By: Phillips H.B. No. 2054
A BILL TO BE ENTITLED
AN ACT
relating to certain rights of a motor vehicle manufacturer or
distributor concerning a proposed transfer of ownership of a
dealership.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2301.359, Occupations Code, is amended
by amending Subsection (i) and adding Subsections (j) and (k) to
read as follows:
(i) Except as provided by Subsection (j), it [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).
(j) A manufacturer or distributor has a right of first
refusal as specified in the franchise agreement to acquire the
assets or ownership of a dealership for which an application is
filed under Subsection (a) if the application proposes a change in
control of the dealership, a change in the controlling interest of
the dealership, or a sale or transfer of 50 percent or more of the
dealership's assets and all of the following conditions are met:
(1) the manufacturer or distributor notifies the
dealer in writing of the intent to exercise the manufacturer's or
distributor's right of first refusal during the 60-day period
prescribed by Subsection (d);
(2) the manufacturer's or distributor's exercise of
the right of first refusal will result in the dealer and the
dealer's owners receiving consideration, terms, and conditions
that are equal to or better than the consideration, terms, and
conditions the dealer or owners would receive under the dealer's
agreement with the proposed transferee, as evidenced by a written
contract between the dealer and proposed transferee; and
(3) the proposed change of the dealership's ownership
or the sale or transfer of assets does not involve the transfer of a
controlling interest in the dealership, the transfer of the
controlling assets of the dealer, or the transfer or issuance of the
controlling stock position of a dealer's owner to:
(A) a designated family member of the owner,
including the owner's spouse, child, grandchild, sibling, niece,
nephew, or parent, or the spouse of the owner's child or grandchild;
(B) a manager of the dealer who:
(i) has been employed continuously by the
dealer in the dealership during the four years preceding the date of
the application; and
(ii) is otherwise qualified as a dealer
operator according to the usual standards of the manufacturer or
distributor;
(C) a partnership or corporation controlled by
any person described by Paragraph (A); or
(D) a trust arrangement established or to be
established to:
(i) allow the dealer to continue to qualify
under the manufacturer's or distributor's usual standards; or
(ii) provide for the succession of the
franchise agreement to a designated family member or qualified
manager in the event of the death or incapacity of the dealer or a
principal owner of the dealer.
(k) Except as otherwise provided by this subsection, a
manufacturer or distributor exercising the right of first refusal
under Subsection (j) must agree to pay the reasonable expenses of
the prospective transferee in negotiating and implementing the
contract for the proposed change of ownership or transfer of assets
incurred before the manufacturer's or distributor's exercise of
that right. Reasonable expenses under this subsection include
reasonable attorney's fees. Payment of expenses and attorney's fees
is not required if the dealer fails to submit an accounting of those
expenses before the 21st day after the date the dealer receives the
manufacturer's or distributor's written request for an accounting.
An expense accounting may be requested by a manufacturer or
distributor before exercising the right of first refusal.
SECTION 2. The change in law made by this Act to Section
2301.359, Occupations Code, applies only to an application to sell
or transfer a dealership that is made on or after the effective date
of this Act. An application made before that date is governed by
the law in effect on the date the application was made, and the
former law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2013.