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ACT No. 89
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.
AN ACT1
To amend and reenact R.S. 32:1254(A)(19) and (E)(9)(d), 1261(6)(a), and 1262(B)(1) and2
(4) and to enact R.S. 32:1262(B)(5) through (7), relative to the sale and distribution3
of motor vehicles; to exclude nonresident exhibitors from licensure by the Motor4
Vehicle Commission; to exempt recreational products dealers from certain licensure,5
franchise modification, and warranty requirements under certain circumstances; to6
provide for certain prohibited acts involving franchise agreements; to provide7
guidelines for audits of dealer records; and to provide for related matters.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 32:1254(A)(19) and (E)(9)(d), 1261(6)(a), and 1262(B)(1) and (4)10
are hereby amended and reenacted and R.S. 32:1262(B)(5) through (7) are hereby enacted11
to read as follows:12
§1254. Application for license; requirements for licensure; contents; licenses;13
franchise filings14
A. The following persons shall be licensed by the commission in order to15
engage in business in the state of Louisiana, regardless of whether or not said person16
maintains or has a place or places of business in this state, and it is a violation of this17
Chapter to operate without first obtaining a license:18
* * *19 ENROLLEDHB NO. 261
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(19) Auto shows, trade shows, and exhibitions, including promoters and1
nonresident exhibitors.2
* * *3
E. Additional licensing and compliance requirements for motor vehicle and4
recreational products dealers.5
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(9)7
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(d) Notwithstanding any other provisions of law to the contrary, any motor9
vehicle or recreational products dealer holding a license hereunder shall not be10
required to obtain a license as a motor vehicle lessor, used motor vehicle dealer, or11
specialty vehicle dealer or converter, when modifying or selling those vehicles or12
products he is duly franchised and licensed to sell, provided such operations are13
conducted from the location from which such motor vehicle or recreational products14
dealer is licensed to do business.15
* * *16
§1261. Unauthorized acts17
It shall be a violation of this Chapter:18
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(6) For any person or other licensee:20
(a)(i) To modify a franchise during the term of the agreement or upon its21
renewal if the modification substantially and adversely affects the franchisee's rights,22
obligations, investment, or return on investment without giving sixty-day written23
notice of the proposed modification to the licensee and the commission which24
includes the grounds upon which the modification is based, unless the modifications25
are modification is required by law, court order, or the commission. Within the26
sixty-day notice period the licensee may file with the commission a complaint for a27
determination whether there is good cause for permitting the proposed modification.28 ENROLLEDHB NO. 261
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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
(ii) With respect to recreational products, to modify a franchise during the7
term of the agreement or upon its renewal if the modification substantially and8
adversely affects the franchisee's rights, obligations, investment, or return on9
investment without giving sixty-day written notice of the proposed modification to10
the licensee and the commission unless the modifications are required by law, court11
order, or the commission. Within the sixty-day notice period the licensee may file12
with the commission a complaint for a determination whether there is good cause for13
permitting the proposed modification. The party seeking to modify or replace an14
agreement shall demonstrate by a preponderance of the evidence that there is good15
cause for the modification or replacement. The commission shall schedule a hearing16
within sixty days to decide the matter. Multiple complaints pertaining to the same17
proposed modifications shall be consolidated for hearing. The proposed18
modification may not take effect pending the determination of the matter.19
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§1262. Warranty; compensation; audits of dealer records21
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B.(1) Notwithstanding the terms of any franchise agreement, warranty, and23
sales incentive, audits of dealer records may be conducted by the manufacturer,24
distributor, distributor branch, or factory branch. Any audit for warranty parts or25
service compensation shall be for the twelve-month period immediately following26
the date of the payment of the claim by the manufacturer or distributor. However,27
a dealer shall not be held liable by virtue of an audit for failure to retain parts for a28 ENROLLEDHB NO. 261
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period in excess of six months. Any audit for sales incentives, service incentives,1
rebates, or other forms of incentive compensation shall only be for the twelve-month2
period immediately following the date of the close of the promotion, event, program,3
or activity. the final payment to the dealer under a promotion, event, program, or4
activity. In no event shall the manufacturer, distributor, distributor branch, or factory5
branch fail to allow the dealer to make corrections to the sales data in less than one6
hundred twenty days from the program period. Additionally, no penalty other than7
amounts advanced on a vehicle reported incorrectly shall be due in connection with8
the audit. With respect to vehicles sold during the time period subject to the audit,9
but submitted incorrectly to the manufacturer, distributor, or wholesale distributor10
branch or factory branch, the dealer shall be charged back for the amount reported11
incorrectly and credited with the amount due, if anything, on the actual sale date.12
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(4)(a) A dealer shall not be charged back on a claim when a dealer performs14
a repair covered by the manufacturer's or distributor's warranty, and the dealer15
reasonably demonstrates that the repair resolved the condition which the customer16
presented for resolution, and the dealer documents what has been repaired and the17
process utilized to accomplish the repair.18
(b) The provisions of Subparagraph (a) of this Paragraph shall not apply to19
recreational products dealers.20
(5) Limitations on warranty parts or service compensation, sales incentive21
audits, rebates, or other forms of incentive compensation, chargebacks for warranty22
parts or service compensation, and service incentives and chargebacks for sales23
compensation only shall not be effective in the case of intentionally false or24
fraudulent claims.25
(6) It shall be deemed an unfair act pursuant to this Chapter to audit a dealer26
more frequently than two sales-related and two service-related audits in a twelve-27
month period. Nothing in this Subsection shall limit a manufacturer's or distributor's28
ability to perform routine claim reviews in the normal course of business.29 ENROLLEDHB NO. 261
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(7) No claim may be rejected as late if it has been submitted within sixty1
days of the date the repair order was written.2
SPEAKER OF THE HOUSE OF REPRESENTATI VES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED: