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AN ACT relating to motor vehicle dealers. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
ď˘Section 1. KRS 190.046 is amended to read as follows: 3
(1) Notwithstanding the terms of any franchise agreement, each motor vehicle 4
manufacturer or distributor, doing business within this Commonwealth, shall 5
assume all responsibility for and shall defend, indemnify, and hold harmless its 6
motor vehicle dealers against any loss, damages, and expenses, including legal 7
costs, arising out of complaints, claims, recall repairs or modifications or factory 8
authorized or directed repairs, or lawsuits resulting from warranty defects, which 9
shall include structural or production defects; defects in the assembly; or design of 10
motor vehicles, parts, accessories; or other functions beyond the control of the 11
dealer, including without limitation, the selection of parts or components for the 12
vehicle. Each manufacturer or distributor shall pay reasonable compensation to any 13
authorized dealer who performs work to repair defects, or to repair any damage to 14
the manufacturer's or distributor's product sustained while the product is in transit to 15
the dealer, when the carrier or the means of transportation is designated by the 16
manufacturer or distributor. Each manufacturer or distributor shall provide to its 17
dealers with each model year a schedule of time allowances for the performance of 18
warranty repair work and services, which shall include time allowances for the 19
diagnosis and performance of warranty work and service time, and shall be 20
reasonable and adequate for the work to be performed. 21
(2) (a) In the determination of what constitutes "reasonable compensation" under this 22
section, the principal factor to be considered shall be the amount of money 23
that the dealer is charging its other customers for the same type service or 24
repair work. Other factors may be considered, including: 25
1. The compensation being paid by other manufacturers or distributors to 26
their dealers for work; and 27 UNOFFICIAL COPY 24 RS HB 592/GA
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2. The prevailing amount of money being paid or charged by the dealers in 1
the city or community in which the authorized dealer is doing business. 2
(b) "Reasonable compensation" shall include: 3
1. Diagnosing the defect as needed; 4
2. Repair service; 5
3. Labor; 6
4. Parts; and 7
5. Administrative and clerical costs. 8
(c) Except as provided in paragraph (d) of this subsection, the compensation of 9
a dealer shall not be less than: 10
1. The amount charged by the dealer for like services and parts, which 11
minimum compensation for parts shall be dealer cost plus thirty percent 12
(30%) gross profit, to retail customers for nonwarranty service and 13
repairs; or[, or less than] 14
2. The amounts indicated for work on the schedule of warranty 15
compensation required to be filed by the manufacturer with the 16
commission as a part of the manufacturer's license application by KRS 17
190.030. 18
(d) The compensation of a dealer for vehicles with a classification of seven (7) 19
or higher as established in 49 C.F.R. sec. 565.15 by a manufacturer, 20
component manufacturer, or distributor shall not be less than the greater 21
of: 22
1. The amount charged by the dealer to the retail customers of the dealer 23
for nonwarranty work of like kind; or 24
2. The dealer acquisition costs of parts or service. 25
(e) A manufacturer or distributor shall not require unreasonable proof to establish 26
"reasonable compensation." 27 UNOFFICIAL COPY 24 RS HB 592/GA
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(3) (a) A manufacturer or distributor shall not require a dealer to submit a claim 1
authorized under this section sooner than thirty (30) days after the dealer 2
completes the preparation, delivery, or warranty service authorizing the claim 3
for preparation, delivery, or warranty service. 4
(b) All claims made by a dealer under this section shall be paid within thirty (30) 5
days after their approval. 6
(c) All claims shall be either approved or disapproved by the manufacturer or 7
distributor within thirty (30) days after their receipt on a completed form 8
supplied or approved by the manufacturer or distributor. 9
(d) Any claims not specifically disapproved in writing within thirty (30) days 10
after the receipt of the form shall be considered to be approved and payment 11
shall be made within thirty (30) days thereafter. 12
(e) A dealer shall not be required to maintain defective parts for more than thirty 13
(30) days after payment of a claim. 14
(f) Any dispute between the dealer and the manufacturer or distributor shall be 15
subject to the provisions of KRS 190.057. 16
(4) A manufacturer or distributor shall compensate the dealer for manufacturer-17
sponsored or distributor-sponsored sales or service promotion events, including but 18
not limited to rebates, programs, or activities in accordance with established written 19
guidelines for such events, programs, or activities, which the manufacturer or 20
distributor shall provide to each dealer. 21
(5) (a) A manufacturer or distributor shall not require a dealer to submit a claim 22
authorized under subsection (4) of this section sooner than thirty (30) days 23
after the dealer becomes eligible to submit the claim. 24
(b) All claims made by a dealer pursuant to subsection (4) of this section for 25
promotion events, including but not limited to rebates, programs, or activities, 26
shall be paid within thirty (30) days after their approval. 27 UNOFFICIAL COPY 24 RS HB 592/GA
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(c) All claims shall be either approved or disapproved by the manufacturer or 1
distributor within thirty (30) days after their receipt on a completed form 2
supplied or approved by the manufacturer or distributor. 3
(d) Any claim not specifically disapproved in writing within thirty (30) days after 4
the receipt of this form shall be considered to be approved and payment shall 5
be made within thirty (30) days. 6
(6) If a dealer submits any claim under this section to a manufacturer or distributor that 7
is incomplete, inaccurate, or lacking any information usually required by the 8
manufacturer or distributor, or if incomplete, inaccurate, or missing information is 9
discovered during an audit, then the manufacturer or distributor shall promptly 10
notify the dealer, and the time limit to submit the claim shall be extended for a 11
reasonable length of time, not less than five (5) business days following notice by 12
the manufacturer or distributor to the dealer, for the dealer to provide the complete, 13
accurate, or lacking information to the manufacturer or distributor. A dealer's 14
failure to comply with the specific requirements of the manufacturer or distributor 15
for processing a claim may not constitute grounds for denial of the claim or 16
reduction of the amount of compensation paid to the dealer if the dealer presents 17
reasonable documentation or other evidence to substantiate the claim. 18
(7) (a) A manufacturer or distributor may only audit warranty, recall, sales, or 19
incentive claims for a period of twelve (12) months following payment, or the 20
end of a program which does not exceed one (1) year in length, whichever is 21
later, subject to all of the provisions of this section. 22
(b) A manufacturer or distributor shall not require documentation for warranty, 23
recall, sales, or incentive claims more than twelve (12) months after the claim 24
was paid or the end of a program which does not exceed one (1) year in 25
length, whichever is later. 26
(c) Prior to requiring any charge-back, reimbursement, or credit against a future 27 UNOFFICIAL COPY 24 RS HB 592/GA
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transaction arising out of an audit, the manufacturer or distributor shall submit 1
written notice to the dealer along with a copy of its audit and the detailed 2
reason for each intended charge-back, reimbursement, or credit. 3
(d) Notwithstanding the limitations of this subsection, a manufacturer that 4
possesses evidence which would cause a person of ordinary caution, 5
prudence, and judgment to believe that a dealer submitted a claim that was 6
fraudulent, false, or misleading 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. 9