auction dealer to sell motor vehicles at auction; 23
(11) "Motor vehicle auction dealer" means any person primarily engaged in the business 24
of offering, negotiating, or attempting to negotiate a sale, purchase, or exchange of 25
a motor vehicle through auction; 26
(12) "Motor vehicle" means every vehicle intended primarily for use and operation on 27 UNOFFICIAL COPY 23 RS BR 242
Page 4 of 26
XXXX 2/7/2023 11:24 AM Jacketed
the public highways that is self-propelled including low-speed motor vehicles as 1
defined in KRS 186.010, but shall not include any recreational vehicle or farm 2
tractors and other machines and tools used in the production, harvesting, and care of 3
farm products; 4
(13) "New motor vehicle" means a vehicle that is in the possession of the manufacturer, 5
distributor, or wholesaler, or has been sold to the holders of a valid sales and 6
service agreement, franchise, or contract, granted by the manufacturer, distributor, 7
or wholesaler for the sale of the make of new vehicle, which is new, and on which 8
the original title has not been issued from the franchised dealer; 9
(14) "Moped" means a motorized bicycle with pedals whose frame design may include 10
one (1) or more horizontal crossbars supporting a fuel tank, or a motorized bicycle 11
with pedals and with a step through type frame rated no more than two (2) brake 12
horsepower, a cylinder capacity not exceeding fifty (50) cubic centimeters, an 13
automatic transmission not requiring clutching or shifting by the operator after the 14
drive system is engaged, and capable of a maximum speed of not more than thirty 15
(30) miles per hour; 16
(15) "Commission" means the Motor Vehicle Commission; 17
(16) "Commissioner" means the commissioner of the department; 18
(17) "Department" means the Department of Vehicle Regulation; 19
(18) "Licensor" means the commission; 20
(19) "Established place of business" means a permanent, enclosed commercial building 21
located within this state, easily accessible and open to the public at all reasonable 22
times, and at which the business of a vehicle dealer, including the display and repair 23
of vehicles, may be lawfully carried on in accordance with the terms of all 24
applicable building codes, zoning, and other land use regulatory ordinances; 25
(20) "Person" means a person, partnership, firm, corporation, association, trust, estate, or 26
other legal entity; 27 UNOFFICIAL COPY 23 RS BR 242
Page 5 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(21) "Franchise" means the agreement or contract between any new motor vehicle 1
manufacturer, written or otherwise, and any new motor vehicle dealer that purports 2
to fix the legal rights and liabilities of the parties to an agreement or contract, and 3
pursuant to which the dealer purchases and resells the franchise product, along with 4
any addendums to the franchise agreement; 5
(22) "Good faith" means honesty in fact, and the observance of reasonable commercial 6
standards of fair dealing in the trade, as is defined and interpreted in KRS 355.2-7
103(1)(b); 8
(23) "Designated family member" means the spouse, child, grandchild, parent, brother, 9
or sister of a dealer who, in the case of a deceased dealer, is entitled to inherit the 10
dealer's ownership interest in the dealership under the terms of the dealer's will; or 11
who has otherwise been designated in writing by a deceased dealer to succeed him 12
in the motor vehicle dealership; or who, under the laws of intestate succession of 13
this state is entitled to inherit the interest; or who, in the case of an incapacitated 14
dealer, has been appointed by a court as the legal representative of the dealer's 15
property. The term includes the appointed and qualified personal representative and 16
testamentary trustee of a deceased dealer; 17
(24) "Fraud" means a misrepresentation in any manner, whether intentionally false or 18
due to gross negligence, of a material fact; a promise or representation not made in 19
good faith; or an intentional failure to disclose material fact; 20
(25) "Sale" means the issuance, transfer, agreement for transfer, exchange, lease, pledge, 21
hypothecation, mortgage in any form, whether by transfer in trust or otherwise, of 22
any motor vehicle or interest in it, or of any franchise related to it, as well as any 23
option, subscription, other contract, or solicitation looking to a sale, offer to attempt 24
to sell in any form, whether spoken or written. A gift or delivery of any motor 25
vehicle or franchise with respect thereto, with or as a bonus on account of the sale 26
of anything, shall be deemed a sale of the motor vehicle or franchise; 27 UNOFFICIAL COPY 23 RS BR 242
Page 6 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(26) "Automotive mobility dealer" means any motor vehicle dealer who: 1
(a) Exclusively engages in the business of selling, offering to sell, or soliciting or 2
advertising the sale of adapted vehicles; 3
(b) Possesses adapted vehicles exclusively for the purpose of resale, either on his 4
or her own account or on behalf of another, as his or her primary business or 5
incidental thereto; or 6
(c) Engages in the business of selling, installing, or servicing; offering to sell, 7
install, or service; or soliciting or advertising the sale, installation, or servicing 8
of equipment or modifications specifically designed to facilitate use or 9
operation of a motor vehicle by an aging or disabled person; 10
(27) "Adapted vehicle" means a new or used motor vehicle especially designed or 11
modified for use by an aging or disabled person; 12
(28) "Mobility equipment" means equipment specifically designed to facilitate the use of 13
a motor vehicle by an aging or disabled person; 14
(29) "Nonprofit motor vehicle dealer" means a nonprofit organization exempt from 15
taxation under Section 501(c)(3) of the Internal Revenue Code that purchases motor 16
vehicles that it may offer for purchase to clients and other individuals who meet the 17
definition of client as defined in this section and who are referred to the 18
organization by public or private social service agencies; 19
(30) "Client" means a person who has an open case file with a nonprofit organization or 20
governmental agency and who meets the standards for disability or disadvantaging 21
condition as established in administrative regulations promulgated by the 22
commission pursuant to KRS 190.032(4); 23
(31) "Recreational vehicle" means a vehicle that: 24
(a) Is primarily designed as temporary living quarters for noncommercial 25
recreation or camping use; 26
(b) Has its own motive power or is towed by another vehicle; 27 UNOFFICIAL COPY 23 RS BR 242
Page 7 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(c) Is regulated by the National Highway Traffic Safety Administration as a 1
vehicle; and 2
(d) Does not require a special highway use permit; and 3
(32) "New recreational vehicle dealer" means a new recreational vehicle dealer as 4
defined in KRS 190A.010. 5
Section 2. KRS 190.042 is amended to read as follows: 6
(1) Any owner of a new motor vehicle dealership may appoint by will, or any other 7
written instrument, a designated family member to succeed in the ownership 8
interest of the said owner in the new motor vehicle dealership. 9
(2) Manufacturers shall permit an owner of a new motor vehicle dealership to 10
propose a successor addendum, which shall be subject to the requirements in this 11
section. 12
(3) Unless there exists good cause for refusal to honor succession on the part of the 13
manufacturer or distributor, any designated family member of a deceased or 14
incapacitated owner of a new motor vehicle dealership may succeed to the 15
ownership of the new motor vehicle dealership under the existing franchise 16
provided that: 17
(a) The designated family member gives the manufacturer or distributor written 18
notice of his or her intention to succeed to the ownership of the new motor 19
vehicle dealership within ninety (90) days of the owner's death or incapacity; 20
and 21
(b) The designated family member agrees to be bound by all the terms and 22
conditions of the franchise. 23
(4)[(3)] The manufacturer or distributor may request, and the designated family 24
member shall provide, promptly upon said request, personal and financial data that 25
is reasonably necessary to determine whether the succession should be honored. 26
Section 3. KRS 190.045 is amended to read as follows: 27 UNOFFICIAL COPY 23 RS BR 242
Page 8 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(1) Notwithstanding the terms, provisions, or conditions of any franchise or 1
notwithstanding the terms or provisions of any waiver, a manufacturer shall not 2
cancel, terminate, or fail to renew any franchise with a licensed new motor vehicle 3
dealer unless the manufacturer has: 4
(a) Satisfied the notice requirement of subsection (4) of this section; 5
(b) Has good cause for cancellation, termination, or nonrenewal; 6
(c) Has acted in good faith as defined in KRS 190.010(22); and 7
(d) Has established the requirements of this subsection in proceedings before the 8
licensor if the action is protested by the new motor vehicle dealer within: 9
1. Thirty (30)[fifteen (15)] days after receiving notice of the cancellation, 10
termination, or nonrenewal; or 11
2. Fifteen (15) days for a termination for a cause listed in subsection 12
(4)(c) of this section. 13
When a protest is filed, the licensor shall inform the manufacturer, distributor, 14
factory branch, or factory representative that a timely protest has been filed and that 15
the manufacturer, distributor, factory branch, or factory representative shall not 16
cancel, terminate, or fail to renew any franchise with the licensed new motor 17
vehicle dealer until the licensor has held a hearing and the licensor has determined 18
that the manufacturer has met its burden under this section. 19
(2) Notwithstanding the terms, provisions, or conditions of any franchise or the terms 20
or provisions of any waiver, good cause shall exist for the purposes of a 21
termination, cancellation, or nonrenewal when: 22
(a) There is a failure by the new motor vehicle dealer to comply with a provision 23
of the franchise which provision is both reasonable and of material 24
significance to the franchise relationship, provided that the dealer has been 25
notified in writing of the failure within one hundred eighty (180) days after 26
the manufacturer first acquired knowledge of the failure. 27 UNOFFICIAL COPY 23 RS BR 242
Page 9 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(b) If the failure by the new motor vehicle dealer, defined in paragraph (a) of this 1
subsection, relates to the performance of the new motor vehicle dealer in sales 2
or service, then good cause shall be defined as the failure of the new motor 3
vehicle dealer to comply with reasonable performance criteria established by 4
the manufacturer, if the new motor vehicle dealer was apprised by the 5
manufacturer in writing of a failure, and 6
1. The notification stated that notice was provided of failure of 7
performance pursuant to this section; 8
2. The new motor vehicle dealer was afforded a reasonable opportunity, 9
for a period of not less than six (6) months, to comply with the criteria; 10
and 11
3. The new motor vehicle dealer did not demonstrate substantial progress 12
toward compliance with the manufacturer's performance criteria during 13
the designated period. 14
(3) The manufacturer shall have the burden of proof under this section. 15
(4) Notwithstanding the terms, provisions, or conditions of any franchise prior to the 16
termination, cancellation, or nonrenewal of any franchise, the manufacturer shall 17
furnish notification of a termination, cancellation, or nonrenewal to the new motor 18
vehicle dealer as follows: 19
(a) In the manner described in subsection (2)(b) of this section; and 20
(b) In not less than ninety (90) days prior to the effective date of the termination, 21
cancellation or nonrenewal; or 22
(c) In not less than fifteen (15) days prior to the effective date of a termination, 23
cancellation, or nonrenewal with respect to any of the following: 24
1. Insolvency of the new motor vehicle dealer, or filing of any petition by 25
or against the new motor vehicle dealer under any bankruptcy or 26
receivership law; 27 UNOFFICIAL COPY 23 RS BR 242
Page 10 of 26
XXXX 2/7/2023 11:24 AM Jacketed
2. Failure of the new motor vehicle dealer to conduct its customary sales 1
and service operations during its customary business hours for seven (7) 2
consecutive business days, except for acts of God or circumstances 3
beyond the direct control of the new motor vehicle dealer; 4
3. Fraudulent misrepresentation by the new motor vehicle dealer to the 5
manufacturer or distributor which is material to the franchise; 6
4. Conviction of the new motor vehicle dealer, or any owner or operator 7
thereof, of any felony which is punishable by imprisonment; or 8
5. Revocation of any license which the new motor vehicle dealer is 9
required to have to operate a dealership; 10
(d) In not less than one hundred eighty (180) days prior to the effective date of a 11
termination or cancellation where the manufacturer or distributor is 12
discontinuing the sale of the product line. 13
(5) Notification under this section shall be in writing by certified mail or personally 14
delivered to the new motor vehicle dealer; and shall contain: 15
(a) A statement of intent to terminate, cancel, or not to renew the franchise; and 16
(b) A statement of the reasons for the termination, cancellation, or nonrenewal; 17
and 18
(c) The date on which the termination, cancellation, or nonrenewal takes effect. 19
(6) Upon the termination, nonrenewal, or cancellation of any franchise, pursuant to this 20
section, the new motor vehicle dealer shall be allowed fair and reasonable 21
compensation by the manufacturer for the: 22
(a) New current model year motor vehicle inventory which has been acquired 23
from the manufacturer, and which has not been damaged or altered while in 24
the dealer's possession; 25
(b) Supplies and parts which have been acquired from the manufacturer; 26
(c) Equipment and furnishings provided the new motor vehicle dealer purchased 27 UNOFFICIAL COPY 23 RS BR 242
Page 11 of 26
XXXX 2/7/2023 11:24 AM Jacketed
from the manufacturer or its approved sources; and 1
(d) Special tools. 2
Fair and reasonable compensation shall be paid by the manufacturer within ninety 3
(90) days of the effective date of termination, cancellation, or nonrenewal, provided 4
the new motor vehicle dealer has clear title to the inventory and other items and is 5
in a position to convey that title to the manufacturer. 6
(7) In the event of a termination, cancellation, or nonrenewal under this section, and the 7
new motor vehicle dealer is leasing the dealership facilities from a lessor other than 8
the manufacturer, or owns the dealership facilities, the manufacturer shall pay a 9
reasonable rent to the dealer in accordance with and subject to subsection (8) of this 10
section. 11
(8) (a) Reasonable rental value shall be paid only to the extent the dealership 12
premises are recognized in the franchise and only if they are: 13
1. Used solely for performance in accordance with the franchise; and 14
2. Not substantially in excess of those facilities recommended by the 15
manufacturer. 16
(b) If the facilities are owned by the dealer, the manufacturer will either: 17
1. Locate a purchaser who will offer to purchase the dealership facilities at 18
a reasonable price; or 19
2. Locate a lessee who will offer to lease the premises for a reasonable 20
term at a reasonable rent; or 21
3. Failing the foregoing, lease the dealership facilities at a reasonable 22
rental value for one (1) year. 23
(c) If the facilities are leased by the dealer, the manufacturer will either: 24
1. Locate a tenant or tenants satisfactory to the lessor, who will sublet or 25
assume the balance of the lease; or 26
2. Arrange with the lessor for the cancellation of the lease without penalty 27 UNOFFICIAL COPY 23 RS BR 242
Page 12 of 26
XXXX 2/7/2023 11:24 AM Jacketed
to the dealer; or 1
3. Failing the foregoing, lease the dealership facilities at a reasonable rent 2
for one (1) year. 3
(d) The manufacturer shall not be obligated to provide assistance under this 4
section if the dealer: 5
1. Fails to accept a bona fide offer from a prospective purchaser, sublessee 6
or assignee; or 7
2. Refuses to execute a settlement agreement with the lessor if the 8
agreement would be without cost to the dealer; or 9
3. Fails to make a written request for assistance under this section within 10
one (1) month of the termination, cancellation, or nonrenewal. 11
(e) If, in an action for damages under this section, the manufacturer or distributor 12
fails to prove either that the manufacturer or distributor has acted in good faith 13
or that there was good cause for the franchise termination, cancellation, or 14
nonrenewal, then the manufacturer or distributor may terminate, cancel, or fail 15
to renew the franchise upon payment to the new motor vehicle dealer of an 16
amount equal to the value of the dealership as an ongoing business location. 17
(9) Notice of termination to a dealer shall entitle the dealer to continue the franchise 18
and the dealer may attempt to sell the franchise until all of the dealer's appeal rights 19
have been exhausted. 20
Section 4. KRS 190.046 is amended to read as follows: 21
(1) Notwithstanding the terms of any franchise agreement, each motor vehicle 22
manufacturer or distributor, doing business within this Commonwealth, shall 23
assume all responsibility for and shall defend, indemnify, and hold harmless its 24
motor vehicle dealers against any loss, damages, and expenses, including legal 25
costs, arising out of complaints, claims, recall repairs or modifications or factory 26
authorized or directed repairs, or lawsuits resulting from warranty defects, which 27 UNOFFICIAL COPY 23 RS BR 242
Page 13 of 26
XXXX 2/7/2023 11:24 AM Jacketed
shall include structural or production defects; defects in the assembly; or design of 1
motor vehicles, parts, accessories; or other functions beyond the control of the 2
dealer, including without limitation, the selection of parts or components for the 3
vehicle. Each manufacturer or distributor shall pay reasonable compensation to any 4
authorized dealer who performs work to repair defects, or to repair any damage to 5
the manufacturer's or distributor's product sustained while the product is in transit to 6
the dealer, when the carrier or the means of transportation is designated by the 7
manufacturer or distributor. Each manufacturer or distributor shall provide to its 8
dealers with each model year a schedule of time allowances for the performance of 9
warranty repair work and services, which shall include time allowances for the 10
diagnosis and performance of warranty work and service time, and shall be 11
reasonable and adequate for the work to be performed. 12
(2) In the determination of what constitutes "reasonable compensation" under this 13
section, the principal factor to be considered shall be the amount of money that the 14
dealer is charging its other customers for the same type service or repair work. 15
Other factors may be considered, including the compensation being paid by other 16
manufacturers or distributors to their dealers for work; and the prevailing amount of 17
money being paid or charged by the dealers in the city or community in which the 18
authorized dealer is doing business. "Reasonable compensation" shall include 19
diagnosing the defect as needed; repair service; labor; parts and administrative and 20
clerical costs. The compensation of a dealer shall not be less than the amount 21
charged by the dealer for like services and parts, which minimum compensation for 22
parts shall be dealer cost plus thirty percent (30%) gross profit, to retail customers 23
for nonwarranty service and repairs, or less than the amounts indicated for work on 24
the schedule of warranty compensation required to be filed by the manufacturer 25
with the commission as a part of the manufacturer's license application by KRS 26
190.030. A manufacturer or distributor shall not require unreasonable proof to 27 UNOFFICIAL COPY 23 RS BR 242
Page 14 of 26
XXXX 2/7/2023 11:24 AM Jacketed
establish "reasonable compensation." 1
(3) (a) A manufacturer or distributor shall not require a dealer to submit a claim 2
authorized under this section sooner than thirty (30) days after the dealer 3
completes the preparation, delivery, or warranty service authorizing the claim 4
for preparation, delivery, or warranty service. 5
(b) All claims made by a dealer under this section shall be paid within thirty (30) 6
days after their approval. 7
(c) All claims shall be either approved or disapproved by the manufacturer or 8
distributor within thirty (30) days after their receipt on a completed form 9
supplied or approved by the manufacturer or distributor. 10
(d) Any claims not specifically disapproved in writing within thirty (30) days 11
after the receipt of the form shall be considered to be approved and payment 12
shall be made within thirty (30) days thereafter. 13
(e) A dealer shall not be required to maintain defective parts for more than thirty 14
(30) days after payment of a claim. 15
(f) Any dispute between the dealer and the manufacturer or distributor shall be 16
subject to the provisions of KRS 190.057. 17
(4) A manufacturer or distributor shall compensate the dealer for manufacturer-18
sponsored or distributor-sponsored sales or service promotion events, including but 19
not limited to rebates, programs, or activities in accordance with established written 20
guidelines for such events, programs, or activities, which the manufacturer or 21
distributor shall provide to each dealer. 22
(5) (a) A manufacturer or distributor shall not require a dealer to submit a claim 23
authorized under subsection (4) of this section sooner than thirty (30) days 24
after the dealer becomes eligible to submit the claim. 25
(b) All claims made by a dealer pursuant to subsection (4) of this section for 26
promotion events, including but not limited to rebates, programs, or activities, 27 UNOFFICIAL COPY 23 RS BR 242
Page 15 of 26
XXXX 2/7/2023 11:24 AM Jacketed
shall be paid within thirty (30) days after their approval. 1
(c) All claims shall be either approved or disapproved by the manufacturer or 2
distributor within thirty (30) days after their receipt on a completed form 3
supplied or approved by the manufacturer or distributor. 4
(d) Any claim not specifically disapproved in writing within thirty (30) days after 5
the receipt of this form shall be considered to be approved and payment shall 6
be made within thirty (30) days. 7
(6) If a dealer submits any claim under this section to a manufacturer or distributor that 8
is incomplete, inaccurate, or lacking any information usually required by the 9
manufacturer or distributor, or if incomplete, inaccurate, or missing information is 10
discovered during an audit, then the manufacturer or distributor shall promptly 11
notify the dealer, and the time limit to submit the claim shall be extended for a 12
reasonable length of time, not less than five (5) business days following notice by 13
the manufacturer or distributor to the dealer, for the dealer to provide the complete, 14
accurate, or lacking information to the manufacturer or distributor. A dealer's 15
failure to comply with the specific requirements of the manufacturer or distributor 16
for processing a claim may not constitute grounds for denial of the claim or 17
reduction of the amount of compensation paid to the dealer if the dealer presents 18
reasonable documentation or other evidence to substantiate the claim. 19
(7) (a) A manufacturer or distributor may only audit warranty, recall, sales, or 20
incentive claims for a period of twelve (12) months following payment, or the 21
end of a program which does not exceed one (1) year in length, whichever is 22
later, subject to all of the provisions of this section. 23
(b) A manufacturer or distributor shall not require documentation for warranty, 24
recall, sales, or incentive claims more than twelve (12) months after the claim 25
was paid or the end of a program which does not exceed one (1) year in 26
length, whichever is later. 27 UNOFFICIAL COPY 23 RS BR 242
Page 16 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(c) Prior to requiring any charge-back, reimbursement, or credit against a future 1
transaction arising out of an audit, the manufacturer or distributor shall submit 2
written notice to the dealer along with a copy of its audit and the detailed 3
reason for each intended charge-back, reimbursement, or credit. 4
(d) Notwithstanding the[The] limitations of this subsection, if a manufacturer 5
reasonably suspects fraud or that a dealer submitted false or misleading 6
claims, the manufacturer may audit the dealer for the claims during any 7
period in which an action for fraud or for the submission of false or 8
misleading claims may be commenced under applicable state law[ do not 9
apply if the manufacturer or distributor can prove fraud on a claim]. 10
Section 5. KRS 190.070 is amended to read as follows: 11
(1) It shall be a violation of this section for any manufacturer, distributor, factory 12
branch, [or] factory representative, distributor branch, or distributor representative 13
licensed under this chapter, one of their subsidiaries, or a company affiliated 14
through ownership of the manufacturer, distributor, factory branch, factory 15
representative, distributor branch, or distributor representative of at least twenty-16
five percent (25%) of the equity of the company, to require any new motor vehicle 17
dealer in the Commonwealth: 18
(a) To order or accept delivery of any motor vehicle, part or accessory thereof, 19
appliances, equipment, or any other product not required by law, which shall 20
not have been voluntarily ordered by the new motor vehicle dealer; except 21
that this section is not intended to modify or supersede any terms or 22
provisions of the franchise requiring new motor vehicle dealers to market a 23
representative line of those motor vehicles which the manufacturer or 24
distributor is publicly advertising;[.] 25
(b) To order or accept delivery of any new motor vehicle with special features, 26
appliances, accessories, or equipment not included in the list price of the 27 UNOFFICIAL COPY 23 RS BR 242
Page 17 of 26
XXXX 2/7/2023 11:24 AM Jacketed
motor vehicle, as publicly advertised by the manufacturer or distributor;[.] 1
(c) To order for any person any parts, accessories, equipment, machinery tools, 2
appliance, or any commodity whatsoever not required in connection with a 3
recall campaign;[.] 4
(d) To participate monetarily in an advertising campaign or contest, any 5
promotional materials, training materials, showroom or other display 6
decorations, or materials, at the expense of the dealer, without the consent of 7
the dealer;[.] 8
(e) To enter into any agreement with the manufacturer, distributor, factory 9
branch, or factory representative, or to do any other act prejudicial to the new 10
motor vehicle dealer by threatening to cancel a franchise or any contractual 11
agreement existing between the dealer and the manufacturer, distributor, 12
factory branch, or factory representative. Notice in good faith to any dealer of 13
the dealer's violation of any terms or provisions of the dealer's franchise, or 14
contractual agreement shall not constitute a violation of this law;[.] 15
(f) To change the capital structure of the dealership, or the means by or through 16
which the dealer finances the operation of the dealership, provided that the 17
dealership at all times meets any reasonable capital standards agreed to by the 18
dealer, excluding any entity engaged primarily in providing financing or 19
insurance on motor vehicles;[.] 20
(g) To refrain from participation in the management or investment in, or the 21
acquisition of any other line of new motor vehicle or related products; 22
provided, however, that this section does not apply unless the new motor 23
vehicle dealer maintains a reasonable line of credit for each make or line of 24
new motor vehicles, and that the new motor vehicle dealer remains in 25
substantial compliance with the terms and conditions of the franchise and with 26
any reasonable facility requirements of the manufacturer, and no change is 27 UNOFFICIAL COPY 23 RS BR 242
Page 18 of 26
XXXX 2/7/2023 11:24 AM Jacketed
made in the principal management of the new motor vehicle dealership;[.] 1
(h) To change location of the dealership, or to, during the course of the 2
agreement, make any substantial alterations to the same components of the 3
dealership premises within ten (10) years of a previously required 4
improvement, alteration, or construction to those same components, when to 5
do so, would be unreasonable in light of the current economic, political, and 6
social considerations;[.] 7
(i) To prospectively assent to a release, assignment, novation, waiver, or estoppel 8
which would relieve any person from liability to be imposed by this law, or to 9
require any controversy between a dealer and a manufacturer, distributor, or 10
representative, to be referred to any person other than the duly constituted 11
courts of the Commonwealth or the United States of America, or to the 12
commissioner, if the referral would be binding upon the dealer;[.] 13
(j) To establish or maintain exclusive facilities, personnel, display space, or 14
signage for a new motor vehicle make or line; or[.] 15
(k) To expand facilities without making available a sufficient supply of new 16
motor vehicles to support the expansion in light of the market and economic 17
conditions. 18
(2) It shall be a violation of this section for any manufacturer, distributor, factory 19
branch, [or] factory representative, distributor branch, or distributor representative 20
licensed under this chapter, one of their subsidiaries, or a company affiliated 21
through ownership of the manufacturer, distributor, factory branch, factory 22
representative, distributor branch, or distributor representative of at least twenty-23
five percent (25%) of the equity of the company, to: 24
(a) To delay, refuse, or fail to deliver motor vehicles, or vehicle parts or 25
accessories in reasonable quantities relative to the new motor vehicle dealer's 26
facilities and sales potential in the new motor vehicle dealer's relevant market 27 UNOFFICIAL COPY 23 RS BR 242
Page 19 of 26
XXXX 2/7/2023 11:24 AM Jacketed
area, and within a reasonable time, but in any case no more than sixty (60) 1
days, after receipt of an order from a dealer having a franchise for the retail 2
sale of any new vehicle sold or distributed by the manufacturer or distributor, 3
any new vehicle, parts, or accessories to new vehicles as are covered by the 4
franchise, if the vehicle, parts, or accessories are publicly advertised as being 5
available for delivery or actually being delivered. The delivery to another 6
dealer of a motor vehicle of the same model and identically[similarly] 7
equipped as the vehicle ordered by a motor vehicle dealer who has not 8
received delivery thereof, but who had placed his or her written order for the 9
vehicle prior to the order of the dealer receiving the vehicle, shall be prima 10
facie evidence of a delayed delivery of, or refusal to deliver, a new motor 11
vehicle to a motor vehicle dealer within sixty (60) days, without cause. This 12
section is not violated, however, if the failure is caused by acts or causes 13
beyond the control of the manufacturer, distributor, factory branch, or factory 14
representative;[.] 15
(b) To refuse to disclose to any new motor vehicle dealer, handling the same line 16
make, the manner and mode of distribution of that line make within the 17
relevant market areas;[.] 18
(c) To prevent or attempt to prevent a dealer from receiving fair and reasonable 19
compensation for the value of the franchised business. There shall not be a 20
transfer or assignment of the dealer's franchise without the consent of the 21
manufacturer or distributor, which consent shall not be unreasonably 22
withheld;[.] 23
(d) To receive money, goods, services, or any other benefit from any vendor on 24
account of a transaction between the dealer and the vendor with whom the 25
dealer does business on the recommendation or requirement of the 26
manufacturer or distributor, other than for compensation for services 27 UNOFFICIAL COPY 23 RS BR 242
Page 20 of 26
XXXX 2/7/2023 11:24 AM Jacketed
rendered, unless the benefit is promptly accounted for, and transmitted to 1
the dealer, excluding any entity engaged primarily in providing financing or 2
insurance on motor vehicles;[To obtain money, goods, service, or any other 3
benefit from any other person with whom the dealer does business, on account 4
of, or in relation to, the transaction between the dealer and the other person, 5
other than for compensation for services rendered, unless the benefit is 6
promptly accounted for, and transmitted to, the dealer, excluding any entity 7
engaged primarily in providing financing or insurance on motor vehicles.] 8
(e) To increase prices of motor vehicles which the dealer had ordered for private 9
retail customers prior to the dealer's receipt of the written official price 10
increase notification, a sales contract signed by a private retail consumer shall 11
constitute evidence of each order, provided that the vehicle is in fact delivered 12
to the customer. In the event of manufacturer price reductions, the amount of 13
a reduction received by a dealer shall be passed on to the private retail 14
consumer by the dealer, if the retail price was negotiated on the basis of the 15
previous higher price to the dealer. Price reductions shall apply to all vehicles 16
in the dealer's inventory which were subject to the price reduction. Price 17
differences applicable to new model or series motor vehicles at the time of the 18
introduction of new models or series shall not be considered a price increase 19
or price decrease. Price changes caused by the following shall not be subject 20
to the provisions of this section: 21
1. The addition to a motor vehicle of required or optional equipment 22
pursuant to state or federal law; 23
2. Revaluation of the United States dollar, in the case of foreign-make 24
vehicles or components; or 25
3. Increased transportation charges due to an increase in the rate charged 26
by common carrier or transporter;[.] 27 UNOFFICIAL COPY 23 RS BR 242
Page 21 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(f) To offer any refunds or other types of inducements to any person for the 1
purchase of new motor vehicles of a certain line make to be sold to the state or 2
any political subdivision thereof, without making the same offer, upon written 3
request, to all other dealers in the same line make within the relevant market 4
area;[.] 5
(g) To release to any outside party, except under subpoena, any administrative, 6
judicial or arbitration proceedings, or any business, financial, or personal 7
information which may be, from time to time, provided by the dealer to the 8
manufacturer, without the express written consent of the dealer;[.] 9
(h) To deny any dealer the right of free association with any other dealer for any 10
lawful purpose;[.] 11
(i) To establish or maintain a relationship, on the part of a manufacturer, 12
distributor, factory branch, or factory representative, where the voting rights 13
exceed a simple majority;[.] 14
(j) To own, operate, or control any motor vehicle dealership in the 15
Commonwealth; however, this subsection shall not prohibit: 16
1. The operation by any manufacturer of a dealership for a temporary 17
period, not to exceed one (1) year, during the transition from one (1) 18
owner to another; 19
2. The ownership or control of a dealership by a manufacturer while the 20
dealership is being sold under a bona fide contract or purchase option to 21
the operator of the dealership; or 22
3. The ownership, operation, or control of a dealership by a manufacturer 23
if the licensor determines after a hearing at the request of any party, that 24
there is not a dealer who is independent of the manufacturer available in 25
the community or trade area to own and operate the franchise in a 26
manner consistent with the public interest;[.] 27 UNOFFICIAL COPY 23 RS BR 242
Page 22 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(k) To compete without good faith with a new motor vehicle dealer in the same 1
line make, operating under an agreement or franchise from the 2
aforementioned manufacturer, distributor, factory branch, or factory 3
representative in the relevant market area. A manufacturer, distributor, factory 4
branch, or factory representative shall not, however, be deemed to be 5
competing when operating a dealership, either temporarily for a reasonable 6
period, not to exceed one (1) year, or in a bona fide retail operation which is 7
for sale to any qualified independent person at a fair and reasonable price, or 8
in a bona fide relationship in which an independent person has made a 9
significant investment, subject to loss in the dealership, and can reasonably 10
expect to acquire full ownership of such dealership on reasonable terms and 11
conditions;[.] 12
(l) To offer to sell or to sell, directly or indirectly, at retail, any new motor 13
vehicle to a consumer in the Commonwealth, except through a new motor 14
vehicle dealer holding a franchise for the line make covering the new motor 15
vehicle; provided, that this prohibition shall not apply to manufacturer or 16
franchisor sales of new motor vehicles to the federal government, charitable 17
organizations, fleet customers, or employees of the manufacturer or 18
franchisor; 19
(m) To fail to assign any retail vehicle reservation, request to purchase, or lease 20
received by the manufacturer from a resident of the Commonwealth to the 21
franchised dealer designated by the customer or, to the franchised dealer in 22
the closest proximity to the consumer, and for which the franchised dealer 23
is otherwise in compliance with the franchise agreement. Nothing in this 24
paragraph shall require a manufacturer or distributer to allocate or supply 25
additional or supplemental inventory to a franchised dealer located in the 26
Commonwealth in order to satisfy a retail consumer's reservation or 27 UNOFFICIAL COPY 23 RS BR 242
Page 23 of 26
XXXX 2/7/2023 11:24 AM Jacketed
request; 1
(n)[(l)] To unfairly discriminate among its new motor vehicle dealers with 2
respect to warranty reimbursement or authority granted its new motor vehicle 3
dealers to make warranty adjustment with retail customers;[.] 4
(o)[(m)] To fail to give consent to the sale, transfer, or exchange of the franchise 5
to a qualified buyer capable of being licensed as a new motor vehicle dealer in 6
this state; provided that consent may be withheld when in light of other 7
circumstances, granting the consent would be unreasonable; or[.] 8
(p)[(n)] To fail to be licensed as provided in this chapter, and to maintain a bond 9
in an amount as determined by this chapter. 10
(3) It shall be unlawful for a manufacturer, either directly or indirectly, or in 11
combination with or through any subsidiary or affiliated entity, to discriminate in 12
favor of one (1) dealer against another dealer holding a franchise for the same line 13
make of motor vehicle by furnishing to only one (1) dealer any of the following: 14
(a) Any vehicle, part, or other product that is not available to each dealer at the 15
same price, including discounts, rebates, incentives, or other payments or 16
allowances affecting the net price of the product; 17
(b) Any vehicle, part, or other product that is not made available to each dealer in 18
quantities proportionate to the demand for the vehicle, part, or other product; 19
(c) Any vehicle, part, or other product that is not made available to each dealer on 20
comparable delivery terms, including time of delivery after placement of an 21
order; 22
(d) Any promotional or advertising payment or allowance that is not made 23
available to each dealer on proportionally equal terms; 24
(e) Any opportunity to purchase or lease from the manufacturer the dealer's 25
facility that is not made available to each dealer on terms proportionate to the 26
respective values of its facilities; 27 UNOFFICIAL COPY 23 RS BR 242
Page 24 of 26
XXXX 2/7/2023 11:24 AM Jacketed
(f) Any personnel training that is not made available to each dealer on 1
proportionally equal terms; 2
(g) Any inventory or other financing that is not made available to each dealer on 3
proportionally equal terms, except that a manufacturer, subsidiary, or 4
affiliated entity shall not be obligated to make available financing to a dealer 5
who does not meet reasonable credit standards uniformly applied by the 6
manufacturer, subsidiary, or affiliated entity; 7
(h) Any opportunity to perform work for which the dealer is entitled to be 8
compensated under this chapter that is not made available to each dealer under 9
uniformly applied standards; 10
(i) Any opportunity to sell products or services distributed by the manufacturer 11
for resale in connection with the line make of the motor vehicle covered by 12
the franchise that is not made available to each dealer on proportionally equal 13
terms; 14
(j) Any opportunity to establish an additional sales, service, or parts outlet that is 15
not made available to each dealer in whose relevant market area the sales, 16
service, or parts outlet will be located; 17
(k) Any information concerning the manufacturer's products, prices or other 18
terms of sale, or promotional programs that is not contemporaneously 19
furnished to the dealer; 20
(l) Any improvement to, or payment to the dealer for an improvement to, the 21
dealer's facilities that is not made available to each dealer on proportionally 22
equal terms; 23
(m) Any opportunity to sell or assign retail installment contracts or consumer 24
leases to the manufacturer or the manufacturer's sales finance company 25
subsidiary that is not made available to each dealer on proportionally equal 26
terms, except that a manufacturer or sales finance company shall not be 27 UNOFFICIAL COPY 23 RS BR 242
Page 25 of 26
XXXX 2/7/2023 11:24 AM Jacketed
obligated to purchase any retail installment contract or consumer lease that 1
does not meet reasonable credit terms uniformly applied by the manufacturer 2
or sales finance company subsidiary; 3
(n) Any product assistance, service, or facility in connection with the franchise 4
that is not made available to each dealer on proportionally equal terms; or 5
(o) Any payment for any service or facility in connection with the franchise that 6
is not made available to each dealer on proportionally equal terms. 7
(4) It shall not be a defense to an alleged violation of subsection (3) of this section, that 8
an item or opportunity was offered to a dealer if the offer was conditioned upon the 9
dealer meeting one (1) or more requirements that are not reasonable and necessary 10
to fulfill the dealer's obligations under the franchise. The manufacturer shall have 11
the burden of proving that any requirement upon which an offer was conditioned 12
was reasonable and necessary to fulfill the dealer's obligations under the franchise 13
when the offer was made. A requirement shall not be found to be reasonable and 14
necessary to fulfill the dealer's obligations under the franchise if the manufacturer 15
cannot prove that it was within the control of each dealer to meet the requirement 16
imposed on the dealer as a condition of the offer. 17
(5) A dealer who alleges a good faith belief that the dealer has been, or is being, 18
discriminated against in violation of subsection (3) of this section, may demand in 19
writing that the manufacturer furnish the dealer with pertinent information 20
reasonably necessary for the dealer to determine if discrimination exists. If the 21
manufacturer fails to furnish the dealer with the information demanded within thirty 22
(30) days of the manufacturer's receipt of the dealer's written demand, the 23
manufacturer shall have, in any subsequent legal proceeding, the burden of proving 24
that the alleged violation has not occurred. 25
(6) Any dealer who is discriminated against by a manufacturer in violation of 26
subsection (3) of this section shall recover three (3) times an amount equal to the 27 UNOFFICIAL COPY 23 RS BR 242
Page 26 of 26
XXXX 2/7/2023 11:24 AM Jacketed
value of what the dealer would have received if the manufacturer had complied 1
with subsection (3) of this section upon furnishing any item or opportunity to 2
another dealer. 3
(7) A change in ownership of a manufacturer or distributor that contemplates a 4
continuation of that line make in the state shall not directly or indirectly, through 5
actions of any parent of the manufacturer or distributor, subsidiary of the 6
manufacturer or distributor, or common entity cause a termination, cancellation, or 7
nonrenewal of a dealer agreement by a present or previous manufacturer or 8
distributor of an existing agreement unless the manufacturer or distributor offers the 9
new vehicle dealer an agreement substantially similar to that offered to other 10
dealers of the same line make. 11