HLS 11RS-439 ORIGINAL
Page 1 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2011
HOUSE BILL NO. 261
BY REPRESENTATIVE CARMODY
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
MOTOR VEHICLES: Provides relative to the La. Motor Vehicle Commission
AN ACT1
To amend and reenact R.S. 32:1261(6)(a) and 1262(B)(1) and to enact R.S. 32:1262(B)(5)2
through (7), relative to the sale and distribution of motor vehicles; to provide for3
certain prohibited acts involving franchise agreements; to provide guidelines for4
audits of dealer records; and to provide for related matters.5
Be it enacted by the Legislature of Louisiana:6
Section 1. R.S. 32:1261(6)(a) and 1262(B)(1) are hereby amended and reenacted and7
R.S. 32:1262(B)(5) through (7) are enacted to read as follows: 8
§1261. Unauthorized acts9
It shall be a violation of this Chapter:10
* * *11
(6) For any person or other licensee:12
(a) To modify a franchise during the term of the agreement or upon its13
renewal if the modification substantially and adversely affects the franchisee's rights,14
obligations, investment, or return on investment without giving sixty-day written15
notice of the proposed modification to the licensee and the commission delineating16
the reasons relied on to justify the proposed modification, unless the modifications17
are modification is required by law, court order, or the commission. Within the18
sixty-day notice period the licensee may file with the commission a complaint for a19
determination whether there is good cause for permitting the proposed modification.20 HLS 11RS-439 ORIGINAL
HB NO. 261
Page 2 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
The party seeking to modify or replace an agreement must shall demonstrate by a1
preponderance of the evidence that there is good cause for the modification or2
replacement. The commission shall schedule a hearing within sixty days to decide3
the matter. Multiple complaints pertaining to the same proposed modifications shall4
be consolidated for hearing. The proposed modification may not take effect pending5
the determination of the matter.6
* * *7
§1262. Warranty; compensation; audits of dealer records8
* * *9
B.(1) Notwithstanding the terms of any franchise agreement, warranty and10
sales incentive, audits of dealer records may be conducted by the manufacturer,11
distributor, distributor branch, or factory branch. Any audit for warranty parts or12
service compensation shall be for the twelve-month period immediately following13
the date of the payment of the claim by the manufacturer or distributor. However,14
a dealer shall not be held liable by virtue of an audit for failure to retain parts for a15
period in excess of six months. Any audit for sales incentives, service incentives,16
rebates, or other forms of incentive compensation shall only be for the twelve-month17
period immediately following the date of the close of the promotion, event, program,18
or activity. payment to dealer. In no event shall the manufacturer, distributor,19
distributor branch, or factory branch fail to allow the dealer to make corrections to20
the sales data in less than one hundred twenty days from the program period.21
Additionally, no penalty other than amounts advanced on a vehicle reported22
incorrectly shall be due in connection with the audit. With respect to vehicles sold23
during the time period subject to the audit, but submitted incorrectly to the24
manufacturer, distributor, or wholesale distributor branch or factory branch, the25
dealer shall be charged back for the amount reported incorrectly and credited with26
the amount due, if anything, on the actual sale date.27
* * *28 HLS 11RS-439 ORIGINAL
HB NO. 261
Page 3 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
(5) When a manufacturer or distributor disapproves a claim, a charge-back1
may not be applied to a claim related to parts installed on a repaired vehicle, unless2
the claim was intentionally false or fraudulent.3
(6) It shall be deemed an unfair act pursuant to this Chapter to audit a dealer4
more frequently than once every twelve months.5
(7) No claim may be rejected as late if it has been submitted within ninety6
days of the date the repair order was written.7
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Carmody HB No. 261
Abstract: Provides relative to the sale and distribution of motor vehicles.
Present law provides for unauthorized acts pursuant to present law regarding the sale and
distribution of motor vehicles.
Present law provides that it is an unauthorized act for any person or other licensee to modify
a franchise during the term of the agreement or upon its renewal if the modification
substantially and adversely affects the franchisee's rights, obligations, investment, or return
on investment without giving 60 days written notice of the proposed modification to the
licensee and Motor Vehicle Commission. Such notice is not required if the modification is
required by law, court order, or the commission.
Proposed law requires that the 60-day written notice to the licensee and commission must
delineate the reasons relied on to justify the proposed modification.
Present law provides that warranty and sales incentive audits of dealer records may be
conducted by the manufacturer, distributor, distributor branch, or factory branch.
Present law further provides that any audit for sales incentives, service incentives, rebates,
or other forms of incentive compensation shall only be for the 12-month period immediately
following the date of the close of the promotion, event, program, or activity.
Proposed law changes present law by providing that the 12-month period shall begin
following the date of payment to the dealer.
Proposed law provides that when a manufacturer or distributor disapproves a claim, a
charge-back may not be applied to a claim related to parts installed on a repaired vehicle,
unless the claim was intentionally false or fraudulent.
Proposed law provides that it shall be deemed an unfair act pursuant to present law to audit
a dealer more frequently than once every 12 months. HLS 11RS-439 ORIGINAL
HB NO. 261
Page 4 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Proposed law provides no claim may be rejected as late if it has been submitted within 90
days of the date the repair order was written.
(Amends R.S. 32:1261(6)(a) and 1262(B)(1); Adds R.S. 32:1262 (B)(5)-(7))