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83rd OREGON LEGISLATIVE ASSEMBLY--2025 Regular Session
House Bill 2127
Introduced and printed pursuant to House Rule 12.00. Presession filed (at the request of House Interim Committee
on Commerce and Consumer Protection for Oregon Auto Dealer Association)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced.The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Makes changes to the law that says what rights car makers and car dealers have in
franchises. (Flesch Readability Score: 80.0).
Makes various changes to the laws that govern franchise agreements between motor vehicle
dealers and manufacturers, distributors and importers.
A BILL FOR AN ACT
Relating to motor vehicle dealer franchises; creating new provisions; and amending ORS 650.120,
650.130, 650.132, 650.133, 650.158, 650.161 and 650.162.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 650.120 is amended to read:
650.120. For the purposes of ORS 650.120 to 650.170:
(1) “Dealer” means any person [who] that has been issued a vehicle dealer certificate under
ORS 822.020 and pursuant to a franchise from a manufacturer, distributor or importer engages in
buying, selling, leasing or exchanging new motor vehicles.
(2) “Dealership” means the location from which a dealer buys, sells, leases, trades, stores, takes
on consignment or in any other manner deals in new motor vehicles.
(3) “Distributor” means:
(a) A person [who] that sells or distributes motor vehicles other than motor homes to motor
vehicle dealers[.]; and
(b) A subsidiary, affiliate, branch, division, director, officer, manager, agent or employee
of a person described in paragraph (a) of this subsection.
(4) “Fleet owner” means a person in this state [who] that at one time buys or leases for use in
a business:
(a) 15 or more motor vehicles with a gross vehicle weight rating of less than 8,500 pounds; or
(b) 50 or more vehicles with a gross vehicle weight rating of 8,500 pounds or more.
(5) “Franchise” means a contract or agreement under which:
(a) The franchisee is granted the right to sell, lease and exchange new motor vehicles manu-
factured, distributed or imported by the franchisor;
(b) The franchisee’s business is an independent business operating as a component of a distrib-
ution or marketing system prescribed in substantial part by the franchisor;
(c) The franchisee’s business is substantially associated with the trademark, trade name, com-
mercial symbol or advertisements designating the franchisor or the products distributed by the
franchisor;
(d) The franchisee’s business is substantially reliant on the franchisor for a continued supply of
NOTE:Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 3059 HB2127
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motor vehicles, parts and accessories;
(e) The franchisee is granted the right to perform warranty repairs authorized by the franchisor;
and
(f) The franchisee is granted the right to sell, install and exchange parts, equipment and acces-
sories manufactured, distributed or imported by the franchisor for use in or on motor vehicles.
(6) “Franchisee” means a dealer [to whom a franchise] that is granted a franchise.
(7) “Franchisor” means a manufacturer, distributor or importer [who] that grants a franchise
to a dealer.
(8) “Importer” means a person [who] that transports or arranges for the transportation of any
foreign manufactured new motor vehicle into the United States for sale in this state.
(9) “Manufacturer” means:
(a) A person [who] that:
(A) Manufactures or assembles motor vehicles [or who manufactures or installs on previously
assembled truck chassis special bodies or equipment, other than motor homes, that when installed forms
an integral part of the motor vehicle and constitutes a major manufacturing alteration and which
completed unit is owned by the manufacturer.]; or
(B) Manufactures or installs a special body or equipment on a previously assembled truck
chassis, the combination of which is a major manufacturing alteration of the previously as-
sembled truck chassis and forms an integrated motor vehicle, other than a motor home, that
the person owns; and
(b) A subsidiary, affiliate, branch, division, director, officer, manager, agent or employee
of a person described in paragraph (a) of this subsection.
(10) “Manufacturer’s suggested retail price” means the retail price of the new motor vehicle
suggested by the manufacturer, including the retail delivered price suggested by the manufacturer
for each accessory or item of optional equipment physically attached to the new motor vehicle at
the time of delivery to the dealer that is not included within the retail price suggested by the
manufacturer for the new motor vehicle without the accessory or optional equipment.
(11) “Motor home” means a motor vehicle that is designedtoprovidetemporary living
quarters, [and] that is built into an integral part of, or is permanently attached to, a self-propelled
motor vehicle chassis or van[. The vehicle must contain] and that has permanently installed inde-
pendent life support systems [and] that provide at least four of the following facilities:
(a) Cooking;
(b) Refrigeration or an ice box;
(c) A self-contained toilet;
(d) Heating or air conditioning;
(e) A potable water supply system including a faucet and sink; or
(f) A separate 110-120 volt electrical power supply or liquefied petroleum gas supply.
(12) “Motor vehicle” means:
(a) A self-propelled device, other than a motor home, used:
(A) For transportation of persons or property upon a public highway; or
(B) In construction; or
(b) A trailer with a gross vehicle weight rating of 20,000 pounds or more that is used for com-
mercial transportation on a public highway.
(13) “Predecessor in interest” means a manufacturer, distributor or importer that transferred to
another manufacturer, distributor or importer, whether through sale or other means, the right to
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manufacture, distribute or import motor vehicles using the manufacturer’s, distributor’s or
importer’s trademark, service mark, trade name, logotype or other commercial symbol.
(14) “Qualified vendor” means a person with a contract or agreement to sell goods or services
to a manufacturer, distributor or importer.
(15) “Relevant market area” means:
(a) For a dealer primarily of motor vehicles with a gross vehicle weight rating of less than 8,500
pounds, a circular area around an existing dealership of:
(A) Not less than a 10-mile radius from the dealership site;
(B) Not less than a 15-mile radius from the dealership site if the population is less than 250,000
within a 10-mile radius from the existing dealership and 150,000 or more within a 15-mile radius from
the existing dealership;
(C) Not less than a 20-mile radius from the dealership site if the population is less than 150,000
within a 15-mile radius from the existing dealership; or
(D) The area of sales and service responsibility determined under the franchise agreement if the
area is larger than the areas provided for in this paragraph.
(b) For a dealer primarily of motor vehicles with a gross vehicle weight rating of 8,500 pounds
or more, a circular area around an existing dealership of:
(A) Not less than a 25-mile radius from the dealership site; or
(B) The area of sales and service responsibility determined under the franchise agreement if the
area is larger than the area provided for in subparagraph (A) of this paragraph.
(16) “Replacement dealer” means any person [who] that, at a dealership where the former dealer
was franchised by the same manufacturer, distributor or importer, or the manufacturer’s,
distributor’s or importer’s predecessor in interest, has been issued a vehicle dealer certificate under
ORS 822.020 and pursuant to a franchise from a manufacturer, distributor or importer, or the
manufacturer’s, distributor’s or importer’s predecessor in interest, engages in buying, selling, leasing
or exchanging new motor vehicles.
(17) “Site-control agreement” means an agreement between a franchisor and franchisee pursuant
to which the franchisor would:
(a) Control the use and development of a dealership site other than as permitted in ORS 650.120
to 650.170;
(b) Require a franchisee to establish or maintain an exclusive dealership under a franchise
agreement with the franchisor by not investing in, managing or sharing another dealership with a
different franchisor; or
(c) Restrict the ability of a franchisee, or if the franchisee leases the dealership, the ability of
the franchisee’s lessor, to transfer, assign, sell, lease, develop or change the use of the dealership
site.
(18) “Successor in interest” means a manufacturer, distributor or importer that acquires,
whether through purchase, transfer or other means, the right to manufacture, distribute or import
motor vehicles using the trademark, service mark, trade name, logotype or other commercial symbol
of another manufacturer, distributor or importer.
SECTION 2. ORS 650.130 is amended to read:
650.130. Notwithstanding the terms of any franchise or other agreement, a manufacturer, dis-
tributor or importer may not:
(1) Require or attempt to require a dealer to accept delivery of any motor vehicle, part, acces-
sory or any other commodity that the dealer did not voluntarily order. This subsection does not
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apply to recall safety and emissions campaign parts that the dealer did not voluntarily order or to
any vehicle features, parts, accessories or other components mandated by federal, state or local law.
(2) Coerce or attempt to coerce a dealer to enter into any agreement or sales promotion pro-
gram by threatening to cancel the dealer’s franchise.
(3) Refuse or fail to deliver, within a reasonable time and in a reasonable quantity, any new
motor vehicle, part or accessory covered by the franchise if the manufacturer, distributor or
importer advertises the vehicle, part or accessory as available for delivery or is delivering the ve-
hicle, part or accessory to another dealer. This subsection does not apply if the failure to deliver
results from a cause beyond the control of the manufacturer, distributor or importer.
(4) Prevent or attempt to prevent a dealer from making reasonable changes in a dealership’s
capital structure or the means by which a dealer finances the dealership, provided that the dealer
meets any reasonable capital requirement of the manufacturer, distributor or importer.
(5) Unreasonably refuse to compensate a dealer for work or services the dealer performed and
expenses the dealer incurred in accordance with the dealer’s delivery, preparation and warranty
obligations under the terms of a franchise or agreement.
(6) Coerce or attempt to coerce a dealer to participate monetarily in any advertising campaign
or contest, or to purchase any promotional materials, display devices or display decorations or ma-
terials at the dealer’s expense.
(7) Establish a maximum price a dealer may charge for motor vehicles with a gross vehicle
weight rating of less than 8,500 pounds.
(8) Initiate an audit to determine the validity of paid claims for dealer compensation, or for any
charge-backs for warranty parts, [or] service compensation or consumer or dealer incentives,
more than one year following the date of payment unless the manufacturer, distributor or importer
has reasonable grounds to believe that the dealer submitted a fraudulent claim.If a manufacturer,
distributor or importer initiates an audit more than one year following the date of payment, the
manufacturer, distributor or importer may charge back to the dealer only the amount of a claim that
the manufacturer, distributor or importer proves was fraudulent. Parties shall cooperate to ensure
that permitted audits conclude not more than 60 days after the audits begin.
[(9) Initiate an audit to determine the validity of paid claims for dealer compensation, or for any
charge-backs for consumer or dealer incentives, more than one year following the date of payment un-
less the manufacturer, distributor or importer has reasonable grounds to believe that the dealer sub-
mitted a fraudulent claim. If a manufacturer, distributor or importer initiates an audit more than one
year following the date of payment, the manufacturer, distributor or importer may charge back to the
dealer only the amount of a claim that the manufacturer, distributor or importer proves was fraudulent.
Parties shall cooperate to ensure that permitted audits conclude not more than 60 days after the audits
begin.]
[(10)] (9) Unfairly compete with a dealer in any matters the franchise governs including, but not
limited to, the sale or allocation of vehicles or other franchisor products, or the execution of dealer
programs or benefits. This subsection applies if the manufacturer, distributor or importer has an
ownership interest in, operates or controls, directly or indirectly, a business that is a dealer in this
state.
(10) Implement or modify a system for reserving or allocating motor vehicles for sale or
lease to a specific retail customer unless the manufacturer, distributor or importer:
(a) Uses objective criteria in the system for reserving or allocating motor vehicles; and
(b) Describes the rules or requirements for the system, or any proposed material mod-
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ification of the system, at least 30 days before implementing or modifying the system.
(11) Have an ownership interest in, operate or control, directly or indirectly, a business that
sells or leases a motor vehicle to a person in [Oregon] this state except to a franchisee of the
manufacturer, distributor or importer. A manufacturer, distributor or importer does not violate this
subsection if:
(a) The manufacturer, distributor or importer:
(A) Has an ownership interest in, operates or controls, directly or indirectly, a business that is
a dealership in this state and is a business that:
(i) A franchisee owned, operated or controlled before the manufacturer, distributor or importer
acquired the ownership interest in or began to operate or control the business;
(ii) The manufacturer, distributor or importer maintains an ownership interest in, operates or
controls for no more than two years; and
(iii) The manufacturer, distributor or importer offers for sale to a qualified independent person
at a fair and reasonable price while the manufacturer, distributor or importer maintains an owner-
ship interest in, operates or controls the business.
(B) Has a part ownership interest in, operates or controls, directly or indirectly, a business that
is a dealership in this state and another person:
(i) Manages the day-to-day operations and business of the dealership;
(ii) Has made, or is obligated to make within 12 months, a significant capital investment in the
dealership that is subject to loss;
(iii) Has an ownership interest in the dealership; and
(iv) Operates the dealership under a franchise through which the person will within 15 years
acquire full ownership of the dealership under reasonable terms and conditions.
(C) As of January 1, 2000, had an ownership interest in, operated or controlled, directly or in-
directly, a business that is a dealership in this state that sells motor vehicles with a gross vehicle
weight rating of 8,500 pounds or more.
(D) Has an ownership interest in, operates or controls, directly or indirectly, a business that
primarily leases or rents motor vehicles for a period of 12 months or less and the only motor vehi-
cles that the business sells are motor vehicles that have been:
(i) Owned by the business for 180 days or more; or
(ii) Driven more than 10,000 miles while owned by the business.
(E)(i) Has an ownership interest in, operates or controls, directly or indirectly, a business that
finances the sale or lease of motor vehicles; and
(ii) Is a business that sells or leases motor vehicles to retail lessees in [Oregon] this state.
(F) Has an ownership interest in, operates or controls, directly or indirectly, a business that
makes a sale or lease of a motor vehicle in a manner that does not violate subsection (12) of this
section.
(b) A manufacturer has a part ownership interest in, operates or controls, directly or indirectly,
a business that is a dealership in this state that buys, sells, leases, trades, stores, takes on
consignment or in any other manner deals exclusively in a single line-make of the manufacturer and:
(A) The manufacturer has, directly or indirectly, no more than 45 percent of the ownership in-
terest in the dealership;
(B) When the manufacturer acquires an ownership interest in the dealership, the distance from
the manufacturer’s dealership to the dealership of a dealer that buys, sells, leases, trades, stores,
takes on consignment or in any other manner deals in the single line-make of the manufacturer and
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in which the manufacturer has no ownership interest is not less than 15 miles;
(C) The manufacturer complies with the area restrictions in ORS 650.120 and 650.150;
(D) The manufacturer’s franchises authorize a dealer of the manufacturer’s single line-make to
operate as many dealerships within a defined geographic area as the dealer and manufacturer agree
on; and
(E) On January 1, 2000:
(i) There were no more than four dealers of the manufacturer’s single line-make in this state;
and
(ii) Of the dealers of the manufacturer’s single line-make in this state, at least one was a
franchisee that owned and operated at least two dealerships within the geographic area authorized
by franchises with the manufacturer.
(12) Sell or lease a motor vehicle to a person in this state other than to a business described
in subsection (11) of this section or to a franchisee of the manufacturer, distributor or importer. A
manufacturer, distributor or importer does not violate this subsection if:
(a) The manufacturer, distributor or importer sells or leases a motor vehicle to:
(A) An employee, retired employee or family member of an employee or retired employee of the
manufacturer, distributor or importer;
(B) A driver training program;
(C) A nonprofit corporation;
(D) A qualified vendor;
(E) A public agency, as defined in ORS 537.515;
(F) A current retail lessee;
(G) A fleet owner;
(H) A business acting as a vehicle dealer under ORS chapter 822 that sells motor vehicles only
to other vehicle dealers; or
(I) The customers of a business acting as a vehicle dealer under ORS chapter 822 that sells
motor vehicles only to other vehicle dealers.
(b) The sale or lease is by a business in this state that primarily leases or rents motor vehicles
for a period of 12 months or less and the only motor vehicles that the business sells are motor ve-
hicles that have been:
(A) Owned by the business for 180 days or more; or
(B) Driven more than 10,000 miles while owned by the business.
(c) The sale or lease is by a subsidiary of a manufacturer, distributor or importer that finances
the sale or lease of motor vehicles and the sale or lease is to a person that previously leased the
vehicle from the subsidiary.
(13)(a) Own, operate or control a business or enter into any contract, agreement or other writ-
ten instrument that permits the manufacturer, distributor or importer to compensate a person that
is not a dealer for performing warranty repairs and services if the business is located within a
dealer’s relevant market area.
(b) Paragraph (a) of this subsection does not apply to:
(A) Warranty repairs and services performed on motor vehicles with a gross vehicle weight
rating of less than 8,500 pounds provided for commercial or government fleets; or
(B) Warranty repairs and services performed on motor vehicles with a gross vehicle weight
rating of 8,500 pounds or more if, after January 1, 2002, a manufacturer, distributor or importer of
only motor vehicles with a gross vehicle weight rating of 8,500 pounds or more has:
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(i) Obtained written permission from the dealers in the relevant market area to perform the re-
pairs or services; or
(ii) Authorized a person that owns or leases the motor vehicles for use in the person’s business
to perform the repairs or services.
(14) Terminate, cancel, fail to renew or fail to approve the sale, transfer or assignment of any
franchise agreement because the dealer owns, has an investment in, participates in the management
of or holds a franchise agreement with another manufacturer, distributor or importer at a different
dealership site, or has franchises with more than one manufacturer, distributor or importer sharing
the same dealership site, facilities, personnel or display space before October 23, 1999.
(15) Terminate, cancel, fail to renew or fail to approve the sale, transfer or assignment of any
franchise agreement because the dealer owns, has an investment in, participates in the management
of or holds a franchise agreement with another manufacturer, distributor or importer at a different
dealership site, or has franchises with more than one manufacturer, distributor or importer sharing
the same dealership site, facilities, personnel or display space on or after January 1, 2012, provided
the dealer complies with the manufacturer’s, distributor’s or importer’s reasonable capitalization and
financial requirements, reasonable space and facility requirements and other requirements that are
justified taking into account the reasonable business considerations of the manufacturer, distributor
or importer and the dealer, and provided there is no change in the principal management of the
dealershipsite.
(16)(a) Require a prospective franchisee to enter into a site-control agreement as a condition of:
(A) Granting or renewing a franchise;
(B) Approving the addition of a line-make of a manufacturer;
(C) Approving the sale, transfer or assignment of a franchise agreement;
(D) Approving the relocation, or granting a new franchise for relocation, of an existing dealer-
ship; or
(E) Obtaining fair and reasonable compensation under ORS 650.145 upon the termination, can-
cellation, nonrenewal or discontinuance of any franchise.
(b) Paragraph (a) of this subsection does not prohibit enforcement of a voluntary agreement be-
tween a franchisee and a manufacturer, distributor or importer for which separate and valuable
consideration that does not include any of the items listed in paragraph (a) of this subsection has
been offered and accepted.
(17) Take any adverse action against a dealer for violating a prohibition that the manufacturer,
distributor or importer imposes on the dealer’s exporting a motor vehicle or selling a motor vehicle
for resale because the dealer sold a motor vehicle to a customer that exported or resold the motor
vehicle in violation of the prohibition, unless the manufacturer, distributor or importer provided the
dealer with written notice of the prohibition and the dealer knew or reasonably should have known
at the time the dealer sold the motor vehicle to the customer that the customer intended to export
or resell the vehicle in violation of the prohibition. A dealer that registers or causes a motor vehicle
to be registered in this state or another state and that collects or causes to be collected any sales
or use tax required in this state establishes a rebuttable presumption that the dealer did not have
reason to know that the customer intended to export or resell the motor vehicle.
(18)(a) Sell, lease, provide, update or finance or offer to sell, lease, provide, update or fi-
nance, except as provided in paragraph (b) of this subsection:
(A) A subscription service that uses components and hardware that are already installed
on a motor vehicle, and that would operate after activation without ongoing cost or support,
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in exchange for a recurring payment, other than a payment for a lease or under a retail in-
stallment contract, as defined in ORS 83.510, from a retail customer; or
(B) A convenience or safety function, such as heated seats or driver assistance, in return
for a payment from a retail customer.
(b) Paragraph (a) of this subsection does not prohibit a manufacturer, distributor or
importerfrom:
(A) Selling, leasing, providing, updating or financing or offering to sell, lease, provide,
update or finance a motor vehicle or a product, service or financing through a dealer;
(B) Providing a motor vehicle, product or service for occasional promotional or charitable
purposes;or
(C) Charging a connection fee or renewing a subscription for:
(i) Any electronic wireless communication system installed in a motor vehicle; or
(ii) An information or entertainment service, navigation system, satellite radio, roadside
assistance or other driver assistance, or automation features that rely on cellular networks
or other data networks for operation.
SECTION 3. ORS 650.132 is amended to read:
650.132. (1)(a) A manufacturer, distributor or importer may not, through any of the methods de-
scribed in paragraph (b) of this subsection, directly or indirectly coerce or attempt to coerce a
dealerto:
(A) Advertise, promote, offer or sell an extended service contract, an extended maintenance
plan, a guaranteed asset protection waiver or other arrangement that pays a purchaser the re-
maining balance on a note secured by a motor vehicle if the motor vehicle is lost, stolen or damaged
beyond repair, or a similar product or service, if the manufacturer, distributor or importer provides,
originates, sponsors or endorses the product or service[.];
(B) Install on the dealer’s premises an electric vehicle charging station to which the
public has access; or
(C) Accept a new plan or system for allocating or scheduling a delivery of a motor vehi-
cle, part or accessory, or a modification to an existing plan or system, if the new or modified
plan or system is not fair, reasonable and equitable for all dealers of the manufacturer’s,
distributor’s or importer’s line-make.
(b) Prohibited methods for coercing or attempting to coerce a dealer include, but are not limited
to:
(A) Stating to a dealer that the dealer’s failure to advertise, promote, offer or sell the products
or services described in paragraph (a)(A) of this subsection will substantially and adversely affect
the dealer’s business or the dealer’s relationship with the manufacturer, distributor or importer;
(B) Requiring the dealer in a franchise agreement to advertise, promote, offer or sell the pro-
ducts or services described in paragraph (a)(A) of this subsection, install the electric vehicle
charging station described in paragraph (a)(B) of this subsection or accept the plan or sys-
tem described in paragraph (a)(C) of this subsection;
(C) Measuring the dealer’s performance in a franchise on the basis of whether, or the extent to
which, the dealer advertises, promotes, offers or sells the products or services described in para-
graph (a)(A) of this subsection, installs the electric vehicle charging station described in para-
graph (a)(B) of this subsection or accepts the plan or system described in paragraph (a)(C)
of this subsection; [or]
(D) Requiring the dealer to advertise, promote, offer or sell the products or services described
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in paragraph (a)(A) of this subsection to the exclusion of other, similar products or services that a
person other than the manufacturer, distributor or importer offers[.];
(E) Using force or a threat of force;
(F) Withholding or threatening to withhold motor vehicles or parts from the dealer, or
offering or providing motor vehicles or parts to the dealer at a price that is higher than the
price that the manufacturer, distributor or importer offers or provides to other dealers of
the manufacturer’s, distributor’s or importer’s line-make; or
(G) Refusing to offer to the dealer or to allow the dealer to earn incentives on the same
terms that the manufacturer, distributor or importer offers or provides to other dealers of
the manufacturer’s, distributor’s or importer’s line-make.
(2) The prohibition in subsection (1) of this section does not affect a manufacturer’s, distributor’s
or importer’s right or ability to:
(a) Provide incentives to a dealer that voluntarily decides to advertise, promote, offer or sell the
products or services described in subsection (1)(a)(A) of this section or to install the electric ve-
hicle charging station described in subsection (1)(a)(B) of this section; or
(b) Require a dealer that sells a product or service that is similar to the products or services
described in subsection (1)(a)(A) of this section, but that the manufacturer, distributor or importer
does not provide, originate, sponsor or endorse, to notify a customer in writing, and to obtain the
customer’s acknowledgment, that the manufacturer, distributor or importer does not provide, origi-
nate, sponsor or endorse the product or service.
(3) A manufacturer, distributor or importer is not coercing a dealer if the manufacturer,
distributor or importer requires the dealer to comply with reasonably necessary standards
to fulfill the dealer’s sales and service obligations.
(4) At a dealer’s request, a manufacturer, distributor or importer shall describe in writ-
ing the basis for allocating or scheduling for delivery a motor vehicle, part or accessory
among all the dealers of the manufacturer’s, distributor’s or importer’s line-make.
(5) A manufacturer, distributor or importer need not pay or make available incentives
or other benefits to a dealer that has qualified for the incentives or benefits on the same
terms that the manufacturer, distributor or importer applies uniformly and equitably to all
of the dealers of the manufacturer’s, distributor’s or importer’s line-make.
SECTION 4. ORS 650.133 is amended to read:
650.133. (1)(a) Except as provided in paragraph (b) of this subsection, a manufacturer, distributor
or importer may not require a dealer to construct a new dealer facility or materially alter or re-
model an existing dealer facility within seven years after the date on which the dealer previously
constructed, materially altered or remodeled the existing dealer facility if the existing dealer facility
complies with the manufacturer’s, distributor’s or importer’s approved brand image standards or
plans that existed at the time the dealer constructed, materially altered or remodeled the existing
dealer facility.
(b) A manufacturer, distributor or importer may require a dealer to construct a new dealer fa-
cility or materially alter or remodel an existing dealer facility within seven years after the dealer
constructed, materially altered or remodeled the existing dealer facility:
(A) If the manufacturer, distributor or importer demonstrates that the manufacturer’s,
distributor’s or importer’s requirement is reasonable and justifiable in light of:
(i) The projected cost of the construction, material alteration or remodel;
(ii) Existing and reasonably foreseeable economic conditions;
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(iii) Financial expectations;
(iv) The availability of additional vehicle allocation; and
(v) The dealer’s market for vehicle sales;
(B) In order to comply with a health or safety law or with a technological requirement that is
necessary to sell or service a motor vehicle that the dealer sells or services under the terms of the
dealer’s franchise; or
(C) By means of a written agreement separate from the franchise agreement if the manufacturer,
distributor or importer provides money, credit, an allowance, an incentive or a reimbursement to the
dealer to compensate for all or a substantial portion of the cost of constructing a new dealer facility
or materially altering or remodeling an existing dealer facility.
(c) Paragraph (a) of this subsection does not prohibit a dealer from voluntarily agreeing with a
manufacturer, distributor or importer to construct a new dealer facility or materially alter or re-
model an existing dealer facility in return for separate and valuable consideration. For the purposes
of this paragraph, renewing a dealer’s franchise is not separate and valuable consideration.
(d) For purposes of this subsection:
(A) “Materially alter” means a significant architectural or structural modification to a dealer
facility that is directly related to effectively selling or servicing motor vehicles of the type that the
dealer’s franchise agreement or license permits the dealer to sell or service.
(B) “Materially alter” does not include routine maintenance, such as interior painting, that is
reasonably necessary to keep a dealer facility in attractive condition.
(2)(a) Except as provided in paragraph (b) of this subsection, a manufacturer, distributor or
importer may not require a dealer to purchase goods or services for constructing, materially altering
or remodeling a dealer facility from a vendor that the manufacturer, distributor or importer selects,
identifies or designates without giving the dealer an option to obtain goods or services of substan-
tially similar quality and design from a vendor that the dealer chooses, subject to the
manufacturer’s, distributor’s or importer’s written approval in advance. The manufacturer, distrib-
utor or importer may not withhold approval unreasonably[.] and must approve or disapprove
within 20 days a dealer’s request to purchase goods and services from a source other than
a source the manufacturer, distributor or importer selects, identifies or designates. If the
manufacturer, distributor or importer does not disapprove the dealer’s request in writing
within 20 days after receiving the request, the request is approved.
(b) A dealer may not select a vendor from which to obtain goods and services for constructing
a new dealer facility or materially altering or remodeling an existing dealer facility if a manufac-
turer, distributor or importer provides money, credit, an allowance or a reimbursement to compen-
sate for all or a substantial portion of the cost of upgrading or improving a dealer facility or for
using a specific material, good or service to upgrade or improve a dealer facility.
(c) This subsection does not permit a dealer or vendor to:
(A) Directly or indirectly or in any way infringe upon, eliminate or impair a manufacturer’s,
distributor’s or importer’s intellectual property rights or reasonable business requirements; or
(B) Erect or maintain signs that do not conform to the manufacturer’s, distributor’s or importer’s
intellectual property usage guidelines.
(3) A manufacturer, distributor or importer has the burden of proof in a dispute with a
dealer over whether:
(a) A requirement the manufacturer, distributor or importer imposes under subsection
(1)(b) of this section is reasonable and justifiable or is necessary to comply with a health or
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safety law or technological requirement; or
(b) A disapproval of a request to purchase goods or services under subsection (2)(a) of
this section was reasonable.
SECTION 5. ORS 650.158 is amended to read:
650.158. (1) Each manufacturer, distributor or importer shall specify in writing to each of the
manufacturer’s, distributor’s or importer’s dealers in this state:
(a) The dealer’s obligations for predelivery preparation and warranty service on the
manufacturer’s, distributor’s or importer’s motor vehicles;
(b) The schedule of compensation the manufacturer, distributor or importer will pay the dealer
for [parts, work and service] diagnostic work, repair service, parts and labor in connection with
predelivery preparation and warranty service; and
(c) The time allowances for performing predelivery preparation and warranty service.
(2)(a) A schedule of compensation must include reasonable compensation for diagnostic work,
repair service, parts and labor and must reasonably, adequately and fairly compensate the
dealer for the work, service, parts and labor. Time allowances for diagnosing and performing
predelivery and warranty service must be reasonable and adequate for the work to be performed.
A manufacturer, distributor or importer may not pay an hourly rate to a dealer that is less than the
rate the dealer charges nonwarranty customers for nonwarranty service and repairs.Reimburse-
ment for parts, other than parts used to repair the living facilities of motor homes, that the dealer
purchases for use in performing predelivery and warranty service must be the amount the dealer
charges nonwarranty customers, as long as the amount is not unreasonable.
(b)(A) For purposes of this subsection and subject to subparagraphs (B) [and (C)] to (D) of this
paragraph, to determine compensation under this subsection, a dealer shall propose an hourly rate,
an estimated time for a specified service or repair or for a range of specified services or
repairs and an amount for parts that the dealer charges nonwarranty customers by submitting to
the manufacturer, distributor or importer copies of 100 sequential nonwarranty service repair in-
voices that customers paid or 90 consecutive days’ worth of nonwarranty service invoices that cus-
tomers paid, whichever is less, for repairs the dealer made not more than 180 days before the
dealer’s submission. If the manufacturer, distributor or importer does not contest the dealer’s pro-
posal and the dealer otherwise complies with the provisions of this paragraph, the dealer’s proposal
is presumed to be fair and reasonable.
(B) A manufacturer, distributor or importer may contest the dealer’s proposal with evidence that
the dealer’s proposal is not accurate or on the basis that the dealer’s proposal does not reasonably
conform with the hourly rate or estimated time for labor or the amount for parts that other
dealers charge nonwarranty customers in the same line-make in market areas that are contiguous
to the dealer’s market area or with other relevant evidence. In contesting a dealer’s proposal based
on evidence from other dealers in the contiguous market area, a manufacturer, distributor or
importer shall rely on evidence from at least three other dealers in the contiguous market area or
three dealers in an economically similar market within the manufacturer’s, distributor’s or
importer’sregion.
(C) A dealer may include in a proposal described in subparagraph (A) of this paragraph
an estimated time for a specified service or repair or range of services or repairs that ac-
counts for all time that the dealer:
(i) Needs for the purpose of diagnosing a repair issue; and
(ii) Spends in communicating with the manufacturer’s, distributor’s or importer’s tech-
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nical assistance providers with respect to the specified service or repair, beginning at the
time the dealer initiates the communication and continuing until the time at which the
dealer terminates the communication.
[(C)] (D) A dealer may not include in [the dealer’s proposal] a proposal described in subpara-
graph (A) of this paragraph:
(i) Repairs for a manufacturer’s, distributor’s or importer’s specials, special events or promo-
tional discounts for retail customer repairs;
(ii) Parts sold at wholesale;
(iii) Routine maintenance that a retail customer warranty does not cover, such as fluids, filters
and belts that a dealer uses in performing work other than repairs;
(iv) Nuts, bolts, fasteners and similar items that do not have an individual part number; and
(v) Vehicle reconditioning.
(c) [The hourly rate or the amount for parts that a dealer charges nonwarranty customers that the
dealer proposes] A dealer’s proposal under paragraph (b)(A) of this subsection becomes effective 30
days after the manufacturer, distributor or importer approves the hourly rate or the amount for
parts. For purposes of this paragraph, a manufacturer, distributor or importer approves the dealer’s
proposal if the manufacturer, distributor or importer does not contest the proposed hourly rate or
amount for parts within 30 days after the dealer submits the proposal.
(d) If a manufacturer, distributor or importer contests a dealer’s proposal, the manufacturer,
distributor or importer shall propose an adjustment to the dealer’s proposal not later than 30 days
after the dealer submits the dealer’s proposal.
(e) Not more than once per year, a manufacturer, distributor or importer may verify the
dealer’s hourly rate or the amount for parts the dealer charges nonwarranty customers and a dealer
may propose an increase in the manner provided in paragraph (b)(A) of this subsection in the
hourly rate or the amount the dealer charges for parts. If the manufacturer, distributor or
importer finds that the dealer’s hourly rate or the amount for parts has decreased, the manufacturer,
distributor or importer may reduce the dealer’s compensation under this subsection prospectively.
If the manufacturer, distributor or importer does not contest the dealer’s proposed increase
in the manner provided in paragraph (b)(B) of this subsection, the increase becomes effective
as provided in paragraph (c) of this subsection.
(3) A manufacturer, distributor or importer shall include, in written notices of vehicle recalls
to motor vehicle owners and dealers, the expected date by which necessary parts and equipment
will be available to the dealers to correct the defect or defects.A manufacturer, distributor or
importer shall adequately compensate a dealer for repair service the dealer performs under the re-
call.
(4) A manufacturer, distributor or importer shall:
(a) Pay or credit a dealer for labor or parts the dealer claims under this section within 30 days
after approving the dealer’s claim;
(b) Approve or disapprove, in the manner the manufacturer, distributor or importer specifies,
all claims that a dealer makes for labor or parts within 30 days after receiving the claim;
(c) Allow a dealer to correct and resubmit a claim for labor or parts within 30 days after
receiving the manufacturer’s, distributor’s or importer’s disapproval;
[(c)] (d) Treat as approved any claim, or resubmission of a corrected claim, that a manufac-
turer, distributor or importer did not approve or disapprove within 30 days after the manufacturer,
distributor or importer received the claim or resubmission and pay or credit the dealer for the
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claim within 60 days after receiving the claim or resubmission; [and]
[(d)] (e) Notify the dealer in writing of the manufacturer’s, distributor’s or importer’s grounds
for disapproving a claim[.]; and
(f) Reimburse the dealer for any parts the dealer provides to satisfy a warranty at the
prevailing retail price that the manufacturer, distributor or importer charges for parts the
manufacturer, distributor or importer makes available for purposes other than satisfying a
warranty, if the prevailing retail price, which must include shipping charges and other ap-
plicable charges that factor into the retail price, is reasonable when compared to retail prices
that dealers of the manufacturer’s, distributor’s or importer’s line-make charge for identical
parts in the relevant market area.
(5) A manufacturer, distributor or importer may:
(a) Require reasonable documentation as substantiation for a dealer’s claim under this
section;
(b) Audit a dealer’s claim under this section within one year after the date on which the
manufacturer, distributor or importer paid the claim; and
(c) Charge back a dealer’s claim under this section that is unsubstantiated, false or
fraudulent.
[(5)] (6) A manufacturer, distributor or importer may not:
(a) Recover all or a portion of cost of compensating a dealer for warranty parts or service by
reducing the amount due a dealer or by imposing a separate charge, surcharge, administrative fee
or other fee.
(b) Deny or charge back a dealer’s claim that is substantiated, and is not false or fraudu-
lent, if the manufacturer, distributor or importer has approved or has not contested the
claim. The manufacturer, distributor or importer also may not deny or charge back a
dealer’s claim solely because a dealer failed to comply with a specific claim processing procedure
because of a clerical or administrative error that does not affect the legitimacy of the dealer’s claim,
if the dealer resubmits the claim in compliance with the manufacturer’s, distributor’s or importer’s
claim processing procedure within 45 days after the manufacturer, distributor or importer initially
denies or charges back the claim.
(c) Deny a dealer’s claim solely because the owner of the motor vehicle drove the motor
vehicle for additional miles while awaiting service or a repair that the dealer could not
complete because parts for the service or repair were not available.
(d) Reduce a payment for a dealer’s claim on the basis of a national market norm or
marketaverage.
(e) Limit or restrict the number of repairs a motor vehicle owner may obtain from a
dealer on the basis of a national index or average of failure rates for the motor vehicle.
(f) Restrict, in the franchise, by limiting or reducing payments on a dealer’s claim or
otherwise, the nature or extent of repairs or service a dealer may provide to satisfy the
terms of a warranty in a workmanlike manner and by providing required parts.
(7)(a) Except as provided in paragraph (b) of this subsection, if a manufacturer, distrib-
utor or importer supplies a part to a dealer for the purpose of replacing the part or making
a repair under warranty to a motor vehicle in the manufacturer’s, distributor’s or importer’s
line-make, but the manufacturer, distributor or importer does not sell the part to the dealer,
the manufacturer, distributor or importer shall compensate the dealer at the equivalent of
the dealer’s average percentage markup on the part as if the manufacturer, distributor or
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importer had sold the part to the dealer at the retail price for the part.
(b) The requirement set forth in paragraph (a) of this subsection does not apply to entire
engine assemblies, propulsion engine assemblies, entire transmission assemblies or electric
batteries. If the manufacturer, distributor or importer supplies the dealer with an assembly
or battery described in this paragraph but does not sell the assembly or battery to the dealer,
the manufacturer, distributor or importer shall compensate the dealer in an amount that is
equivalent to 30 percent of what the dealer would have paid for the assembly or battery had
the manufacturer, distributor or importer sold the assembly or battery to the dealer at the
retail price.
SECTION 6. ORS 650.161 is amended to read:
650.161. (1) As used in this section:
(a) “Do not drive order” means a notice in which a manufacturer advises owners of a vehicle
not to drive the vehicle until the owner has obtained a repair for a safety defect in the vehicle.
(b) “Stop sale order” means a notice in which a manufacturer prohibits a franchisee from leasing
or selling at wholesale or retail a [used] motor vehicle in the franchisee’s inventory because of a
federal recall for a safety defect or a failure to comply with a federal safety standard or a federal
emissions standard.
(c) “Valuation” means the average trade-in value shown in an independent third-party guide for
the year, make and model of a [used] motor vehicle.
(2) A manufacturer shall compensate the manufacturer’s franchisees for all labor and parts the
manufacturer requires the franchisees to use to perform repairs on vehicles that are subject to a
recall. The manufacturer shall compensate franchisees in accordance with the standards and process
for compensation set forth in ORS 650.158.
(3)(a) Subject to the conditions set forth in paragraphs (b) and (c) of this subsection, a man-
ufacturershall compensate a dealer at a prorated rate of least 1.5 percent of the valuation of a
[used] motor vehicle that is subject to a recall during each month in which the dealer holds the
vehicle for sale while awaiting parts or a remedy that is necessary to repair or service the vehicle.
(b) The manufacturer shall pay the compensation described in paragraph (a) of this subsection:
(A) If the [used] motor vehicle is subject to a federal recall for a safety defect or a failure to
comply with a federal safety standard or a federal emissions standard;
(B) If the manufacturer issued a do not drive order or stop sale order for the [used] motor ve-
hicle;
(C) If the manufacturer has authorized the dealer to sell and service new vehicles of the same
line-make as the [used] motor vehicle that is subject to the recall;
(D) If the dealer had the [used] motor vehicle in the dealer’s inventory at the time the man-
ufacturer issued the do not drive order or stop sale order or if the dealer received the [used] motor
vehicle as a trade-in as part of a consumer’s purchase of [a new] another motor vehicle after the
manufacturer issued the do not drive order or stop sale order;
(E) If a part or remedy necessary to repair or service the [used] motor vehicle is not reasonably
available within 30 days after the manufacturer issued an initial recall notice; and
(F) For a period that begins 30 days after the date on which the manufacturer issued the do not
drive order or stop sale order and that ends on the earlier of the following dates:
(i) The date on which the manufacturer makes available to the dealer a part or remedy that is
necessary to repair the [used] motor vehicle that is subject to the recall; or
(ii) The date on which the dealer sells, trades or otherwise disposes of the [used] motor vehicle
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that is subject to the recall.
(c) A manufacturer may direct the manner and method by which a dealer must demonstrate that
the dealer had a [used] motor vehicle that was subject to a recall in the dealer’s inventory as re-
quired under paragraph (b)(D) of this subsection. The manufacturer may not require a demonstration
that is unreasonable or unduly burdensome or require information that is unreasonably or unduly
burdensome for the dealer to provide.
(d) This subsection does not require a manufacturer to provide total compensation to a dealer
that exceeds the valuation of a [used] motor vehicle that is subject to a recall.
(4) A claim for compensation that a franchisee makes under subsection (2) of this section or that
a dealer makes under subsection (3) of this section is subject to the same requirements and limita-
tions to which a claim for compensation under ORS 650.158 is subject unless:
(a) The manufacturer compensates the franchisee or the dealer under a national program that
provides compensation for recall service or repairs that is equal to or greater than the compensation
the manufacturer would provide under subsection (3) of this section; or
(b) The manufacturer and franchisee or dealer agree to different compensation.
(5)(a) A manufacturer may not reduce compensation that the manufacturer owes to a franchisee
by means of a chargeback, reducing the amount the manufacturer owes a franchisee under or re-
moving a franchisee from an incentive program or any other means solely because the franchisee
submitted a claim for or received compensation under this section.
(b) This subsection does not prohibit a manufacturer from modifying or discontinuing an incen-
tive program or other program prospectively or from making ordinary business decisions.
(c) A franchisee may contest the amount of compensation a manufacturer provides under this
section in accordance with the procedures set forth in ORS 650.158.
(6) A remedy that a dealer obtains under this section is exclusive and may not be combined with
other compensation or remedies that are available under state or federal law or state or federal
compensationprograms.
SECTION 7. ORS 650.162 is amended to read:
650.162. (1) To transfer, assign or sell the ownership or management, or any interest in the
ownership or management, of a dealer, dealership or franchise, the dealer shall notify the franchisor
of the decision to transfer, assign or sell. The notice [shall] must include completed application
forms and related information [generally used by] the manufacturer, distributor or importer gener-
ally uses to conduct a review of transfers, assignments or sales and must include a copy of all
agreements regarding the transfer, assignment or sale.
(2) Within 60 days [of] after receiving notice sent under subsection (1) of this section, a
franchisor shall send a notice by certified mail to the dealer. The notice sent under this subsection
[shall] must specify approval or disapproval of the transfer, assignment or sale. If the transfer, as-
signment or sale is disapproved, the notice [shall] must set forth material reasons for the disap-
proval.
(3) A manufacturer, distributor or importer may not unreasonably withhold approval of a
transfer, assignment or sale.[It is unreasonable for] A manufacturer, distributor or importer [to re-
ject] unreasonably withholds approval for a transfer, assignment or sale if the manufacturer,
distributor or importer rejects a prospective transferee, assignee or buyer who is of good moral
character and who otherwise meets the manufacturer’s, distributor’s or importer’s written and rea-
sonable standards or qualifications relating to the prospective transferee’s, assignee’s or buyer’s:
(a) Business experience and performance; and
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(b) Financial qualifications.
(4) If the manufacturer, distributor or importer does not respond within 60 days [of] after re-
ceiving a notice sent under subsection (1) of this section, the transfer, assignment or sale [shall be
considered approved and shall take effect] is approved and takes effect.
(5) A manufacturer, distributor or importer may exercise a right of first refusal if the right is
included in the franchise agreement, the transfer, assignment or sale consists of more than 50 per-
cent of the dealer’s ownership of the franchise and all of the following requirements are met:
(a) The manufacturer, distributor or importer sends a notice by certified mail to the dealer
within 60 days [of] after receiving a notice under subsection (1) of this section specifying that the
franchisor is exercising a right of first refusal.
(b) The exercise of the right of first refusal will result in the dealer and any owner of the dealer
receiving consideration, terms and conditions that are either the same as or better than [those con-
tracted to] the consideration, terms and conditions the dealer and owner would receive under
the transfer, assignment or sale.
(c) The transferee, assignee or buyer is not any of the following:
(A) Any of the following family members of any owner of the dealer:
(i) A spouse;
(ii) A child or stepchild;
(iii) A grandchild or stepgrandchild;
(iv) The spouse of a child, stepchild, grandchild or stepgrandchild;
(v) A brother or sister or a stepbrother or stepsister; or
(vi) A parent or stepparent;
(B) A manager employed by the dealer who is otherwise qualified to be a dealer;
(C) A partnership or corporation controlled by any of the family members listed in paragraph
(c)(A) of this subsection; or
(D) A trust established or to be established:
(i) For the purposes of allowing the transferee, assignee or buyer to continue to qualify as such
under the manufacturer’s, distributor’s or importer’s standards; or
(ii) To provide for the succession of the franchise to qualified designated family members or a
qualified manager in the event of the death or incapacity of the dealer.
(d) The manufacturer, distributor or importer pays the reasonable expenses, including attorney
fees, that are incurred by the transferee, assignee or buyer before the manufacturer, distributor or
importer exercises a right of first refusal. A manufacturer, distributor or importer may require the
transferee, assignee or buyer to provide an accounting of expenses incurred prior to issuing pay-
ment.
(6) A manufacturer, distributor or importer may not exercise or threaten to exercise a
right of first refusal in bad faith.
SECTION 8. Section 9 of this 2025 Act is added to and made a part of ORS 650.120 to
650.170.
SECTION 9.A franchisor shall indemnify a franchisee or former franchisee or a succes-
sor in interest to the franchisee or former franchisee for damages, attorney fees, court ex-
penses and related expenses that the franchisee or former franchisee incurs as a result of
aclaim:
(1) Alleging responsibility for a defect in the condition, a characteristic or the design of
a motor vehicle, in a tool or process used in manufacturing or assembling a motor vehicle,
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in a component or part of a motor vehicle or in an accessory or equipment installed in or
on a motor vehicle;
(2) For injury or damages from a service system, procedure or method that the
franchisor requires or required the franchisee or former franchisee to use, if the franchisee
or former franchisee used the system, procedure or method properly and in accordance with
the franchisor’s training or instructions;
(3) For injury or damages from a franchisor’s disclosure or improper use of protected
dealer data, as defined in ORS 650.123;
(4) For which the franchisee or former franchisee would have a right of indemnity or
contribution against the franchisor under applicable law or under a franchise, even if the
franchise expired or was terminated; or
(5) For injury or damages as a result of the franchisee’s or former franchisee’s use of
an electronic system for managing protected dealer data, as defined in ORS 650.123, that the
franchisor requires or required the franchisee or former franchisee to use and the use vio-
lated a federal law or a law of this state, unless the franchisee’s or former franchisee’s use
of the system in violation of federal law or a law of this state was willful or intentional.
SECTION 10. Section 9 of this 2025 Act and the amendments to ORS 650.120, 650.130,
650.132, 650.133, 650.158, 650.161 and 650.162 by sections 1 to 7 of this 2025 Act apply to fran-
chises that a franchisor and franchisee enter into or renew on or after the effective date of
this 2025 Act.
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