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STATE OF OKLAHOMA
2nd Session of the 59th Legislature (2024)
COMMITTEE SUBSTITUTE
FOR
SENATE BILL 2022 By: Thompson (Roger) of the
Senate
and
Dobrinski of the Hou se
COMMITTEE SUBSTITUTE
An Act relating to motor vehicle dealers ; amending 47
O.S. 2021, Section 562, as amended by Section 3,
Chapter 29, O.S.L. 2023 (47 O.S. Supp. 2023, Section
562), which relates to definitions; modifying
definition; amending 47 O.S. 2021, Section 565, as
last amended by Section 8, Chapter 29, O.S.L . 2023
(47 O.S. Supp. 2023, Section 565), which relates to
denial, revocation, or suspension of license;
modifying entity subject to license denial,
revocation, suspension, or fine; m odifying reasons
for license denial, revocation, suspension, or fine;
prohibiting certain withholding of proportionate
share of vehicles; requiring certain considerations
for location of dealership change; requiring purchase
of dealership if certain conditions are met; setting
value for purchase; setting process if parties cann ot
agree; requiring certain maintenance of records for
period of time; requiri ng certain written request be
received within certain time frame; requiring certain
written request conta in certain information; amending
47 O.S. 2021, Section 565.2, as amended by S ection
10, Chapter 29, O.S.L. 2023 (47 O.S. Supp. 2023,
Section 565.2), which relates to termination,
cancellation, or nonrenewal of new motor vehicle
dealer franchise; updating statutory reference;
allowing franchise to remain in full force and effect
through any appeal; modifying actions required to be
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taken when a factory terminates, cancel s, or does not
renew a franchise; modifying actions required to be
taken when a factory te rminates, cancels, or does not
renew due to a discontinuance of product line;
requiring certain purchase at certain value; setting
certain valuation; setting process if parties cannot
agree; allowing for certain sole ownership,
possession, use, and control of certain property;
requiring payment of reasonable rent if certain
conditions are met; requiring compensation for
certain pecuniary loss; requiring certain documents
be provided for payment to be made; providing for
appraisal process; requiring certain oath be taken;
requiring certain average be taken to determine
value; allowing for appointment of third appraiser to
determine fair market value if certain conditions are
met; requiring appraisers make certain valuation;
requiring payment within certain time frame; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 47 O.S. 2021, Section 562, as
amended by Section 3, Chapter 29, O.S.L. 2023 (47 O.S. Supp. 2023,
Section 562), is amended to read as follows:
Section 562. The following words, terms, and phrases, when used
in Sections 561 thro ugh 567, 572, 578.1, 579 , and 579.1 of this
title, shall have the mea nings respectively ascribed to them in this
section, except where the context clearly in dicates a different
meaning:
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1. “Motor vehicle” means any motor-driven vehicle required to
be registered under the Oklahoma Vehicle License and Regis tration
Act. The term motor vehicle does not include:
a. recreational vehicles, as defined in the Recreational
Vehicle Franchise Act, or
b. all-terrain vehicles, utility vehicles, and
motorcycles used exc lusively for off-road use which
are sold by a retail implement dealer;
2. “New motor vehicle dealer ” means any person, firm,
association, corporation, or trust not excluded by this paragraph
who sells, offers for sale, advertises to sell, leases , or displays
new motor vehicles an d holds a bona fide contra ct or franchise in
effect with a manufacturer or di stributor authorized by the
manufacturer to make predelivery preparation of such vehicles sol d
to purchasers and to perform post-sale work pursuant to the
manufacturer’s or distributor’s warranty. As used h erein,
“authorized predelivery preparation ” means the rendition by the
dealer of services and safety adjustments on each new mot or vehicle
in accordance with the procedure and safety standards r equired by
the manufacturer of the vehicle to be made before its delivery to
the purchaser. “Performance of authorized post-sale work pursuant
to the warranty”, as used herein, means the rendition of ser vices
which are required by the terms of the warrant y that stands extended
to the vehicle at the time of its sale and are to be made in
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accordance with the safety standards prescribed by the manufac turer.
The term includes premises or facili ties at which a person engages
only in the repair of motor vehicle s if repairs are performed
pursuant to the terms of a franch ise and motor vehicle
manufacturer’s warranty. For the purpose of Sections 561 thr ough
567, 572, 578.1, 579, and 579.1 of this title, the terms new motor
vehicle dealer and “new motor vehicle dealership ” shall be
synonymous. The term new motor vehicle dealer 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,
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 employees, or
d. a powersports vehicl e dealer;
3. “Motor vehicle salesperson” means any person who, for gain
or compensation of any kind, either direc tly or indirectly,
regularly or occasionally, by any form o f agreement or arrangement,
assists or offers assistance to customers in selecting a vehicle ;
explains product performance, applicati on, and benefits to
customers; describes optional equipment available on the vehicle ;
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offers or coordinates t est drives to customers; explains the
operating features of a vehicle, or paperwork to the customer; or
sells or negotiates f or the sale, lease, or conveyance or arranges
the financing of any new motor vehicle as an employee for any new
motor vehicle dealer to any one or m ore third parties. Provided,
this definition does not apply to employees of any manufacturer or
distributor who has new motor vehicle sales and service agr eements
with new motor vehicle dealers in this state and does not sell motor
vehicles directly to consumers;
4. “Commission” means the Oklahoma New Motor Vehicle
Commission;
5. “Manufacturer” means any person, firm, association,
corporation, or trust, resident or nonresident, that manufactures or
assembles new and unused motor vehicles or that engages in the
fabrication or assembly of motorized vehicles of a type required to
be registered in this state;
6. “Distributor” means any person, firm, associatio n,
corporation, or trust, resident or nonresid ent, that, being
authorized by the original manu facturer, in whole or in part sells
or distributes new and unused motor vehicles to new motor vehicle
dealers, or that maintains distributor representatives;
7. “Factory branch” means any branch office maintained by a
person, firm, association, corporation , or trust that manufactures
or assembles motor vehicles for the sale of motor vehicles to
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distributors, or for the sale of motor vehicles t o new motor vehicle
dealers, or for directing or supervising, in wh ole or in part, its
representatives;
8. “Distributor branch” means any branch office similarly
maintained by a distributor for the same p urposes a factory bra nch
is maintained;
9. “Factory representative” means any officer or agent engaged
as a representative of a manufacturer of motor vehicles or by a
factory branch, for the purpose of making or promoting the sale of
its motor vehicles, or for supervising or contacting its dealers or
prospective dealers;
10. “Distributor representative” means any person, firm,
association, corporation , or trust and each officer and employee
thereof engaged as a re presentative of a distributor or distrib utor
branch of motor vehicles, for the purpose of mak ing or promoting the
sale of its motor vehicles, or for supervising o r 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 activities of a new motor
vehicle dealer as defined by this section;
12. “New or unused motor vehicle” means a vehicle which is in
the possession of the manufac turer or distributor or has been sold
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only to the holder of a valid franchise granted by the manufac turer
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 n ew 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 branc h, or distributor
representative, in which the new mo tor vehicle dealer is held
responsible for the promotion and developm ent of sales and rend ering
of service for the make of motor vehicle for which the new motor
vehicle dealer holds a franchise or sellin g 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, ass ociation,
corporation, or trust which has control, either permanently or
temporarily, over the rea l property upon which the off-premises sale
or display is conduc ted;
16. “Product” means new motor vehi cles and new motor vehicle
parts;
17. “Service” means motor vehicle warranty repairs including
both parts and labor;
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18. “Lead” means a consumer conta ct in response 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 repr esentative, or distributor
representative, which manufactures or distributes vehicle products;
21. “Powersports vehicle” means motorcycles, sco oters, mopeds,
all-terrain vehicles, and utility vehicles;
22. “Powersports vehicle dea ler” means any person, firm, or
corporation that is in the business of selling any new powersports
vehicles except for retail implement dea lers;
23. “Retail implement dealer” means a business engaged
primarily in the sale of farm tractors as defined in Se ction 1-118
of this title or implements of husbandry as de fined in Section 1-125
of this title or a combination thereof ;
24. “Consumer data” means nonpublic personal information as
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 part y acting on behalf of a
manufacturer.
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The 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; and
25. “Fleet vehicle” means a new motor vehicle sold and titled
or registered to a business and used for business purposes only .
SECTION 2. AMENDATORY 47 O.S. 202 1, Section 565, as last
amended by Section 8, Chapter 29, O.S.L. 2023 (47 O.S. Supp. 2023,
Section 565), is amended to read as follows:
Section 565. A. The Oklahoma New Motor Vehicle Commis sion may
deny an application for a license, revoke or suspend a license , or
impose a fine against any person or entity, not to exceed Ten
Thousand Dollars ($10,000.00) per occurrence, that violates any
provision of Sections 561 through 567, 572, 578.1, 579, and 579.1 of
this title or for any of the following reasons:
1. On satisfactory proof of unfitness of the applicant in any
application for any license under the provisions of Section 561 et
seq. of this title;
2. For any material misstat ement made by an applicant in any
application for any lic ense under the provisio ns 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 a ny rule promulgated by the Commission
under authority vested in it by Section 561 et seq. of this titl e;
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4. A change of cond ition after license is granted resulting in
failure to maintain the qualifications for license;
5. Being a new motor vehicle dealer who :
a. has required a purchaser of a new m otor vehicle, as a
condition of sale and delivery thereof , to also
purchase special features, appliance s, accessories, or
equipment not desired or requested by the purchaser
and installed by the new motor vehicle dealer,
b. uses any false or misleading adv ertising in connection
with business as a new motor vehic le dealer,
c. has committed any unlawful act w hich resulted in the
revocation of any similar license in another state,
d. has failed or refused to perform any written agreement
with any retail buyer involving the sale of a motor
vehicle,
e. has been convicted of a felony crime t hat
substantially relates to the occupation of a new motor
vehicle dealer and poses a reasonable threat to public
safety,
f. has committed a fraudulent act in selling, purchasi ng,
or otherwise dealing in new motor vehicles or has
misrepresented the terms a nd conditions of a sale,
purchase or contract for sale or purchase of a new
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motor vehicle or any interest therein including an
option to purchase such vehicle,
g. has failed to meet or maintain the conditions and
requirements necessa ry to qualify for the i ssuance 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 vehicle dealer w ho:
a. does not have an established plac e of business,
b. does not provide for a suitable repair shop separate
from the display room with ample sp ace to repair or
recondition one or more v ehicles at the same time, and
which is staffed with properly tr ained and qualified
repair technicians and is equipped with such parts,
tools, and equipment as may be requisite for the
servicing of motor vehicles in such a manner as to
make them comply with the safety laws of this state
and to properly fulfill the dealer ’s or manufacturer’s
warranty obligation,
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c. does not hold a franchise in effect with a
manufacturer or distributor of new or unused motor
vehicles for the sale of the same and is not
authorized by the manufacturer or distributor to
render predelivery pr eparation 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 cert ificate of
registration for the person, or utilizes the services
of used motor vehicle lots or dealers or ot her
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 original purchaser thereof, or
f. fails to order and stoc k a reasonable number of new
motor vehicles necessary to meet consumer demand for
each of the new moto r vehicles included in 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:
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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 or
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, accessories,
or equipment not included in the list p rice of
the motor vehicles as publicly advertised by the
manufacturer thereof, or
(3) to order or accept delivery of any parts,
accessories, equipment, machinery, tools,
appliances, or any commodity whatsoever,
b. induced under threat o r discrimination by the
withholding from delivery to a new motor vehicle
dealer certain models of moto r vehicles, changing or
amending unilaterally the new motor vehicle dealer’s
allotment of motor vehicles, and/or withholding and
delaying delivery of the vehicles out of the ordinary
course of business, in order to induce by such
coercion any new motor vehicle dealer to participate
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or contribute to any local or national advertising
fund controlled directly or indirectly by the facto ry
or for any other purpo ses such as contest,
“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 vehicle allotmen t, to
order a certain percentage of the vehicle s 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 tha t may have
a material effect on a right of the dealer to vehicle
allocation; or payment under any incentive or
reimbursement program that is unfair, unreasonable,
inequitable, and not based on accurate information,
d. used a performance standard for measur ing sales or
service performance o f any new motor vehicle dealer
under the terms of the franchise agreement which:
(1) is unfair, unreasonable, arbitrary, or
inequitable, and
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(2) does not consider the relevant and material local
and state or regional crite ria, including
prevailing economic conditions affecting the
sales or service perf ormance of a vehicle dealer,
vehicle allocation from the manufacturer , or and
any relevant and material d ata and facts
presented by the dealer in writing within thirty
(30) days of the written notice of the
manufacturer 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 vehicle dealers a t the same price
for a comparably equipped m otor vehicle, on the same
terms, with no different ial in functionally available
discount, allowance, credit , or bonus, except as
provided in subparagraph e of paragraph 9 of this
subsection,
f. failed to provide reasonable c ompensation to a new
motor vehicle dealer substantially equivalent to the
actual cost of providing a manufacturer required
loaner or rental vehicle to any consumer who is havin g
a vehicle serviced at the dealership. For purposes of
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this paragraph, actual cost is the average cost in the
new motor vehicle dealer’s region for the rental o f a
substantially similar make and model as the vehicle
being serviced, or
g. failed to make available to its new motor vehicle
dealers a fair and proportional share of all n ew
vehicles distributed to sam e line-make dealers in this
state, subject to the sam e reasonable terms, including
any vehicles distributed from a common new vehicle
inventory pool outside of the factory’s ordinary
allocation process such as any vehicles the factory
reserves to distribut e on a discretionary basis;
9. Being a factory that :
a. has attempted to coerce or has coerced any new motor
vehicle dealer to enter into any agr eement or to
cancel any agreement; has failed to act in good faith
and in a fair, equitable, and nondiscriminatory
manner; has directly or indirectly coerced,
intimidated, threatened , or restrained any new motor
vehicle dealer; has acted dishonestly; or has failed
to act in accordance with the reasonable standards of
fair dealing,
b. has failed to compensate its dealers for the work and
services they are required to perform in connecti on
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with the dealer’s delivery and preparation obligation s
according to the agreements on file with the
Commission which must be found by the Commission to be
reasonable, or has failed to adequately and fairly
compensate its dealers for labor, parts , and other
expenses incurred by the dealer to perform under and
comply with manufacturer’s warranty agreements and
recall repairs which 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 upda te to any part, system,
accessory, or function by the manufacturer a nd
performed by the dealer in order to satisfy th e
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 rates customarily charged for retail
consumer repairs as calculated herein, for parts and
labor for warranty and recall repairs shall, at the
option of the new motor ve hicle dealer, be established
by the new motor vehicle dealer submitting to the
manufacturer or distributor one hundre d sequential
nonwarranty consumer-paid service repair orders which
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contain warranty-like repairs, or ninety (90)
consecutive days of nonwarranty consumer-paid service
repair orders which contain warranty-like repairs,
whichever is less, covering repairs made no more than
one hundred eighty (180) days before the submission
and declaring the average percentag e labor rate and/or
markup rate. A new motor vehicle dealer may not
submit a request to establ ish its retail rates more
than once in a twelve -month period. That request may
establish a parts markup 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 orders submitted,
dividing that amount by the new motor vehicle dealer ’s
total cost of the purchase of those parts, subtracting
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
amount of the new motor vehicle dealer ’s total labor
sales from the qualified repair orders by the total
labor hours charged for those sales. When submitting
repair orders to establish a retail parts and labor
rate, a new motor vehicle dealer need not include
repairs for:
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(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 r epair,
(2) factory special events, specials, or promotional
discounts for retail consumer rep airs,
(3) parts sold or repairs performed at wholesale,
(4) factory-approved goodwill or policy repairs or
replacements,
(5) repairs with aftermarket parts, when c alculating
the retail parts rate but not the re tail labor
rate,
(6) repairs on aftermarket pa rts,
(7) replacement of or work on tires 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 part numbers
including, but not limited to, nuts, bolts, and
fasteners.
A manufacturer or distributor may, not later than
forty-five (45) days after submission, rebut that
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declared retail parts and labor rate in writing by
reasonably substantiating that the rate is not
accurate or is incomplete pursuant to the provisions
of this section. If the manufa cturer or distributor
determines the set of repair orders submitted by the
new motor vehicle dealer pursuant to this section for
a retail labor rate or retail parts markup rate is
substantially higher than the new motor vehicle
dealer’s current warranty rates, the manufacturer or
distributor may request, in writing, within forty-five
(45) days after the manufacturer’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 repa ir
orders initially submitted by the new motor vehicle
dealer. All time periods under this sectio n shall be
suspended until the supplemental repair orders are
provided. If the manufacturer or distributor requests
supplemental repair orders, the manufactu rer or
distributor may, within thirty (30) days after
receiving the supplemental repair orders and in
accordance with the formula described in this
subsection, calculate a pr oposed adjusted retail labor
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rate or retail parts markup rate, as applicable, base d
upon any set of the qualified repair orders submitted
by the franchisee and following the formul a set forth
herein to establish the rate. The retail labor and
parts rates shall go into effect thirty (30) days
following the approval by the manufacturer or
distributor. If the declared rate is rebutted, the
manufacturer or distributor shall provide written
notice stating the reasons for the rebuttal, an
explanation of the rea sons for the rebuttal, and a
copy of all calculations used by the franchisor in
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 forty-five (45) days after submission.
If the new motor vehicle dealer does not agree with
the proposed average percentage ma rkup or labor rate,
the new motor vehicle dealer may file a protest with
the Commission not later than thirty (30) days after
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
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inaccurate or not complete pursuant to the provisions
of this section. A manufacturer or dis tributor may
not retaliate against any new motor vehicle d ealer
seeking to exercise its rights u nder this section. A
manufacturer or dist ributor may require a d ealer to
submit repair orders in accordance with this section
in order to validate the reasonableness of a dealer’s
retail rate for parts or labor not m ore often than
once every twelve (12) months. A manufacturer or
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
solely intended to recover the cos t of reimbursing a
new motor vehicle dealer for parts and labor pursuant
to this section; provided, a ma nufacturer or
distributor shall not be prohibited from increasing
prices for vehicles or parts in the normal course of
business or from auditing and cha rging back claims in
accordance with this section. All claims made by
dealers for compensation for delivery, preparation,
warranty, or recall repair work shall be paid within
thirty (30) days after approval and shall be approved
or disapproved within thi rty (30) days after receipt.
When any claim is disapproved, the dealer shall be
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notified in writing of the grounds for disapproval.
The dealer’s delivery, preparation , and warranty
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 of suspected fraud , audits of warranty payments
shall only be for the one-year period immediately
following the date of the p ayment. A manufacturer
shall reserve the right to reasonable, periodic audits
to determine the validity of 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
charge a new motor v ehicle dealer back subsequent to
the payment of the claim unless the factory can show
that the claim was fa lse or fraudulent or that the new
motor vehicle dealer failed t o reasonably substantiate
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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 registration
laws of this state and is not prevented from
compliance by any action of the new motor vehicle
dealer; provided, that the factory may require the new
motor vehicle dealer to provide, w ithin thirty (30)
days of notice of charge-back, withholding of payment,
or denial of claim, the documentation to demonstrate
the vehicle sale, delivery, and customer qualification
for an incentive as reported, including consumer name
and address and written a ttestation signed by the
dealer operator or general manager stating the
consumer was not on the export control list and the
dealer 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 spec ific audit results and
proposed charge-back amount. A dealer that receives
notice of a proposed charge -back pursuant to a
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factory’s audit has the right to file a protest wi th
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 fil ing a
protest has passed or a final adjudication is rendered
by the Commission, whi chever is later, unless the
dealer has agreed to the charge-back or charge-backs,
c. fails to compensate th e new motor vehicle 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 v ehicle dealer is
franchised to sell or on which the new motor
vehicle dealer is authorized to perform recall
repairs,
(2) that is subject to a stop-sale or do-not-drive
order 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 s top-sale
or do-not-drive order is issued or that is taken
by the new motor vehicle dealer into the dealer’s
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inventory after the recall notice as a re sult of
a retail consumer trade-in or a lease return to
the dealer inventory in accordance with an
applicable lease contract,
(4) that cannot be repaired due to the
unavailability, within thirty (30) days after
issuance of the stop-sale or do-not-drive order,
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 that is thirty
(30) days after the date on which the stop-sale
order was provided to the new motor vehicle
dealer until the earlier o f either of the
following:
(a) the date the recall remedy o r parts are made
available, or
(b) the date the new motor vehicle dealer sells,
trades, or otherwise disposes of the
affected used motor vehicle.
For the purposes of division (5) of this subparagra ph,
the value of a used vehicle shall be the average Blac k
Book value for the year, make, and model of the
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recalled vehicle. A factory may direct th e manner and
method in which a new motor vehicle dealer must
demonstrate the inventory status of an affecte d used
motor vehicle to determine eligibility under this
subparagraph; provided, that the manner and method may
not be unduly burdensome and may not require
information that is unduly burdensome to provide. All
reimbursement claims made by new motor vehic le dealers
pursuant to this section for recall remedies o r
repairs, or for compensation where no part or repair
is reasonably available and the vehic le is subject to
a stop-sale or do-not-drive order, shall be subject to
the same limitations and requiremen ts as a warranty
reimbursement claim made under subparagr aph b of this
paragraph. In the alternative, a manufacturer may
compensate its franchised n ew motor vehicle dealers
under a national recall compensation program;
provided, the compensation under the program is equal
to or greater than that provided under division (5) of
this subparagraph, or as the manufacturer and new
motor vehicle dealer other wise agree. Nothing in this
section shall require a factory to provide total
compensation to a new motor v ehicle dealer which would
exceed the total average Black Book value of the
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affected used motor vehicle as originally determined
under 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 same
line-make franchised dealers a reasonable supply and
mix of all models manufactured for that line-make, or
unreasonably requires a dealer to pay any extra fee,
purchase unreasonabl e advertising displays or other
materials, or enter into a separate agreement which
adversely alters the rights or obligations contained
within the new motor vehicle dealer’s existing
franchise agreement or which waives any right of 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
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
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failure to deliver any such new motor vehicle shall
not be considered a violation of the secti on 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 subparagraph shall not
apply to recreational vehicles, limited production
model vehicles, a vehicle not advertised by the
factory for sale in this state, vehicles that are
subject to allocation affected by federal
environmental laws or environmental laws of this
state, or vehicles allocated in response t o an
unforeseen event or circumstance,
e. except as necessary to comply wit h a health or safety
law, or to comply with a technology re quirement which
is necessary to sell or service a motor vehicle that
the franchised new motor vehicle dealer is authorized
or licensed by the franchisor to sell or service,
requires a new motor veh icle dealer to construct a new
facility or substantially renovate the new motor
vehicle dealer’s existing facility unless the facility
construction or reno vation is justified by the
economic conditions existing at the time, as well as
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the reasonably forese eable projections, in the new
motor vehicle dealer ’s market and in the automotive
industry. However, this subparagraph shall not apply
if the new motor vehicle dealer voluntarily agrees to
facility construction or renovation in exchange f or
money, credit, allowance, reimbursement, or additional
vehicle allocation 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 cost of, the
facility constructio n or renovation. Except as
necessary to comply with a health or safety law, or to
comply with a technology or safety requirement which
is necessary to sell or service a motor vehicle that
the franchised new motor vehicle dealer is authorized
or licensed by the franchisor to sell or service, a
new motor vehicle dealer which comple tes a facility
construction or renovation pursuant to factory
requirements shall not be requir ed 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 t en (10)
years and the construction or alteration was approved
by the manufacturer as a p art of a facility upgrade
program, standard, or policy. For purposes of this
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subparagraph, “substantially altered” means to perform
an alteration that subst antially impacts 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 doe s not contain a specific
time period during which the manufacturer or
distributor shall provide paym ents or benefits to a
participating dealer, or the time f rame specified
under the program is reduced or canceled prematurely
in the unilateral discreti on of the manufacturer or
distributor, the manufacturer or distributor shall not
deny the participating dealer any payment or benefit
under the terms of the program, standard, or p olicy 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 changed or canceled, unless the
manufacturer and dealer agree, in writing, to the
change in payment or b enefit. During the ten-year
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period following facility construction or substantial
alteration, the manufacturer shall not withhold from
the dealer its proportionate share of vehicles
distributed to dealers of the same line-make, subject
to the same reasonable terms, including vehicles
distributed from 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,
f. requires a new motor vehicle dealer to establish an
exclusive facility or to change the loc ation of the
dealership, unless supported by reasonable business,
market, and economic considerations; provided, that
this section shall not restrict the terms of any
agreement for such exc lusive facility volun tarily
entered into and supported by valuable consideration
separate from the ne w motor vehicle dealer’s right to
sell and service motor vehicles for t he franchisor.
If a dealer is required by the manufacturer or
distributor to change a previously approved location
of the dealership and has not sold its existing
dealership facility and real estate within the later
of one hundred eighty (180) days of listing the
property for sale or ninety (90) days after the
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facility relocation, then, upon the written request of
the dealer, the manufacturer or distributor shall
purchase the existing dealership facility of the
dealer and real estate. The facility and rea l estate
shall be valued as if a new motor vehicle dealers hip
continues to operate on the property. If the factory
and dealer cannot agree on the value of the terminated
franchise, then the factory and dealer shall utilize
the process described in paragraph 6 of subsecti on G
of Section 565.2 of this title. If a manufacturer or
distributor purchases a dealership facility and real
estate, then it shall be entitled to sole own ership,
possession, use, and contr ol of any items, buildings,
or property that were included in the contract to
purchase,
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 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
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site-control agreement, a site -control 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,
h. refuses to pay, or claims reimbursement from, a new
motor vehicle dealer fo r sales, incentives, or other
payments related to a motor vehicle sold by the new
motor vehicle dealer because the purchaser of the
motor vehicle exported or resold the motor vehicle in
violation of the policy of the factory unless the
factory can show tha t, at the time of the sale, the
new motor vehicle dealer knew or reasonably should
have known of the pu rchaser’s intention to export or
resell the motor vehicle. There is a rebu ttable
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 pu rchase goods
or services for the construction, renovation, or
improvement of the new motor vehicle dealer’s facility
from a vendor chosen by the factory if goods or
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services available from o ther sources are of
substantially similar quality and design and comply
with all applicable 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 withh eld. Nothing in
this subparagraph may be construed to allow a new
motor vehicle dealer to impair or elimin ate a
factory’s intellectual property, trademark rights, or
trade dress usage guide lines. Nothing in this section
prohibits the enforcement of a voluntary agreement
between the factory and the new motor vehicle dealer
where separate and valuable considera tion has been
offered and accepted;
10. Being a factory that:
a. establishes a system of motor vehicle allocation or
distribution which is unfair, i nequitable, or
unreasonably discriminatory. A manufacturer and
distributor shall maintain for three (3) year s records
that describe its metho ds or formula of allocation and
distribution of its motor v ehicles and records of its
actual allocation and distribution of motor v ehicles
to its motor vehicle dealers. Upon the written
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request of any new motor vehicle dealer franchised by
it the manufacturer or distributor, received by the
manufacturer or distributor within thirty (30) days of
the written notice from the manufacturer or
distributor to the dealer of the intention to cancel
or terminate, or written notice from the manufact urer
or distributor of a sales performance deficiency
requiring the dealer to take action to cure the
alleged performance deficiency , a factory manufacturer
or distributor shall disclose in writing to the new
motor vehicle dealer the basis upon which new motor
vehicles are allocated, scheduled, and delivered, by
vehicle model, to among the new motor vehicle dealers
of the same line-make for that factory manufacturer or
distributor for the prior three (3) years, and the
basis upon which the current allocatio n or
distribution is being made or will be made to such
dealer, or
b. changes an established plan or system of motor vehicle
distribution. A new motor vehicle dealer franchi se
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
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under the franchise agreement. The appoint ment of a
new importer or distributor for motor vehicles offered
for sale under the franchise agreement shall be deemed
to be a change of an establis hed 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 substant ially 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 compara ble vehicle previously
sold through their line -make. Changing a vehicle ’s
powertrain is not sufficient to show it is
substantially different. Upon the occurrence of suc h
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 w ho is a party to the
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franchise agreement a new franchise agreement
containing substantially the same provis ions 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 st ate except through a new
motor vehicle dealer holding a franchise for the line -make that
includes the new motor vehicle. This paragraph does not apply to
factory sales of new moto r vehicles to its employees, family members
of employees, retirees and famil y members of retirees, not-for-
profit organizations, or the 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 vehicle or from establishing a
program to sell or offer to sell new motor vehicles through
participating dealers subject to the limitations provided in
paragraph 2 of Section 562 of this title;
12. a. Being a factory whic h directly or indirec tly:
(1) owns any ownership interest or has any financial
interest in a new motor vehicl e dealer or any
person who sells products or services pursuant to
the terms of the franchise agreement,
(2) operates or controls a new motor vehicle dealer,
or
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(3) acts in the capacity of a new motor vehicle
dealer.
b. (1) This paragraph does not pr ohibit a factory from
owning or controlling a new motor vehicle dealer
while in a bona fide r elationship with a dealer
development candidate wh o has made a substant ial
initial investment i n the franchise and whose
initial investment is subject to potential loss.
The dealer development candidate can reasonably
expect to acquire full o wnership of a new motor
vehicle dealer within a reasonable period of time
not to exceed ten (10) years and o n reasonable
terms and conditions. The ten-year acquisition
period may be expanded for good cause shown.
(2) This paragraph does not prohibit a factory from
owning, operating, controlling, or acting in the
capacity of a new motor vehicle dealer for a
period not to exceed twelve (12) months during
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 New Motor Vehicle Commission may
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extend the time limit set forth above; extensions
may be granted for periods not to excee d twelve
(12) months.
(3) This paragraph does no t 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 pr ohibit a factory from
owning, directly or indirectly, a minority
interest in an entity that owns, operates , or
controls 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
manufacturer in this state t rade 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 facilitie s as the dealer and
manufacturer shall agree are appropriate,
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(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 neare st
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 New Motor
Vehicle Commission to do business w ithin the
state, and
(e) prior to January 1, 2000, the factory shall
have furnished or made available to
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
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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 motor vehicle dealer, other t han in
composite form to new motor vehicle dealers in the same line-make or
in response to a subpoena 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 doe s not provide or direct leads in a
fair, equitable, and timely manner. Nothing in this paragraph shall
be construed to require a factory to d isregard the preference of a
consumer in providing or directing a lead;
15. Being a factory which used the consumer list of a new motor
vehicle dealer for the purpose of unfairly competing with dealers;
16. Being a factory which prohibits a new motor vehicle dealer
from relocating after a written request by such new motor vehicle
dealer if:
a. the facility and the p roposed new location satisfies
or meets the written reasonable guidelines of the
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factory. Reasonable guidelines do not include
exclusivity or site control unless agreed to as set
forth in subparagraphs f and g of paragraph 9 of this
subsection,
b. the proposed new location is within the a rea of
responsibility of the new motor vehicle dealer
pursuant to Section 578 .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 approval 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
of each factory. Reasonable facility guidelines do not include a
requirement to maintain exclusivity or site control unless agreed to
by the dealer as set forth in subparagraphs f and g of paragraph 9
of this subsection;
18. Being a factory tha t increases prices of new motor vehicles
which the new motor vehicle dealer had ordered for retail consumers
and notified the factory prior to the new motor vehicle dealer’s
receipt of the written official price increase notification. A
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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
consumer. Price differences applicable to new models or series
motor vehicles at the time of the introduction of new models or
series shall not be considered a price increase for purposes of this
paragraph. Price changes ca used by any of the following shall not
be subject to the provisions of this paragraph:
a. the addition to a motor vehicle of required or
optional equipment pursua nt 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 transportation 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 campaign or co ntest, or
purchase any promotional materials, sh owroom, or other display
decoration or materials at the expense of the new motor vehicle
dealer without consent of the new motor vehicle dealer, which
consent shall not be unreasonably wi thheld;
20. Being a factory that denies any new motor vehicle deale r
the right of free association with any other n ew motor vehicle
dealer for any lawful purpose, unless otherwise pe rmitted by this
chapter; or
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21. Being a factory that requires a new motor vehicle dealer to
sell, offer to sell, or sell exclusively an ext ended 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, or
b. by measuring the new motor vehicle dealer’s
performance under the franchise based on the sale of
extended service contracts, extended maintenance
plans, or similar products offered, e ndorsed, or
sponsored by the manufacturer or distributor.
B. Notwithstanding the terms of any franchise agreement, in the
event of a proposed sale or transfer of a dealership, the
manufacturer or distributor shall be permitted to exer cise a right
of first refusal to acquire the assets or ownership interest of the
dealer of the new motor vehicle dealership, if such sale or transfer
is conditioned upon the manufactu rer or dealer entering into a
dealer agreement with the proposed new owner or transferee, only if
all the following requirements are met:
1. To exercise its right of first refusal, the factory must
notify the new motor vehicle dealer in writing within six ty (60)
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days of receipt of the completed proposal for the proposed sale
transfer;
2. The exercise of the right of first refusal will r esult in
the new motor vehicle 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 ownership or
transfer;
3. The proposed sale or transfer 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 by such pe rsons; and
4. The factory agrees to pay the reasonable expenses, including
attorney fees which do not exceed the usual, customary, and
reasonable fees charged for simila r work done for other clients
incurred by the proposed new owner and transferee prior to the
exercise by the factory of its right of first refusal in negotiating
and implementing the contract for the proposed sale or transfer of
the dealership or dealershi p assets. Notwithstanding the foregoing,
no payment of expenses and attorney fees sha ll be required if the
proposed new dealer or t ransferee has not submitted or caused to b e
submitted an accounting of those expenses within thirty (30) days of
receipt of the written request of the factory for such an
accounting. The accounting may be requested b y a factory before
exercising its right of first refusal.
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C. Nothing in this section shall prohibit, limit, restrict, or
impose conditions on:
1. Business activities, including without limitation the
dealings with motor vehicle manufacturers and t he representatives
and affiliates of motor v ehicle manufacturers, of any person that is
primarily engaged in the business of short-term, not to exceed
twelve (12) months, rental of motor vehicles and industrial and
construction equipment and activities incidental to that business,
provided that:
a. any motor vehicle sold by that person is limited to
used motor vehicles that have been previously used
exclusively and regular ly 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 person on motor
vehicles are limited to those motor vehicles that the
person owns, previously own ed, or takes in trade, and
c. motor vehicle financing provided by that person to
retail consumers for motor vehicles is limited to used
vehicles sold by that person in the c onduct 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:
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1. “Substantially relates” means the nature of criminal conduct
for which the person wa s convicted has a direct bearing on the
fitness or ability to perform one or mor e 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 was convicted involved an act or threat
of harm against another and has a bearing on th e fitness or ability
to serve the public or work with others in the occupation.
E. Nothing in this section shall prohibit a manufacturer or
distributor from requiring a dealer to be in compliance with the
franchise agreement and authorized to sell a make and model based on
applicable reasonable standards and requirements that include but
are not limited to any facility, technology, or training
requirements necessary to sell or service a vehicle, in order to be
eligible for delivery or allotment of a make o r model of a new motor
vehicle or an incentive.
SECTION 3. AMENDATORY 47 O.S. 2021, Section 565.2, as
amended by Section 10, Chapter 29, O.S.L. 2023 (4 7 O.S. Supp. 2023,
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
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this section and has good cause for cancellation, termination, or
nonrenewal. The manufacturer shall not a ttempt to cancel or fail to
renew the franchise agreement of a new motor vehicle de aler in this
state unfairly and without just provocation or without due regard to
the equities of the dea ler 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 equita ble manner toward
each other, with freedom from coercion or intimidation or threats
thereof from each other.
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 comply with a
provision of the franchise, which provision is both reasonable and
of material significance to the franchise relationship, or the ne w
motor vehicle dealer has failed to comply with reasonable
performance criteria for sales or se rvice established by the
manufacturer, and the new motor vehicle dealer has been notified by
written notice from the manufacturer; and
2. The new motor vehicl e dealer has received written
notification of failure to comply with the manufacturer ’s reasonable
sales performance standards, capitalization requirements, facility
commitments, business-related equipment acquisitions, or other such
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remediable failings exclusive of those reasons enumerate d in
paragraph 1 of subsection C of this section, and the new motor
vehicle dealer has been afforded a reasonable oppo rtunity 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 termin ation, cancellation, or
nonrenewal of any franchise, the manufacture r shall furnish
notification of such termination, cancel lation, or nonrenewal to the
new motor vehicle dealer and the Oklahoma New Motor Vehicle
Commission as follows:
1. Not less than ni nety (90) days prior to the effective date
of the termination, cancellation, or nonrenewal unless for a cause
described in paragraph 2 of this subse ction;
2. Not less than fifteen (15) days prior to the effec tive date
of the termination, cancell ation, or nonrenewal with respect to any
of the following:
a. insolvency of the new motor vehicle dealer, or the
filing of any petitio n by or against 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
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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 motor vehicle dealer of any
felony which is punishable by imprison ment or a
violation of the Federal Odometer Act federal odometer
law, 49 U.S.C., Section 32701 et seq. ; and
3. Not less than one hundred ei ghty (180) days prior to the
effective date of the termination or cancellation where the
manufacturer or distributor is discontinuing the sale of the product
line.
The notification required by this subsection shall be by
certified mail, return receipt requ ested, 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 date the termination shall take
effect.
D. Upon the affected new mot or 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. The
hearing shall be held within one hundred eighty (180) days of the
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date of the timely protest by the dealer and in accordance with the
provisions of the Administrative Procedures Act, Sections 250
through 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 facto ry has complied
with its obligations pursuant to subsections A, B , and C of this
section and the factory shall have the burden of proof. Either
party may request an additional one-hundred-eighty-day extension of
the hearing date from the Commission. Approval of the requested
extension may not be unreasonab ly withheld or delayed. If the
Commission finds that the threatened cancellation, termination, or
nonrenewal of the franchise has not been for good cause or violates
subsection 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 to appeal such order. During the
pendency of the hearing and after the decision, through any appeal,
the franchise shall rema in in full force and effect, including the
right to transfer the franchise. If the Commission find s that the
threatened cancellation, term ination, or nonrenewal is for good
cause and does not violate subsection A, B, or C of this section,
the new motor vehicle dealer shall have the right to an appeal.
During the pendency of the action, including the f inal decision or
appeal, the franchise s hall remain in full force and effect,
including the right to transfer the franchise. If the new motor
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vehicle dealer prevails in the threatened termination action, the
Commission shall award to the 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, the new motor vehicle deal er 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 new motor vehicle
dealer’s possession;
2. Supplies and parts which have b een 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 new motor vehicle dealer;
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 withi n ninety (90) days of the effective
date of the termination, cancellation , or nonrenewal, provided the
new motor vehicle dealer has clear title to the inventory and other
items and is in a position to convey that title to the manufac turer.
a. For the purposes of paragraph 1 o f this subsection,
fair and reasonable compensation shal l be no less than
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the net acquisition pr ice 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 reason able compensation shall be
the net acquisition price paid by the new motor
vehicle dealer less a twenty-percent (20%) straight-
line depreciation for each year following the dealer’s
acquisition of the supplies, parts, equipment,
furnishings, and/or special tools.
F. 1. If a factory prevails in an action to terminate, cancel ,
or not renew any franchise and the new motor vehi cle dealer is
leasing the dealership facilities, the manufacturer shall pay a
reasonable rent to the lessor in accord ance with and subject to the
provisions of this subsection G of this section. Nothing in this
section shall be construed to relieve a new motor vehicle 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
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utilized by the franchise being terminated, canceled ,
or nonrenewed, and
b. not substantially in excess of facilities recommended
by the manufacturer.
2. If the facilities are owned by the new motor vehicle dealer,
an entity considered a relationship as defined in 26 U.S.C., Section
267(b), or a member, partner, or shareholder of the dealership,
within ninety (90) days following the effect ive date of the
termination, cancellation, or nonrenewal, at the option of the
dealer or related ent ity, the manufacturer will shall 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 lease term at the rent set
forth in the lease, or
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
purchase the existing dealership facility of the
dealer and real estate at its fair market value . If
the factory and dealer can not agree on the fair market
value of the terminated franchise or agree to a
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process to determine the fair market value, then the
factory and dealer shall utilize the process described
in paragraph 6 of subsection G of this section . If a
manufacturer or distributor pur chases a dealership
facility and real estate, then it shall be entitle d to
sole ownership, posse ssion, use, and control of any
items, buildings, or property that were included in
the contract to purchase, or
b. locate a qualified purchaser who will offer to
purchase the dealership facilities and property at a
reasonable price.
3. If the facilities are leased by the new motor ve hicle dealer
from an entity other than an entity considered a relationship as
defined in 26 U.S.C., Section 267(b), or a member, partner or
shareholder of the d ealership, within ninety (90) days follow ing the
effective 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 o f the
lease without penalty to the new motor vehicle dealer,
or
c. failing the foregoing, lease the dealership facilities
at a reasonable rent for the portion of the facility
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that is recognized in the franchise agreement for one
(1) year or the remainder of the lease, whichever is
less.
4. The manufacturer shall not be obligated to provide
assistance under this section if the new motor vehicle dealer:
a. fails to accept a bona fide offer from a p rospective
purchaser, sublessee, or assignee,
b. refuses to execute a settlement agreement with the
manufacturer or lessor if such agreement with the
manufacturer or lessor would be without cost to th e
new motor vehicle dealer, or
c. fails to make written request for assistance under
this section within ninety (90) days after the
effective date of the termination, cancellation , or
nonrenewal.
5. The manufacturer shall be entitled to occupy and use any
space for which it pays rent required by this section .
H. G. In addition to the repurchase requirements set forth in
subsections E and G F of this section, in the event the termination ,
or cancellation, or nonrenewal is the result of a discontinuance of
a product line, the manufacturer or distributor shall compensate the
new motor vehicle dealer in as follows:
1. In an amount equivalent to the fair market value of the
terminated franchise as of the date immediately preceding the
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manufacturer’s or distributor’s announcement or provid e the new
motor vehicle dealer with a replacement franchise on substantially
similar terms and conditions as those offered to other same line -
make dealers.;
2. If the facilities are owned by the new motor vehicle dealer
or an entity considered a relationship as defined in 26 U.S.C.,
Section 267(b), or a member, partner, or shareholder of the
dealership, and the owner has not sold the existing dealership
facility and real estate within the later of one hundred eighty
(180) days of listing the propert y for sale or ninety (90) days
after the effective date of the termi nation, then, upon the writ ten
request of the dealer, the manufact urer or distributor shall
purchase the existing dealership facility of the dealer and real
estate. The facility and real estate shall be valued as if a new
motor vehicle dealership continues to operate on the property. If
the factory and dealer ca nnot agree on the value of the terminated
franchise or agree to a process to determine the value, then the
factory and dealer shall utilize the process described in paragraph
6 of this subsection . If a manufacturer or distributor purchases a
dealership facility and real estate, then it shall be entitled to
sole ownership, possession, use, and control of any items,
buildings, or property that were included in the contract to
purchase;
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3. If the facilities are leased by the new motor vehicle dealer
from an entity other than an entity considered a relationshi p as
defined in 26 U.S.C., Section 267(b), or a member, partner, or
shareholder of the dealership, lease the dealership facilities at a
reasonable rent for the remainder of the lease;
4. Any amount of pecuniary loss to the new motor vehi cle
dealership as a result of the discontinuation of a product line,
including but not limited to the cost of terminating services such
as the dealership management system contract ;
5. The new motor vehicle dealer may immediately request payment
under this section following the announcement in exchange for
canceling any further franchise right s, except payments owed to the
new motor vehicle dealer in the ordinary course of business, or may
request payment under this section upon the final termination,
cancellation, or nonrenewal of the franchise. In either ca se,
payment under this section shall be made not later than ninety (90)
days after the fair market value is determined., the lease agreement
is provided, or other reasonable documentation is provided to the
manufacturer or distributor supporting other pecuniary losses; and
6. If the factory and new motor vehicle dealer cannot agree on
the fair market value of the terminated franchise or real estate, or
agree to a process to determine the f air market value, then, within
thirty (30) days of a written request by dealer, the factory and new
motor vehicle dealer shall utilize a neutral third-party mediator to
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resolve the disagreement shall select one appraiser, and the dealer
shall select one appraiser who shall make an independent appraisal .
The appraisers shall be state-certified general real estate
appraisers and in good standing with the Real Estate Appraiser
Board. Before entering upon their duties, such appraisers shall
take and subscribe an oath, befor e a notary public or some other
person authorized to administer oaths, that they will perform their
duties faithfully and impartially to the best of their ability. If
the appraisals are within ten percent (10%) of each other, the
average of the two apprais als shall constitute the value. If the
two appraisals differ by more than ten percent (10%), the two
appraisers may appoint a third appraiser who shall review the two
appraisals. The third appraisal, when taken with the first two
appraisals and averaged among the three, shall establish the value.
The cost of the third appraiser shall be shared equally by the
factory and dealer. The appraisers shall make a val uation and
determine the amount of compensation to be paid by the factory to
the dealer. The factory will then have ninety (90) days to complete
the transaction, unless otherwise agreed to by the parties. The
factory and the dealer shall each be responsible for the costs of
their retained appraisers.
SECTION 4. This act shall become effective November 1, 2024.
59-2-3504 QD 2/19/2024 3:54:52 PM