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| 5 | 5 | | 2025 -- H 5588 |
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| 6 | 6 | | ======== |
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| 7 | 7 | | LC001370 |
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| 8 | 8 | | ======== |
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| 9 | 9 | | S T A T E O F R H O D E I S L A N D |
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| 10 | 10 | | IN GENERAL ASSEMBLY |
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| 11 | 11 | | JANUARY SESSION, A.D. 2025 |
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| 12 | 12 | | ____________ |
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| 13 | 13 | | |
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| 14 | 14 | | A N A C T |
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| 15 | 15 | | RELATING TO MOTOR AN D OTHER VEHICLES -- REGULATION OF BUSINESS |
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| 16 | 16 | | PRACTICES AMONG MOTO R VEHICLES MANUFACTU RES, DISTRIBUTORS, AND |
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| 17 | 17 | | DEALERS |
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| 18 | 18 | | Introduced By: Representatives J. Brien, Solomon, Baginski, Santucci, and Casimiro |
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| 19 | 19 | | Date Introduced: February 26, 2025 |
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| 20 | 20 | | Referred To: House Corporations |
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| 21 | 21 | | |
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| 22 | 22 | | |
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| 23 | 23 | | It is enacted by the General Assembly as follows: |
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| 24 | 24 | | SECTION 1. Sections 31-5.1-1, 31-5.1-2 and 31-5.1-4 of the General Laws in Chapter 31-1 |
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| 25 | 25 | | 5.1 entitled "Regulation of Business Practices Among Motor Vehicle Manufacturers, Distributors, 2 |
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| 26 | 26 | | and Dealers" are hereby amended to read as follows: 3 |
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| 27 | 27 | | 31-5.1-1. Definitions. 4 |
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| 28 | 28 | | The following words and phrases, for the purposes of this chapter, have the following 5 |
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| 29 | 29 | | meanings: 6 |
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| 30 | 30 | | (1) “Common entity” means a person: 7 |
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| 31 | 31 | | (i) Who is directly or indirectly controlled by or has more than thirty percent (30%) of its 8 |
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| 32 | 32 | | equity interest directly or indirectly owned, beneficially or of record, through any form of 9 |
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| 33 | 33 | | ownership structure, by a manufacturer, distributor, factory branch, or an affiliate thereof; or 10 |
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| 34 | 34 | | (ii) Who has more than thirty percent (30%) of its equity interest directly or indirectly 11 |
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| 35 | 35 | | controlled or owned, beneficially or of record, through any form of ownership structure, by one or 12 |
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| 36 | 36 | | more persons who also directly or indirectly control or own, beneficially or of record, more than 13 |
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| 37 | 37 | | thirty percent (30%) of the equity interests of a manufacturer, distributor, factory branch, or an 14 |
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| 38 | 38 | | affiliate thereof. 15 |
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| 39 | 39 | | (1)(2) “Designated family member” means the spouse, child, grandchild, parent, brother, 16 |
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| 40 | 40 | | or sister of the owner of a new motor vehicle dealership who, in the case of the owner’s death, is 17 |
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| 41 | 41 | | entitled to inherit the ownership interest in the new motor vehicle dealership under the terms of the 18 |
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| 42 | 42 | | |
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| 43 | 43 | | |
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| 44 | 44 | | LC001370 - Page 2 of 18 |
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| 45 | 45 | | owner’s will, or who has been nominated in any other written instrument, or who, in the case of an 1 |
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| 46 | 46 | | incapacitated owner of a new motor vehicle dealership, has been appointed by a court as the legal 2 |
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| 47 | 47 | | representative of the new motor vehicle dealer’s property. 3 |
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| 48 | 48 | | (2)(3) “Distributor” means any person, firm, association, corporation, or trust, resident or 4 |
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| 49 | 49 | | nonresident, who in whole or in part offers for sale, sells, or distributes any new motor vehicle to 5 |
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| 50 | 50 | | new motor vehicle dealers, who maintains factory representatives or who controls any person, firm, 6 |
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| 51 | 51 | | association, corporation or trust, resident or nonresident, who in whole or in part offers for sale, 7 |
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| 52 | 52 | | sells or distributes any new motor vehicle to new motor vehicle dealers . 8 |
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| 53 | 53 | | (3)(4) “Established place of business” means a permanent, commercial building located 9 |
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| 54 | 54 | | within this state, easily accessible and open to the public at all reasonable times, and at which the 10 |
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| 55 | 55 | | business of a new motor vehicle dealer, including the display and repair of vehicles, may be 11 |
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| 56 | 56 | | lawfully carried on in accordance with the terms of all applicable building codes, zoning, and other 12 |
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| 57 | 57 | | land-use regulatory ordinances. 13 |
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| 58 | 58 | | (4)(5) “Factory branch” means a branch office maintained by a manufacturer for the 14 |
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| 59 | 59 | | purpose of selling, or offering for sale, vehicles to a distributor or new motor vehicle dealer, or for 15 |
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| 60 | 60 | | directing or supervising in whole or in part factory or distributor representatives. 16 |
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| 61 | 61 | | (5)(6) “Franchise” means the agreement or contract between any new motor vehicle 17 |
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| 62 | 62 | | manufacturer, written or otherwise, and any new motor vehicle dealer which purports to fix the 18 |
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| 63 | 63 | | legal rights and liabilities of the parties to that agreement or contract, and pursuant to which the 19 |
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| 64 | 64 | | dealer purchases and resells the franchise product or leases or rents the dealership premises. 20 |
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| 65 | 65 | | (6)(7) “Fraud” includes, in addition to its normal legal connotation, the following: a 21 |
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| 66 | 66 | | misrepresentation in any manner, whether intentionally false or due to gross negligence, of a 22 |
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| 67 | 67 | | material fact; a promise or representation not made honestly and in good faith; and an intentional 23 |
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| 68 | 68 | | failure to disclose a material fact. 24 |
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| 69 | 69 | | (7)(8) “Good faith” means honesty in fact and the observation of reasonable commercial 25 |
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| 70 | 70 | | standards of fair dealing in the trade as defined and interpreted in § 6A-2-103(1)(b). 26 |
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| 71 | 71 | | (8)(9) “Manufacturer” means any person, partnership, firm, association, corporation, or 27 |
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| 72 | 72 | | trust, resident or nonresident, who manufactures or assembles new motor vehicles, or imports for 28 |
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| 73 | 73 | | distribution through distributors of motor vehicles, or any partnership, firm, association, joint 29 |
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| 74 | 74 | | venture, corporation, or trust, resident or nonresident, which is a common entity controlled by the 30 |
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| 75 | 75 | | manufacturer. 31 |
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| 76 | 76 | | (9)(10) “Motor vehicle” means every vehicle intended primarily for use and operation on 32 |
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| 77 | 77 | | the public highways which is self-propelled, regardless of the size or type of motor or source of 33 |
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| 78 | 78 | | power, but not including farm tractors and other machines and tools used in the production, 34 |
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| 79 | 79 | | |
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| 80 | 80 | | |
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| 81 | 81 | | LC001370 - Page 3 of 18 |
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| 82 | 82 | | harvesting, and care of farm products. 1 |
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| 83 | 83 | | (10)(11) “New motor vehicle” means a vehicle which has been sold to a new motor vehicle 2 |
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| 84 | 84 | | dealer and which has not been used for other than demonstration purposes and on which the original 3 |
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| 85 | 85 | | title has not been issued from the new motor vehicle dealer. that has never been the subject of a 4 |
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| 86 | 86 | | completed, successful, or conditional sale that was subsequently approved other than between new 5 |
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| 87 | 87 | | motor vehicle dealers, or between a manufacturer and a new motor vehicle dealer of the same 6 |
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| 88 | 88 | | franchise. The term “motor vehicle” also includes any engine, transmission, or rear axle, regardless 7 |
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| 89 | 89 | | of whether it is attached to a vehicle chassis, that is manufactured for installation in any motor-8 |
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| 90 | 90 | | driven vehicle with a gross vehicle weight rating of more than sixteen thousand (16,000) pounds 9 |
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| 91 | 91 | | that is required to be registered. 10 |
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| 92 | 92 | | (11)(12) “New motor vehicle dealer” means any person engaged in the business of selling, 11 |
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| 93 | 93 | | offering to sell, soliciting, or advertising the sale of new motor vehicles and who holds, or held at 12 |
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| 94 | 94 | | the time a cause of action under this chapter accrued, a valid sales and service agreement, franchise, 13 |
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| 95 | 95 | | or contract, granted by the manufacturer or distributor for the retail sale of that manufacturer’s or 14 |
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| 96 | 96 | | distributor’s new motor vehicles. “New motor vehicle dealer” includes any person who engages 15 |
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| 97 | 97 | | exclusively in the repair of motor vehicles, if such repairs are performed as part of a manufacturer’s 16 |
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| 98 | 98 | | warrant. 17 |
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| 99 | 99 | | (12)(13) “Person” means a natural person, corporation, partnership, trust, or other entity, 18 |
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| 100 | 100 | | and, in case of an entity, it includes any other entity in which it has a majority interest or effectively 19 |
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| 101 | 101 | | controls, as well as the individual officers, directors, and other persons in active control of the 20 |
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| 102 | 102 | | activities of that entity. 21 |
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| 103 | 103 | | (13)(14) “Relevant market area” means the area within a radius of twenty (20) miles around 22 |
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| 104 | 104 | | an existing dealer or the area of responsibility defined in the franchise, whichever is greater. 23 |
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| 105 | 105 | | (15) “Sell”, “selling”, “sold”, “exchange”, “retail sales”, and “leases” includes: 24 |
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| 106 | 106 | | (i) Accepting a deposit or receiving a payment for the retail purchase, lease, or other use of 25 |
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| 107 | 107 | | a motor vehicle, but does not include facilitating a motor vehicle dealer’s acceptance of a deposit 26 |
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| 108 | 108 | | or receipt of a payment from a consumer or receiving payment under a retail installment sale 27 |
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| 109 | 109 | | contract; 28 |
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| 110 | 110 | | (ii) Accepting a reservation from a retail consumer for the purchase or lease of a vehicle, 29 |
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| 111 | 111 | | but does not include a manufacturer, distributor or factory branch accepting a reservation that it 30 |
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| 112 | 112 | | assigns to a licensed motor vehicle dealer within this state authorized to sell that make and model; 31 |
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| 113 | 113 | | (iii) Setting the retail price for the purchase, lease, or other use of a motor vehicle, but does 32 |
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| 114 | 114 | | not include setting a manufacturer’s suggested retail price; 33 |
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| 115 | 115 | | (iv) Offering or negotiating with a retail consumer terms for the purchase, lease, or other 34 |
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| 116 | 116 | | |
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| 117 | 117 | | |
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| 118 | 118 | | LC001370 - Page 4 of 18 |
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| 119 | 119 | | use of a motor vehicle; 1 |
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| 120 | 120 | | (v) Offering or negotiating with a retail consumer a value or a motor vehicle being traded 2 |
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| 121 | 121 | | in as part of the purchase, lease, or other use of a motor vehicle, but does not include a website or 3 |
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| 122 | 122 | | other means of electronic communication that identifies to a consumer a conditional trade-in value 4 |
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| 123 | 123 | | and that contains language informing the consumer that the trade-in value is not binding on any 5 |
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| 124 | 124 | | motor vehicle dealer; 6 |
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| 125 | 125 | | (vi) Any transaction where the title of a motor vehicle or a used motor vehicle is transferred 7 |
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| 126 | 126 | | to a retail consumer; 8 |
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| 127 | 127 | | (vii) Any retail lease transaction where a retail consumer leases a vehicle for a period of at 9 |
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| 128 | 128 | | least twelve (12) months, but does not include administering lease agreements, taking assignments 10 |
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| 129 | 129 | | of leases, performing required actions pursuant to such lease, or receiving payments under a lease 11 |
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| 130 | 130 | | agreement that was originated by a motor vehicle dealer; 12 |
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| 131 | 131 | | (viii) Displaying sample vehicles, offering or coordinating test drives to customers; 13 |
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| 132 | 132 | | (ix) Arranging the pickup or delivery of a newly purchased new motor vehicle; or 14 |
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| 133 | 133 | | (x) Compensating employees, agents or contractors to engage in these activities. 15 |
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| 134 | 134 | | 31-5.1-2. Application of chapter. 16 |
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| 135 | 135 | | (a) Any person who engages directly or indirectly in purposeful contacts within this state 17 |
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| 136 | 136 | | in connection with the offering or advertising for sale of, or has business dealings with respect to, 18 |
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| 137 | 137 | | a motor vehicle within the state shall be subject to the provisions of this chapter and shall be subject 19 |
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| 138 | 138 | | to the jurisdiction of the courts of this state, upon service of process in accordance with the 20 |
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| 139 | 139 | | provisions of the general laws. 21 |
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| 140 | 140 | | (b) Any parent, subsidiary, or common entity of a manufacturer, distributor, factory branch, 22 |
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| 141 | 141 | | or other entity, which by contractual arrangement or otherwise pursuant to the direction of the 23 |
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| 142 | 142 | | manufacturer, engages in the distribution in this state of line-make motor vehicles manufactured or 24 |
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| 143 | 143 | | substantially manufactured by such manufacturer, distributor, or factory branch shall be deemed to 25 |
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| 144 | 144 | | be the agent of the manufacturer, distributor, or factory branch for the purposes of any franchise 26 |
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| 145 | 145 | | agreement entered into between such agent and a motor vehicle dealer engaged in business in this 27 |
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| 146 | 146 | | state and shall be bound by the terms and provisions of such franchise agreement as if it were the 28 |
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| 147 | 147 | | principal. A manufacturer, distributor, or factory branch of line-make motor vehicles which are 29 |
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| 148 | 148 | | offered for sale or lease in this state under any franchise agreement executed by an agent of such 30 |
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| 149 | 149 | | manufacturer, distributor, or factory branch is bound by the terms and provisions of such franchise 31 |
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| 150 | 150 | | agreement as if it and not the agent had executed the franchise agreement. Said manufacturer, 32 |
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| 151 | 151 | | distributor, or factory branch shall be subject to all of the restrictions, limitations, remedies, and 33 |
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| 152 | 152 | | penalties of this chapter related to such franchise agreement, the performance thereof, or any cause 34 |
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| 153 | 153 | | |
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| 154 | 154 | | |
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| 155 | 155 | | LC001370 - Page 5 of 18 |
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| 156 | 156 | | of action pertaining thereto. The agency relationship established in this section is not intended to 1 |
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| 157 | 157 | | apply to a person or entity that engages in the distribution of motor vehicles in this state under its 2 |
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| 158 | 158 | | own brand name which are substantially manufactured by another person or entity, provided the 3 |
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| 159 | 159 | | distributing person or entity is substantially engaged in the manufacture of other line-make motor 4 |
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| 160 | 160 | | vehicles and is licensed in this state as a manufacturer. 5 |
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| 161 | 161 | | (c) Notwithstanding any provisions of any law, rule or regulation to the contrary, a motor 6 |
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| 162 | 162 | | vehicle dealer licensed pursuant to chapter 5 of title 31 prior to January 1, 2020 and exclusively 7 |
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| 163 | 163 | | manufacturing zero-emission vehicles may buy from and sell, offer to sell, or deal to a consumer a 8 |
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| 164 | 164 | | zero-emission vehicle; provided that, the dealer owns or operates, directly or indirectly: 9 |
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| 165 | 165 | | (i) No more than three (3) places of business in the state; and 10 |
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| 166 | 166 | | (ii) At least one retail facility for the servicing, including warranty servicing, of zero 11 |
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| 167 | 167 | | emission vehicles sold, offered for sale, or otherwise distributed in this state. This facility shall be 12 |
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| 168 | 168 | | furnished with all the equipment required to service a zero-emission vehicle. 13 |
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| 169 | 169 | | (d) A franchisor shall not be required to establish or operate a place of business at a retail 14 |
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| 170 | 170 | | facility for the servicing of zero emission vehicles. 15 |
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| 171 | 171 | | 31-5.1-4. Violations. 16 |
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| 172 | 172 | | (a) It shall be deemed a violation of this chapter for any manufacturer, distributor, factory 17 |
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| 173 | 173 | | branch, or motor vehicle dealer to engage in any action that is arbitrary, in bad faith, or 18 |
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| 174 | 174 | | unconscionable and that causes damage to any of the parties involved or to the public. 19 |
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| 175 | 175 | | (b) It shall be deemed a violation of this chapter for a manufacturer, distributor, factory 20 |
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| 176 | 176 | | branch, or officer, agent, or other representative of a manufacturer, distributor or factory branch to 21 |
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| 177 | 177 | | coerce, or attempt to coerce, any motor vehicle dealer: 22 |
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| 178 | 178 | | (1) To order or accept delivery of any motor vehicle or vehicles, equipment, parts, or 23 |
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| 179 | 179 | | accessories for them, or any other commodity or commodities that the motor vehicle dealer has not 24 |
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| 180 | 180 | | voluntarily ordered. 25 |
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| 181 | 181 | | (2) To order or accept delivery of any motor vehicle with special features, accessories, or 26 |
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| 182 | 182 | | equipment not included in the list price of that motor vehicle as publicly advertised by the 27 |
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| 183 | 183 | | manufacturer, distributor or factory branch of the vehicle. 28 |
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| 184 | 184 | | (3) To participate monetarily in an advertising campaign or contest, or to purchase any 29 |
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| 185 | 185 | | promotional materials, or training materials, showroom, or other display decorations, or materials 30 |
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| 186 | 186 | | at the expense of the new motor vehicle dealership. 31 |
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| 187 | 187 | | (4) To enter into any agreement with the manufacturer, distributor or factory branch or to 32 |
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| 188 | 188 | | do any other act prejudicial to the new motor vehicle dealer by threatening to terminate or cancel a 33 |
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| 189 | 189 | | franchise or any contractual agreement existing between the dealer and the manufacturer, 34 |
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| 190 | 190 | | |
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| 191 | 191 | | |
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| 192 | 192 | | LC001370 - Page 6 of 18 |
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| 193 | 193 | | distributor or factory branch; except that this subdivision is not intended to preclude the 1 |
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| 194 | 194 | | manufacturer, or distributor, or factory branch from insisting on compliance with the reasonable 2 |
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| 195 | 195 | | terms or provisions of the franchise or other contractual agreement. Notice in good faith to any new 3 |
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| 196 | 196 | | motor vehicle dealer of the new motor vehicle dealer’s violation of those terms or provisions shall 4 |
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| 197 | 197 | | not constitute a violation of the chapter. 5 |
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| 198 | 198 | | (5) To refrain from participation in the management of, investment in, or acquisition of any 6 |
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| 199 | 199 | | other line of new motor vehicle or related products. This subdivision does not apply unless the new 7 |
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| 200 | 200 | | motor vehicle dealer maintains a reasonable line of credit for each make or line of new motor 8 |
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| 201 | 201 | | vehicles, the new motor vehicle dealer remains in compliance with any reasonable facilities 9 |
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| 202 | 202 | | requirements of the manufacturer, distributor or factory branch; and no change is made in the 10 |
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| 203 | 203 | | principal management of the new motor vehicle dealer. 11 |
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| 204 | 204 | | (6) To assent to a release, assignment, novation, waiver, or estoppel in connection with the 12 |
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| 205 | 205 | | transfer or voluntary termination of a franchise, or that would relieve any person from the liability 13 |
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| 206 | 206 | | to be imposed by this law; or to require any controversy between a new motor vehicle dealer and a 14 |
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| 207 | 207 | | manufacturer, distributor, or representative to be referred to any person other than the duly 15 |
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| 208 | 208 | | constituted courts of this state or of the United States of America, or to the department of revenue 16 |
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| 209 | 209 | | of this state, if that referral would be binding upon the new motor vehicle dealer. 17 |
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| 210 | 210 | | (7) To order for any person any parts, accessories, equipment, machinery, tools, or any 18 |
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| 211 | 211 | | commodities. 19 |
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| 212 | 212 | | (c) It shall be deemed a violation of this chapter for a manufacturer, distributor, factory 20 |
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| 213 | 213 | | branch, or officer, agent, or other representative: 21 |
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| 214 | 214 | | (1) To refuse to deliver in reasonable quantities and within a reasonable time after receipt 22 |
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| 215 | 215 | | of the dealer’s order, to any motor vehicle dealer having a franchise or contractual arrangement for 23 |
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| 216 | 216 | | the retail sale of new motor vehicles sold or distributed by the manufacturer, distributor or factory 24 |
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| 217 | 217 | | branch any motor vehicles covered by the franchise or contract, specifically publicly advertised by 25 |
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| 218 | 218 | | the manufacturer to be available for immediate delivery. However, the failure to deliver any motor 26 |
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| 219 | 219 | | vehicle shall not be considered a violation of this chapter if that failure is due to an act of God, 27 |
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| 220 | 220 | | work stoppage, or delay due to a strike or labor difficulty, shortage of materials, a freight embargo, 28 |
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| 221 | 221 | | or other cause over which the manufacturer, distributor, factory branch, or wholesaler, its agent, 29 |
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| 222 | 222 | | shall have no control. 30 |
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| 223 | 223 | | (2) To refuse to deliver, or otherwise deny, to any motor vehicle dealer having a franchise 31 |
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| 224 | 224 | | or contractual arrangement for the retail sale of new motor vehicles sold or distributed by the 32 |
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| 225 | 225 | | manufacturer any particular new motor vehicle model made or distributed by the manufacturer or 33 |
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| 226 | 226 | | factory branch under the name of the division of the manufacturer, distributor or factory branch of 34 |
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| 227 | 227 | | |
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| 228 | 228 | | |
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| 229 | 229 | | LC001370 - Page 7 of 18 |
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| 230 | 230 | | which the dealer is an authorized franchise. 1 |
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| 231 | 231 | | (3) It shall be deemed a prima facie violation of this chapter for any automotive vehicle 2 |
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| 232 | 232 | | division manufacturer, distributor or factory branch to require any separate franchise or contractual 3 |
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| 233 | 233 | | arrangement with any new motor vehicle dealer already a party to a franchise or contractual 4 |
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| 234 | 234 | | arrangement with that automotive vehicle division for the retail sale of any particular new motor 5 |
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| 235 | 235 | | vehicle model made or distributed by that division. 6 |
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| 236 | 236 | | (4) To coerce, or attempt to coerce, any motor vehicle dealer to enter into any agreement 7 |
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| 237 | 237 | | with the manufacturer, distributor, factory branch or their officers, agents, or other representatives, 8 |
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| 238 | 238 | | or to do any other act prejudicial to the dealer, by threatening to cancel any franchise or any 9 |
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| 239 | 239 | | contractual agreement existing between the manufacturer, distributor or factory branch and the 10 |
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| 240 | 240 | | dealer. Notice in good faith to any motor vehicle dealer of the dealer’s violation of any terms or 11 |
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| 241 | 241 | | provisions of the franchise or contractual agreement shall not constitute a violation of this chapter. 12 |
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| 242 | 242 | | (5) To resort to or use any false or misleading advertisement in connection with his or her 13 |
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| 243 | 243 | | business as a manufacturer, distributor or factory branch an officer, agent, or other representative. 14 |
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| 244 | 244 | | (6) To sell or lease any new motor vehicle to, or through, any new motor vehicle dealer at 15 |
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| 245 | 245 | | a lower actual price therefore than the actual price offered to any other new motor vehicle dealer 16 |
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| 246 | 246 | | for the same model vehicle similarly equipped or to utilize any device, including, but not limited 17 |
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| 247 | 247 | | to, sales promotion plans or programs, that result in a lesser actual price. The provisions of this 18 |
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| 248 | 248 | | paragraph shall not apply to sales to a new motor vehicle dealer for resale to any unit of the United 19 |
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| 249 | 249 | | States government or to the state or any of its political subdivisions. A manufacturer, distributor or 20 |
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| 250 | 250 | | factory branch may not reduce the price of a motor vehicle charged to a dealer or provide different 21 |
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| 251 | 251 | | financing terms to a dealer in exchange for the dealer’s agreement to: 22 |
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| 252 | 252 | | (i) Maintain an exclusive sales or service facility; 23 |
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| 253 | 253 | | (ii) Build or alter a sales or service facility; or 24 |
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| 254 | 254 | | (iii) Participate in a floor plan or other financing. 25 |
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| 255 | 255 | | (7) To sell or lease any new motor vehicle to any person, except a manufacturer’s, 26 |
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| 256 | 256 | | distributor or factory branch employee, at a lower actual price than the actual price offered and 27 |
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| 257 | 257 | | charged to a new motor vehicle dealer for the same model vehicle similarly equipped or to utilize 28 |
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| 258 | 258 | | any device which results in a lesser actual price. The provisions of this paragraph shall not apply 29 |
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| 259 | 259 | | to sales to a new motor vehicle dealer for resale to any unit of the United States government, or to 30 |
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| 260 | 260 | | the state or any of its political subdivisions. 31 |
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| 261 | 261 | | (8) To offer in connection with the sale of any new motor vehicle or vehicles, directly or 32 |
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| 262 | 262 | | indirectly, to a fleet purchaser, within or without this state, terms, discounts, refunds, or other 33 |
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| 263 | 263 | | similar types of inducements to that purchaser without making the same offer or offers available to 34 |
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| 264 | 264 | | |
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| 265 | 265 | | |
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| 266 | 266 | | LC001370 - Page 8 of 18 |
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| 267 | 267 | | all of its new motor vehicles dealers in this state. No manufacturer, distributor or factory branch 1 |
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| 268 | 268 | | may impose or enforce any restrictions against new motor vehicle dealers in this state or their 2 |
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| 269 | 269 | | leasing, rental, or fleet divisions or subsidiaries that are not imposed or enforced against any other 3 |
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| 270 | 270 | | direct or indirect purchaser from the manufacturer, distributor or factory branch. The provisions of 4 |
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| 271 | 271 | | this paragraph shall not apply to sales to a new motor vehicle dealer for resale to any unit of the 5 |
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| 272 | 272 | | United States government, or to the state or any of its political subdivisions. 6 |
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| 273 | 273 | | (9) To use or consider the performance of a motor vehicle dealer relating to the sale of the 7 |
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| 274 | 274 | | manufacturer’s, distributor's or factory branch's vehicles or the motor vehicle dealer’s ability to 8 |
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| 275 | 275 | | satisfy any minimum sales or market share quota or responsibility relating to the sale of the 9 |
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| 276 | 276 | | manufacturer’s, distributor's or factory branch's new vehicles in determining: 10 |
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| 277 | 277 | | (i) The motor vehicle dealer’s eligibility to purchase program, certified, or other used motor 11 |
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| 278 | 278 | | vehicles from the manufacturer, distributor or factory branch; 12 |
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| 279 | 279 | | (ii) The volume, type, or model of program, certified, or other used motor vehicles that a 13 |
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| 280 | 280 | | motor vehicle dealer is eligible to purchase from the manufacturer, distributor or factory branch; 14 |
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| 281 | 281 | | (iii) The price of any program, certified, or other used motor vehicle that the dealer is 15 |
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| 282 | 282 | | eligible to purchase from the manufacturer, distributor or factory branch; or 16 |
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| 283 | 283 | | (iv) The availability or amount of any discount, credit, rebate, or sales incentive that the 17 |
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| 284 | 284 | | dealer is eligible to receive from the manufacturer, distributor or factory branch for the purchase of 18 |
|---|
| 285 | 285 | | any program, certified, or other used motor vehicle offered for sale by the manufacturer. 19 |
|---|
| 286 | 286 | | (10) To offer to sell or to sell parts or accessories to any new motor vehicle dealer for use 20 |
|---|
| 287 | 287 | | in the dealer’s own business for the purpose of repairing or replacing the same parts or accessories 21 |
|---|
| 288 | 288 | | or a comparable part or accessory, at a lower actual price than the actual price charged to any other 22 |
|---|
| 289 | 289 | | new motor vehicle dealer for similar parts or accessories to use in the dealer’s own business. In 23 |
|---|
| 290 | 290 | | those cases where new motor vehicle dealers operate or serve as wholesalers of parts and 24 |
|---|
| 291 | 291 | | accessories to retail outlets, these provisions shall be construed to prevent a manufacturer, 25 |
|---|
| 292 | 292 | | distributor, factory branch or its agents, from selling to a new motor vehicle dealer who operates 26 |
|---|
| 293 | 293 | | and services as a wholesaler of parts and accessories, any parts and accessories that may be ordered 27 |
|---|
| 294 | 294 | | by that new motor vehicle dealer for resale to retail outlets at a lower actual price than the actual 28 |
|---|
| 295 | 295 | | price charged a new motor vehicle dealer who does not operate or serve as a wholesaler of parts 29 |
|---|
| 296 | 296 | | and accessories. 30 |
|---|
| 297 | 297 | | (11) To prevent, or attempt to prevent, by contract or otherwise, any new motor vehicle 31 |
|---|
| 298 | 298 | | dealer from changing the capital structure of his or her dealership or the means by which, or through 32 |
|---|
| 299 | 299 | | which the dealer finances the operation of his or her dealership. However, the new motor vehicle 33 |
|---|
| 300 | 300 | | dealer shall at all times meet any reasonable capital standards agreed to between the dealership and 34 |
|---|
| 301 | 301 | | |
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| 302 | 302 | | |
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| 303 | 303 | | LC001370 - Page 9 of 18 |
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| 304 | 304 | | the manufacturer, distributor or factory branch; provided, that any change in the capital structure 1 |
|---|
| 305 | 305 | | by the new motor vehicle dealer does not result in a change in the executive management control 2 |
|---|
| 306 | 306 | | of the dealership. 3 |
|---|
| 307 | 307 | | (12) To prevent, or attempt to prevent, by contract or otherwise, any new motor vehicle 4 |
|---|
| 308 | 308 | | dealer, or any officer, partner, or stockholder of any new motor vehicle dealer, from selling or 5 |
|---|
| 309 | 309 | | transferring any part of the interest of any of them to any other person or persons or party or parties. 6 |
|---|
| 310 | 310 | | Provided, however, that no dealer, officer, partner, or stockholder shall have the right to sell, 7 |
|---|
| 311 | 311 | | transfer, or assign the franchise or power of management or control without the consent of the 8 |
|---|
| 312 | 312 | | manufacturer, distributor or factory branch except that the consent shall not be unreasonably 9 |
|---|
| 313 | 313 | | withheld. 10 |
|---|
| 314 | 314 | | (13) To obtain money, goods, services, anything of value, or any other benefit from any 11 |
|---|
| 315 | 315 | | other person with whom the new motor vehicle dealer does business, on account of, or in relation 12 |
|---|
| 316 | 316 | | to, the transactions between the dealer and that other person, unless that benefit is promptly 13 |
|---|
| 317 | 317 | | accounted for and transmitted to the new motor vehicle dealer. 14 |
|---|
| 318 | 318 | | (14) To compete with a new motor vehicle dealer operating under an agreement or 15 |
|---|
| 319 | 319 | | franchise from the manufacturer, distributor or factory branch in the state of Rhode Island,: 16 |
|---|
| 320 | 320 | | (i) through Through the ownership, operation, or control of any new motor vehicle dealers 17 |
|---|
| 321 | 321 | | in this state, or by participation in the ownership, operation, or control of any new motor vehicle 18 |
|---|
| 322 | 322 | | dealer in this state. A manufacturer, distributor or factory branch shall not be deemed to be 19 |
|---|
| 323 | 323 | | competing when operating, controlling, or owning a dealership, either temporarily for a reasonable 20 |
|---|
| 324 | 324 | | period, but in any case not to exceed one year, which one-year (1) period may be extended for a 21 |
|---|
| 325 | 325 | | one-time, additional period of up to six (6) months upon application to, and approval by, the motor 22 |
|---|
| 326 | 326 | | vehicle dealers license and hearing board, which approval shall be subject to the manufacturer, 23 |
|---|
| 327 | 327 | | distributor or factory branch demonstrating the need for this extension, and with other new motor 24 |
|---|
| 328 | 328 | | vehicle dealers of the same line or make being given notice and an opportunity to be heard in 25 |
|---|
| 329 | 329 | | connection with said application, or in a bona fide relationship in which an independent person had 26 |
|---|
| 330 | 330 | | made a significant investment subject to loss in the dealership and can reasonably expect to acquire 27 |
|---|
| 331 | 331 | | full ownership of the dealership on reasonable terms and conditions within a reasonable period of 28 |
|---|
| 332 | 332 | | time; or 29 |
|---|
| 333 | 333 | | (ii) By selling directly or indirectly new motor vehicles to any retail consumer in the state 30 |
|---|
| 334 | 334 | | except through a new motor vehicle dealer holding a franchise for the line-make that includes the 31 |
|---|
| 335 | 335 | | new motor vehicle. The provisions of this subsection shall not preclude a manufacturer, distributor, 32 |
|---|
| 336 | 336 | | or factory branch from: 33 |
|---|
| 337 | 337 | | (A) Selling new vehicles to its employees, family members of employees, retirees and 34 |
|---|
| 338 | 338 | | |
|---|
| 339 | 339 | | |
|---|
| 340 | 340 | | LC001370 - Page 10 of 18 |
|---|
| 341 | 341 | | family members of retirees, not-for-profit organizations, or the federal, state or local governments; 1 |
|---|
| 342 | 342 | | (B) Providing information to a consumer for the purpose of marketing; or 2 |
|---|
| 343 | 343 | | (C) Displaying vehicles or allowing test drives for promotional purposes at events where 3 |
|---|
| 344 | 344 | | the manufacturer, distributor, or factory branch is a sponsor and the vehicles are not for sale to the 4 |
|---|
| 345 | 345 | | public at the event. 5 |
|---|
| 346 | 346 | | (15) To refuse to disclose to any new motor vehicle dealer, handling the same line or make, 6 |
|---|
| 347 | 347 | | the manner and mode of distribution of that line or make within the relevant market area. 7 |
|---|
| 348 | 348 | | (16) To increase prices of new motor vehicles that the new motor vehicle dealer had 8 |
|---|
| 349 | 349 | | ordered for private retail consumers prior to the new motor vehicle dealer’s receipt of the written, 9 |
|---|
| 350 | 350 | | official price increase notification. A sales contract signed by a private retail consumer shall 10 |
|---|
| 351 | 351 | | constitute evidence of an order, provided that the vehicle is in fact delivered to that customer. In 11 |
|---|
| 352 | 352 | | the event of manufacturer price reductions or cash rebates paid to the new motor vehicle dealer, the 12 |
|---|
| 353 | 353 | | amount of any reduction or rebate received by a new motor vehicle dealer shall be passed on to the 13 |
|---|
| 354 | 354 | | private retail consumer by the new motor vehicle dealer. Price reductions shall apply to all vehicles 14 |
|---|
| 355 | 355 | | in the dealer’s inventory that were subject to the price reduction. Price differences applicable to 15 |
|---|
| 356 | 356 | | new model or series motor vehicles at the time of the introduction of new models or series shall not 16 |
|---|
| 357 | 357 | | be considered a price increase or price decrease. Price changes caused by either: (i) The addition to 17 |
|---|
| 358 | 358 | | a motor vehicle of required or optional equipment; (ii) Revaluation of the United States dollar, in 18 |
|---|
| 359 | 359 | | the case of foreign-make vehicles or components; or (iii) An increase in transportation charges due 19 |
|---|
| 360 | 360 | | to increased rates imposed by common carriers, shall not be subject to the provisions of this 20 |
|---|
| 361 | 361 | | subdivision. 21 |
|---|
| 362 | 362 | | (17) To release to any outside party, except under subpoena or as otherwise required by 22 |
|---|
| 363 | 363 | | law, or in an administrative, judicial, or arbitration proceeding involving the manufacturer, 23 |
|---|
| 364 | 364 | | distributor, factory branch, or new motor vehicle dealer, any business, financial, or personal 24 |
|---|
| 365 | 365 | | information that may be, from time to time, provided by the new motor vehicle dealer to the 25 |
|---|
| 366 | 366 | | manufacturer, distributor or factory branch without the express written consent of the new motor 26 |
|---|
| 367 | 367 | | vehicle dealer. 27 |
|---|
| 368 | 368 | | (18) To unfairly discriminate among its new motor vehicle dealers with respect to warranty 28 |
|---|
| 369 | 369 | | reimbursement, or any program that provides assistance to its dealers, including internet listings; 29 |
|---|
| 370 | 370 | | sales leads; warranty policy adjustments; marketing programs; and dealer recognition programs. 30 |
|---|
| 371 | 371 | | (19) To unreasonably withhold consent to the sale, transfer, or exchange of the franchise 31 |
|---|
| 372 | 372 | | to a qualified buyer capable of being licensed as a new motor vehicle dealer in this state. 32 |
|---|
| 373 | 373 | | (20) To fail to respond, in writing, to a request for consent as specified in subdivision (19) 33 |
|---|
| 374 | 374 | | of this subsection within sixty (60) days of the receipt of a written request on the forms, if any, 34 |
|---|
| 375 | 375 | | |
|---|
| 376 | 376 | | |
|---|
| 377 | 377 | | LC001370 - Page 11 of 18 |
|---|
| 378 | 378 | | generally utilized by the manufacturer or distributor, or factory branch for those purposes and 1 |
|---|
| 379 | 379 | | containing the information required therein. The failure to respond shall be deemed to be a consent 2 |
|---|
| 380 | 380 | | to the request. A manufacturer, distributor or factory branch may not impose a condition on the 3 |
|---|
| 381 | 381 | | approval of a sale, transfer, or exchange of the franchise if the condition would violate the 4 |
|---|
| 382 | 382 | | provisions of this chapter if imposed on an existing dealer. 5 |
|---|
| 383 | 383 | | (21) To unfairly prevent a new motor vehicle dealer from receiving fair and reasonable 6 |
|---|
| 384 | 384 | | compensation for the value of the new motor vehicle dealership. 7 |
|---|
| 385 | 385 | | (22) To require that a new motor vehicle dealer execute a written franchise agreement that 8 |
|---|
| 386 | 386 | | does not contain substantially the same provisions as the franchise agreement being offered to other 9 |
|---|
| 387 | 387 | | new motor vehicle dealers handling the same line or make. In no instance shall the term of any 10 |
|---|
| 388 | 388 | | franchise agreement be of a duration of less than three (3) years. 11 |
|---|
| 389 | 389 | | (23) To require that a new motor vehicle dealer provide exclusive facilities, personnel, or 12 |
|---|
| 390 | 390 | | display space taking into consideration changing market conditions, or that a dealer execute a site 13 |
|---|
| 391 | 391 | | control agreement giving a manufacturer, distributor or factory branch control over the dealer’s 14 |
|---|
| 392 | 392 | | facilities. 15 |
|---|
| 393 | 393 | | (24) To require that a dealer expand, alter, improve, renovate, or remodel facilities without 16 |
|---|
| 394 | 394 | | a guarantee of a sufficient supply of new motor vehicles to justify that expansion or to require that 17 |
|---|
| 395 | 395 | | a dealer expand facilities to a greater degree than is necessary to sell and service the number of 18 |
|---|
| 396 | 396 | | vehicles that the dealer sold and serviced in the most recent calendar year. 19 |
|---|
| 397 | 397 | | (25) To prevent a dealer from adjusting his or her facilities to permit a relocation of office 20 |
|---|
| 398 | 398 | | space, showroom space, and service facilities so long as the relocation is within five hundred (500) 21 |
|---|
| 399 | 399 | | yards of the present location. 22 |
|---|
| 400 | 400 | | (26) To engage in any predatory practice against a new motor vehicle dealer. 23 |
|---|
| 401 | 401 | | (27) To prevent, prohibit, or coerce any new motor vehicle dealer from charging any 24 |
|---|
| 402 | 402 | | consumer any fee allowed to be charged by the dealer under Rhode Island law or regulation except 25 |
|---|
| 403 | 403 | | as related to eligible participants under a military discount program in which the dealer voluntarily 26 |
|---|
| 404 | 404 | | participates and receives financial compensation from the manufacturer, distributor or factory 27 |
|---|
| 405 | 405 | | branch or distributor, to the extent that such a program is not offered to the general public. 28 |
|---|
| 406 | 406 | | (d) It shall be a violation of this chapter for a manufacturer, distributor or factory branch to 29 |
|---|
| 407 | 407 | | terminate, cancel, or fail to renew the franchise of a new motor vehicle dealer except as provided 30 |
|---|
| 408 | 408 | | in this subsection: 31 |
|---|
| 409 | 409 | | (1) Notwithstanding the terms, provisions, or conditions of any franchise, whether entered 32 |
|---|
| 410 | 410 | | into before or after the enactment of this chapter or any of its provisions, or notwithstanding the 33 |
|---|
| 411 | 411 | | terms or provisions of any waiver, whether entered into before or after the enactment of this chapter 34 |
|---|
| 412 | 412 | | |
|---|
| 413 | 413 | | |
|---|
| 414 | 414 | | LC001370 - Page 12 of 18 |
|---|
| 415 | 415 | | or any of its provisions, no manufacturer, distributor or factory branch shall cancel, terminate, or 1 |
|---|
| 416 | 416 | | fail to renew any franchise with a licensed new motor vehicle dealer unless the manufacturer, 2 |
|---|
| 417 | 417 | | distributor or factory branch has: 3 |
|---|
| 418 | 418 | | (i) Satisfied the notice requirement of this subsection; 4 |
|---|
| 419 | 419 | | (ii) Has good cause for the cancellation, termination, or nonrenewal; 5 |
|---|
| 420 | 420 | | (iii) Has not committed any violations set forth in subsection (b) of this section; and 6 |
|---|
| 421 | 421 | | (iv) Has acted in good faith as defined in this chapter and has complied with all provisions 7 |
|---|
| 422 | 422 | | of this chapter. 8 |
|---|
| 423 | 423 | | (2) Notwithstanding the terms, provisions, or conditions of any franchise or the terms or 9 |
|---|
| 424 | 424 | | provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation, or 10 |
|---|
| 425 | 425 | | nonrenewal when: 11 |
|---|
| 426 | 426 | | (i) There is a failure by the new motor vehicle dealer to comply with a provision of the 12 |
|---|
| 427 | 427 | | franchise, which provision is both reasonable and of material significance to the franchise 13 |
|---|
| 428 | 428 | | relationship, provided that the dealer has been notified, in writing, of the failure within one hundred 14 |
|---|
| 429 | 429 | | eighty (180) days after the manufacturer, distributor or factory branch first acquired knowledge of 15 |
|---|
| 430 | 430 | | that failure; 16 |
|---|
| 431 | 431 | | (ii) If the failure by the new motor vehicle dealer, as provided in paragraph (i) of this 17 |
|---|
| 432 | 432 | | subdivision, relates to the performance of the new motor vehicle dealer in sales or service, then 18 |
|---|
| 433 | 433 | | good cause shall be defined as the failure of the new motor vehicle dealer to comply with reasonable 19 |
|---|
| 434 | 434 | | performance criteria established by the manufacturer, distributor or factory branch if the new motor 20 |
|---|
| 435 | 435 | | vehicle dealer was apprised by the manufacturer, distributor or factory branch, in writing, of that 21 |
|---|
| 436 | 436 | | failure; and: 22 |
|---|
| 437 | 437 | | (A) The notification stated that notice was provided of failure of performance pursuant to 23 |
|---|
| 438 | 438 | | paragraph (i) of this subdivision; 24 |
|---|
| 439 | 439 | | (B) The new motor vehicle dealer was afforded a reasonable opportunity, for a period of 25 |
|---|
| 440 | 440 | | not less than six (6) months, to comply with those criteria; and 26 |
|---|
| 441 | 441 | | (C) The new motor vehicle dealer did not demonstrate substantial progress towards 27 |
|---|
| 442 | 442 | | compliance with the manufacturer’s performance criteria during that period. ; and 28 |
|---|
| 443 | 443 | | (D) The performance criteria employed shall: 29 |
|---|
| 444 | 444 | | (I) Take into account the actual vehicle allocation offered to the dealer by the manufacturer, 30 |
|---|
| 445 | 445 | | distributor, or factory branch, as well as the dealer’s inventory levels relevant to achieve any 31 |
|---|
| 446 | 446 | | minimum performance standards to which the manufacturer, distributor, or factory branch holds 32 |
|---|
| 447 | 447 | | the dealer accountable; provided, however, the failure to provide allocation of any products or 33 |
|---|
| 448 | 448 | | vehicles, including by series, product line, or model, may not be considered a violation of this 34 |
|---|
| 449 | 449 | | |
|---|
| 450 | 450 | | |
|---|
| 451 | 451 | | LC001370 - Page 13 of 18 |
|---|
| 452 | 452 | | chapter if such failure is due to the dealer’s refusal or declination to accept product allocation 1 |
|---|
| 453 | 453 | | offered; 2 |
|---|
| 454 | 454 | | (II) Not be unfair, unreasonable, arbitrary or inequitable; and 3 |
|---|
| 455 | 455 | | (III) Consider the relevant and material local and state or regional criteria, including 4 |
|---|
| 456 | 456 | | prevailing economic conditions affecting the sales or service performance of a vehicle dealer. 5 |
|---|
| 457 | 457 | | (3) The manufacturer, distributor or factory branch shall have the burden of proof for 6 |
|---|
| 458 | 458 | | showing that the notice requirements have been complied with; that there was good cause for the 7 |
|---|
| 459 | 459 | | franchise termination; cancellation or nonrenewal; and that the manufacturer, distributor or factory 8 |
|---|
| 460 | 460 | | branch has acted in good faith. 9 |
|---|
| 461 | 461 | | (i) Notwithstanding the terms, provisions, or conditions of any franchise, prior to the 10 |
|---|
| 462 | 462 | | termination, cancellation, or nonrenewal of any franchise, the manufacturer, distributor or factory 11 |
|---|
| 463 | 463 | | branch shall furnish notification of the termination, cancellation, or nonrenewal to the new motor 12 |
|---|
| 464 | 464 | | vehicle dealer as follows: 13 |
|---|
| 465 | 465 | | (A) In the manner described in paragraph (ii) of this subdivision; and 14 |
|---|
| 466 | 466 | | (B) Not fewer than ninety (90) days prior to the effective date of the termination, 15 |
|---|
| 467 | 467 | | cancellation, or nonrenewal; or 16 |
|---|
| 468 | 468 | | (C) Not fewer than fifteen (15) days prior to the effective date of the termination, 17 |
|---|
| 469 | 469 | | cancellation, or nonrenewal for any of the following reasons: 18 |
|---|
| 470 | 470 | | (I) Insolvency of the new motor vehicle dealer, or the filing of any petition by, or against, 19 |
|---|
| 471 | 471 | | the new motor vehicle dealer under any bankruptcy or receivership law; 20 |
|---|
| 472 | 472 | | (II) Failure of the new motor vehicle dealer to conduct his customary sales and service 21 |
|---|
| 473 | 473 | | operations during his or her customary business hours for seven (7) consecutive business days; 22 |
|---|
| 474 | 474 | | (III) Final conviction of the new motor vehicle dealer, or any owner or operator of the 23 |
|---|
| 475 | 475 | | dealership, of a crime which is associated with or related to, the operation of the dealership; 24 |
|---|
| 476 | 476 | | (IV) Revocation of any license that the new motor vehicle dealer is required to have to 25 |
|---|
| 477 | 477 | | operate a dealership; or 26 |
|---|
| 478 | 478 | | (D) Not fewer than one hundred eighty (180) days prior to the effective date of the 27 |
|---|
| 479 | 479 | | termination or cancellation where the manufacturer, or distributor or factory branch is discontinuing 28 |
|---|
| 480 | 480 | | the sale of the product line. 29 |
|---|
| 481 | 481 | | (ii) Notification under this subsection shall be in writing, shall be by certified mail or 30 |
|---|
| 482 | 482 | | personally delivered to the new motor vehicle dealer, and shall contain: 31 |
|---|
| 483 | 483 | | (A) A statement of intention to terminate, cancel, or not to renew the franchise; 32 |
|---|
| 484 | 484 | | (B) A statement of the reasons for the termination, cancellation, or nonrenewal; and 33 |
|---|
| 485 | 485 | | (C) The date on which the termination, cancellation, or nonrenewal shall take effect. 34 |
|---|
| 486 | 486 | | |
|---|
| 487 | 487 | | |
|---|
| 488 | 488 | | LC001370 - Page 14 of 18 |
|---|
| 489 | 489 | | (iii) Upon the involuntary or voluntary termination, nonrenewal, or cancellation of any 1 |
|---|
| 490 | 490 | | franchise, by either the manufacturer, distributor or factory branch or the new motor vehicle dealer, 2 |
|---|
| 491 | 491 | | notwithstanding the terms of any franchise whether entered into before or after the enactment of 3 |
|---|
| 492 | 492 | | this chapter or any of its provisions, the new motor vehicle dealer shall be allowed fair and 4 |
|---|
| 493 | 493 | | reasonable compensation by the manufacturer, distributor or factory branch for the following: 5 |
|---|
| 494 | 494 | | (A) The new motor vehicle dealer’s cost, less allowances paid by the manufacturer, 6 |
|---|
| 495 | 495 | | distributor or factory branch of each new, undamaged, unsold, and unaltered, except for dealer-7 |
|---|
| 496 | 496 | | installed, manufacturer-, distributor- or factory branch-authorized accessories, motor vehicle, 8 |
|---|
| 497 | 497 | | regardless of model year purchased from the manufacturer, distributor or factory branch or another 9 |
|---|
| 498 | 498 | | dealer of the same line or make in the ordinary course of business within twenty-four (24) months 10 |
|---|
| 499 | 499 | | of termination, having five hundred (500) or fewer miles recorded on the odometer that is in the 11 |
|---|
| 500 | 500 | | new motor vehicle dealer’s inventory at the time of termination, nonrenewal, or cancellation. 12 |
|---|
| 501 | 501 | | (B) The new motor vehicle dealer’s cost of each new, unused, undamaged, and unsold part 13 |
|---|
| 502 | 502 | | or accessory that is in the current parts catalogue, or is identical to a part or accessory in the current 14 |
|---|
| 503 | 503 | | parts catalogue except for the number assigned to the part or accessory due to a change in the 15 |
|---|
| 504 | 504 | | number after the purchase of the part or accessory, and that is still in the original, resalable 16 |
|---|
| 505 | 505 | | merchandising package and in an unbroken lot, except that, in the case of sheet metal, a comparable 17 |
|---|
| 506 | 506 | | substitute for the original package may be used. 18 |
|---|
| 507 | 507 | | (C) The fair market value of each undamaged sign, normal wear and tear excepted, owned 19 |
|---|
| 508 | 508 | | by the dealer that bears a trademark or trade name used or claimed by the manufacturer, distributor 20 |
|---|
| 509 | 509 | | or factory branch that was purchased as a requirement of the manufacturer, distributor or factory 21 |
|---|
| 510 | 510 | | branch. 22 |
|---|
| 511 | 511 | | (D) The fair market value of all special tools, and automotive services equipment owned 23 |
|---|
| 512 | 512 | | by the dealer that: (I) Were recommended in writing and designated as special tools and equipment; 24 |
|---|
| 513 | 513 | | (II) Were purchased as a requirement of the manufacturer, distributor or factory branch; and (III) 25 |
|---|
| 514 | 514 | | Are in usable and good condition except for reasonable wear and tear. 26 |
|---|
| 515 | 515 | | (E) The cost of transporting, handling, packing, storing, and loading any property that is 27 |
|---|
| 516 | 516 | | subject to repurchase under this section. 28 |
|---|
| 517 | 517 | | (F) The payments above are due within sixty (60) days from the date the dealer submits an 29 |
|---|
| 518 | 518 | | accounting to the manufacturer, distributor or factory branch of the vehicle inventory subject to 30 |
|---|
| 519 | 519 | | repurchase, and for other items within sixty (60) days from the date the dealer submits an 31 |
|---|
| 520 | 520 | | accounting of the other items subject to repurchase, provided, the new motor vehicle dealer has 32 |
|---|
| 521 | 521 | | clear title (or will have clear title upon using the repurchase funds to obtain clear title) to the 33 |
|---|
| 522 | 522 | | inventory and other items and is in a position to convey that title to the manufacturer, distributor or 34 |
|---|
| 523 | 523 | | |
|---|
| 524 | 524 | | |
|---|
| 525 | 525 | | LC001370 - Page 15 of 18 |
|---|
| 526 | 526 | | factory branch. If the inventory or other items are subject to a security interest, the manufacturer, 1 |
|---|
| 527 | 527 | | distributor or factory branch, wholesaler, or franchisor may make payment jointly to the dealer and 2 |
|---|
| 528 | 528 | | the holder of the security interest. In no event shall the payments be made later than ninety (90) 3 |
|---|
| 529 | 529 | | days of the effective date of the termination, cancellation, or nonrenewal. 4 |
|---|
| 530 | 530 | | (iv) In the event the termination, cancellation, or nonrenewal is involuntary and not 5 |
|---|
| 531 | 531 | | pursuant to subsection (3)(i)(C) of this section and: 6 |
|---|
| 532 | 532 | | (A) The new motor vehicle dealer is leasing the dealership facilities from a lessor other 7 |
|---|
| 533 | 533 | | than the manufacturer, distributor or factory branch, the manufacturer, distributor or factory branch 8 |
|---|
| 534 | 534 | | shall pay the new motor vehicle dealer a sum equivalent to the rent for the unexpired term of the 9 |
|---|
| 535 | 535 | | lease or (2) two year’s rent, whichever is less; or 10 |
|---|
| 536 | 536 | | (B) If the new motor vehicle dealer owns the facilities, the manufacturer, distributor or 11 |
|---|
| 537 | 537 | | factory branch shall pay the new motor vehicle dealer a sum equivalent to the reasonable rental 12 |
|---|
| 538 | 538 | | value of the facilities for two (2) years; if: 13 |
|---|
| 539 | 539 | | (I) The new motor vehicle dealer is unable to reasonably utilize the facilities for another 14 |
|---|
| 540 | 540 | | purpose; 15 |
|---|
| 541 | 541 | | (II) The new motor vehicle dealer, or the manufacturer, distributor or factory branch acting 16 |
|---|
| 542 | 542 | | as its agent, is unable to make arrangements for the cancellation or assumption of its lease 17 |
|---|
| 543 | 543 | | obligations by another party in the case of leased facilities, or is unable to sell dealer-owned 18 |
|---|
| 544 | 544 | | facilities; and 19 |
|---|
| 545 | 545 | | (III) Only to the extent those facilities were required as a condition of the franchise and 20 |
|---|
| 546 | 546 | | used to conduct sales and service operations related to the franchise product. 21 |
|---|
| 547 | 547 | | (v) In addition to any injunctive relief and any other damages allowable by this chapter, if 22 |
|---|
| 548 | 548 | | the manufacturer, distributor or factory branch is discontinuing the product line or fails to prove 23 |
|---|
| 549 | 549 | | that there was good cause for the termination, cancellation, or nonrenewal, or if the manufacturer, 24 |
|---|
| 550 | 550 | | distributor or factory branch fails to prove that the manufacturer, distributor or factory branch acted 25 |
|---|
| 551 | 551 | | in good faith, then the manufacturer, distributor or factory branch shall pay the new motor vehicle 26 |
|---|
| 552 | 552 | | dealer fair and reasonable compensation for the value of the dealership as an ongoing business. 27 |
|---|
| 553 | 553 | | In addition to the other compensation described in paragraphs (iii) and (iv) above and in 28 |
|---|
| 554 | 554 | | this section, the manufacturer, distributor or factory branch shall also reimburse the dealer for any 29 |
|---|
| 555 | 555 | | costs incurred for facility upgrades or alterations required by the manufacturer, distributor or 30 |
|---|
| 556 | 556 | | factory branch within two (2) years of the effective date of the termination. 31 |
|---|
| 557 | 557 | | (vi) If a manufacturer, distributor or factory branch is discontinuing the product line and 32 |
|---|
| 558 | 558 | | thus, as a result a franchise for the sale of motor vehicles is subject to termination, cancellation, or 33 |
|---|
| 559 | 559 | | nonrenewal, the manufacturer, distributor or factory branch shall: 34 |
|---|
| 560 | 560 | | |
|---|
| 561 | 561 | | |
|---|
| 562 | 562 | | LC001370 - Page 16 of 18 |
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| 563 | 563 | | (A) Authorize the dealer, at the dealer’s option, that remains a franchised dealer of the 1 |
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| 564 | 564 | | manufacturer, distributor or factory branch regardless of the discontinuation of a product line, to 2 |
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| 565 | 565 | | continue servicing and supplying parts (without prejudice to the right of the manufacturer, 3 |
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| 566 | 566 | | distributor or factory branch to also authorize other franchised dealers to provide service and parts 4 |
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| 567 | 567 | | for a discontinued product line), including services and parts pursuant to a warranty issued by the 5 |
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| 568 | 568 | | manufacturer, distributor or factory branch for any goods or services marketed by the dealer 6 |
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| 569 | 569 | | pursuant to the motor vehicle franchise for a period of not less than five (5) years from the effective 7 |
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| 570 | 570 | | date of the termination, cancellation, or nonrenewal; 8 |
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| 571 | 571 | | (B) Continue to reimburse the dealer that remains a franchised dealer of the manufacturer, 9 |
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| 572 | 572 | | distributor or factory branch regardless of the discontinuation of a product line or another 10 |
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| 573 | 573 | | franchised dealer of the manufacturer, distributor or factory branch in the area for warranty parts 11 |
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| 574 | 574 | | and service in an amount, and on terms not less favorable than, those in effect prior to the 12 |
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| 575 | 575 | | termination, cancellation, or nonrenewal; 13 |
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| 576 | 576 | | (C) The manufacturer, distributor or factory branch shall continue to supply the dealer that 14 |
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| 577 | 577 | | remains a franchised dealer of the manufacturer, distributor or factory branch regardless of the 15 |
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| 578 | 578 | | discontinuation of a product line or another franchised dealer of the manufacturer, distributor or 16 |
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| 579 | 579 | | factory branch in the area with replacement parts for any goods or services marketed by the dealer 17 |
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| 580 | 580 | | pursuant to the franchise agreement for a period of not less than five (5) years from the effective 18 |
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| 581 | 581 | | date of the termination, cancellation, or nonrenewal, at a price, and on terms not less favorable than, 19 |
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| 582 | 582 | | those in effect prior to the termination, cancellation, or nonrenewal; 20 |
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| 583 | 583 | | (vii) The requirements of this section do not apply to a termination, cancellation, or 21 |
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| 584 | 584 | | nonrenewal due to the sale of the assets or stock of the motor vehicle dealer. 22 |
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| 585 | 585 | | (D) To be entitled to facilities assistance from the manufacturer, distributor or factory 23 |
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| 586 | 586 | | branch as described above, the dealer shall have the obligation to mitigate damages by listing the 24 |
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| 587 | 587 | | dealership facilities for lease or sublease with a licensed real estate agent within thirty (30) days 25 |
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| 588 | 588 | | after the effective date of the termination of the franchise and thereafter be reasonably cooperating 26 |
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| 589 | 589 | | with such real estate agent in the performance of the agent’s duties and responsibilities. If the dealer 27 |
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| 590 | 590 | | is able to lease or sublease the dealership facilities on terms that are consistent with local zoning 28 |
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| 591 | 591 | | requirements to preserve the right to sell motor vehicles from the dealership facilities and the terms 29 |
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| 592 | 592 | | of the dealer’s lease, the dealer shall be obligated to pay the manufacturer, distributor or factory 30 |
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| 593 | 593 | | branch the net revenue received from such mitigation, but only following receipt of facilities 31 |
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| 594 | 594 | | assistance payments pursuant to this chapter, and only up to the total amount of facilities assistance 32 |
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| 595 | 595 | | payments that the dealer has received. 33 |
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| 596 | 596 | | (e) It shall be deemed a violation of this chapter for a motor vehicle dealer: 34 |
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| 597 | 597 | | |
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| 598 | 598 | | |
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| 599 | 599 | | LC001370 - Page 17 of 18 |
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| 600 | 600 | | (1) To require a purchaser of a new motor vehicle, as a condition of the sale and delivery 1 |
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| 601 | 601 | | thereof, to also purchase special features, equipment, parts, or accessories not desired or requested 2 |
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| 602 | 602 | | by the purchaser. This prohibition shall not apply as to special features, equipment, parts, or 3 |
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| 603 | 603 | | accessories that are already installed on the car before sale by the dealer. 4 |
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| 604 | 604 | | (2) To represent and sell as a new motor vehicle any motor vehicle that is a used motor 5 |
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| 605 | 605 | | vehicle. 6 |
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| 606 | 606 | | (3) To resort to or use any false or misleading advertisement in connection with his or her 7 |
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| 607 | 607 | | business as a motor vehicle dealer. 8 |
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| 608 | 608 | | (4) To engage in any deception or fraudulent practice in the repair of motor vehicles. 9 |
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| 609 | 609 | | SECTION 2. This act shall take effect upon passage. 10 |
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| 610 | 610 | | ======== |
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| 611 | 611 | | LC001370 |
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| 612 | 612 | | ======== |
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| 613 | 613 | | |
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| 614 | 614 | | |
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| 615 | 615 | | LC001370 - Page 18 of 18 |
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| 616 | 616 | | EXPLANATION |
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| 617 | 617 | | BY THE LEGISLATIVE COUNCIL |
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| 618 | 618 | | OF |
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| 619 | 619 | | A N A C T |
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| 620 | 620 | | RELATING TO MOTOR AN D OTHER VEHICLES -- REGULATION OF BUSINESS |
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| 621 | 621 | | PRACTICES AMONG MOTO R VEHICLES MANUFACTU RES, DISTRIBUTORS, AND |
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| 622 | 622 | | DEALERS |
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| 623 | 623 | | *** |
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| 624 | 624 | | This act would extend certain protocols applicable to motor vehicle manufacturers to their 1 |
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| 625 | 625 | | distributors and factory branches, amend definitions relative to common entities and sales, as well 2 |
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| 626 | 626 | | as prohibit any motor vehicle manufacturers, common entities, affiliates or joint ventures licensed 3 |
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| 627 | 627 | | after January 1, 2020 from directly selling to the public. 4 |
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| 628 | 628 | | This act would take effect upon passage. 5 |
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| 630 | 630 | | LC001370 |
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