82R4187 MAW-F
By: Hunter H.B. No. 2293
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of motor vehicle dealers, manufacturers,
and distributors.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2301.002, Occupations Code, is amended
by adding Subdivision (27-a) to read as follows:
(27-a) "Property use agreement" means a contract,
other than a franchise, between a franchised dealer and a
manufacturer, distributor, or representative that grants the
manufacturer, distributor, or representative the right to regulate
the franchised dealer's use of the dealership and other facilities
covered by a franchise.
SECTION 2. Subchapter A, Chapter 2301, Occupations Code, is
amended by adding Section 2301.008 to read as follows:
Sec. 2301.008. APPLICABILITY OF CHAPTER TO BANKRUPTCY OF
MANUFACTURER, DISTRIBUTOR, OR REPRESENTATIVE. Except as expressly
provided by an order of a court with jurisdiction over a filing in
bankruptcy by a manufacturer, distributor, or representative, the
terms of this chapter apply to the manufacturer, distributor, or
representative during the pendency of the bankruptcy.
SECTION 3. Section 2301.359, Occupations Code, is amended
by amending Subsection (e) and adding Subsections (g), (h), and (i)
to read as follows:
(e) A manufacturer or distributor may not unreasonably
withhold approval of an application filed under Subsection (a).
[It is unreasonable for a manufacturer or distributor to reject a
prospective transferee who is of good moral character and who meets
the written, reasonable, and uniformly applied standards or
qualifications, if any, of the manufacturer or distributor relating
to the prospective transferee's business experience and financial
qualifications.]
(g) In determining whether to approve an application filed
under Subsection (a), a manufacturer or distributor may consider:
(1) whether a prospective transferee is or has been a
franchised dealer in this state;
(2) the moral character of the prospective transferee;
or
(3) the extent to which a prospective transferee
satisfies any criteria developed by the manufacturer or distributor
and made available to the prospective transferee, specifically to
determine the business experience and financial qualifications of a
prospective transferee.
(h) A manufacturer or distributor may consider the criteria
developed under Subsection (g)(3) only if the criteria are in
writing, are reasonable, and are uniformly applied in similar
situations.
(i) It is unreasonable for a manufacturer or distributor to
reject a prospective transferee who is of good moral character and
who satisfies the criteria developed under Subsection (g)(3).
SECTION 4. Section 2301.465(b), Occupations Code, is
amended to read as follows:
(b) Notwithstanding the terms of any franchise, after the
termination of a franchise, a manufacturer, distributor, or
representative shall pay to a franchised dealer or any lienholder,
in accordance with the interest of each, the following amounts:
(1) the dealer cost of each new motor vehicle in the
dealer's inventory with mileage of 5,000 miles or less, exclusive
of mileage placed on the vehicle before it was delivered to the
dealer, reduced by the net discount value of each vehicle, except
that if a vehicle cannot be reduced by the net discount value, the
manufacturer or distributor shall pay the dealer the net cost of the
vehicle;
(2) the dealer cost of each new, unused, undamaged,
and unsold part or accessory that:
(A) is in the current parts catalogue and is
still in the original, resalable merchandising package and in an
unbroken lot, except in the case of sheet metal, a comparable
substitute for the original package may be used; and
(B) was purchased by the dealer either directly
from the manufacturer or distributor or from an outgoing authorized
dealer as a part of the dealer's initial inventory;
(3) the fair market value of each undamaged sign owned
by the dealer that bears a trademark or tradename used or claimed by
the manufacturer, distributor, or representative and that was
purchased from or at the request of the manufacturer, distributor,
or representative;
(4) the fair market value of all special tools, data
processing equipment, computer software, and automotive service
equipment owned by the dealer that:
(A) were recommended in writing and designated as
special tools, computer software, or [and] equipment;
(B) were purchased from or at the request of the
manufacturer, distributor, or representative; and
(C) are in usable and good condition except for
reasonable wear and tear; and
(5) the cost of transporting, handling, packing,
storing, and loading any property subject to repurchase under this
section.
SECTION 5. Subchapter J, Chapter 2301, Occupations Code, is
amended by adding Section 2301.4651 to read as follows:
Sec. 2301.4651. ADDITIONAL PAYMENT TO FRANCHISED DEALER IN
CERTAIN SITUATIONS. (a) This section applies to a manufacturer,
distributor, or representative that:
(1) terminates or discontinues a franchise by any
means without complying with Section 2301.453; or
(2) regardless of whether the manufacturer,
distributor, or representative complies with Section 2301.453,
terminates or discontinues a franchise by:
(A) discontinuing a line-make;
(B) ceasing to do business in this state; or
(C) changing the distributor or method of
distribution of its products in this state.
(b) In addition to the duties placed on a manufacturer,
distributor, or representative by Section 2301.465, a
manufacturer, distributor, or representative to whom this section
applies shall pay to the franchised dealer the following amounts as
applicable:
(1) either:
(A) the dealer's construction costs for a new
dealership constructed in the two years preceding the date of the
termination or discontinuance described by Subsection (a); or
(B) if the dealer does not have any costs
described by Paragraph (A), the fair monthly rental value of the
dealership payable in cash each month beginning on the first day of
the first month following the date of the termination or
discontinuance described by Subsection (a) and ending on the
earlier of:
(i) the first anniversary of the
termination or discontinuance date; or
(ii) the date on which the dealer no longer
owns the dealership;
(2) the dealer's costs for upgrading, substantially
altering, or furnishing a dealership in the two years preceding the
date of the termination or discontinuance described by Subsection
(a); and
(3) an amount equal to the value of the goodwill
associated with the franchise as it existed on the day before the
earlier of:
(A) the date of the termination or discontinuance
described by Subsection (a); or
(B) the date on which the intention of the
manufacturer, distributor, or representative to terminate or
discontinue the franchise in a manner described by Subsection (a)
became publicly known in the area in which the dealership is
located.
(c) A franchised dealer receiving money under Subsection
(b)(1)(B) shall:
(1) make a reasonable effort to earn income from a
dealership after a termination or discontinuance described by
Subsection (a); and
(2) inform the manufacturer, distributor, or
representative of the dealer's efforts under Subdivision (1) and of
any income earned from the dealership.
(d) A manufacturer, distributor, or representative may
reduce the amount of a payment made to a franchised dealer under
Subsection (b)(1)(B) by the amount of any income earned by the
dealer from the dealership during the month preceding the payment.
(e) The manufacturer, distributor, or representative, as
appropriate, shall pay any amount described by Subsection
(b)(1)(A), (2), or (3) not later than the 30th day after the date of
the termination or discontinuance described by Subsection (a).
(f) An amount payable under Subsection (b)(1)(A) or (2) does
not include any amount previously paid to the franchised dealer by
the manufacturer, distributor, or representative to subsidize the
costs incurred by the dealer in performing the activities described
by Subsection (b)(1)(A) or (2).
SECTION 6. Section 2301.467, Occupations Code, is amended
by amending Subsections (b) and (c) and adding Subsection (b-1) to
read as follows:
(b) Notwithstanding the terms of any franchise, a
manufacturer, distributor, or representative may not unreasonably
require a franchised dealer to relocate, or to replace or
substantially change, alter, or remodel the dealer's facilities.
Except as provided by Subsection (b-1) [For purposes of this
subsection], an act is reasonable if it is justifiable in light of
current and reasonably foreseeable projections of economic
conditions, financial expectations, and the market for new motor
vehicles in the relevant market area.
(b-1) It is unreasonable for a manufacturer, distributor,
or representative to require a franchised dealer to construct a new
dealership or to substantially change, alter, or remodel an
existing dealership before the 15th anniversary of the date the
dealership at that location was constructed or substantially
changed, altered, or remodeled if the construction, change,
alteration, or remodel was in substantial compliance with standards
or plans provided by a manufacturer, distributor, or
representative, or through a subsidiary or agent of the
manufacturer, distributor, or representative.
(c) This [The prohibitions under this] section applies
[apply] to the relationship between a manufacturer, distributor, or
representative and:
(1) a current franchisee of the manufacturer,
distributor, or representative; [or]
(2) a successor of a current franchisee of the
manufacturer, distributor, or representative; or
(3) a franchised dealer who is seeking to become a
franchisee of the manufacturer, distributor, or representative.
SECTION 7. Subchapter J, Chapter 2301, Occupations Code, is
amended by adding Section 2301.4671 to read as follows:
Sec. 2301.4671. RESTRICTION ON DEALER'S USE OF DEALERSHIP
PROPERTY. (a) Notwithstanding the terms of any franchise, a
manufacturer, distributor, or representative may not:
(1) unreasonably limit or impair the ability of a
franchised dealer to use the dealership property as the dealer
considers appropriate;
(2) control the use of the dealership property after
the franchise is terminated or discontinued; or
(3) at any time exercise exclusive control over the
use of the dealership property.
(b) To the extent of any conflict between this section and
another section of this chapter, the other section controls over
this section.
SECTION 8. Section 2301.468, Occupations Code, is amended
to read as follows:
Sec. 2301.468. INEQUITABLE TREATMENT OF [DISCRIMINATION
AMONG] DEALERS OR FRANCHISEES. Notwithstanding the terms of a
franchise, a [A] manufacturer, distributor, or representative may
not[:
[(1) notwithstanding the terms of any franchise,
directly or indirectly discriminate against a franchised dealer or
otherwise] treat franchised dealers differently as a result of the
application of a formula or other computation or process intended
to gauge the performance of a dealership or otherwise enforce
standards or guidelines applicable to its franchised dealers in the
sale of motor vehicles if, in the application of the standards or
guidelines, the franchised dealers are unreasonably treated
differently [; or
[(2) discriminate unreasonably between or among
franchisees] in the sale of a motor vehicle owned by the
manufacturer or distributor.
SECTION 9. Section 2301.475(a), Occupations Code, is
amended to read as follows:
(a) Except as provided by Subsection (b), after the first
anniversary of the date a franchised dealer submits a claim under
[ending date of] a manufacturer or distributor incentive program, a
manufacturer or distributor may not:
(1) charge back to a dealer money paid by the
manufacturer or distributor as a result of the incentive program;
(2) charge back to a dealer the cash value of a prize
or other thing of value awarded to the dealer as a result of the
incentive program; or
(3) audit the records of a dealer to determine
compliance with the terms of the incentive program, unless the
manufacturer or distributor has reasonable grounds to believe the
dealer committed fraud with respect to the incentive program.
SECTION 10. Subchapter J, Chapter 2301, Occupations Code,
is amended by adding Sections 2301.480 and 2301.481 to read as
follows:
Sec. 2301.480. DISCLOSURE OF CERTAIN INFORMATION. A
manufacturer, distributor, or representative may not require that a
franchised dealer provide to the manufacturer, distributor, or
representative information regarding a customer, except to the
extent that a specific item of information is necessary:
(1) for the sale or delivery of a new motor vehicle to
a customer;
(2) to validate a claim and make payment under an
incentive program;
(3) to support a dealer's claim for reimbursement for
repairs performed under a manufacturer's warranty; or
(4) to satisfy a product recall or safety obligation.
Sec. 2301.481. PROPERTY USE AGREEMENT. (a) A provision in
a property use agreement that unreasonably limits or impairs the
ability of a franchised dealer to use the dealership as the dealer
considers appropriate is void and unenforceable.
(b) A manufacturer, distributor, or representative may not
require that a dealer enter into a property use agreement as a
condition of the manufacturer, distributor, or representative:
(1) entering into a franchise;
(2) approving a franchised dealer's application to add
a line-make;
(3) approving a franchised dealer's application to
relocate a franchise; or
(4) approving a sale or transfer of a dealer,
dealership, or franchise.
(c) The following provisions in a property use agreement are
void and unenforceable:
(1) a limitation on the franchised dealer's ability to
add a line-make; or
(2) a provision that binds a franchised dealer's
successor.
(d) A property use agreement expires on the earlier of:
(1) the date provided by the property use agreement;
or
(2) the termination of the franchise between the
parties to the property use agreement.
(e) This section applies to a subsidiary of, a person owned
or controlled by, or a person whose business decisions are
substantially influenced by a manufacturer, distributor, or
representative.
SECTION 11. Section 2301.522(a), Occupations Code, is
amended to read as follows:
(a) In an action brought against a manufacturer or
distributor under Subchapter J [Sections 2301.451-2301.474] by a
franchised dealer whose franchise provides for arbitration in
compliance with this chapter, the board shall order the parties to
submit the dispute to mediation in the manner provided by this
subchapter.
SECTION 12. Section 2301.805(a), Occupations Code, is
amended to read as follows:
(a) Notwithstanding any other law, including Subchapter E,
Chapter 17, Business & Commerce Code, in addition to the other
remedies provided by this subchapter, a person may institute an
action under Subchapter E, Chapter 17, Business & Commerce Code, or
any successor statute to that subchapter, and is entitled to any
procedure or remedy under that subchapter, if the person:
(1) has sustained damages as a result of a violation of
Sections 2301.351-2301.354 or Section 2301.357; or
(2) is a franchised dealer who has sustained damages
as a result of a violation of:
(A) Subchapter J of this chapter [Sections
2301.451-2301.474]; or
(B) Subchapter E, Chapter 17, Business & Commerce
Code.
SECTION 13. The change in law made by this Act applies only
to an agreement entered into or renewed under Chapter 2301,
Occupations Code, on or after the effective date of this Act. An
agreement entered into or renewed before the effective date of this
Act is governed by the law in effect on the date the agreement was
entered into or renewed, and the former law is continued in effect
for that purpose.
SECTION 14. This Act takes effect September 1, 2011.