Texas 2011 - 82nd Regular

Texas House Bill HB2293 Compare Versions

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1	1	82R17031 MAW-F
2	2	By: Hunter, Margo, Cook, Guillen, Woolley H.B. No. 2293
3	3	Substitute the following for H.B. No. 2293:
4	4	By: Thompson C.S.H.B. No. 2293
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the regulation of motor vehicle dealers, manufacturers,
10	10	distributors, and representatives.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 2301.002, Occupations Code, is amended
13	13	by adding Subdivision (27-a) to read as follows:
14	14	(27-a) "Property use agreement" means a contract,
15	15	other than a franchise, between a franchised dealer and a
16	16	manufacturer, distributor, or representative that grants the
17	17	manufacturer, distributor, or representative the right to regulate
18	18	the franchised dealer's use of the dealership and other facilities
19	19	covered by the franchise.
20	20	SECTION 2. Section 2301.359, Occupations Code, is amended
21	21	by amending Subsection (e) and adding Subsections (g), (h), and (i)
22	22	to read as follows:
23	23	(e) A manufacturer or distributor may not unreasonably
24	24	withhold approval of an application filed under Subsection (a).
25	25	[It is unreasonable for a manufacturer or distributor to reject a
26	26	prospective transferee who is of good moral character and who meets
27	27	the written, reasonable, and uniformly applied standards or
28	28	qualifications, if any, of the manufacturer or distributor relating
29	29	to the prospective transferee's business experience and financial
30	30	qualifications.]
31	31	(g) In determining whether to approve an application filed
32	32	under Subsection (a), a manufacturer or distributor may consider:
33	33	(1) the prospective transferee's financial and
34	34	operational performance as a franchised dealer, if the prospective
35	35	transferee is or has been a franchised dealer;
36	36	(2) the prospective transferee's moral character; or
37	37	(3) the extent to which a prospective transferee
38	38	satisfies any criteria developed by the manufacturer or distributor
39	39	and made available to the prospective transferee, specifically to
40	40	determine the business experience and financial qualifications of a
41	41	prospective transferee.
42	42	(h) A manufacturer or distributor may consider the criteria
43	43	developed under Subsection (g)(3) only if the criteria are in
44	44	writing, are reasonable, and are uniformly applied in similar
45	45	situations.
46	46	(i) It is unreasonable for a manufacturer or distributor to
47	47	reject a prospective transferee who is of good moral character and
48	48	who satisfies the criteria developed under Subsection (g)(3).
49	49	SECTION 3. Section 2301.465(b), Occupations Code, is
50	50	amended to read as follows:
51	51	(b) Notwithstanding the terms of any franchise, after the
52	52	termination of a franchise, a manufacturer, distributor, or
53	53	representative shall pay to a franchised dealer or any lienholder,
54	54	in accordance with the interest of each, the following amounts:
55	55	(1) the dealer cost of each new motor vehicle in the
56	56	dealer's inventory with mileage of 5,000 miles or less, exclusive
57	57	of mileage placed on the vehicle before it was delivered to the
58	58	dealer, reduced by the net discount value of each vehicle, except
59	59	that if a vehicle cannot be reduced by the net discount value, the
60	60	manufacturer or distributor shall pay the dealer the net cost of the
61	61	vehicle;
62	62	(2) the dealer cost of each new, unused, undamaged,
63	63	and unsold part or accessory that:
64	64	(A) is in the current parts catalogue and is
65	65	still in the original, resalable merchandising package and in an
66	66	unbroken lot, except in the case of sheet metal, a comparable
67	67	substitute for the original package may be used; and
68	68	(B) was purchased by the dealer either directly
69	69	from the manufacturer or distributor or from an outgoing authorized
70	70	dealer as a part of the dealer's initial inventory;
71	71	(3) the fair market value of each undamaged sign owned
72	72	by the dealer that bears a trademark or tradename used or claimed by
73	73	the manufacturer, distributor, or representative and that was
74	74	purchased from or at the request of the manufacturer, distributor,
75	75	or representative;
76	76	(4) the fair market value of all special tools, data
77	77	processing equipment, and automotive service equipment owned by the
78	78	dealer that:
79	79	(A) were recommended in writing and designated as
80	80	special tools and equipment;
81	81	(B) were purchased from or at the request of the
82	82	manufacturer, distributor, or representative; and
83	83	(C) are in usable and good condition except for
84	84	reasonable wear and tear; [and]
85	85	(5) the cost of transporting, handling, packing,
86	86	storing, and loading any property subject to repurchase under this
87	87	section; and
88	88	(6) the depreciated value of computer software that
89	89	was recommended and required in writing by the manufacturer,
90	90	distributor, or representative.
91	91	SECTION 4. Subchapter J, Chapter 2301, Occupations Code, is
92	92	amended by adding Section 2301.4651 to read as follows:
93	93	Sec. 2301.4651. ADDITIONAL PAYMENT TO FRANCHISED DEALER IN
94	94	CERTAIN SITUATIONS. (a) This section applies to a manufacturer,
95	95	distributor, or representative that:
96	96	(1) terminates or discontinues a franchise by any
97	97	means without complying with Section 2301.453; or
98	98	(2) regardless of whether the manufacturer,
99	99	distributor, or representative complies with Section 2301.453,
100	100	terminates or discontinues a franchise by:
101	101	(A) discontinuing a line-make;
102	102	(B) ceasing to do business in this state; or
103	103	(C) changing the distributor or method of
104	104	distribution of its products in this state.
105	105	(b) In addition to the duties placed on a manufacturer,
106	106	distributor, or representative by Section 2301.465, a
107	107	manufacturer, distributor, or representative to whom this section
108	108	applies shall pay to the franchised dealer the following amounts as
109	109	applicable:
110	110	(1) either:
111	111	(A) the dealer's construction costs for a new
112	112	dealership completed in the two years preceding the date of the
113	113	termination or discontinuance described by Subsection (a); or
114	114	(B) if the dealer does not have any costs
115	115	described by Paragraph (A), the fair monthly rental value of the
116	116	dealership payable in cash each month beginning on the first day of
117	117	the first month following the date of the termination or
118	118	discontinuance described by Subsection (a) and ending on the
119	119	earlier of:
120	120	(i) the first anniversary of the
121	121	termination or discontinuance date; or
122	122	(ii) the date on which the dealer no longer
123	123	owns the dealership;
124	124	(2) the dealer's costs for upgrading or substantially
125	125	altering a dealership if the upgrades or alterations were completed
126	126	or added in the two years preceding the date of the termination or
127	127	discontinuance described by Subsection (a); and
128	128	(3) an amount equal to the value of the goodwill
129	129	associated with the franchise as it existed on the day before the
130	130	earlier of:
131	131	(A) the date of the termination or discontinuance
132	132	described by Subsection (a); or
133	133	(B) the date on which the manufacturer,
134	134	distributor, or representative announced its intention to
135	135	terminate or discontinue the franchise in a manner described by
136	136	Subsection (a).
137	137	(c) A franchised dealer receiving money under Subsection
138	138	(b)(1)(B) shall:
139	139	(1) make a reasonable effort to earn income from a
140	140	dealership after a termination or discontinuance described by
141	141	Subsection (a); and
142	142	(2) inform the manufacturer, distributor, or
143	143	representative of the dealer's efforts under Subdivision (1) and of
144	144	any income earned from the dealership.
145	145	(d) If a termination or discontinuance described by
146	146	Subsection (a) does not involve each franchise operated by a
147	147	franchised dealer at a single location, the amounts to be paid under
148	148	Subsection (b)(1) or (2) to the dealer by a manufacturer,
149	149	distributor, or representative shall be based on the percentage of
150	150	the total square footage of the dealership, including areas
151	151	attributable to sales, service, and parts, that was allocated to
152	152	the franchise being terminated or discontinued at the time of the
153	153	termination or discontinuance.
154	154	(e) A franchised dealer receiving money under Subsection
155	155	(b)(1) or (2) shall mitigate damages by listing the dealership for
156	156	lease or sublease with a real estate broker licensed under Chapter
157	157	1101 not later than the 30th day after the effective date of the
158	158	termination or discontinuance described by Subsection (a) and shall
159	159	reasonably cooperate with the broker in the performance of the
160	160	broker's duties.
161	161	(f) A manufacturer, distributor, or representative may
162	162	reduce the amount of a payment made to a franchised dealer under
163	163	Subsection (b)(1)(B) by the amount of any income earned by the
164	164	dealer from the dealership during the month preceding the payment.
165	165	(g) The manufacturer, distributor, or representative, as
166	166	appropriate, shall pay any amount described by Subsection
167	167	(b)(1)(A), (b)(2), or (b)(3) not later than the 90th day after the
168	168	date of the termination or discontinuance described by Subsection
169	169	(a).
170	170	(h) An amount payable under Subsection (b)(1)(A) or (b)(2)
171	171	does not include any tax depreciation benefit received by the
172	172	franchised dealer or any amount previously paid to the franchised
173	173	dealer by the manufacturer, distributor, or representative to
174	174	subsidize the costs incurred by the dealer in performing the
175	175	activities described by Subsection (b)(1)(A) or (b)(2).
176	176	SECTION 5. Section 2301.467, Occupations Code, is amended
177	177	by amending Subsections (b) and (c) and adding Subsections (b-1)
178	178	and (b-2) to read as follows:
179	179	(b) Notwithstanding the terms of any franchise, a
180	180	manufacturer, distributor, or representative may not unreasonably
181	181	require a franchised dealer to relocate, or to replace or
182	182	substantially change, alter, or remodel the dealer's facilities.
183	183	Except as provided by Subsections (b-1) and (b-2) [For purposes of
184	184	this subsection], an act is reasonable if it is justifiable in light
185	185	of current and reasonably foreseeable projections of economic
186	186	conditions, financial expectations, and the market for new motor
187	187	vehicles in the relevant market area.
188	188	(b-1) It is unreasonable for a manufacturer, distributor,
189	189	or representative to require a franchised dealer to construct a new
190	190	dealership before the 15th anniversary of the date the construction
191	191	of the dealership at that location was completed if the
192	192	construction was in substantial compliance with standards or plans
193	193	provided by a manufacturer, distributor, or representative, or
194	194	through a subsidiary or agent of the manufacturer, distributor, or
195	195	representative.
196	196	(b-2) It is unreasonable for a manufacturer, distributor,
197	197	or representative to require a franchised dealer to substantially
198	198	change, alter, or remodel an existing dealership before the 10th
199	199	anniversary of the date that a prior change, alteration, or remodel
200	200	of the dealership at that location was completed if the change,
201	201	alteration, or remodel was in substantial compliance with standards
202	202	or plans provided by a manufacturer, distributor, or
203	203	representative, or through a subsidiary or agent of the
204	204	manufacturer, distributor, or representative.
205	205	(c) This [The prohibitions under this] section applies
206	206	[apply] to the relationship between a manufacturer, distributor, or
207	207	representative and:
208	208	(1) a current franchisee of the manufacturer,
209	209	distributor, or representative; [or]
210	210	(2) a successor of a current franchisee of the
211	211	manufacturer, distributor, or representative; or
212	212	(3) a franchised dealer who is seeking to become a
213	213	franchisee of the manufacturer, distributor, or representative.
214	214	SECTION 6. Subchapter J, Chapter 2301, Occupations Code, is
215	215	amended by adding Section 2301.4671 to read as follows:
216	216	Sec. 2301.4671. RESTRICTION ON DEALER'S USE OF DEALERSHIP
217	217	PROPERTY. Notwithstanding the terms of any franchise, a
218	218	manufacturer, distributor, or representative may not:
219	219	(1) unreasonably limit or impair the ability of a
220	220	franchised dealer to use the dealership property as the dealer
221	221	considers appropriate;
222	222	(2) control the use of the dealership property after
223	223	the franchise is terminated or discontinued; or
224	224	(3) at any time exercise exclusive control over the
225	225	use of the dealership property.
226	226	SECTION 7. Section 2301.468, Occupations Code, is amended
227	227	to read as follows:
228	228	Sec. 2301.468. INEQUITABLE TREATMENT OF [DISCRIMINATION
229	229	AMONG] DEALERS OR FRANCHISEES. Notwithstanding the terms of a
230	230	franchise, a [A] manufacturer, distributor, or representative may
231	231	not[:
232	232	[(1) notwithstanding the terms of any franchise,
233	233	directly or indirectly discriminate against a franchised dealer or
234	234	otherwise] treat franchised dealers of the same line-make
235	235	differently as a result of the application of a formula or other
236	236	computation or process intended to gauge the performance of a
237	237	dealership or otherwise enforce standards or guidelines applicable
238	238	to its franchised dealers in the sale of motor vehicles if, in the
239	239	application of the standards or guidelines, the franchised dealers
240	240	are treated unfairly or inequitably [; or
241	241	[(2) discriminate unreasonably between or among
242	242	franchisees] in the sale of a motor vehicle owned by the
243	243	manufacturer or distributor.
244	244	SECTION 8. Subchapter J, Chapter 2301, Occupations Code, is
245	245	amended by adding Section 2301.4749 to read as follows:
246	246	Sec. 2301.4749. MANUFACTURER OR DISTRIBUTOR INCENTIVE
247	247	PROGRAMS: PAYMENT TO DEALER. (a) A manufacturer or distributor
248	248	shall pay a dealer's claim filed under a manufacturer or
249	249	distributor incentive program not later than the 30th day after the
250	250	date the claim is approved.
251	251	(b) A claim is considered approved unless a manufacturer or
252	252	distributor rejects the claim not later than the 31st day after the
253	253	date of receipt of the claim by the manufacturer or distributor.
254	254	(c) The manufacturer or distributor shall provide the
255	255	dealer with written notice of a rejection of a claim and the reasons
256	256	for the rejection.
257	257	SECTION 9. The heading to Section 2301.475, Occupations
258	258	Code, is amended to read as follows:
259	259	Sec. 2301.475. MANUFACTURER OR DISTRIBUTOR INCENTIVE
260	260	PROGRAMS: AUDIT OR CHARGE BACK.
261	261	SECTION 10. Section 2301.475(a), Occupations Code, is
262	262	amended to read as follows:
263	263	(a) Except as provided by Subsection (b), after the first
264	264	anniversary of the [ending] date [of] a manufacturer or distributor
265	265	pays a claim under Section 2301.4749, the [incentive program, a]
266	266	manufacturer or distributor may not:
267	267	(1) charge back to a dealer money paid by the
268	268	manufacturer or distributor as a result of the incentive program;
269	269	(2) charge back to a dealer the cash value of a prize
270	270	or other thing of value awarded to the dealer as a result of the
271	271	incentive program; or
272	272	(3) audit the records of a dealer to determine
273	273	compliance with the terms of the incentive program, unless the
274	274	manufacturer or distributor has reasonable grounds to believe the
275	275	dealer committed fraud with respect to the incentive program.
276	276	SECTION 11. Subchapter J, Chapter 2301, Occupations Code,
277	277	is amended by adding Sections 2301.480 and 2301.481 to read as
278	278	follows:
279	279	Sec. 2301.480. DISCLOSURE OF CERTAIN INFORMATION. A
280	280	manufacturer, distributor, or representative may not require that a
281	281	franchised dealer provide to the manufacturer, distributor, or
282	282	representative information regarding a customer, except to the
283	283	extent that a specific item of information is necessary:
284	284	(1) for the sale or delivery of a new motor vehicle to
285	285	a customer;
286	286	(2) for reasonable marketing purposes;
287	287	(3) to validate a claim and make payment under an
288	288	incentive program;
289	289	(4) to support a dealer's claim for reimbursement for
290	290	repairs performed under a manufacturer's warranty; or
291	291	(5) to satisfy a product recall or safety obligation.
292	292	Sec. 2301.481. PROPERTY USE AGREEMENT. (a) A provision in
293	293	a property use agreement that unreasonably limits or impairs the
294	294	ability of a franchised dealer to use the dealership as the dealer
295	295	considers appropriate is void and unenforceable.
296	296	(b) A manufacturer, distributor, or representative may not
297	297	require that a dealer enter into a property use agreement as a
298	298	condition of the manufacturer, distributor, or representative:
299	299	(1) entering into a franchise;
300	300	(2) approving a franchised dealer's application to add
301	301	a line-make;
302	302	(3) approving a franchised dealer's application to
303	303	relocate a franchise; or
304	304	(4) approving a sale or transfer of a dealer,
305	305	dealership, or franchise.
306	306	(c) The following provisions in a property use agreement are
307	307	void and unenforceable:
308	308	(1) a limitation on the franchised dealer's ability to
309	309	add a line-make; or
310	310	(2) a provision that binds a franchised dealer's
311	311	successor.
312	312	(d) A property use agreement expires on the earlier of:
313	313	(1) the date provided by the property use agreement;
314	314	or
315	315	(2) the termination of the franchise between the
316	316	parties to the property use agreement.
317	317	(e) This section applies to a subsidiary of, or a person
318	318	controlled by, a manufacturer, distributor, or representative.
319	319	SECTION 12. Section 2301.522(a), Occupations Code, is
320	320	amended to read as follows:
321	321	(a) In an action brought against a manufacturer or
322	322	distributor under Subchapter J [Sections 2301.451-2301.474] by a
323	323	franchised dealer whose franchise provides for arbitration in
324	324	compliance with this chapter, the board shall order the parties to
325	325	submit the dispute to mediation in the manner provided by this
326	326	subchapter.
327	327	SECTION 13. Section 2301.652(b), Occupations Code, is
328	328	amended to read as follows:
329	329	(b) Except as provided by Subsection (c) and Sections
330	330	2301.6521 and 2301.6522, a person has standing under this section
331	331	to protest an application to establish or relocate a dealership if
332	332	the person filing the protest is a franchised dealer of the same
333	333	line-make whose dealership is located:
334	334	(1) in the county in which the proposed dealership is
335	335	to be located; or
336	336	(2) within a 15-mile radius of the proposed
337	337	dealership.
338	338	SECTION 14. Subchapter N, Chapter 2301, Occupations Code,
339	339	is amended by adding Sections 2301.6521 and 2301.6522 to read as
340	340	follows:
341	341	Sec. 2301.6521. RIGHT TO PROTEST: CERTAIN RELOCATIONS. (a)
342	342	In this section, "affected county" means:
343	343	(1) a county with a population of one million or more;
344	344	or
345	345	(2) a county with a population of 500,000 or more but
346	346	less than one million that is adjacent to a county with a population
347	347	of one million or more.
348	348	(b) Notwithstanding any other provision of this chapter and
349	349	except as provided by Subsection (d), a franchised dealer may
350	350	protest an application to relocate a dealership from a location in
351	351	an affected county to a location within the same affected county or
352	352	an adjacent affected county only if the dealer is:
353	353	(1) a dealer of the same line-make as the relocating
354	354	dealership and is in the affected county where the proposed
355	355	dealership is being relocated and is nearest to the proposed
356	356	relocation site; or
357	357	(2) a dealer of the same line-make as the relocating
358	358	dealership whose dealership location is within 15 miles of the
359	359	proposed relocation site.
360	360	(c) If more than one dealership location is an equal
361	361	distance from the proposed relocation site and each dealer and
362	362	dealership location satisfies the requirements of Subsection
363	363	(b)(1), each dealer may protest the relocation under Subsection
364	364	(b)(1).
365	365	(d) A dealer may not protest an application to relocate a
366	366	dealership under this section if the proposed relocation site is
367	367	two miles or less from the dealership's current location.
368	368	Sec. 2301.6522. RIGHT TO PROTEST: ECONOMICALLY IMPAIRED
369	369	DEALER. (a) In this section, "economically impaired dealer" means
370	370	a franchised dealer whose profitability has been, or is reasonably
371	371	expected to be, substantially reduced at the dealer's current
372	372	location, with no reasonable expectation of substantial
373	373	improvement at that location, due to:
374	374	(1) a natural disaster;
375	375	(2) the exercise of eminent domain authority with
376	376	respect to the dealership; or
377	377	(3) the sale of all or part of the dealership to a
378	378	governmental entity under threat of the exercise of eminent domain
379	379	authority.
380	380	(b) Notwithstanding any other provision of this chapter and
381	381	except as provided by Subsections (c) and (d), a dealer may not
382	382	protest the relocation of an economically impaired dealer if:
383	383	(1) the relocation is reasonably expected to be
384	384	completed before the first anniversary of the date of the event
385	385	described by Subsection (a); and
386	386	(2) the proposed relocation site is two miles or less
387	387	from the economically impaired dealer's current location.
388	388	(c) A dealer of the same line-make as an economically
389	389	impaired dealer whose dealership is nearest to the proposed
390	390	relocation site of the economically impaired dealer may protest the
391	391	relocation if the proposed relocation site is more than two miles
392	392	closer to the protesting dealer's dealership than the site of the
393	393	economically impaired dealer's current location.
394	394	(d) If more than one dealership location is an equal
395	395	distance from the proposed relocation site and each dealer and
396	396	dealership location satisfies the requirements of Subsection (c),
397	397	each dealer may protest the relocation under Subsection (c).
398	398	SECTION 15. Section 2301.805(a), Occupations Code, is
399	399	amended to read as follows:
400	400	(a) Notwithstanding any other law, including Subchapter E,
401	401	Chapter 17, Business & Commerce Code, in addition to the other
402	402	remedies provided by this subchapter, a person may institute an
403	403	action under Subchapter E, Chapter 17, Business & Commerce Code, or
404	404	any successor statute to that subchapter, and is entitled to any
405	405	procedure or remedy under that subchapter, if the person:
406	406	(1) has sustained damages as a result of a violation of
407	407	Sections 2301.351-2301.354 or Section 2301.357; or
408	408	(2) is a franchised dealer who has sustained damages
409	409	as a result of a violation of:
410	410	(A) Subchapter J of this chapter [Sections
411	411	2301.451-2301.474]; or
412	412	(B) Subchapter E, Chapter 17, Business & Commerce
413	413	Code.
414	414	SECTION 16. The change in law made by this Act applies only
415	415	to an agreement entered into or renewed under Chapter 2301,
416	416	Occupations Code, on or after the effective date of this Act. An
417	417	agreement entered into or renewed before the effective date of this
418	418	Act is governed by the law in effect on the date the agreement was
419	419	entered into or renewed, and the former law is continued in effect
420	420	for that purpose.
421	421	SECTION 17. This Act takes effect September 1, 2011.