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HOUSE OF REPRESENTATIVES - FLOOR VERSION
STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 2244 By: Dobrinski of the House
and
Thompson (Roger) of the
Senate
COMMITTEE SUBSTITUTE
An Act relating to motor vehicl es; defining terms;
authorizing dealer management system providers
perform certain actions; prohibiting dealer
management system providers from certain actions;
making conflicting term or condition of contracts
void and unenforceable; requiring certain actions of
authorized integrators; allowing dealers to withd raw,
revoke or amend certain express written au thorization
under certain circumstances; requiring certain
obligations to secure and prevent unauthorized acces s
to certain information; stating certain parties not
liable for certain actions; requiring indemn ification
for certain claims; confining certain judgments to
operations of this act directly involved in the
controversy in which judgment is rendered; requiring
manufacturers to allow new motor vehicle dealers to
make certain offers to consumers; making c ertain
exceptions; amending 47 O.S. 2021, Section 562, which
relates to definitions; modifying definition s;
defining terms; amending 47 O.S. 2021, S ection 564,
which relates to licenses; disallowing certain
authorization; making certain exception; amending 47
O.S. 2021, Section 565, as last amended by Section 3,
Chapter 192, O.S.L. 2022 (47 O.S. Supp. 2022, Section
565), which relates to denial, revocation, or
suspension of license; modifying entity subject to
license denial, revocation, suspension, or fine;
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modifying reasons for license denial, revocation,
suspension, or punishment by fine; prohibiting
certain standards to measure performance; requiring
certain vehicles be offered at same price; requiring
certain reimbursement for rental c ars; making certain
exception; requiring new vehicles be distributed in
certain manner; limiting dealers to one part or labor
rate request per year; providing for certain
calculation; providing for exclusions for certain
rate calculation; modifying reasons for cert ain
rebuttal; allowing certain written request; allowing
certain adjustments; requiring certain written
notice; prohibiting certain recovery of costs;
prohibiting factory denial of certain claims and
implementation of certain charge-backs; requiring
certain documentation and written attestation;
providing for certain compensation calculation;
requiring certain method for used vehicle
calculations; allowing factory to direct dealer in
certain manner and method; requiring certain
reimbursement claims be subject to certain
limitations and requirements; placing certain limit
on total compensation; disallowing certain remedy
combinations; disallowing the use of certain
agreements; making certain exception; providing for
certain violation; allowing for certain construction
or renovation; providing certain rebuttable
presumption; prohibiting factories from changing
certain plans or systems; limiting license for
distribution; amending 47 O.S. 2021, Section 565.1,
which relates to succe ssion dealerships; defining
term; clarifying language; requiring adherence to
certain agreement; requiring certain changes be in
compliance with exis ting law; amending 47 O.S. 2021,
Section 565.2, which relates to termination,
cancellation, or nonrenewal of franchise; requiring
certain compensation; amending 47 O.S. 2021, Section
565.3, which relates t o notice of proposed sale;
requiring use of certain standards ; requiring certain
changes be in compli ance with existing law; limiting
certain evaluations; deleting c ertain protest right;
amending 47 O.S. 2021, Section 578.1, which relates
to procedures for relocation or establishment;
modifying definition; amending 47 O.S. 2021, Section
580.2, which relates to insurance coverage on loan
vehicles; defining term; making certain liability
policy coverage distinction; providing for
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noncodification; providing for codification; and
providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 564.3 of Title 47, unless there
is created a duplication in numbering, reads as follows:
A. As used in this section:
1. "Access fee" means a requirement to pay money for access to
protected dealer data.
2. "Authorized integrator " means a person with which a dealer
has a contractual rela tionship or to which the dealer otherwise
gives express written authorization to have access to prote cted
dealer data stored on a dealer data system or to write protected
dealer data to the dealer d ata system for the purpose of performing
a specific function for the dealer.
3. "Dealer data system" means software, hardware or firmware
that a dealer leases or rents from a dealer management system
provider for the purpose of storing protected dealer da ta.
4. "Dealer management system provider " means a person that for
compensation maintains and provides access to a dealer data system
in which a dealer stores protected dealer data.
5. "Protected dealer data " means:
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a. personal data or financial data abo ut a consumer that
a dealer generated or that the consumer pr ovided to
the dealer that is not otherwise publicly available
and which the consumer has not otherwise provided
consent or acknowledgment permitting his or her
information may be shared, and
b. any other personal or financial data in connection
with the dealer's daily business operations to which a
dealer has rights in a dealer data system.
6. "Authorized integrator" and "dealer management system
provider" do not include:
a. a manufacturer, distr ibutor or importer or any entity
that is a subsidiary or affil iate of, or acts on
behalf of, a manufacturer, distributor or importer, or
b. a governmental body or other person that is acting in
accordance with federal, state or local law or a valid
court order.
B. A dealer management system provider may:
1. Condition a dealer's or authorized integrator 's access and
ability to receive, share, copy, use, write o r transmit protected
dealer data from or to a dealer data system on the dealer 's or
authorized integrator's compliance with security standards;
2. Require an authorized integrator to have express written
authorization from a dealer before allowing the aut horized
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integrator to gain access to, receive, share, copy, use or transmit
protected dealer data ; and
3. Deny access to a dealer data system to a dealer if t he
dealer fails to pay an amount due to the dealer management system
provider under a lease, cont ract or other agreement concerning the
dealer's access to or use of the dealer data system.
C. Except as provided in subsection B of this section, a dealer
management system provider shall not take any action that would
limit or prohibit a dealer 's or an authorized integrator's ability
to receive, protect, store, copy, share or use protected dealer d ata
using means that include, but are not limited to:
1. Imposing an access fee on a dealer or authorized integrator ;
and
2. Restricting a dealer or an autho rized integrator from
sharing protected dealer data or writing data or having access to a
dealer data system. Examples of restrictions this paragraph does
not permit include, but are not limited to:
a. limits on the scope or nature of protected dealer dat a
to which a dealer or authorized integrator has access
or may share or write to a dealer data sy stem, and
b. a requirement for a dealer or authorized integrator to
provide sensitive or confidential business information
or information that a dealer or auth orized integrator
uses for competitive purposes in return for access to
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protected dealer data or an authorization to share or
write protected dealer data to a dealer data system.
D. Except as otherwise provided in this section, any term or
condition of a contract with a dealer management system provider
that conflicts with the requirements set forth in subsection C of
this section is void and unenforceable to the extent of the
conflict.
E. 1. An authorized integrator shall:
a. obtain express written auth orization from a dealer
before gaining access to, receiving, sharing, copying,
using, writing or transmitting protected dealer data,
and
b. comply with security standards in gaining access to,
receiving, sharing, copying, using, writing or
transmitting protected dealer data.
2. Allow a dealer to withdraw, revoke or amend any express
written authorization the dealer provides under subparagraph a of
paragraph 1 of this subsection:
a. at the dealer's sole discretion, if the dealer gives
30 days' prior notice to an authorized integrator, or
b. immediately, for good cause.
F. 1. This section does not pre vent a dealer, a dealer
management system provid er or an authorized integrator from
discharging the dealer 's, dealer management system provider 's or
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authorized integrator's obligations under federal, state or local
law to secure and prevent unauthorized ac cess to protected dealer
data, or from limiting the scope of the obligations, in accordance
with federal, state or local law.
2. A dealer management system pr ovider is not liable for any
action that a dealer takes directly with respect to securing or
preventing unauthorized access to protected dealer da ta, or for
actions that an authorized integrator takes in appropriately
following the dealer 's written instructions for securing or
preventing unauthorized access to protected dealer data, to the
extent that the actions prevent the dealer management system
provider from meeting a legal obligation to secure or prevent
unauthorized access to protected dealer data.
3. A dealer is not liable for any action that an authorized
integrator takes directly with respec t to securing or preventing
unauthorized access to protected dealer data, or for actions that
the authorized integrator takes in appropriately following the
dealer's written instructions for securing or preventing
unauthorized access to protected dealer da ta, to the extent that the
actions prevent the dea ler from meeting a legal obligation to secure
or prevent unauthorized access to protected dealer data.
4. An authorized integrator is not liable for any action that a
dealer takes directly with respect to securing or preventing
unauthorized access to prote cted dealer data, or for actions that
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the dealer takes in appropriately following the authorized
integrator's written instructions for securing or preventing
unauthorized access to protected dealer data, t o the extent that the
actions prevent the authorize d integrator from meeting a legal
obligation to secure or prevent unauthorized access to protected
dealer data.
5. A manufacturer, distributor or importer or any entity that
is a subsidiary or affiliate o f, or acts on behalf of, a
manufacturer, distributo r or importer is not liable for any action
that a dealer, dealer management system provider, authorized
integrator, or other third party takes directly with respect to
securing or preventing unauthorized a ccess to protected dealer data,
or for actions that an authorized integrator, dealer management
system provider, or other third party takes in appropriately
following the dealer's written instructions for securing or
preventing unauthorized access to prote cted dealer data.
6. Notwithstanding any other agre ement, an authorized
integrator shall indemnify and hold the new motor vehicle dealer
harmless from any thi rd-party claims asserted against or damages
incurred by the new motor vehicle dealer to the exten t caused by
access to, use of, or disclosure of cons umer data in violation of
this section.
7. Notwithstanding any other agreement, a manufacturer,
distributor or importer or any entity that is a subsidiary or
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affiliate of, or acts on behalf of, a manufac turer, distributor or
importer shall indemnify the d ealer for any third-party claims
asserted against or damages incurred by the dealer to the extent the
claims or damages are caused by the access to and unlawful
disclosure of protected dealer data resulti ng from a breach caused
by the manufacturer or distr ibutor or a third party to which the
manufacturer or distributor has provided the protected dealer data
in violation of this section, the written consent granted by the
dealer, or other applicable state o r federal law.
SECTION 2. NEW LAW A ne w section of law to be codified
in the Oklahoma Statutes as Section 564.4 of Title 47, unless there
is created a duplication in numbering, reads as follows:
If any part or provision of this act or the application thereof
to any person or circumstance be ad judged invalid by any court of
competent jurisdicti on, such judgment shall be confined in its
operation to the part, provision, or application directly involved
in the controversy in which such judgment shall have been rendered
and shall not affect or impa ir the validity of the remainder of this
act or the application thereof to other persons or circu mstances.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 565.4 of Title 47, unless there
is created a duplication in numbering, reads as follows:
Any manufacturer or distributor who has new motor vehicle sales
and service contracts with new motor ve hicles dealers shall allow
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its new motor vehicle dealers to offer consumers any remote software
upgrade or change to vehicle functions and features to a new motor
vehicle which is of a line-make the new motor vehicle dealer holds
an active sales and service contract for, at the same price and for
a reasonable profit as any offered to consumers by the manufacturer
or distributor, and such upgrade or change shall be a vailable for an
authorized new motor vehicle dealer to offer to consumers at any
time during the life cycle of the vehicle , provided the same
continues to be made available and offered to consumers by the
manufacturer or distributor. This section does not apply to remot e
software upgrades or changes related solely to the safety, cyber
security, or recall of the new motor vehicle.
SECTION 4. AMENDATORY 47 O.S. 2021, Section 562, is
amended to read as fol lows:
Section 562. The following words, t erms and phrases, when used
in Sections 561 through 567, 572, 578.1, 579 and 579.1 of this
title, shall have the meanings respectively ascribed to them in this
section, except where the context clearly indicates a different
meaning:
1. "Motor vehicle" means any motor-driven vehicle required to
be registered under the Oklahoma Vehicle License and Registration
Act. The term "motor vehicle" does not include:
a. recreational vehicles, as defined in the Recreational
Vehicle Franchise Act, or
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b. all-terrain vehicles, utility vehicles, and
motorcycles used exclusively for off-road use which
are sold by a retail implement dealer;
2. "New motor vehicle dealer" means any person, fir m,
association, corporation or trust not e xcluded by this paragraph who
sells, offers for sale, advertises to sell, leases or displays new
motor vehicles and holds a bona fide contract or franchise in effect
with a manufacturer or distributor authorized by the manufacturer to
make predelivery preparation of such vehicles sold to purchasers and
to perform post-sale work pursuant to the manufacturer's or
distributor's warranty. As used herein, "authorized predelivery
preparation" means the rendition by the dealer of services and
safety adjustments on each new motor vehicle in accordance with the
procedure and safety standards required by the manufacturer of the
vehicle to be made before its de livery to the purchaser.
"Performance of authorized post-sale work pursuant to the warranty",
as used herein, means the rendition of services which are required
by the terms of the warranty that stands extended to the vehicle at
the time of its sale and a re to be made in accordance with the
safety standards prescribed by the manufacturer. The term includes
premises or facilities at which a person engages only in the repair
of motor vehicles if repairs are performed pursuant to the terms of
a franchise and motor vehicle manufacturer's warranty. However, the
term shall not include premises or facilitie s at which a new motor
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vehicle dealer or deale rs within the area of responsibility of such
dealer or dealers as defined in the manufact urer's franchise
agreement of such dealer or dealers performs motor vehicle repairs
pursuant to the terms of a franchise and motor vehicle
manufacturer's warranty. For the purpose of Sections 561 through
567, 572, 578.1, 579 and 579.1 of this title, the t erms "new motor
vehicle dealer" and "new motor vehicle dealership" shall be
synonymous. The term "new motor vehicle deal er" does not include:
a. receivers, trustees, administrators, executors,
guardians or other persons appointed by or acting
under judgment or order of any court,
b. public officers while performing or in operation of
their duties, or
c. employees of persons , corporations or associations
enumerated in subparagraph a of this paragraph when
engaged in the specific performance of their duties as
such employee employees, or
d. a powersports vehicle dealer;
3. "Motor vehicle salesperson" means any person who, for gain
or compensation of any kind, either dire ctly or indirectly,
regularly or occasionally, by any form of agreement or arrangement,
sells or negotiates for the sale, lease, or conveyance or arranges
the financing of any new motor vehicle for as an employee of any new
motor vehicle dealer to any one or more third parties;
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4. "Commission" means the Oklahoma Motor Vehicle Commission;
5. "Manufacturer" means any person, firm, association,
corporation or trust, resident or nonresident, who that manufactures
or assembles new and unused motor vehicles or who that engages in
the fabrication or assembly of motorized vehicles of a type required
to be registered in the State of Oklahoma;
6. "Distributor" means any person, firm, association,
corporation or trust, resident or nonresident, who that, being
authorized by the original manufacturer, in whole or in part sells
or distributes new and unused mo tor vehicles to new motor vehicle
dealers, or who that maintains distributor representatives;
7. "Factory branch" means any branch office maintained by a
person, firm, association, corporation or trust who that
manufactures or assembles motor vehicles for the sale of motor
vehicles to distributors, or for the sale of motor vehicles to new
motor vehicle dealers, or for directing or supervising, in whole or
in part, its representatives;
8. "Distributor branch" means any branch office similarly
maintained by a distr ibutor for the same purposes a factory branch
is maintained;
9. "Factory representative" means any officer or agent e ngaged
as a representative of a manufacturer of motor vehicles or by a
factory branch, for the purpose of making or promoting the sale of
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its motor vehicles, or for supervising or contacting its dealers or
prospective dealers;
10. "Distributor representat ive" means any person, firm,
association, corporation or trust and each officer and employee
thereof engaged as a representative of a dist ributor or distributor
branch of motor vehicles, for the purpose of making or promoting the
sale of its motor vehicles , or for supervising or contacting its
dealers or prospective dealers;
11. "Franchise" means any contract or agreement between a new
motor vehicle dealer and a manufacturer of a new motor vehicle or
its distributor or factory branch by which the new motor vehicle
dealer is authorized to engage in the business of selling any
specified make or makes of new motor vehicles activities of a new
motor vehicle dealer as defined by this section;
12. "New or unused motor vehicle" means a vehicle which is i n
the possession of the manufacturer or distributor or has been sold
only to the holder of a valid selling agreement, franchise or
contract, granted by the manufacturer or distributor for the sale of
that make of new vehicle so long as the manufacturer 's statement of
origin has not been assigned to anyone other than a licensed
franchised new motor vehicle dealer of the same line-make;
13. "Area of responsibility" means the geographical area, as
designated by the manufacturer, factory branch, factory
representative, distributor, distributor branch or distributor
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representative, in which the new motor vehicle dealer is held
responsible for the promotion and development of sales and rendering
of service for the make of motor vehicle for which the new motor
vehicle dealer holds a franchise or selling agreement;
14. "Off premises" means at a location other than the address
designated on the new motor vehicle dealer's license;
15. "Sponsoring entity" means any person, firm, association,
corporation or trust which ha s control, either permanently or
temporarily, over the real property upon which t he off-premise off-
premises sale or display is conducted;
16. "Product" means new motor vehicles and new motor vehicle
parts;
17. "Service" means motor vehicle warranty repa irs including
both parts and labor;
18. "Lead" means a consumer contact in respo nse to a factory
program designed to generate interest in purchasing or leasing a new
motor vehicle;
19. "Sell or sale" means to sell or lease;
20. "Factory" means a manufacturer, distributor, factory
branch, distributor branch, factory representative or distributor
representative, which manufactures or distributes vehicle products;
21. "Powersports vehicle" means motorcycles, scooters, mopeds,
all-terrain vehicles, and utility vehicles;
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22. "Powersports vehicle dealer" means any person, firm, or
corporation who that is in the business of selling any new
powersports vehicles except for retail implement dealers; and
23. "Retail implement dealer" means a business engaged
primarily in the sale of farm tractors as defined in Section 1-118
of this title or implements of husbandry as defined in Section 1-125
of this title or a combination thereof;
24. "Consumer data" means nonpublic personal information as
such term is defined in 15 U.S.C ., Section 6809(4) as it existed on
January 1, 2023, that is:
a. collected by a new motor vehicle dealer, and
b. provided by the new motor vehicle dealer directly to a
manufacturer or third party acting on behalf of a
manufacturer.
Such term shall not include the same or similar data obtained by
a manufacturer from any source other than the new motor vehicle
dealer or new motor vehicle dealer's data management system;
25. "Data management system" means a computer hardware or
software system that:
a. is owned, leased, or licensed by a new motor vehicle
dealer including a system or web-based applications,
computer software or computer hardware,
b. is located at the dealership or hosted remotely, and
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c. stores and provides access to consumer data collected
or stored by a new motor vehicle dealer.
Such term shall include, but shall not be limited to, dealership
management systems and customer relations management systems; and
26. "Fleet vehicle" means a new motor vehicle sold and titled
or registered to a business and used for business purposes only.
SECTION 5. AMENDATORY 47 O.S. 2021, Section 564, is
amended to read as follows:
Section 564. A. It shall be unlawful for any person, firm,
association, corporation or trust to engage in business as, or serve
in the capacity of, or act as a new motor vehicle dealer or
manufacturer or distributor of new motor vehicles, or factory
branch, distributor branch or factory representative or distributor
representative, as such defined in Section 562 of this title, in
this state without first obtaining a license therefor as provided
for by law. Any person, firm, association, corporation or trust
engaging in more than one of such capacities or having more than one
place where such business is carried on or conducted shall be
required to obtain and hold a current license for each thereof.
Provided that, a new motor vehicle dealer's license shall authorize
one person to sell in the event such person shall be the owner of a
proprietorship, or the person designated as principal in the
dealer's franchise or the managing officer or one partner if no
principal person is named in the franchise. It is further provided
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that a factory or an entity affiliated by any owner ship or control
by the factory shall not be permitted to be licensed as a new motor
vehicle dealer in this state, except as provided by subparagraph b
of paragraph 12 of Section 565 of this title.
B. Applications for licenses required to be obtained under
provisions of Section 561 et seq. of this title shall be verified by
the oath or affirmation of the applicant and shall be on forms
prescribed by the Oklahoma Motor Vehicle C ommission and furnished to
such applicants, and shall contain such information as the
Commission deems necessary to enable it to fully determine the
qualifications and eligibility of the several applicants to receive
the license or licenses applied for. T he Commission shall require
in such application, or otherwise, information relating to the
applicant's financial standing, the applicant's business integrity,
whether the applicant has an established place of business and is
primarily engaged in the pursui t, avocation or business for which a
license, or licenses, are applied for, and whether the applicant is
able to properly conduct the business for which a license, or
licenses, are applied for, and such other pertinent informati on
consistent with the safeg uarding of the public interest and the
public welfare. All such applications for license or licenses shall
be accompanied by the appropriate fee or fees therefor in accordance
with the schedule thereof hereinafter set out. In the event any
such application is denied and the license applied for is not
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issued, the entire license fee shall be returned to the applicant.
All licenses issued under the provisions of Section 561 et seq. of
this title shall expire on June 30, following the date of issue and
shall be nontransferable. All applications for renewal of a license
for a new motor vehicle dealer, manufacturer, distributor or
manufacturer's or distributor's representative shall be submitted by
June 1 of each year, and such lice nse or licenses will be issu ed by
July 1. If applications have not been made for renewal of licenses
at the times described in this subsection, it shall be illegal for
any person to represent himself or herself and act as a dealer,
manufacturer, distribut or or manufacturer's or distributor's
representative. Motor license agents will be notified not to accept
such dealers' titles until such time as licenses have been issued by
the Commission.
C. The schedule of license fees to be charged and received by
the Commission for the licens es issued hereunder shall be as
follows:
1. For each factory branch or distributor branch, Four Hundred
Dollars ($400.00) initial fee with annual renewal fee of Three
Hundred Dollars ($300.00);
2. For each manufacturer or dist ributor of new motor vehicle s,
Four Hundred Dollars ($400.00) initial fee with annual renewal fee
of Three Hundred Dollars ($300.00);
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3. For each factory representative or distributor
representative, One Hundred Dollars ($100.00) annually;
4. For each new motor vehicle dealer, exce pt powersports
vehicle dealers, initial fee of Three Hundred Dollars ($300.00) per
franchise sold at each location licensed, with an annual renewal fee
of One Hundred Dollars ($100.00) per franchise sold at each location
per year; and
5. For each powerspo rts vehicle dealer, initial fee of Three
Hundred Dollars ($300.00) per manufacturer represented by the dealer
at each location licensed, with an annual renewal fee of One Hundred
Dollars ($100.00) per manufacturer represented by the dealer at each
location licensed per year.
D. The licenses issued to each new motor vehicle dealer,
manufacturer, distributor , factory branch, distrib utor branch or
representative, if a corporation, shall specify the location of the
factory, office or branch thereof. In case such location is
changed, the Commission may endorse the change of location on the
license without charg e unless the change of ad dress triggers a
relocation of a new motor vehicle dealer pursuant to the provisions
of Section 578.1 of this title. The license of each new motor
vehicle dealer shall be posted in a conspicuous place in the new
motor vehicle dealer's place or places of b usiness.
Every motor vehicle facto ry representative or distributor
representative if an individual shall physically possess the license
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when engaged in business, and shall display same upon request. The
name of the employer of such fac tory representative or distributor
representative shall be stated on the license and, in case of a
change of employer, the holder of such license shall immediately
mail same to the Commission for its endorsement of such change
thereon. The Commission shal l endorse each such change of employer
on licenses for a fee of Ten Dollars ($10.00).
E. The powersports dealer license shall only allow the sale of
the specific types of powersports vehicles authorized by the
manufacturer and agreed to by the powersports dealer.
SECTION 6. AMENDATORY 47 O.S. 2021, Section 565, as
amended by Section 3, Chapter 192, O.S.L. 2022 (47 O.S. Supp. 2022,
Section 565), is amended to read as follows:
Section 565. A. The Oklahoma Motor Vehicle Commission may deny
an application for a license, or revoke or suspend a license, or
impose a fine against any person or entity, not to exceed Ten
Thousand Dollars ($10,000.00) against a manufacturer or distributor
or a fine not to exceed On e Thousand Dollars ($1,000.00) against a
dealer per occurrence, that violates any provision of Sections 561
through 567, 572, 578.1, 579 and 579.1 of this title is violated or
for any of the following reasons:
1. On satisfactory proof of unfitness of the applicant in any
application for any license u nder the provisions of Section 561 et
seq. of this title;
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2. For any material misstatement made by an applicant in any
application for any licens e under the provisions of Section 561 et
seq. of this title;
3. For any failure to comply with any provision of Section 561
et seq. of this title or any rule promulgated by the Commission
under authority vested in it by Section 561 et seq. of this title;
4. A change of condition after license is g ranted resulting in
failure to maintain the qualifications for lic ense;
5. Being a new motor vehicl e dealer who:
a. has required a purchaser of a new motor vehicle, as a
condition of sale and delivery thereof, t o also
purchase special features, appliances , accessories or
equipment not desired or requested by the purchas er
and installed by the new motor vehicle dealer,
b. uses any false or misleading advertising in connection
with business as a new motor vehicle d ealer,
c. has committed any unlawful act whi ch resulted in the
revocation of any similar license in another st ate,
d. has failed or refused to p erform any written agreement
with any retail buyer involving the sale of a motor
vehicle,
e. has been convicted of a felony crime that
substantially relates to the occupation of a new motor
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vehicle dealer and poses a reasonabl e threat to public
safety,
f. has committed a fraudulent act in selling, purchasing
or otherwise dealing in new motor vehicles or has
misrepresented the terms and conditions of a sale,
purchase or contract for sale or purchase of a new
motor vehicle or any interest therein including an
option to purchase such vehicle,
g. has failed to meet or maintain the conditions and
requirements necessary to qualify for the issuance of
a license, or
h. completes any sale or transaction of an extended
service contract, extended maintenance plan, or
similar product using contract forms that do not
conspicuously disclose the identity of the service
contract provider;
6. Being a new motor vehicle salesperson who is not employed as
such by a licensed new motor vehicle dealer ;
7. Being a new motor vehicl e dealer who:
a. does not have an established place of business,
b. does not provide for a suitable repair shop separate
from the display room with ample space to repair or
recondition one or more vehicles at the same time, an d
which is staffed with properly trained and qualified
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repair technicians and is equipped with such parts,
tools and equipment as may be requi site for the
servicing of motor vehicles in such a manner as to
make them comply with the safety laws of this stat e
and to properly fulfill the new motor vehicle dealer's
or manufacturer's warranty obligation,
c. does not hold a franchise in effect with a
manufacturer or distributor of new or unused mot or
vehicles for the sale of the same and is not
authorized by the manufacturer or distributor to
render predelivery preparation of such vehicles sold
to purchasers and to perform any authorized post -sale
work pursuant to the manufacturer's or distributor's
warranty,
d. employs a person without obtaining a certificate of
registration for the person, o r utilizes the services
of used motor vehicle lots or dealers or other
unlicensed persons in connection with the sale of new
motor vehicles,
e. does not properly service a new motor vehicle before
delivery of same to the origi nal purchaser thereof, or
f. fails to order and stock a reasonable number of new
motor vehicles necessary to meet customer consumer
demand for each of the new motor vehicles included in
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the new motor vehicle dealer 's franchise agreement,
unless the new motor vehicles are not readily
available from the manufacturer or distributor due to
limited production;
8. Being a factory that has:
a. either induced or attempted to induce by means of
coercion or intimidation, any new motor vehicle
dealer:
(1) to accept delivery of any motor vehicle o r
vehicles, parts or accessories therefor, or any
other commodities including advertising material
which shall not have been ordered by the new
motor vehicle dealer,
(2) to order or accept delivery of any motor vehicle
with special features, appliances, ac cessories or
equipment not included in the list price of the
motor vehicles as publicly advertised by the
manufacturer thereof, or
(3) to order or accept delive ry of any parts,
accessories, equipment, machinery, tools,
appliances or any commodity whatsoeve r, or
b. induced under threat or discrimination by the
withholding from delivery to a new motor vehicle
dealer certain models of motor vehicles, changing or
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amending unilaterally the new motor vehicle dealer's
allotment of motor vehicles and/or withholding and
delaying delivery of such vehicles out of the ordinary
course of business, in order to indu ce by such
coercion any such new motor vehicle dealer to
participate or contribute to any local or national
advertising fund contr olled directly or indirectly b y
the factory or for any other purposes such as contest,
"give-aways" "giveaways" or other so-called sales
promotional devices and/or change of quotas in any
sales contest; or has required new motor vehicle
dealers, as a condition to receiving their vehicl e
allotment, to order a certain percentage of the
vehicles with optional equipment not specified by the
new motor vehicle dealer; however, nothing in this
section shall prohibit a factory from supporting an
advertising association which is open to all new motor
vehicle dealers on the same basis ;,
c. used a performance standard, sales objective or
program for measuring dealer performance that may have
a material effect on a dealer 's right to vehicle
allocation; or payment under any incentive or
reimbursement program that is unfair, unreasonable,
inequitable and not based on accurate information,
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d. used a performance standard for measuring sales or
service performance of any new vehicle dealer under
the terms of the franchise agr eement which:
(1) is unfair, unreasonable, arbitrary or
inequitable; and
(2) does not consider the relevant and material loca l
and state or regional criteria, including
prevailing economic conditions affecting the
sales or service performance of a vehicle dealer
or any relevant and mat erial data and facts
presented by the dealer in writing within thirty
(30) days of the manufact urer's written notice to
the dealer of its intention to cancel, terminate,
or not renew the dealer 's franchise agreement.
e. failed or refused to sell, or offer for sale, new
motor vehicles to all of its authorized same line -make
franchised new motor vehic le dealers at the same price
for a comparably equipped motor vehicle, on the same
terms, with no differential in functionally avail able
discount, allowance, cred it or bonus, except as
provided in subparagraph e of paragraph 9 of this
subsection.
f. failed to provide reasonable compensation to a new
motor vehicle dealer substantially equivalent to the
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actual cost of providing a manufac turer required
loaner or rental vehicle to any consumer who is having
a vehicle serviced at the dealership. For purposes of
this paragraph, actual cost is the average cost in the
new motor vehicle dealer 's region for the rental of a
substantially similar m ake and model as the vehicle
being serviced, or
g. failed to make available to its new motor vehicle
dealers a fair and pro portional share of all new
vehicles distributed to same line -make dealers in this
state, subject to the same reasonable terms, including
any vehicles distributed f rom a common new vehicle
inventory pool outside of the factory 's ordinary
allocation process such as any vehicles the factory
reserves to distribute on a discretionary basis.
9. Being a factory that:
a. has attempted to coer ce or has coerced any new moto r
vehicle dealer to enter into any agreement or to
cancel any agreement, or fails to act in g ood faith
and in a fair, equitable and nondiscriminatory manner;
or has directly or indirectly coerced, intimidated,
threatened or restrained any new motor vehicle dealer;
or has acted dishonestly, or has failed to act in
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accordance with the reasonable standar ds of fair
dealing,
b. has failed to compensate its dealers for the work and
services they are required to perform in connection
with the dealer's delivery and preparation obligations
according to the agreements on file with the
Commission which must be fo und by the Commission to be
reasonable, or fail has failed to adequately and
fairly compensate its dealers for labor, parts and
other expenses incurred by such dealer to perform
under and comply with manufacturer 's warranty
agreements, and recall repairs w hich shall include
diagnostic work as applicable and assistance requested
by a consumer whose vehicle was subjected to an over -
the-air or remote change, repair , or update to any
part, system, accessory, or function by the
manufacturer and performed by the dealer in order to
satisfy the consumer. Time allowances for the
diagnosis and performance of repair work shall be
reasonable and adequate for the work to be performed.
Adequate and fair compensation , which under this
provision shall be no less than the ra tes customarily
charged for retail consumer repairs as calculated
herein, for parts and/or labor for warranty and recall
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repairs shall, at the option of the new motor vehicle
dealer, be established by the new motor vehicle dealer
submitting to the manufact urer or distributor one
hundred sequential nonwarranty customer-paid consumer-
paid service repair orders which contain warranty -like
parts repairs, or ninety (90) consecutive days of
nonwarranty customer-paid consumer-paid service repair
orders which contain warranty -like parts repairs,
whichever is less, covering repairs made no more than
one hundred eighty (180) days before the subm ission
and declaring the average percentage labor rate and/or
markup rate. Adequate and fair compensation for labor
shall be established by the dealer submitting to the
manufacturer or distributor one hundred sequential
customer-paid service repair orders which contain
labor charges, or ninety (90) consecutive days of
customer-paid service repair orders which contain
labor charges, whicheve r is less. A new motor vehicle
dealer may not submit a request to establish its
retail rates more than once in a twel ve-month period.
That request may establish a parts mark-up rate, labor
rate, or both. The new motor vehicle dealer shall
calculate its retail parts rate by determining the
total charges for parts from the qualified repair
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orders submitted, dividing that amount by the new
motor vehicle dealer's total cost of the purchase of
those parts, subtracti ng one (1), and multiplying by
one hundred (100) to produce a percentage. The new
motor vehicle dealer shall calculate its retail labor
rate by dividing the amou nt of the new motor vehicl e
dealer's total labor sales from the qualified repair
orders by the total labor hours charged for those
sales. When submitting repair orders to calculate
establish a retail parts and/or labor rate, a new
motor vehicle dealer need not include repair orders
repairs for:
(1) routine maintenance including, but not limited
to, the replacement of bulbs, fluids, filters,
batteries, and belts that are not provided in the
course of and related to a repair,
(2) factory special events, spec ials, or promotional
discounts for retail consumer repairs,
(3) parts sold or repairs performe d at wholesale,
(4) factory-approved goodwill or policy repairs or
replacements,
(5) repairs with aftermarket parts, when calculating
the retail parts rate but no t the retail labor
rate,
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(6) repairs on aftermarket parts,
(7) replacement of or work on t ires including front -
end alignments and wheel or tire rotations,
(8) repairs of motor vehicles owned by the new motor
vehicle dealer or employee thereof at the time of
the repair,
(9) vehicle reconditioning, or
(10) items that do not have individual par t numbers
including, but not limited to, nuts, bolt s and
fasteners.
A manufacturer or distributor may, not later than thirty
(30) days after submission, rebut that dec lared retail
parts and/or labor rate in writing by reasonably
substantiating that the r ate is inaccurate or unreasonable
in light of the practices of all other franchised motor
vehicle dealers in an economically similar part of the
state offering the same line-make vehicles not accurate or
is incomplete pursuant to the provisions of this section.
If the manufacturer or distributor determines from the new
motor vehicle dealer's set of repair orders submitted
pursuant to this section that the new motor vehic le
dealer's submission for a retail labor rate or retail parts
markup is substantially higher than the new motor vehicle
dealer's current warranty rates, the manufacturer or
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distributor may request, in writing, within thirty (30)
days after the manufacture r's or distributor's receipt of
the new motor vehicle dealer 's initial submission, all
repair orders closed within the period of thirty (30) days
immediately preceding, or thirty (30) days immediately
following, the set of repair orders initially submitted by
the new motor vehicle dealer. All time periods under this
section shall be suspended until the supplemental repair
orders are provided. If the manufacturer or distributor
requests supplemental repair orders, the manufacturer or
distributor may, withi n thirty (30) days after r eceiving
the supplemental repair orders and in accordance with the
formula described in this subsection, calculate a proposed
adjusted retail labor rate or retail parts markup, as
applicable, based upon any set of the qualified re pair
orders submitted by t he franchisee and following the
formula set forth herein to establish the rate . The retail
rate labor and parts rates shall go into effect thirty (30)
days following the approval by the manufacturer , subject to
audit of the submitted repair orders by the franchisor and
a rebuttal of the declared rate as described abo ve or
distributor. If the declared rate is rebutte d, the
manufacturer or distributor shall provide written notice
stating the reasons for the rebuttal, an explanation of the
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reasons for the rebuttal, and a copy of all calculations
used by the franchisor i n determining the manufacturer or
distributor's position and propose an adjustment in writing
of the average percentage markup or labor rate based on
that rebuttal not later than thirty (30) da ys after
submission. If the new motor vehicle dealer does not agree
with the proposed average percentage markup or labor rate,
the new motor vehicle dealer may file a protest with the
Commission not later than thirty (30) days af ter receipt of
that proposal by the manufacturer or distributor. In the
event a protest is filed, the manufacturer or distributor
shall have the burden of proof to establish the new motor
vehicle dealer's submitted parts markup rate or labor rate
was inaccurate or unreasonable in light of the practices of
all other franchised motor vehicle de alers in an
economically similar part of the state is not complete
pursuant to the provisions of this section . A manufacturer
or distributor may not retaliate against any new motor
vehicle dealer seeking to exercise its rights under this
provision section. A manufacturer or distributor may
require a dealer to submit repair orders in accordance with
this section in order to validate the reasonableness of a
dealer's retail rate for parts or labo r not more often than
once every twelve (12) months. A manufacturer or
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distributor may not otherwise recover its costs from new
motor vehicle dealers within this state including a
surcharge imposed on a new motor vehicle dealer s olely
intended to recover the cost of reimbursing a new motor
vehicle dealer for parts an d labor pursuant to this
section; provided, a manuf acturer or distributor shall not
be prohibited from increasing prices for vehicles or parts
in the normal course of business. All claims made by
dealers for compensation for delivery, preparation and,
warranty, or recall repair work shall be paid within t hirty
(30) days after approval and shall be approved or
disapproved within thirty (30) days after receipt. When
any claim is disapproved, the dealer shall be notified in
writing of the grounds for disappro val. The dealer's
delivery, preparation and warra nty obligations as filed
with the Commission shall constitute the dealer 's sole
responsibility for product liability as between the dealer
and manufacturer. A factory may reasonably and
periodically audit a new motor vehicle dealer to determine
the validity of paid claims for new motor vehicle dealer
compensation or any charge -backs for warranty parts or
service compensation. Except in cases o f suspected fraud,
audits of warranty payments shall only be for the one-year
period immediately following the dat e of the payment. A
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manufacturer shall reserve the right to reasonable,
periodic audits to determine the validity o f paid claims
for dealer compensation or any charge-backs for consumer or
dealer incentives. Except in cases of suspected fraud,
audits of incentive payments shall only be for a one -year
period immediately following the date of the payment. A
factory shall not deny a claim or cha rge a new motor
vehicle dealer back subsequent to the payment of the claim
unless the factory can show that the cl aim was false or
fraudulent or that the new motor vehicle dealer failed to
reasonably substantiate the claim by the written reasonable
procedures of the factory. A factory shall not deny a
claim or implement a charge-back against a new motor
vehicle dealer after payment of a claim in the event a
purchaser of a new vehicle that is the subject of a claim
fails to comply with titling or registrati on laws of this
state and is not prevented from compliance by an y action of
the new motor vehicle dealer; provided , that the factory
may require the new motor vehicle dealer to provide, within
thirty (30) days of notice of chargeb ack, withholding of
payment, or denial of claim, the following:
(1) documentation to demonstrate the vehicle sale and
delivery as reported, including consumer name and
address, and
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(2) written attestation signed by the dealer operator
or general manager st ating the consumer was not
on the export control list and the de aler did not
know or have reason to know the vehicle was being
exported or resold.
The factory shall provide written notice to a dealer of a
proposed charge-back that is the result of an audit along
with the specific audit results and proposed charge-back
amount. A dealer that receives notice of a proposed
charge-back pursuant to a factory's audit has the right to
file a protest with the Commission within thirty (30) days
after receipt of the notice of the charge-back or audit
results, whichever is later. The factory is prohibited
from implementing the charge -back or debiting the dealer's
account until either the time frame for filing a protest
has passed or a final adjudication is rendered by the
Commission, whichever is later, unless the dealer has
agreed to the charge-back or charge-backs,
c. fails to compensate the new motor v ehicle dealer for a
used motor vehicle:
(1) that is of the same make and model manufactured,
imported or distributed by the factory and is a
line-make that the new motor vehicle dealer is
franchised to sell or on which the new motor
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vehicle dealer is autho rized to perform recall
repairs,
(2) that is subject to a stop-sale or do-not-drive
notice issued by the factory or an authorized
governmental agency,
(3) that is held by the new motor vehicle dealer in
the dealer's inventory at the time the stop -sale
or do-not-drive notice is issued or that is ta ken
by the new motor vehicle dealer into the dealer 's
inventory after the recall notice as a result of
a retail consumer trade-in or a lease return to
the dealer inventory in accordance with an
applicable lease con tract,
(4) that cannot be repaired due to the
unavailability, within thirty (30) days after
issuance of the stop -sale or do-not-drive notice,
of a remedy or parts necessary for the new motor
vehicle dealer to make the recall repair, and
(5) that is not at least in the prorated amount of
one percent (1.00%) of the value of the vehicle
per month beginning on the date tha t is thirty
(30) days after the date on which the stop-sale
order was provided to the new motor vehicle
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dealer until the earlier of either of the
following:
(a) the date the recall remedy or parts are made
available, or
(b) the date the new motor vehicle d ealer sells,
trades, or otherwise disposes of the
affected used motor vehicle.
For the purposes of division (5) of this subparagraph, the val ue
of a used vehicle shall be the average Black Book value for the
year, make, and model of the recalled vehicle.
A factory may direct the ma nner and method in which a new motor
vehicle dealer must demonstrate the inventory status of an affected
used motor vehicle to determine eligibility under this subparagraph;
provided, that the manner and method may not be unduly b urdensome
and may not require information that is unduly burdensome to
provide.
All reimbursement claims made by new motor vehicle dealers
pursuant to this section for recall remedies or repairs, or for
compensation where no part or repair is reasonably av ailable and the
vehicle is subject to a stop-sale or do-not-drive order, shall be
subject to the same limitations and requirements as a warra nty
reimbursement claim made under subparagraph b of this paragraph. In
the alternative, a manufacturer may compen sate its franchised new
motor vehicle dealers under a national recall compensation program;
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provided, the compensation under the program is e qual to or greater
than that provided under division (5) of this subparagraph, or as
the manufacturer and new motor vehicle dealer otherwise agree.
Nothing in this section shall require a factory to provide total
compensation to a new motor vehicle dealer which would exceed the
total average Black Book value of the affected used motor vehicle as
originally determined u nder division (5) of this subparagraph.
Any remedy provided to a new motor vehicle dealer under this
subparagraph is exclusive and may not be combined with any other
state or federal compensation remedy.
d. unreasonably fails or refuses to offer to its sam e
line-make franchised dealers a reasonable supply and
mix of all models manufactured for that line -make, or
unreasonably requires a dealer t o pay any extra fee,
purchase unreasonable advertising displays or other
materials, or enter into a separate agreem ent which
adversely alters the rights or obligations contained
within the new motor vehicle dealer 's existing
franchise agreement or which wa ives any right the new
motor vehicle dealer as protected by Section 561 et
seq. of this title, or remodel, renovate , or
recondition the new motor vehicle dealer's existing
facilities as a prerequisite to receiving a model or
series of vehicles, except as may be necessary to sell
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or service the model or series of vehicles as provided
by subparagraph e of this paragraph. It shall be a
violation of this section for new vehicle allocation
to be withheld subject to any requirement to purchase
or sell any number of used or off-lease vehicles. The
failure to deliver any such new motor vehicle shall
not be considered a violat ion of the section if the
failure is not arbitrary or is due to lack of
manufacturing capacity or to a strike or labor
difficulty, a shortage of materials, a freight embargo
or other cause over which the manufacturer has no
control. However, this subparag raph shall not apply
to recreational vehicles, or limited production model
vehicles, or a vehicle not advertised by the factory
for sale in this state,
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e. except as necessary to comply with a health or safety
law, or to comply with a technology requirem ent which
is necessary to sell or service a motor vehicle that
the franchised new motor vehicle dealer is authorized
or licensed by the franc hisor to sell or service,
requires a new motor vehicle dealer to construct a new
facility or substantially renovate the new motor
vehicle dealer's existing facility unless the facility
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construction or renovation is justified by the
economic conditions exis ting at the time, as well as
the reasonably foreseeable projections, in the new
motor vehicle dealer 's market and in the automotive
industry. However, this subparagraph shall not apply
if the factory provides new motor vehicle dealer
voluntarily agrees to facility construction or
renovation in exchange for money, credit, allowance,
reimbursement, or additional vehicle all ocation to a
new motor vehicle dealer from the factory to
compensate the new motor vehicle dealer for the cost
of, or a portion of the co st of, the facility
construction or renovation. Except as necessary to
comply with a health or safety law, or to compl y with
a technology or safety requirement which is necessary
to sell or service a motor vehicle that the franchised
new motor vehicle dea ler is authorized or licensed by
the franchisor to sell or service, a new motor vehicle
dealer which completes a facili ty construction or
renovation pursuant to factory requirements shall not
be required to construct a new facility or renovate
the existing facility if the same area of the facility
or premises has been constructed or substantially
altered within the last te n (10) years and the
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construction or alteration was approved by the
manufacturer as a part of a facility upgrade program,
standard, or policy. For purposes of this subsection,
"substantially altered" means to perform an alteration
that substantially im pacts the architectural features,
characteristics, or integrity of a structure or lot.
The term shall not include routine maintenance
reasonably necessary to maintain a dealership in
attractive condition. If a facility upgrade program,
standard, or policy under which the dealer completed a
facility construction or substantial alteration does
not contain a specific time period during which th e
manufacturer or distributor shall provide pa yments or
benefits to a participating dealer, or the time frame
specified under the program is reduced or cancelled
prematurely in the unilateral discretion of the
manufacturer or distributor, the manufacturer or
distributor shall not deny the participatin g dealer
any payment or benefit under the terms of the program,
standard, or policy as it existed when the dealer
began to perform under the program, standard, or
policy for the balance of the ten -year period,
regardless of whether the manufacturer's or
distributor's program, standard, or policy has been
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changed or canceled, unless the manufacturer and
dealer agree, in writing, to the change in payment or
benefit,
e.
f. requires a new motor vehicle dealer to es tablish an
exclusive facility, unless supporte d by reasonable
business, market and economic considerations;
provided, that this provision section shall not
restrict the terms of any agreement for such exclusive
facility voluntarily entered into and support ed by
valuable consideration separate from the new motor
vehicle dealer's right to sell and service motor
vehicles for the franchisor,
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g. requires a new motor vehicle dealer to enter into a
site-control agreement covering any or all of the new
motor vehicle dealer's facilities or premises;
provided, that this provision section shall not
restrict the terms of any site -control agreement
voluntarily entered into and supported by valuable
consideration separate from the new motor vehicle
dealer's right to sell and service motor vehicles for
the franchisor. Notwithstanding the foregoing or the
terms of any site-control agreement, a site-control
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agreement automatically extinguishes if all of the
factory's franchises that operated from the location
that are the subject of the site-control agreement are
terminated by the factory as part of the
discontinuance of a product line, or
g.
h. refuses to pay, or claims reimbursement from, a new
motor vehicle dealer for sales, incentives or other
payments related to a mot or vehicle sold by the new
motor vehicle dealer because the purchaser of the
motor vehicle exported or resold the moto r vehicle in
violation of the policy of the factory unless the
factory can show that, at the time of the sale, the
new motor vehicle deale r knew or reasonably should
have known of the pu rchaser's intention to export or
resell the motor vehicle. There is a rebuttable
presumption that the new motor vehicle dealer did not
know or could not have known that the vehicle would be
exported if the vehicle is titled and registered in
any state of the United States, or
i. requires a new motor vehicle dealer to purcha se goods
or services for the construction, renovation, or
improvement of the dealer 's facility from a vendor
chosen by the factory if good s or services available
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from other sources are o f substantially similar
quality and design and comply with all applica ble
laws; provided, however, that such goods are not
subject to the factory 's intellectual property or
trademark rights and the new motor vehicle dealer has
received the factory's approval, which approval may
not be unreasonably withheld. Nothing in this
subparagraph may be construed to allow a new motor
vehicle dealer to impair or eliminate a factory 's
intellectual property, trademark righ ts or trade dress
usage guidelines. Nothing in this section prohibits
the enforcement of a voluntary agreement betwee n the
factory and the new motor vehicle dealer where
separate and valuable consideration has been offered
and accepted;
10. Being a factory that:
a. establishes a system of motor vehic le allocation or
distribution which is unfair, inequitable or
unreasonably discriminatory. Upon the request of any
new motor vehicle dealer franchised by it, a factory
shall disclose in writing to the new motor vehicle
dealer the basis upon which new moto r vehicles are
allocated, scheduled and delivered among the new motor
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vehicle dealers of the same line-make for that
factory, or
b. changes an established plan or system of motor vehicle
distribution. A new motor vehicle dealer franchise
agreement shall continue in full force and operation
notwithstanding a change, in whole or in part, of an
established plan or system of distribution of the
motor vehicles offered or previously offered for sale
under such franchise agreement. The appointment of a
new importer or distributor for motor vehicles offered
for sale under such fran chise agreement shall be
deemed to be a change of an established plan or system
of distribution. The discontinuation of a line -make
shall not be deemed to be a change of an established
plan or system of motor vehicle distribution. The
creation of a line-make shall not be deemed to be a
change of an established plan or system of motor
vehicle distribution as long as the new line -make is
not selling the same, or substantially the same
vehicle or vehicles previously sold through another
line-make by new motor vehicle dealers with an active
franchise agreement for the other line -make in the
state if such new motor vehicle dealers are no longer
authorized to sell the comparable vehicle previously
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sold through their line -make. Changing a vehicle 's
powertrain is not sufficient to show it is
substantially different. Upon the occurrence of such
change, the manufacturer or distributor shall be
prohibited from obtaining a license to distribute
vehicles under the new plan or system of distribution
unless the manufacturer or distributor offers to each
new motor vehicle dealer who is a party to the
franchise agreement a new franchise agreement
containing substantially the same provisions which
were contained in the previous franchise agreement ;
11. Being a factory that sells directly or indirectly new motor
vehicles to any retail consumer in the state except thr ough a new
motor vehicle dealer holding a f ranchise for the line-make that
includes the new motor vehicle. This paragraph does not apply to
factory sales of new motor vehicles to its employees, family members
of employees, retirees and family members of r etirees, not-for-
profit organizations or th e federal, state or local governments.
The provisions of this paragraph shall not preclude a factory from
providing information to a consumer for the purpose of marketing or
facilitating a sale of a new motor veh icle or from establishing a
program to sell or offer to sell new motor vehicles through
participating dealers subject to the limitations contained in
paragraph 2 of Section 562 of this title;
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12. a. Being a factory which directly or indirectly:
(1) owns any ownership interest or has any financial
interest in a new motor vehicle dealer or any
person who sells products or services pursuant to
the public terms of the franchise agreement,
(2) operates or controls a new motor vehicle dealer,
or
(3) acts in the capacity of a new motor vehicle
dealer.
b. (1) This paragraph does not prohibit a factory from
owning or controlling a new motor vehicle dealer while
in a bona fide relationship with a dealer development
candidate who has made a substantial initial
investment in the franchise and whose initial
investment is subject to potential loss. The dealer
development candidate can reasonably expect to acquire
full ownership of a new motor vehicle dealer within a
reasonable period of time not to exceed ten (10) years
and on reasonable terms and conditions. Th e ten-year
acquisition period may be expanded for good cause
shown.
(2) This paragraph does not prohibit a factory fro m
owning, operating, controlling or acting in the
capacity of a new motor vehicle dealer for a
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period not to exceed twelve (12) months dur ing
the transition from one independent dealer to
another independent dealer if the dealership is
for sale at a reasonable price and on reasonable
terms and conditions to an independent qualified
buyer. On showing by a factory of good cause,
the Oklahoma Motor Vehicle Commission may extend
the time limit set forth above; extensions may be
granted for periods not to exceed twelve (12)
months.
(3) This paragraph does not prohibit a factory from
owning, operating or controlling or acting in the
capacity of a new motor vehicle dealer which was
in operation prior to January 1, 2000.
(4) This paragraph does not prohibit a fac tory from
owning, directly or indirectly, a minority
interest in an entity that owns, operates or
controls new motor vehicle dealerships of the
same line-make franchised by the manufacturer,
provided that each of the following conditions
are met:
(a) all of the new motor vehicle dealerships
selling the motor vehicles of that
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manufacturer in this state trade exclusively
in the line-make of that manufacturer,
(b) all of the franchise agreements of the
manufacturer confer rights on the dealer of
the line-make to develop and operate, within
a defined geographic territory or area, as
many dealership facilities as the dealer and
manufacturer shall ag ree are appropriate,
(c) at the time the manufacturer first acquires
an ownership interest or assumes operation,
the distance between any dealership thus
owned or operated and the nearest
unaffiliated new motor vehicle dealership
trading in the same line -make is not less
than seventy (70) miles,
(d) during any period in which the manufacturer
has such an ownership interest, the
manufacturer has no more than three
franchise agreements with new motor vehicle
dealers licensed by the Oklahoma Motor
Vehicle Commission to do business within the
state, and
(e) prior to January 1, 2000, the factory shall
have furnished or made available to
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prospective new motor vehicle dealers an
offering-circular in accordance with the
Trade Regulation Rule on Franchising of the
Federal Trade Commission, and any guidelines
and exemptions issued thereunder, which
disclose the possibility that the factory
may from time to time seek to own or
acquire, directly or indirectly, ownership
interests in retail dealerships;
13. Being a factory which directly or indirectly makes
available for public disclosure any proprietary information provided
to the factory by a new m otor vehicle dealer, other than in
composite form to new motor vehicle dealers in the same line -make or
in response to a sub poena or order of the Commission or a court.
Proprietary information includes, but is not limited to,
information:
a. derived from monthly financial statements provided to
the factory, and
b. regarding any aspect of the profitability of a
particular new motor vehicle dealer;
14. Being a factory which does not provide or direct leads in a
fair, equitable and timely manner. Nothing in this paragraph shall
be construed to require a factory to disregard the preference of a
consumer in providing or directing a lead;
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15. Being a factory which used the customer consumer list of a
new motor vehicle dealer for the purpose of unfairly competi ng with
dealers;
16. Being a factory whi ch prohibits a new motor vehicle dealer
from relocating after a written request by such new motor vehicle
dealer if:
a. the facility and the proposed new location satisfies
or meets the written reasonable guidelines of the
factory. Reasonable guidelines d o not include
exclusivity or site control unless agreed to as set
forth in subparagraphs e f and f g of paragraph 9 of
this subsection,
b. the proposed new location is within the area of
responsibility of the new mo tor vehicle dealer
pursuant to Section 57 8.1 of this title, and
c. the factory has sixty (60) days from receipt of the
new motor vehicle dealer's relocation request to
approve or deny the request. The failure to approve
or deny the request within the sixty -day time frame
shall constitute approva l of the request;
17. Being a factory which prohibits a new motor vehicle dealer
from adding additional line-makes to its existing facility, if,
after adding the additional line -makes, the facility satisfies the
written reasonable capitalization standards and facility guidelines
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of each factory. Reasonable facility guidelines do not in clude a
requirement to maintain exclusivity or site control unless agreed to
by the dealer as set forth in subparagraphs e f and f g of paragraph
9 of this subsection;
18. Being a factory that increases prices of new motor vehicles
which the new motor veh icle dealer had ordered for retail consumers
and notified the factory pr ior to the dealer's receipt of the
written official price increase notification. A sales contract
signed by a retail consumer accompanied with proof of order
submission to the factory shall constitute evidence of each such
order, provided that the vehicle is in fact delivered to the
customer consumer. Price differences applicable to new models or
series motor vehicles at the time of the introduction of new models
or series shall not b e considered a price increase for purposes of
this paragraph. Price cha nges caused by any of the following shall
not be subject to the pr ovisions of this paragraph:
a. the addition to a motor vehicle of required or
optional equipment pursuant to state or federal law,
b. revaluation of the United States dollar in the case of
foreign-made vehicles or components, or
c. an increase in transport ation charges due to increased
rates imposed by common or contract carriers;
19. Being a factory that requires a new motor vehicle dealer to
participate monetarily in an advertising campaig n or contest, or
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purchase any promotional materials, showroom or o ther display
decoration or material s at the expense of the new motor vehicle
dealer without consent of the dealer, whi ch consent shall not be
unreasonably withheld;
20. Being a factory that denies any new motor vehicle dealer
the right of free association with any other new motor vehicle
dealer for any lawful purpose, unless otherwise permitted by this
chapter; or
21. Being a factory that requires a new motor vehicle dealer to
sell, offer to sell or sell exclusively an extended service
contract, extended maintenance plan or similar product , such as gap
products offered, endorsed or sponsored by the factory by the
following means:
a. by an act or statement from the factory that will in
any manner adversely impact the new motor vehicle
dealer,
b. by measuring the new motor vehicle dealer's
performance under the franchise based on the sale of
extended service contracts, exte nded maintenance plans
or similar products offered, endorsed or sponsore d by
the manufacturer or distributor.
B. Notwithstanding the term s of any franchise agreement, in th e
event of a proposed sale or transfer of a dealership, the
manufacturer or distrib utor shall be permitted to exercise a right
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of first refusal to acquire the assets or ownership interest of the
dealer of the new motor vehicle dealership, if such sale or transfe r
is conditioned upon the manufacturer or dealer entering into a
dealer agreement with the proposed new owner or transferee, only if
all the following requ irements are met:
1. To exercise its right of first refusal, t he factory must
notify the dealer in w riting within sixty (60) days of receipt of
the completed proposal for the pr oposed sale transfer;
2. The exercise of the right of first refusal will resu lt in
the dealer and the owner of the dealership receiving the same or
greater consideration as they have contracted to receive in
connection with the proposed change of ownershi p or transfer;
3. The proposed sale or transfer of the assets of the
dealership does not involve the transfer or sale to a member or
members of the family of one or more dealer o wners, or to a
qualified manager or a partnership or corporation controlled b y such
persons; and
4. The factory agrees to pay the reasonable expenses, inc luding
attorney fees which do not exceed the usual, customary a nd
reasonable fees charged for similar work done for other clients
incurred by the proposed new owner and transfere e prior to the
exercise by the factory of its right of first refusal in negoti ating
and implementing the contract for the proposed sale or tr ansfer of
the dealership or dealership assets. Notwithstanding the foregoing,
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no payment of expenses and attorney fees shall be required if the
proposed new dealer or transferee has not submit ted or caused to be
submitted an accounting of those expenses w ithin thirty (30) days of
receipt of the written request of the factory for such an
accounting. The accounting may be requested by a factory before
exercising its right of first refusal.
C. Nothing in this section shall prohibit, limit, restrict or
impose conditions on:
1. Business activiti es, including without limitation the
dealings with motor vehicle manufacturer s and the representatives
and affiliates of motor vehicle manufacturers, of an y person that is
primarily engaged in the business of short -term, not to exceed
twelve (12) months, r ental of motor vehicles and industrial and
construction equipment and activit ies incidental to that business,
provided that:
a. any motor vehicle sold by t hat person is limited to
used motor vehicles that have been pre viously used
exclusively and regularly by that person in the
conduct of business and used motor vehicles traded in
on motor vehicles sold by that person,
b. warranty repairs performed by that p erson on motor
vehicles are limited to those motor vehicles tha t it
owns, previously owned or takes i n trade, and
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c. motor vehicle financing provided by that person to
retail consumers for motor vehicles is limited to used
vehicles sold by that person in t he conduct of
business; or
2. The direct or indirect ownership , affiliation or control of
a person described in paragraph 1 of this subsection.
D. As used in this section:
1. "Substantially relates" means the nature of criminal conduct
for which the person was convicted has a direct bearing on the
fitness or ability to perform one or more of the duties or
responsibilities necessarily related to the occupation; and
2. "Poses a reasonable threat" means the nature of criminal
conduct for which the person w as convicted involved an act or threat
of harm against another and has a bearing on the fitness or ab ility
to serve the public or work with others in the occupation.
SECTION 7. AMENDATORY 47 O.S. 2021, Section 565.1, is
amended to read as follows:
Section 565.1 A. For the purposes of this section, "designated
successor" means a person who the new motor vehicle dealer has
designated to take over operation of the dealership or legal heir or
devisee under the will of a new motor vehicle dealer or under the
laws of descent and dis tribution of this state .
B. Notwithstanding the terms of any franchise agreement, and
subject to the following conditions contained in paragraphs 1
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through 5 of this section subsection, any manufacturer or
distributor who prevents or refuses to honor the succession to the
operation of a dealership by any legal heir or devisee under the
will of a new motor vehicle dealer or under the laws of descent and
distribution of this state, a designated successor, without good
cause or good faith, as defined in this section, shall be subject to
the following procedure:
1. Within one hundr ed twenty (120) days after the death or
departure of the new motor vehicle dealer, the manufacturer shall
receive a written notice from any legal heir or devisee the
designated successor who intends to establish a become the successor
dealership operator. If timely notice is not so received, then this
paragraph shall not apply, and any succession shall be governed
solely by the terms of the franchise;
2. Within thirty (30) days of receipt of the legal heir's or
devisee's designated successor's timely written notice , the
manufacturer may request, and the legal heir or devisee designated
successor shall, within a reasonable time, provide any information
which is reasonably necessary for the manufacturer to evaluate the
proposed successor dealer and dealership, including , but not limited
to, applications, proposals for facilities and financing;
3. Within sixty (60) days of receipt of such information, the
manufacturer shall approve or disapprove the proposed designated
successor dealership dealer, and in case of disapproval shall
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communicate in writing such disapproval and grounds for disapproval
to the legal heir or devisee designated successor;
4. Failure of the manufacturer to act in a timely manner with
respect to any time period described above shall constitute a wai ver
of the manufacturer's right to disapprove the proposed succession;
5. Within ten (10) days of its the designated successor's
receipt of the manufacturer's notice of disapproval, the legal heir
or devisee designated successor may file a protest of the
manufacturer's decision with the Oklahoma Motor Vehicle Commission
and request a hearing. Such hearing shall be heard in a
substantially similar manner as provided by Section 566 of this
title, except that the Commission shall render a final decision
within sixty (60) days of the filing of the protest. The
manufacturer shall have the burden of proof to show that its
disapproval was for a good cause and in good faith. A denial shall
not be for good cause and in good faith unless the factory
establishes that the legal heir or devisee, or the legal heir or
devisee's controlling executive management, designated successor is
not of good moral character or fails to meet the written, reasonable
and uniformly applied requirements of the manufacturer or
distributor relating to financial qualifications, general business
experience, and other requirements relating to prospective
franchisees. However, a legal heir that designated successor who is
a family member and who is of good moral character in accordance
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with the factory's reasonable factory qualifications and meets the
factory's financial qualifications may rely on controlling executive
management that is of good moral character and meets the factory's
qualifications for general business experience and other
requirements relating to prospective franchi ses. Any denial of the
designated successor based upon a failure to agree to terms other
than those contained in the existing franchise agreement, related
addendums and agreements, and any writ ten notice provided to the
existing dealer prior to the manufacturer's or distributor's receipt
of any written notice from the existing dealer of the proposed
transfer shall not be considered good cause for such denial.
However, any proposed change to the franchise pursuant to written
notice from the manufacturer or distributor, to be valid, shall be
in compliance with existing law. The disapproval by the
manufacturer shall be final if the legal heir or devisee designated
successor fails to file a timely protest of such disapproval. In
the event that the Commission finds that the manufacturer's
disapproval was not made for good cause, then it shall issue a final
order requiring the manufacture r to honor the successor designated
in the notice sent by the legal heir or devisee designated
successor. Notwithstanding anything to the contrary in this
section, a new motor vehicle dealer may designate any person as
successor by filing a written instrument pursuant to the f ranchise
with the manufacturer during the new motor vehicle dealer's
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lifetime. In such a case, the written instrument and franchise
shall govern the dealership succession.
The suspension, revocation or refusal to issue or renew a
license or the imposition of any other penalty by the Commission
shall be in addition to any penalty wh ich might be imposed upon any
licensee upon judgment or conviction in a court of competent
jurisdiction for any violation of the provisions of Sections 561
through 567, 572, 578. 1, 579 and 579.1 of this title.
SECTION 8. AMENDATORY 47 O.S. 2021, Section 565.2, is
amended to read as follows:
Section 565.2 A. Irrespective of the terms, provisions or
conditions of any franchise, or the terms or provisions of any
waiver, no manufacturer shall terminate, cancel or fail to renew any
franchise with a licensed new motor vehicle dealer unless the
manufacturer has satisfied the notice requirements as provided in
this section and has good cause for cancellation, te rmination or
nonrenewal. The manufacturer shall not attempt to cancel or fail to
renew the franchise agreement of a new motor vehicle dealer in this
state unfairly and without just provocation or without due regard to
the equities of the dealer or without good faith as defined herein.
As used herein, "good faith" means the duty of each party to any
franchise agreement to act in a fair and equitable manner toward
each other, with freedom from coercion or intimidation or threats
thereof from each other.
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B. Irrespective of the terms, provisions or conditions of any
franchise, or the terms or provisions of any waiver, good cause
shall exist for the purpose of a termination, cancellation, or
nonrenewal when:
1. The new motor vehicle dealer has failed to compl y with a
provision of the franchise, which provision is both reasonable and
of material significance to the franchise relationship, or the new
motor vehicle dealer has failed to comply with reasonable
performance criteria for sales or service established b y the
manufacturer, and the dealer has been notified by written notice
from the manufacturer; and
2. The new motor vehicle dealer has received written
notification of failure to comply with the manufacturer's reasonable
sales performance standards, capita lization requirements, facility
commitments, business-related equipment acquis itions or other such
remediable failings exclusive of those reasons enumerated in
paragraph 1 of subsection C of this section, and the new motor
vehicle dealer has been afforded a reasonable opportunity of not
less than six (6) months to comply with such a provision or
criteria.
C. Irrespective of the terms, provisions or conditions of any
franchise agreement prior to the termination, cancellation or
nonrenewal of any franchise, the manufacturer shall furnish
notification of such termination, cancellation or nonrenewal to the
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new motor vehicle dealer and the Oklahoma Motor Vehicle Commission
as follows:
1. Not less than ninety (90) days prior to the effective date
of such termination, cancellation or nonrenewal unless for a cause
described in paragraph 2 o f this subsection;
2. Not less than fifteen (15) days prior to the effective date
of such termination, cancellation or nonrenewal with respect to any
of the following:
a. insolvency of the new motor vehicle dealer, or the
filing of any petition by or agai nst the new motor
vehicle dealer under any bankruptcy or receivership
law,
b. 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, provided th at such failure to conduct
business shall not be due to an act of God or
circumstances beyond the direct control of the new
motor vehicle dealer, or
c. conviction of the new moto r vehicle dealer of any
felony which is punishable by imprisonment or a
violation of the Federal Odometer Act; and
3. Not less than one hundred eighty (180) days prior to the
effective date of such termination or cancellation where the
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manufacturer or distributor is discontinuing the sale of the product
line.
The notification requi red by this subsection shall be by
certified mail, return receipt requested, and shall contain a
statement of intent to terminate, to cancel or to not renew the
franchise, a statement of the reasons for the termination,
cancellation or nonrenewal and the d ate the termination shall take
effect.
D. Upon the affected new motor vehicle dealer's receipt of the
aforementioned notice of termination, cancellation or nonrenewal,
the new motor vehicle dealer shall have the right to file a protest
of such threatened termination, cancellation or nonrenewal with the
Commission within thirty (30) days and request a hearing. Such
hearing shall be held in accordance with the provisions of the
Administrative Procedures Act, Sections 301 250 through 326 323 of
Title 75 of the Oklahoma Statutes, to determine if the threatened
cancellation, termination or nonrenewal of the franchise has been
for good cause and if the factory has complied with its obl igations
pursuant to subsections A, B and C of this section and the factory
shall have the burden of proof. If the Commission finds that the
threatened cancellation, termination or nonrenewal of the franchise
has not been for good cause or violates subsec tion A, B or C of this
section, then it shall issue a final order stating that the
threatened termination is wrongful. A factory shall have the right
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to appeal such order. During the pendency of the hearing and after
the decision, the franchise shall rem ain in full force and effect,
including the right to transfer the franchise. If the Commission
finds that the threatened cancellation, termination or nonrenewal is
for good cause and does not violate subsection A, B or C of this
section, the new motor veh icle dealer shall have the right to an
appeal. During the pendency of the act ion, including the final
decision or appeal, the franchise shall remain in full force and
effect, including the right to transfer the franchise. If the new
motor vehicle dealer prevails in the threatened termination action,
the Commission shall award to t he new motor vehicle dealer the
attorney fees and costs incurred to defend the action.
E. If the factory prevails in an action to terminate, cancel or
not renew any franchise, t he new motor vehicle dealer shall be
allowed fair and reasonable compensation by the manufacturer for:
1. New current and previous model year vehicle inventory which
has been acquired from the manufacturer, and which is unused and has
not been damaged or altered while in the dealer's possession;
2. Supplies and parts which have be en acquired from the
manufacturer, for the purpose of this section, limited to any and
all supplies and parts that are listed on the current parts price
sheet available to the de aler;
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3. Equipment and furnishings, provided the new motor vehicle
dealer purchased them from the manufacturer or its approved sources;
and
4. Special tools, with such fair and reasonable compensation to
be paid by the manufacturer within ninety (90) day s of the effective
date of the termination, cancellation or nonrenewal, provid ed 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.
a. For the purposes of paragraph 1 of this subsection,
fair and reasonable compensation shall be no less than
the net acquisition price of the vehicle paid by the
new motor vehicle dealer.
b. For the purposes of paragraphs 2, 3 and 4 of this
subsection, fair and reasonable compensation sha ll be
the net acquisition price paid by the new motor
vehicle dealer less a tw enty-percent (20%) straight-
line depreciation for each year following the dealer's
acquisition of the supplies, parts, equipment,
furnishings and/or special tools.
F. If a factory prevails in an action to terminate, cancel or
not renew any franchise and t he new motor vehicle dealer is leasing
the dealership facilities, the manufacturer shall pay a reasonable
rent to the lessor in accordance with and subject to the provisions
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of subsection G of this section. Nothing in this section shall be
construed to relieve a dealer of its duty to mitigate damages.
G. 1. Such reasonable rental value shall be paid only to the
extent the dealership premises are recognized in the franchise and
only if they are:
a. used solely for performance in accordance with the
franchise. If the facility is used for the operation
of more than one franchise, the reasonable rent shall
be paid based upon the portion of the facility
utilized by the franchise bei ng terminated, canceled
or nonrenewed, and
b. not substantially in excess of f acilities recommended
by the manufacturer.
2. If the facilities are owned by the new motor vehicle dealer,
within ninety (90) days following the effective date of the
termination, cancellation or nonrenewal the manufacturer will
either:
a. locate a qualified purchaser who will offer to
purchase the dealership facilities at a reasonable
price,
b. locate a qualified lessee who will offer to lease the
premises for the remaining leas e term at the rent set
forth in the lease, or
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c. failing the foregoing, lease the dealership facilities
at a reasonable rental value for the portion of the
facility that is recognized in the franchise agreement
for one (1) year.
3. If the facilities are l eased by the new motor vehicle
dealer, within ninety (90) days following the e ffective date of the
termination, cancellation or nonrenewal the manufacturer will
either:
a. locate a tenant or tenants satisfactory to the lessor,
who will sublet or assume the balance of the lease,
b. arrange with the lessor for the cancellation of the
lease without penalty to the dealer, or
c. failing the foregoing, lease the dealership facilities
at a reasonable rent for the portion of the facility
that is recognized in the f ranchise agreement for one
(1) year.
4. The manufacturer shall not be obligat ed to provide
assistance under this section if the new motor vehicle dealer:
a. fails to accept a bona fide offer from a prospective
purchaser, subleases or assignee,
b. refuses to execute a settlement agreement with the
lessor if such agreement with the l essor would be
without cost to the dealer, or
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c. fails to make written request for assistance under
this section within ninety (90) days after the
effective date of the terminati on, cancellation or
nonrenewal.
5. The manufacturer shall be entitled to occu py and use any
space for which it pays rent required by this section.
H. In addition to the repurchase requirements set forth in
subsections E and G of this section, in the even t the termination or
cancellation is the result of a discontinuance of a produ ct line,
the manufacturer or distributor shall compensate the new motor
vehicle dealer in an amount equivalent to the fair market value of
the terminated franchise as of the date of immediately preceding the
manufacturer's or distributor's announcement or provide the new
motor vehicle dealer with a replacement franchise on substantially
similar terms and conditions as those offered to other same line-
make dealers. The dealer may immediately request payment under this
provision section following the announc ement in exchange for
cancelling any further franchise rights, except payments owed to the
dealer in the ordinary course of business, or may request payment
under this provision section upon the final termination,
cancellation or nonrenewal of the franchis e. In either case,
payment under this provision section shall be made not later than
ninety (90) days after the fair market value is determined. If the
factory and dealer canno t agree on the fair market value of the
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terminated franchise or agree to a pro cess to determine the fair
market value, then the factory and dealer shall utilize a neutral
third party third-party mediator to resolve the disagreement.
SECTION 9. AMENDATORY 47 O.S. 2021, Section 565.3, is
amended to read as follows:
Section 565.3 A. A franchised vehicle dealer proposing a sale,
transfer, or assignment of a franchise agreement or the business and
assets of a dealership or an interest in a dealer ship to another
person, hereinafter transferee, shall notify the manufacturer or
distributor whose vehicles the dealer is franchised to sell of the
proposed action of the dealer. The manufacturer or distributor may
make written request to the proposed transferee to submit completed
application forms and related information generall y utilized by a
manufacturer to evaluate such a proposal and a copy of all
agreements related to the proposed sale, transfer, or assignment.
B. The approval by the manufacturer or distributor of the sale,
transfer, or assignment shall not be unreasonably withheld unless
the proposed transferee is not of good moral character or fails to
meet the written, reasonable, and uniformly applied requirements of
the manufacturer or distrib utor relating to prospective franchisees.
Approval of the transfer shall not be made contingent upon the
transferee meeting unreasonable facility requirements or performance
standards, but may be made contingent upon the transferee meeting
reasonable written requirements different than those contained in
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the transferor's franchise agreement and related addendum a nd
agreements, and any written notices provided to the existing dealer
prior to the manufacturer's or distributor's receipt of any written
notice from the existing dealer of the proposed t ransfer. However,
to be valid, any proposed change to the franchise pursuant to
written notice from the manufacturer or distributor shall be in
compliance with existing law. The burden of proof shall be upon the
manufacturer or distributor to show good cause existed to withhold
approval. The manufacturer or distributor that has made such a
determination shall send a letter by certified mail to the dealer
and the applicant of its refusal to approve the proposal, which
shall include a statement of the specific grounds for refusal,
within sixty (60) days after the later of:
1. Receipt by the manufacturer or distributor of the notice of
the proposed sale, transfer, or assignment; or
2. Receipt by the manufacturer or distributor of the
information requested from the proposed transferee pursuant to
subsection A of this sectio n if the manufacturer or distributor has
requested such information within fifteen (15) days of receipt of
written notice of the proposed sale, transfer, or assignment.
C. Failure of the manufacturer or distributor to send its
notice of refusal pursuant t o subsection B of this section shall
mean that the application for the proposed sale, transfer, or
assignment is approved.
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D. If the proposed sale, transfer, or assignment is to an
existing owner's family member or other existing owner, the
manufacturer or distributor's evaluation of such proposal is limited
to the written, reasonable, and uniformly applied requirements of
the manufacturer or distributor relating to good moral character and
financial qualifications. Notwithstanding the provisions of this
subsection, a change in dealer operation shall be addressed pursuant
to the provisions of Section 565.1 of this title.
E. A dealer dealership or dealership owner receiving notice of
refusal of the sale, transfer, or assignment shall have the right to
file a protest with the Oklahoma Motor Vehicle Commission within
thirty (30) days of receipt of the refusal. A dealer receiving
notice that the sale, transfer or assignment is contingent upon the
transferee meeting facility and/or performance standards shall have
the right to file a protest with the Commission within thirty (30)
days of receipt of the notice. In the event a protest is filed, the
manufacturer or distributor s hall have the burden of proof to
establish the proposed transferee or the proposed transferee's
controlling executive management is not of good moral character or
fails to meet the written reasonable and uniformly applied
requirements of the manufacturer o r distributor relating to
prospective franchisees or that the facility requirements are not
reasonable based on the reasons set forth in subparagraph d of
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paragraph 9 of Section 565 of this title different than those
contained in the transfero r's franchise agreement.
SECTION 10. AMENDATORY 47 O.S. 2021, Section 578.1, is
amended to read as follows:
Section 578.1 A. Notwithstanding the terms of a franchise and
notwithstanding the terms of a waiver, i f a factory intends or
proposes to enter into a franchise to establish an additional new
motor vehicle dealer or to relocate an existing new motor vehicle
dealer within or into a relevant market area in which the same line-
make of motor vehicle is currently represented, the factory shall
provide at least sixty (60) days advance written notice to the
Commission and to each new motor vehicle dealer of the same line-
make in the relevant market area, of the intention of the factory to
establish an additional ne w motor vehicle dealer or to relocate an
existing new motor vehicle dealer within or into the relevant market
area. For purposes of this section, the "relevant market area"
means the area within a radius of fifteen (15) miles of around the
site of the proposed new motor vehicle dealership measured from the
property boundary of the primary deale rship property. The notice
shall be sent by certified mail to each party and shall include the
following information:
1. The specific location at which the additional or relocated
new motor vehicle dealer will be established;
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2. The date on or after which the additional or relocated new
motor vehicle dealer intends to commence business at the proposed
location;
3. The identity of all new motor vehicle dealers who are
franchised to sell the same line-make vehicles as the proposed new
motor vehicle dealer and who have licensed locations within the
relevant market area;
4. The names and addresses of the person intended to be
franchised as the proposed additional or relocated new motor vehicle
dealership, the principal investors in the propos ed additional or
relocated new motor vehicle dealership, and the proposed dealer
operator of the proposed additional or relocated new motor vehicle
dealership; and
5. The specific grounds or reasons for the proposed
establishment of an additional new motor vehicle dealer or
relocation of an existing new motor vehicle dealer.
B. This section does not apply:
1. To the relocation of an existing new motor vehicle dealer
within the relevant market area of that dealer; provided, that the
relocation not be at a site within ten (10) miles of a licensed new
motor vehicle dealer for the same line-make of motor vehicle;
2. To a proposed additional new motor vehicle dealer which is
to be established at or within two (2) miles of a location at which
a former licensed new motor vehicle dealer for the same line-make of
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new motor vehicle had ceased operating within the previous two (2)
years;
3. To the relocation of an existing new motor vehicle dealer
within two (2) miles of the existing site of the new motor vehicle
dealership; or
4. To the relocation of an existing new motor vehicle dealer if
the proposed site of the relocated new motor vehicle dealership is
farther away from all other new motor vehicle dealers of the same
line-make in that relevant market area.
C. Within thirty (30) days after receipt of the notice, or
within thirty (30) days after the end of an appeal procedure
provided by the factory, whichever is greater, a new motor vehicle
dealer so notified or entitled to notice may file a petition with
the Commission protesting the proposed establishment or relocation.
The petition shall contain a short statement setting forth the
reasons for the objection of the dealer to the proposed
establishment or relocation. Upon filing of a protest, the
Commission shall promptly notify the factory that a timely protest
has been filed and shall schedule a hearing, which shall be held
within one hundred twenty (120) days of the filing of a timely
protest. The factory shall not establish or relocate the new motor
vehicle dealer until the Commission has held a hearing and has
determined that there is good cause for permitting the proposed
establishment or relocation. When more than one protest is filed
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against the establishment or relocation of the same dealer, the
Commission shall consolidate the hearings to expedite disposition of
the matter.
D. The burden of proof to establish that good cause exists for
permitting the proposed establishment of a new motor vehicle dealer
or relocating an existing new motor vehicle dealership shall be on
the applicant who seeks to establish a new motor vehicle dealership
or the relocation of an existing new motor vehicle dealership.
SECTION 11. AMENDATORY 47 O.S. 2021, Section 580.2, is
amended to read as follows:
Section 580.2 During the time a person is operating a motor
vehicle with the express or implied permission of an authorized a
new motor vehicle dealer, as defined in Section 562 of this title,
such person's motor vehicle liability policy shall have primary
coverage with the motor vehicle liability policy of the new motor
vehicle dealer having secondary coverage until the vehicle is
returned. As used herein, "motor vehicle liability policy" means
motor vehicle insurance against legal li ability for the death,
injury, or disability of any human being, or for damage to real or
personal property. The motor vehicle liability policy of any person
who has been loaned a vehicle by a new motor vehicle dealer pursuant
to the terms of this section shall provide primary coverage for any
death or injury of any h uman being or for any real or personal
property damage, including damage to the loaned vehicle, with the
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motor vehicle insurance policy of the new motor vehicle dealer
having secondary coverage for any death or injury of any human being
or for any real or personal property damage, including damage to the
loaned vehicle. The change in financial responsibility shall be
evidenced by a release signed by the person operati ng the vehicle
with the express or implied pe rmission of the new motor vehicle
dealer with the release to be returned to the person upon the return
of the motor vehicle to the new motor vehicle dealer. The motor
vehicle liability policy of such person shall meet the minimum
financial responsibility requirements found in Section 7-324 of this
title.
This section shall apply only to the loan of a motor vehicle by
an authorized a new motor vehicle dealer which loan occurs without
financial remuneration in the form of a fee or lease charge.
SECTION 12. This act shall become effective November 1, 2023.
COMMITTEE REPORT BY: COMMITTEE ON BUSINESS AND COMMERCE, dated
02/23/2023 - DO PASS, As Amended and Coauthored.