CHAPTER 7
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CHAPTER 7
( HB 150 )
AN ACT relating to motor vehicle dealers.
Be it enacted by the General Assembly of the Commonwealth of Kentucky:
Section 1. KRS 190.010 is amended to read as follows:
As used in this chapter:
(1) "Manufacturer" means any person, partnership, firm, association, corporation, or trust, resident or nonresident,
who manufactures or assembles new motor vehicles, or imports for distribution through distributors of new
motor vehicles, or any partnership, firm, association, joint venture, corporation, or trust, resident or
nonresident, which is controlled by the manufacturer. Additionally, the term "manufacturer" shall include the
following terms:
(a) "Distributor" which means any person, firm, association, corporation, or trust, resident or nonresident,
who in whole or in part offers for sale, sells, or distributes any new motor vehicle to new motor vehicle
dealers, or who maintains factory representatives, or who controls any person, firm, association,
corporation, or trust, resident or nonresident, who in whole or in part offers for sale, sells, or distributes
any new motor vehicle to new motor vehicle dealers;
(b) "Factory branch" which means a branch office maintained by a manufacturer for the purpose of selling,
or offering for sale, new motor vehicles to a distributor, wholesaler, or new motor vehicle dealer, or for
directing or supervising, in whole or in part, factory or distributor representatives, and shall further
include any sales promotion organization, whether the same be a person, firm, or corporation, which is
engaged in promoting the sale of new motor vehicles in this state of a particular brand or make to new
motor vehicle dealers;
(c) "Factory representative" which means a representative employed by a manufacturer, distributor, or
factory branch for the purpose of making or promoting for the sale of his or her, its, or their new motor
vehicles, or for supervising or contracting with his or her, its, or their dealers, or prospective dealers;
(d) "Distributor branch" which means a branch office similarly maintained by a distributor or wholesaler
for the same purposes; and
(e) "Distributor representative" which means a representative similarly employed by a distributor,
distributor branch, or wholesaler;
(2) "Motor vehicle dealer" means any person not excluded by subsection (3) of this section, engaged in the
business of selling, offering to sell, soliciting, or advertising the same, of new or used motor vehicles, or
possessing motor vehicles for the purpose of resale, either on his or her own account, or on behalf of another,
either as his or her primary business or incidental thereto;
(3) The term "motor vehicle dealer" shall not include:
(a) Receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under
the judgment or order of any court, and any bank, trust company, or lending institution that is subject to
state or federal regulation, with regard to its disposition of repossessed motor vehicles;
(b) Public officers while performing their official duties; or
(c) Employees of persons enumerated in paragraphs (a) and (b) of this subsection, when engaged in the
specific performance of their duties as employees;
(4) "New motor vehicle dealer" means a vehicle dealer who holds a valid sales and service agreement, franchise,
or contract, granted by the manufacturer, distributor, or wholesaler for the sale of the manufacturer's new
motor vehicles;
(5) "New motor vehicle dealership facility" means an established place of business which is being used or will be
used primarily for the purpose of selling, buying, displaying, repairing, and servicing motor vehicles;
(6) "Used motor vehicle dealer" means any person engaged in the business of selling at retail, displaying, offering
for sale, or dealing in used motor vehicles or autocycles as defined in KRS 186.010, but shall not mean any ACTS OF THE GENERAL ASSEMBLY 2
person engaged in the business of dismantling, salvaging, or rebuilding motor vehicles by means of using used
parts, or any public officer performing his or her official duties;
(7) "Motor vehicle leasing dealer" means any person engaged in the business of regularly making available,
offering to make available, or arranging for another person to use a motor vehicle pursuant to a bailment,
lease, or other contractual arrangement under which a charge is made for its use at a periodic rate for at least a
monthly term, and title to the motor vehicle is in a person other than the user, but shall not mean a
manufacturer or its affiliate leasing to its employees or to dealers;
(8) "Restricted motor vehicle dealer" means a motor vehicle dealer who exclusively sells, offers to sell, solicits, or
advertises specialized motor vehicles including, but not limited to, funeral coaches, emergency vehicles, and
an automotive recycling dealer engaged in the business of dismantling, salvaging, or recycling salvage motor
vehicles for the purpose of harvesting used parts, components, assemblies, and recyclable materials for resale,
reuse, or reclamation;
(9) "Motorcycle dealer" means a motor vehicle dealer who exclusively sells, offers to sell, solicits, or advertises
motorcycles, including alternative-speed motorcycles as defined in KRS 186.010 and autocycles as defined in
KRS 186.010. Motorcycles shall not include mopeds as defined in this section;
(10) "Motor vehicle salesperson" means any person who is employed as a salesperson by a motor vehicle dealer to
sell motor vehicles, or who is employed as an auctioneer by a motor vehicle auction dealer to sell motor
vehicles at auction;
(11) "Motor vehicle auction dealer" means any person primarily engaged in the business of offering, negotiating, or
attempting to negotiate a sale, purchase, or exchange of a motor vehicle through auction;
(12) "Motor vehicle" means every vehicle intended primarily for use and operation on the public highways that is
self-propelled including low-speed motor vehicles as defined in KRS 186.010, but shall not include any
recreational vehicle or farm tractors and other machines and tools used in the production, harvesting, and care
of farm products;
(13) "New motor vehicle" means a vehicle that is in the possession of the manufacturer, distributor, or wholesaler,
or has been sold to the holders of a valid sales and service agreement, franchise, or contract, granted by the
manufacturer, distributor, or wholesaler for the sale of the make of new vehicle, which is new, and on which
the original title has not been issued from the franchised dealer;
(14) "Moped" means a motorized bicycle with pedals whose frame design may include one (1) or more horizontal
crossbars supporting a fuel tank, or a motorized bicycle with pedals and with a step through type frame rated
no more than two (2) brake horsepower, a cylinder capacity not exceeding fifty (50) cubic centimeters, an
automatic transmission not requiring clutching or shifting by the operator after the drive system is engaged,
and capable of a maximum speed of not more than thirty (30) miles per hour;
(15) "Commission" means the Motor Vehicle Commission;
(16) "Commissioner" means the commissioner of the department;
(17) "Department" means the Department of Vehicle Regulation;
(18) "Licensor" means the commission;
(19) "Established place of business" means a permanent, enclosed commercial building located within this state,
easily accessible and open to the public at all reasonable times, and at which the business of a vehicle dealer,
including the display and repair of vehicles, may be lawfully carried on in accordance with the terms of all
applicable building codes, zoning, and other land use regulatory ordinances;
(20) "Person" means a person, partnership, firm, corporation, association, trust, estate, or other legal entity;
(21) "Franchise" means the agreement or contract between any new motor vehicle manufacturer, written or
otherwise, and any new motor vehicle dealer that purports to fix the legal rights and liabilities of the parties to
an agreement or contract, and pursuant to which the dealer purchases and resells the franchise product, along
with any addendums to the franchise agreement;
(22) "Good faith" means honesty in fact, and the observance of reasonable commercial standards of fair dealing in
the trade, as is defined and interpreted in KRS 355.2-103(1)(b);
(23) "Designated family member" means the spouse, child, grandchild, parent, brother, or sister of a dealer who, in
the case of a deceased dealer, is entitled to inherit the dealer's ownership interest in the dealership under the CHAPTER 7
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terms of the dealer's will; or who has otherwise been designated in writing by a deceased dealer to succeed him
in the motor vehicle dealership; or who, under the laws of intestate succession of this state is entitled to inherit
the interest; or who, in the case of an incapacitated dealer, has been appointed by a court as the legal
representative of the dealer's property. The term includes the appointed and qualified personal representative
and testamentary trustee of a deceased dealer;
(24) "Fraud" means a misrepresentation in any manner, whether intentionally false or due to gross negligence, of a
material fact; a promise or representation not made in good faith; or an intentional failure to disclose material
fact;
(25) "Sale" means the issuance, transfer, agreement for transfer, exchange, lease, pledge, hypothecation, mortgage
in any form, whether by transfer in trust or otherwise, of any motor vehicle or interest in it, or of any franchise
related to it, as well as any option, subscription, other contract, or solicitation looking to a sale, offer to attempt
to sell in any form, whether spoken or written. A gift or delivery of any motor vehicle or franchise with respect
thereto, with or as a bonus on account of the sale of anything, shall be deemed a sale of the motor vehicle or
franchise;
(26) "Automotive mobility dealer" means any motor vehicle dealer who:
(a) Exclusively engages in the business of selling, offering to sell, or soliciting or advertising the sale of
adapted vehicles;
(b) Possesses adapted vehicles exclusively for the purpose of resale, either on his or her own account or on
behalf of another, as his or her primary business or incidental thereto; or
(c) Engages in the business of selling, installing, or servicing; offering to sell, install, or service; or
soliciting or advertising the sale, installation, or servicing of equipment or modifications specifically
designed to facilitate use or operation of a motor vehicle by an aging or disabled person;
(27) "Adapted vehicle" means a new or used motor vehicle especially designed or modified for use by an aging or
disabled person;
(28) "Mobility equipment" means equipment specifically designed to facilitate the use of a motor vehicle by an
aging or disabled person;
(29) "Nonprofit motor vehicle dealer" means a nonprofit organization exempt from taxation under Section
501(c)(3) of the Internal Revenue Code that purchases motor vehicles that it may offer for purchase to clients
and other individuals who meet the definition of client as defined in this section and who are referred to the
organization by public or private social service agencies;
(30) "Client" means a person who has an open case file with a nonprofit organization or governmental agency and
who meets the standards for disability or disadvantaging condition as established in administrative regulations
promulgated by the commission pursuant to KRS 190.032(4);
(31) "Recreational vehicle" means a vehicle that:
(a) Is primarily designed as temporary living quarters for noncommercial recreation or camping use;
(b) Has its own motive power or is towed by another vehicle;
(c) Is regulated by the National Highway Traffic Safety Administration as a vehicle; and
(d) Does not require a special highway use permit; and
(32) "New recreational vehicle dealer" means a new recreational vehicle dealer as defined in KRS 190A.010.
Section 2. KRS 190.042 is amended to read as follows:
(1) Any owner of a new motor vehicle dealership may appoint by will, or any other written instrument, a
designated family member to succeed in the ownership interest of the said owner in the new motor vehicle
dealership.
(2) Manufacturers shall permit an owner of a new motor vehicle dealership to propose a successor addendum,
which shall be subject to the requirements in this section.
(3) Unless there exists good cause for refusal to honor succession on the part of the manufacturer or distributor,
any designated family member of a deceased or incapacitated owner of a new motor vehicle dealership may
succeed to the ownership of the new motor vehicle dealership under the existing franchise provided that: ACTS OF THE GENERAL ASSEMBLY 4
(a) The designated family member gives the manufacturer or distributor written notice of his or her
intention to succeed to the ownership of the new motor vehicle dealership within ninety (90) days of the
owner's death or incapacity; and
(b) The designated family member agrees to be bound by all the terms and conditions of the franchise.
(4)[(3)] The manufacturer or distributor may request, and the designated family member shall provide, promptly
upon said request, personal and financial data that is reasonably necessary to determine whether the succession
should be honored.
Section 3. KRS 190.045 is amended to read as follows:
(1) Notwithstanding the terms, provisions, or conditions of any franchise or notwithstanding the terms or
provisions of any waiver, a manufacturer shall not cancel, terminate, or fail to renew any franchise with a
licensed new motor vehicle dealer unless the manufacturer has:
(a) Satisfied the notice requirement of subsection (4) of this section;
(b) Has good cause for cancellation, termination, or nonrenewal;
(c) Has acted in good faith as defined in KRS 190.010(22); and
(d) Has established the requirements of this subsection in proceedings before the licensor if the action is
protested by the new motor vehicle dealer within:
1. Thirty (30)[fifteen (15)] days after receiving notice of the cancellation, termination, or
nonrenewal; or
2. Fifteen (15) days for a termination for a cause listed in subsection (4)(c) of this section.
When a protest is filed, the licensor shall inform the manufacturer, distributor, factory branch, or factory
representative that a timely protest has been filed and that the manufacturer, distributor, factory branch, or
factory representative shall not cancel, terminate, or fail to renew any franchise with the licensed new motor
vehicle dealer until the licensor has held a hearing and the licensor has determined that the manufacturer has
met its burden under this section.
(2) Notwithstanding the terms, provisions, or conditions of any franchise or the terms or provisions of any waiver,
good cause shall exist for the purposes of a termination, cancellation, or nonrenewal when:
(a) There is a failure by the new motor vehicle dealer to comply with a provision of the franchise which
provision is both reasonable and of material significance to the franchise relationship, provided that the
dealer has been notified in writing of the failure within one hundred eighty (180) days after the
manufacturer first acquired knowledge of the failure.
(b) If the failure by the new motor vehicle dealer, defined in paragraph (a) of this subsection, relates to the
performance of the new motor vehicle dealer in sales or service, then good cause shall be defined as the
failure of the new motor vehicle dealer to comply with reasonable performance criteria established by
the manufacturer, if the new motor vehicle dealer was apprised by the manufacturer in writing of a
failure, and
1. The notification stated that notice was provided of failure of performance pursuant to this
section;
2. The new motor vehicle dealer was afforded a reasonable opportunity, for a period of not less than
six (6) months, to comply with the criteria; and
3. The new motor vehicle dealer did not demonstrate substantial progress toward compliance with
the manufacturer's performance criteria during the designated period.
(3) The manufacturer shall have the burden of proof under this section.
(4) Notwithstanding the terms, provisions, or conditions of any franchise prior to the termination, cancellation, or
nonrenewal of any franchise, the manufacturer shall furnish notification of a termination, cancellation, or
nonrenewal to the new motor vehicle dealer as follows:
(a) In the manner described in subsection (2)(b) of this section; and
(b) In not less than ninety (90) days prior to the effective date of the termination, cancellation or
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(c) In not less than fifteen (15) days prior to the effective date of a termination, cancellation, or nonrenewal
with respect to any of the following:
1. Insolvency of the new motor vehicle dealer, or filing of any petition by or against the new motor
vehicle dealer under any bankruptcy or receivership law;
2. Failure of the new motor vehicle dealer to conduct its customary sales and service operations
during its customary business hours for seven (7) consecutive business days, except for acts of
God or circumstances beyond the direct control of the new motor vehicle dealer;
3. Fraudulent misrepresentation by the new motor vehicle dealer to the manufacturer or distributor
which is material to the franchise;
4. Conviction of the new motor vehicle dealer, or any owner or operator thereof, of any felony
which is punishable by imprisonment; or
5. Revocation of any license which the new motor vehicle dealer is required to have to operate a
dealership;
(d) In not less than one hundred eighty (180) days prior to the effective date of a termination or cancellation
where the manufacturer or distributor is discontinuing the sale of the product line.
(5) Notification under this section shall be in writing by certified mail or personally delivered to the new motor
vehicle dealer; and shall contain:
(a) A statement of intent to terminate, cancel, or not to renew the franchise; and
(b) A statement of the reasons for the termination, cancellation, or nonrenewal; and
(c) The date on which the termination, cancellation, or nonrenewal takes effect.
(6) Upon the termination, nonrenewal, or cancellation of any franchise, pursuant to this section, the new motor
vehicle dealer shall be allowed fair and reasonable compensation by the manufacturer for the:
(a) New current model year motor vehicle inventory which has been acquired from the manufacturer, and
which has not been damaged or altered while in the dealer's possession;
(b) Supplies and parts which have been acquired from the manufacturer;
(c) Equipment and furnishings provided the new motor vehicle dealer purchased from the manufacturer or
its approved sources; and
(d) Special tools.
Fair and reasonable compensation shall be paid by the manufacturer within ninety (90) days of the effective
date of termination, cancellation, or nonrenewal, provided the new motor vehicle dealer has clear title to the
inventory and other items and is in a position to convey that title to the manufacturer.
(7) In the event of a termination, cancellation, or nonrenewal under this section, and the new motor vehicle dealer
is leasing the dealership facilities from a lessor other than the manufacturer, or owns the dealership facilities,
the manufacturer shall pay a reasonable rent to the dealer in accordance with and subject to subsection (8) of
this section.
(8) (a) Reasonable rental value shall be paid only to the extent the dealership premises are recognized in the
franchise and only if they are:
1. Used solely for performance in accordance with the franchise; and
2. Not substantially in excess of those facilities recommended by the manufacturer.
(b) If the facilities are owned by the dealer, the manufacturer will either:
1. Locate a purchaser who will offer to purchase the dealership facilities at a reasonable price; or
2. Locate a lessee who will offer to lease the premises for a reasonable term at a reasonable rent; or
3. Failing the foregoing, lease the dealership facilities at a reasonable rental value for one (1) year.
(c) If the facilities are leased by the dealer, the manufacturer will either: ACTS OF THE GENERAL ASSEMBLY 6
1. Locate a tenant or tenants satisfactory to the lessor, who will sublet or assume the balance of the
lease; or
2. Arrange with the lessor for the cancellation of the lease without penalty to the dealer; or
3. Failing the foregoing, lease the dealership facilities at a reasonable rent for one (1) year.
(d) The manufacturer shall not be obligated to provide assistance under this section if the dealer:
1. Fails to accept a bona fide offer from a prospective purchaser, sublessee or assignee; or
2. Refuses to execute a settlement agreement with the lessor if the agreement would be without cost
to the dealer; or
3. Fails to make a written request for assistance under this section within one (1) month of the
termination, cancellation, or nonrenewal.
(e) If, in an action for damages under this section, the manufacturer or distributor fails to prove either that
the manufacturer or distributor has acted in good faith or that there was good cause for the franchise
termination, cancellation, or nonrenewal, then the manufacturer or distributor may terminate, cancel, or
fail to renew the franchise upon payment to the new motor vehicle dealer of an amount equal to the
value of the dealership as an ongoing business location.
(9) Notice of termination to a dealer shall entitle the dealer to continue the franchise and the dealer may attempt to
sell the franchise until all of the dealer's appeal rights have been exhausted.
Section 4. KRS 190.046 is amended to read as follows:
(1) Notwithstanding the terms of any franchise agreement, each motor vehicle manufacturer or distributor, doing
business within this Commonwealth, shall assume all responsibility for and shall defend, indemnify, and hold
harmless its motor vehicle dealers against any loss, damages, and expenses, including legal costs, arising out
of complaints, claims, recall repairs or modifications or factory authorized or directed repairs, or lawsuits
resulting from warranty defects, which shall include structural or production defects; defects in the assembly;
or design of motor vehicles, parts, accessories; or other functions beyond the control of the dealer, including
without limitation, the selection of parts or components for the vehicle. Each manufacturer or distributor shall
pay reasonable compensation to any authorized dealer who performs work to repair defects, or to repair any
damage to the manufacturer's or distributor's product sustained while the product is in transit to the dealer,
when the carrier or the means of transportation is designated by the manufacturer or distributor. Each
manufacturer or distributor shall provide to its dealers with each model year a schedule of time allowances for
the performance of warranty repair work and services, which shall include time allowances for the diagnosis
and performance of warranty work and service time, and shall be reasonable and adequate for the work to be
performed.
(2) In the determination of what constitutes "reasonable compensation" under this section, the principal factor to
be considered shall be the amount of money that the dealer is charging its other customers for the same type
service or repair work. Other factors may be considered, including the compensation being paid by other
manufacturers or distributors to their dealers for work; and the prevailing amount of money being paid or
charged by the dealers in the city or community in which the authorized dealer is doing business. "Reasonable
compensation" shall include diagnosing the defect as needed; repair service; labor; parts and administrative
and clerical costs. The compensation of a dealer shall not be less than the amount charged by the dealer for
like services and parts, which minimum compensation for parts shall be dealer cost plus thirty percent (30%)
gross profit, to retail customers for nonwarranty service and repairs, or less than the amounts indicated for
work on the schedule of warranty compensation required to be filed by the manufacturer with the commission
as a part of the manufacturer's license application by KRS 190.030. A manufacturer or distributor shall not
require unreasonable proof to establish "reasonable compensation."
(3) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under this section
sooner than thirty (30) days after the dealer completes the preparation, delivery, or warranty service
authorizing the claim for preparation, delivery, or warranty service.
(b) All claims made by a dealer under this section shall be paid within thirty (30) days after their approval.
(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30)
days after their receipt on a completed form supplied or approved by the manufacturer or distributor. CHAPTER 7
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(d) Any claims not specifically disapproved in writing within thirty (30) days after the receipt of the form
shall be considered to be approved and payment shall be made within thirty (30) days thereafter.
(e) A dealer shall not be required to maintain defective parts for more than thirty (30) days after payment of
a claim.
(f) Any dispute between the dealer and the manufacturer or distributor shall be subject to the provisions of
KRS 190.057.
(4) A manufacturer or distributor shall compensate the dealer for manufacturer-sponsored or distributor-sponsored
sales or service promotion events, including but not limited to rebates, programs, or activities in accordance
with established written guidelines for such events, programs, or activities, which the manufacturer or
distributor shall provide to each dealer.
(5) (a) A manufacturer or distributor shall not require a dealer to submit a claim authorized under subsection
(4) of this section sooner than thirty (30) days after the dealer becomes eligible to submit the claim.
(b) All claims made by a dealer pursuant to subsection (4) of this section for promotion events, including
but not limited to rebates, programs, or activities, shall be paid within thirty (30) days after their
approval.
(c) All claims shall be either approved or disapproved by the manufacturer or distributor within thirty (30)
days after their receipt on a completed form supplied or approved by the manufacturer or distributor.
(d) Any claim not specifically disapproved in writing within thirty (30) days after the receipt of this form
shall be considered to be approved and payment shall be made within thirty (30) days.
(6) If a dealer submits any claim under this section to a manufacturer or distributor that is incomplete, inaccurate,
or lacking any information usually required by the manufacturer or distributor, or if incomplete, inaccurate, or
missing information is discovered during an audit, then the manufacturer or distributor shall promptly notify
the dealer, and the time limit to submit the claim shall be extended for a reasonable length of time, not less
than five (5) business days following notice by the manufacturer or distributor to the dealer, for the dealer to
provide the complete, accurate, or lacking information to the manufacturer or distributor. A dealer's failure to
comply with the specific requirements of the manufacturer or distributor for processing a claim may not
constitute grounds for denial of the claim or reduction of the amount of compensation paid to the dealer if the
dealer presents reasonable documentation or other evidence to substantiate the claim.
(7) (a) A manufacturer or distributor may only audit warranty, recall, sales, or incentive claims for a period of
twelve (12) months following payment, or the end of a program which does not exceed one (1) year in
length, whichever is later, subject to all of the provisions of this section.
(b) A manufacturer or distributor shall not require documentation for warranty, recall, sales, or incentive
claims more than twelve (12) months after the claim was paid or the end of a program which does not
exceed one (1) year in length, whichever is later.
(c) Prior to requiring any charge-back, reimbursement, or credit against a future transaction arising out of
an audit, the manufacturer or distributor shall submit written notice to the dealer along with a copy of its
audit and the detailed reason for each intended charge-back, reimbursement, or credit.
(d) Notwithstanding the limitations of this subsection,[ do not apply if the] a manufacturer that possesses
evidence which would cause a person of ordinary caution, prudence, and judgment to believe that a
dealer submitted a claim that was fraudulent, false, or misleading may audit the dealer for the claims
during any period in which an action for fraud or for the submission of false or misleading claims
may be commenced under applicable state law[or distributor can prove fraud on a claim].
Section 5. KRS 190.070 is amended to read as follows:
(1) It shall be a violation of this section for any manufacturer, distributor, factory branch, or factory representative
licensed under this chapter, either directly or indirectly, to require any new motor vehicle dealer in the
Commonwealth:
(a) To order or accept delivery of any motor vehicle, part or accessory thereof, appliances, equipment, or
any other product not required by law, which shall not have been voluntarily ordered by the new motor
vehicle dealer; except that this section is not intended to modify or supersede any terms or provisions of ACTS OF THE GENERAL ASSEMBLY 8
the franchise requiring new motor vehicle dealers to market a representative line of those motor
vehicles which the manufacturer or distributor is publicly advertising;[.]
(b) To order or accept delivery of any new motor vehicle with special features, appliances, accessories, or
equipment not included in the list price of the motor vehicle, as publicly advertised by the manufacturer
or distributor;[.]
(c) To order for any person any parts, accessories, equipment, machinery tools, appliance, or any
commodity whatsoever not required in connection with a recall campaign;[.]
(d) To participate monetarily in an advertising campaign or contest, any promotional materials, training
materials, showroom or other display decorations, or materials, at the expense of the dealer, without the
consent of the dealer;[.]
(e) To enter into any agreement with the manufacturer, distributor, factory branch, or factory
representative, or to do any other act prejudicial to the new motor vehicle dealer by threatening to
cancel a franchise or any contractual agreement existing between the dealer and the manufacturer,
distributor, factory branch, or factory representative. Notice in good faith to any dealer of the dealer's
violation of any terms or provisions of the dealer's franchise, or contractual agreement shall not
constitute a violation of this law;[.]
(f) To change the capital structure of the dealership, or the means by or through which the dealer finances
the operation of the dealership, provided that the dealership at all times meets any reasonable capital
standards agreed to by the dealer, excluding any entity engaged primarily in providing financing or
insurance on motor vehicles;[.]
(g) To refrain from participation in the management or investment in, or the acquisition of any other line of
new motor vehicle or related products; provided, however, that this section does not apply unless the
new motor vehicle dealer maintains a reasonable line of credit for each make or line of new motor
vehicles, and that the new motor vehicle dealer remains in substantial compliance with the terms and
conditions of the franchise and with any reasonable facility requirements of the manufacturer, and no
change is made in the principal management of the new motor vehicle dealership;[.]
(h) To change the location of the dealership[,] or[ to], during the course of the agreement, make any
substantial alterations to the same components of the dealership premises:
1. Within ten (10) years of a previously required improvement, alteration, or construction to
those same components; or[,]
2. When to do so, would be unreasonable in light of the current economic, political, and social
considerations;[.]
(i) To prospectively assent to a release, assignment, novation, waiver, or estoppel which would relieve any
person from liability to be imposed by this law, or to require any controversy between a dealer and a
manufacturer, distributor, or representative, to be referred to any person other than the duly constituted
courts of the Commonwealth or the United States of America, or to the commissioner, if the referral
would be binding upon the dealer;[.]
(j) To establish or maintain exclusive facilities, personnel, display space, or signage for a new motor
vehicle make or line; or[.]
(k) To expand facilities without making available a sufficient supply of new motor vehicles to support the
expansion in light of the market and economic conditions.
(2) It shall be a violation of this section for any manufacturer, distributor, factory branch, or factory representative,
either directly or indirectly:
(a) To delay, refuse, or fail to deliver motor vehicles, or vehicle parts or accessories in reasonable
quantities relative to the new motor vehicle dealer's facilities and sales potential in the new motor
vehicle dealer's relevant market area, and within a reasonable time, but in any case no more than sixty
(60) days, after receipt of an order from a dealer having a franchise for the retail sale of any new vehicle
sold or distributed by the manufacturer or distributor, any new vehicle, parts, or accessories to new
vehicles as are covered by the franchise, if the vehicle, parts, or accessories are publicly advertised as
being available for delivery or actually being delivered. The delivery to another dealer of a motor
vehicle of the same model and identically[similarly] equipped as the vehicle ordered by a motor vehicle
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prior to the order of the dealer receiving the vehicle, shall be prima facie evidence of a delayed delivery
of, or refusal to deliver, a new motor vehicle to a motor vehicle dealer within sixty (60) days, without
cause. This section is not violated, however, if the failure is caused by acts or causes beyond the control
of the manufacturer, distributor, factory branch, or factory representative;[.]
(b) To refuse to disclose to any new motor vehicle dealer, handling the same line make, the manner and
mode of distribution of that line make within the relevant market areas;[.]
(c) To prevent or attempt to prevent a dealer from receiving fair and reasonable compensation for the value
of the franchised business. There shall not be a transfer or assignment of the dealer's franchise without
the consent of the manufacturer or distributor, which consent shall not be unreasonably withheld;[.]
(d) To receive money, goods, services, or any other benefit from any vendor on account of a transaction
between the dealer and the vendor with whom the dealer does business on the recommendation or
requirement of the manufacturer or distributor, other than for compensation for services rendered,
unless the benefit is promptly accounted for, and transmitted to the dealer, excluding any entity
engaged primarily in providing financing or insurance on motor vehicles;[To obtain money, goods,
service, or any other benefit from any other person with whom the dealer does business, on account of,
or in relation to, the transaction between the dealer and the other person, other than for compensation
for services rendered, unless the benefit is promptly accounted for, and transmitted to, the dealer,
excluding any entity engaged primarily in providing financing or insurance on motor vehicles.]
(e) To increase prices of motor vehicles which the dealer had ordered for private retail customers prior to
the dealer's receipt of the written official price increase notification, a sales contract signed by a private
retail consumer shall constitute evidence of each order, provided that the vehicle is in fact delivered to
the customer. In the event of manufacturer price reductions, the amount of a reduction received by a
dealer shall be passed on to the private retail consumer by the dealer, if the retail price was negotiated
on the basis of the previous higher price to the dealer. Price reductions shall apply to all vehicles in the
dealer's inventory which were subject to the price reduction. Price differences applicable to new model
or series motor vehicles at the time of the introduction of new models or series shall not be considered a
price increase or price decrease. Price changes caused by the following shall not be subject to the
provisions of this section:
1. The addition to a motor vehicle of required or optional equipment pursuant to state or federal
law;
2. Revaluation of the United States dollar, in the case of foreign-make vehicles or components; or
3. Increased transportation charges due to an increase in the rate charged by common carrier or
transporter;[.]
(f) To offer any refunds or other types of inducements to any person for the purchase of new motor
vehicles of a certain line make to be sold to the state or any political subdivision thereof, without
making the same offer, upon written request, to all other dealers in the same line make within the
relevant market area;[.]
(g) To release to any outside party, except under subpoena, any administrative, judicial or arbitration
proceedings, or any business, financial, or personal information which may be, from time to time,
provided by the dealer to the manufacturer, without the express written consent of the dealer;[.]
(h) To deny any dealer the right of free association with any other dealer for any lawful purpose;[.]
(i) To establish or maintain a relationship, on the part of a manufacturer, distributor, factory branch, or
factory representative, where the voting rights exceed a simple majority;[.]
(j) To own, operate, or control any motor vehicle dealership in the Commonwealth; however, this
subsection shall not prohibit:
1. The operation by any manufacturer of a dealership for a temporary period, not to exceed one (1)
year, during the transition from one (1) owner to another;
2. The ownership or control of a dealership by a manufacturer while the dealership is being sold
under a bona fide contract or purchase option to the operator of the dealership; or ACTS OF THE GENERAL ASSEMBLY 10
3. The ownership, operation, or control of a dealership by a manufacturer if the licensor determines
after a hearing at the request of any party, that there is not a dealer who is independent of the
manufacturer available in the community or trade area to own and operate the franchise in a
manner consistent with the public interest;[.]
(k) To compete without good faith with a new motor vehicle dealer in the same line make, operating under
an agreement or franchise from the aforementioned manufacturer, distributor, factory branch, or factory
representative in the relevant market area. A manufacturer, distributor, factory branch, or factory
representative shall not, however, be deemed to be competing when operating a dealership, either
temporarily for a reasonable period, not to exceed one (1) year, or in a bona fide retail operation which
is for sale to any qualified independent person at a fair and reasonable price, or in a bona fide
relationship in which an independent person has made a significant investment, subject to loss in the
dealership, and can reasonably expect to acquire full ownership of such dealership on reasonable terms
and conditions;[.]
(l) To offer to sell or to sell, directly or indirectly, at retail, any new motor vehicle to a consumer in the
Commonwealth, except through a new motor vehicle dealer holding a franchise for the line make
covering the new motor vehicle. The prohibition in this paragraph shall not apply to manufacturer or
franchisor sales of new motor vehicles to the federal government, charitable organizations, fleet
customers, or employees of the manufacturer or franchisor;
(m) To fail to assign any retail vehicle reservation, request to purchase, or lease received by the
manufacturer from a resident of the Commonwealth to the franchised dealer designated by the
customer or, if no designation is made, to the franchised dealer in the closest proximity to the
consumer, and for which the franchised dealer is otherwise in compliance with the franchise
agreement and authorized to sell the make and model based on applicable standards and
requirements that include but are not limited to any facility, technology, or training requirements
necessary to sell or service the vehicle, so long as the standards and requirements are compliant with
the applicable laws and regulations. Nothing in this paragraph shall require a manufacturer or
distributer to allocate or supply additional or supplemental inventory to a franchised dealer located
in the Commonwealth in order to satisfy a retail consumer's reservation or request;
(n)[(l)] To unfairly discriminate among its new motor vehicle dealers with respect to warranty
reimbursement or authority granted its new motor vehicle dealers to make warranty adjustment with
retail customers;[.]
(o)[(m)] To fail to give consent to the sale, transfer, or exchange of the franchise to a qualified buyer
capable of being licensed as a new motor vehicle dealer in this state; provided that consent may be
withheld when in light of other circumstances, granting the consent would be unreasonable; or[.]
(p)[(n)] To fail to be licensed as provided in this chapter, and to maintain a bond in an amount as
determined by this chapter.
(3) It shall be unlawful for a manufacturer, either directly or indirectly, or in combination with or through any
subsidiary or affiliated entity, to discriminate in favor of one (1) dealer against another dealer holding a
franchise for the same line make of motor vehicle by furnishing to only one (1) dealer any of the following:
(a) Any vehicle, part, or other product that is not available to each dealer at the same price, including
discounts, rebates, incentives, or other payments or allowances affecting the net price of the product;
(b) Any vehicle, part, or other product that is not made available to each dealer in quantities proportionate
to the demand for the vehicle, part, or other product;
(c) Any vehicle, part, or other product that is not made available to each dealer on comparable delivery
terms, including time of delivery after placement of an order;
(d) Any promotional or advertising payment or allowance that is not made available to each dealer on
proportionally equal terms;
(e) Any opportunity to purchase or lease from the manufacturer the dealer's facility that is not made
available to each dealer on terms proportionate to the respective values of its facilities;
(f) Any personnel training that is not made available to each dealer on proportionally equal terms;
(g) Any inventory or other financing that is not made available to each dealer on proportionally equal
terms, except that a manufacturer, subsidiary, or affiliated entity shall not be obligated to make CHAPTER 7
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available financing to a dealer who does not meet reasonable credit standards uniformly applied by the
manufacturer, subsidiary, or affiliated entity;
(h) Any opportunity to perform work for which the dealer is entitled to be compensated under this chapter
that is not made available to each dealer under uniformly applied standards;
(i) Any opportunity to sell products or services distributed by the manufacturer for resale in connection
with the line make of the motor vehicle covered by the franchise that is not made available to each
dealer on proportionally equal terms;
(j) Any opportunity to establish an additional sales, service, or parts outlet that is not made available to
each dealer in whose relevant market area the sales, service, or parts outlet will be located;
(k) Any information concerning the manufacturer's products, prices or other terms of sale, or promotional
programs that is not contemporaneously furnished to the dealer;
(l) Any improvement to, or payment to the dealer for an improvement to, the dealer's facilities that is not
made available to each dealer on proportionally equal terms;
(m) Any opportunity to sell or assign retail installment contracts or consumer leases to the manufacturer or
the manufacturer's sales finance company subsidiary that is not made available to each dealer on
proportionally equal terms, except that a manufacturer or sales finance company shall not be obligated
to purchase any retail installment contract or consumer lease that does not meet reasonable credit terms
uniformly applied by the manufacturer or sales finance company subsidiary;
(n) Any product assistance, service, or facility in connection with the franchise that is not made available to
each dealer on proportionally equal terms; or
(o) Any payment for any service or facility in connection with the franchise that is not made available to
each dealer on proportionally equal terms.
(4) It shall not be a defense to an alleged violation of subsection (3) of this section, that an item or opportunity was
offered to a dealer if the offer was conditioned upon the dealer meeting one (1) or more requirements that are
not reasonable and necessary to fulfill the dealer's obligations under the franchise. The manufacturer shall have
the burden of proving that any requirement upon which an offer was conditioned was reasonable and necessary
to fulfill the dealer's obligations under the franchise when the offer was made. A requirement shall not be
found to be reasonable and necessary to fulfill the dealer's obligations under the franchise if the manufacturer
cannot prove that it was within the control of each dealer to meet the requirement imposed on the dealer as a
condition of the offer.
(5) A dealer who alleges a good faith belief that the dealer has been, or is being, discriminated against in violation
of subsection (3) of this section, may demand in writing that the manufacturer furnish the dealer with pertinent
information reasonably necessary for the dealer to determine if discrimination exists. If the manufacturer fails
to furnish the dealer with the information demanded within thirty (30) days of the manufacturer's receipt of the
dealer's written demand, the manufacturer shall have, in any subsequent legal proceeding, the burden of
proving that the alleged violation has not occurred.
(6) Any dealer who is discriminated against by a manufacturer in violation of subsection (3) of this section shall
recover three (3) times an amount equal to the value of what the dealer would have received if the
manufacturer had complied with subsection (3) of this section upon furnishing any item or opportunity to
another dealer.
(7) A change in ownership of a manufacturer or distributor that contemplates a continuation of that line make in
the state shall not directly or indirectly, through actions of any parent of the manufacturer or distributor,
subsidiary of the manufacturer or distributor, or common entity cause a termination, cancellation, or
nonrenewal of a dealer agreement by a present or previous manufacturer or distributor of an existing
agreement unless the manufacturer or distributor offers the new vehicle dealer an agreement substantially
similar to that offered to other dealers of the same line make.
Signed by Governor March 16, 2023.