Bill Text: IL SB1687 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Amends the Motor Vehicle Franchise Act. Provides additional findings that the regulation of motor vehicle manufacturers creates a system for servicing vehicles and complying with warranties. Provides that paying manufacturer's and distributor's fees under the Illinois Vehicle Code constitutes agreement with the terms of the Motor Vehicle Franchise Act. Limits the ability of a manufacturer to penalize a dealer if a customer resells or exports a vehicle. Limits a manufacturer from requiring dealer improvements or requiring that dealers use specific vendors for improvements. Effective immediately.

Spectrum: Slight Partisan Bill (Democrat 2-1)

Status: (Introduced) 2017-04-28 - Rule 2-10 Third Reading Deadline Established As May 31, 2017 [SB1687 Detail]

Download: Illinois-2017-SB1687-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB1687

Introduced 2/9/2017, by Sen. Martin A. Sandoval

SYNOPSIS AS INTRODUCED:
815 ILCS 710/1.1 from Ch. 121 1/2, par. 751.1
815 ILCS 710/1.5 new
815 ILCS 710/2 from Ch. 121 1/2, par. 752
815 ILCS 710/4 from Ch. 121 1/2, par. 754
815 ILCS 710/12 from Ch. 121 1/2, par. 762

Amends the Motor Vehicle Franchise Act. Provides additional findings that the regulation of motor vehicle manufacturers creates a system for servicing vehicles and complying with warranties. Provides that paying manufacturer's and distributor's fees under the Illinois Vehicle Code constitutes agreement with the terms of the Motor Vehicle Franchise Act. Limits the ability of a manufacturer to penalize a dealer if a customer resells or exports a vehicle. Limits a manufacturer from requiring dealer improvements or requiring that dealers use specific vendors for improvements. Effective immediately.
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A BILL FOR

SB1687LRB100 07840 JLS 17909 b
1 AN ACT concerning business.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Motor Vehicle Franchise Act is amended by
5changing Sections 1.1, 2, 4, and 12 and by adding Section 1.5
6as follows:
7 (815 ILCS 710/1.1) (from Ch. 121 1/2, par. 751.1)
8 Sec. 1.1. Declaration of purpose. The Legislature finds and
9declares that the distribution and sale of vehicles within this
10State vitally affects the general economy of the State and the
11public interest, and welfare, and safety and that in order to
12promote the public interest, and welfare, and safety, and in
13the exercise of its police power, it is necessary to regulate
14motor vehicle manufacturers, distributors, wholesalers and
15factory or distributor branches or representatives, and to
16regulate dealers of motor vehicles doing business in this State
17in order to prevent frauds, impositions, discrimination, and
18other abuses upon its citizens, to protect and preserve the
19investments and properties of the citizens of this State, to
20foster healthy competition, and to provide adequate and
21sufficient service to consumers generally. The licensing and
22supervision of motor vehicle dealers is necessary for the
23protection of consumers and the sale of motor vehicles by

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1unlicensed dealers should be prevented.
2 The Legislature further finds that the regulation of motor
3vehicle manufacturers, distributors, wholesalers, factory
4branches, distributor branches and representatives, and
5dealers promotes the distribution of motor vehicles to the
6public and provides a system for servicing vehicles and for
7complying with manufacturer warranties so that consumers can
8keep their motor vehicles properly functioning and safe. The
9sale and distribution of motor vehicles constitutes a
10continuing obligation of manufacturers, distributors,
11wholesalers, factory branches, distributor branches and
12representatives, and dealers to consumers, and the public has
13an interest in promoting the availability of post-sale
14mechanical and operational services.
15(Source: P.A. 83-922.)
16 (815 ILCS 710/1.5 new)
17 Sec. 1.5. Manufacturer's and distributor's fee. By paying
18the fee imposed under Section 5-109 of the Illinois Vehicle
19Code, a manufacturer or distributor agrees that the terms of
20this Act, as now or hereafter amended, apply to any franchise
21agreement in effect between the manufacturer or distributor and
22its franchised dealers.
23 (815 ILCS 710/2) (from Ch. 121 1/2, par. 752)
24 Sec. 2. Definitions. As used in this Act, the following

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1words shall, unless the context otherwise requires, have the
2following meanings:
3 (a) "Motor vehicle", any motor driven vehicle required to
4be registered under "The Illinois Vehicle Code". Beginning
5January 1, 2010, the term "motor vehicle" also includes any
6engine, transmission, or rear axle, regardless of whether it is
7attached to a vehicle chassis, that is manufactured for
8installation in any motor-driven vehicle with a gross vehicle
9weight rating of more than 16,000 pounds that is required to be
10registered under the Illinois Vehicle Code.
11 (b) "Manufacturer", any person engaged in the business of
12manufacturing or assembling new and unused motor vehicles.
13"Manufacturer" includes a factory branch, distributor, and
14distributor branch.
15 (c) "Factory branch", a branch office maintained by a
16manufacturer which manufactures or assembles motor vehicles
17for sale to distributors or motor vehicle dealers or which is
18maintained for directing and supervising the representatives
19of the manufacturer.
20 (d) "Distributor branch", a branch office maintained by a
21distributor or wholesaler who or which sells or distributes new
22or used motor vehicles to motor vehicle dealers.
23 (e) "Factory representative", a representative employed by
24a manufacturer or employed by a factory branch for the purpose
25of making or promoting the sale of motor vehicles or for
26contracting with, supervising, servicing or instructing motor

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1vehicle dealers or prospective motor vehicle dealers.
2 (f) "Distributor representative", a representative
3employed by a distributor branch, distributor or wholesaler.
4 (g) "Distributor" or "wholesaler", any person who sells or
5distributes new or used motor vehicles to motor vehicle dealers
6or who maintains distributor representatives within the State.
7 (h) "Motor vehicle dealer", any person who, in the ordinary
8course of business, is engaged in the business of selling new
9or used motor vehicles to consumers or other end users.
10 (i) "Franchise", an oral or written arrangement for a
11definite or indefinite period in which a manufacturer,
12distributor or wholesaler grants to a motor vehicle dealer a
13license to use a trade name, service mark, or related
14characteristic, and in which there is a community of interest
15in the marketing of motor vehicles or services related thereto
16at wholesale, retail, leasing or otherwise.
17 (j) "Franchiser", a manufacturer, distributor or
18wholesaler who grants a franchise to a motor vehicle dealer.
19 (k) "Franchisee", a motor vehicle dealer to whom a
20franchise is offered or granted.
21 (l) "Sale", shall include the issuance, transfer,
22agreement for transfer, exchange, pledge, hypothecation,
23mortgage in any form, whether by transfer in trust or
24otherwise, of any motor vehicle or interest therein or of any
25franchise related thereto; and any option, subscription or
26other contract or solicitation, looking to a sale, or offer or

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1attempt to sell in any form, whether oral or written. A gift or
2delivery of any motor vehicle or franchise with respect thereto
3with or as a bonus on account of the sale of anything shall be
4deemed a sale of such motor vehicle or franchise.
5 (m) "Fraud", shall include, in addition to its normal legal
6connotation, the following: a misrepresentation in any manner,
7whether intentionally false or due to reckless disregard for
8truth or falsity, of a material fact; a promise or
9representation not made honestly and in good faith; and an
10intentional failure to disclose a material fact.
11 (n) "Person", a natural person, corporation, partnership,
12trust or other entity, and in case of an entity, it shall
13include any other entity in which it has a majority interest or
14which it effectively controls as well as the individual
15officers, directors and other persons in active control of the
16activities of each such entity.
17 (o) "New motor vehicle", a motor vehicle which has not been
18previously sold to any person except a distributor or
19wholesaler or motor vehicle dealer for resale.
20 (p) "Market Area", the franchisee's area of primary
21responsibility as defined in its franchise.
22 (q) "Relevant Market Area", the area within a radius of 10
23miles from the principal location of a franchise or dealership
24if said principal location is in a county having a population
25of more than 300,000 persons; if the principal location of a
26franchise or dealership is in a county having a population of

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1less than 300,000 persons, then "relevant market area" shall
2mean the area within a radius of 15 miles from the principal
3location of said franchise or dealership.
4 (r) "Late model vehicle" means a vehicle of the current
5model year and one, 2, or 3 preceding model years for which the
6motor vehicle dealer holds an existing franchise from the
7manufacturer for that same line make.
8 (s) "Factory repurchase vehicle" means a motor vehicle of
9the current model year or a late model vehicle reacquired by
10the manufacturer under an existing agreement or otherwise from
11a fleet, lease or daily rental company or under any State or
12federal law or program relating to allegedly defective new
13motor vehicles, and offered for sale and resold by the
14manufacturer directly or at a factory authorized or sponsored
15auction.
16 (t) "Board" means the Motor Vehicle Review Board created
17under this Act.
18 (u) "Secretary of State" means the Secretary of State of
19Illinois.
20 (v) "Good cause" means facts establishing commercial
21reasonableness in lawful or privileged competition and
22business practices as defined at common law.
23(Source: P.A. 95-678, eff. 10-11-07; 96-11, eff. 5-22-09.)
24 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
25 Sec. 4. Unfair competition and practices.

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1 (a) The unfair methods of competition and unfair and
2deceptive acts or practices listed in this Section are hereby
3declared to be unlawful. In construing the provisions of this
4Section, the courts may be guided by the interpretations of the
5Federal Trade Commission Act (15 U.S.C. 45 et seq.), as from
6time to time amended.
7 (b) It shall be deemed a violation for any manufacturer,
8factory branch, factory representative, distributor or
9wholesaler, distributor branch, distributor representative or
10motor vehicle dealer to engage in any action with respect to a
11franchise which is arbitrary, in bad faith or unconscionable
12and which causes damage to any of the parties or to the public.
13 (c) It shall be deemed a violation for a manufacturer, a
14distributor, a wholesaler, a distributor branch or division, a
15factory branch or division, or a wholesale branch or division,
16or officer, agent or other representative thereof, to coerce,
17or attempt to coerce, any motor vehicle dealer:
18 (1) to accept, buy or order any motor vehicle or
19 vehicles, appliances, equipment, parts or accessories
20 therefor, or any other commodity or commodities or service
21 or services which such motor vehicle dealer has not
22 voluntarily ordered or requested except items required by
23 applicable local, state or federal law; or to require a
24 motor vehicle dealer to accept, buy, order or purchase such
25 items in order to obtain any motor vehicle or vehicles or
26 any other commodity or commodities which have been ordered

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1 or requested by such motor vehicle dealer;
2 (2) to order or accept delivery of any motor vehicle
3 with special features, appliances, accessories or
4 equipment not included in the list price of the motor
5 vehicles as publicly advertised by the manufacturer
6 thereof, except items required by applicable law; or
7 (3) to order for anyone any parts, accessories,
8 equipment, machinery, tools, appliances or any commodity
9 whatsoever, except items required by applicable law.
10 (d) It shall be deemed a violation for a manufacturer, a
11distributor, a wholesaler, a distributor branch or division, or
12officer, agent or other representative thereof:
13 (1) to adopt, change, establish or implement a plan or
14 system for the allocation and distribution of new motor
15 vehicles to motor vehicle dealers which is arbitrary or
16 capricious or to modify an existing plan so as to cause the
17 same to be arbitrary or capricious;
18 (2) to fail or refuse to advise or disclose to any
19 motor vehicle dealer having a franchise or selling
20 agreement, upon written request therefor, the basis upon
21 which new motor vehicles of the same line make are
22 allocated or distributed to motor vehicle dealers in the
23 State and the basis upon which the current allocation or
24 distribution is being made or will be made to such motor
25 vehicle dealer;
26 (3) to refuse to deliver in reasonable quantities and

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1 within a reasonable time after receipt of dealer's order,
2 to any motor vehicle dealer having a franchise or selling
3 agreement for the retail sale of new motor vehicles sold or
4 distributed by such manufacturer, distributor, wholesaler,
5 distributor branch or division, factory branch or division
6 or wholesale branch or division, any such motor vehicles as
7 are covered by such franchise or selling agreement
8 specifically publicly advertised in the State by such
9 manufacturer, distributor, wholesaler, distributor branch
10 or division, factory branch or division, or wholesale
11 branch or division to be available for immediate delivery.
12 However, the failure to deliver any motor vehicle shall not
13 be considered a violation of this Act if such failure is
14 due to an act of God, a work stoppage or delay due to a
15 strike or labor difficulty, a shortage of materials, a lack
16 of manufacturing capacity, a freight embargo or other cause
17 over which the manufacturer, distributor, or wholesaler,
18 or any agent thereof has no control;
19 (4) to coerce, or attempt to coerce, any motor vehicle
20 dealer to enter into any agreement with such manufacturer,
21 distributor, wholesaler, distributor branch or division,
22 factory branch or division, or wholesale branch or
23 division, or officer, agent or other representative
24 thereof, or to do any other act prejudicial to the dealer
25 by threatening to reduce his allocation of motor vehicles
26 or cancel any franchise or any selling agreement existing

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1 between such manufacturer, distributor, wholesaler,
2 distributor branch or division, or factory branch or
3 division, or wholesale branch or division, and the dealer.
4 However, notice in good faith to any motor vehicle dealer
5 of the dealer's violation of any terms or provisions of
6 such franchise or selling agreement or of any law or
7 regulation applicable to the conduct of a motor vehicle
8 dealer shall not constitute a violation of this Act;
9 (5) to require a franchisee to participate in an
10 advertising campaign or contest or any promotional
11 campaign, or to purchase or lease any promotional
12 materials, training materials, show room or other display
13 decorations or materials at the expense of the franchisee;
14 (6) to cancel or terminate the franchise or selling
15 agreement of a motor vehicle dealer without good cause and
16 without giving notice as hereinafter provided; to fail or
17 refuse to extend the franchise or selling agreement of a
18 motor vehicle dealer upon its expiration without good cause
19 and without giving notice as hereinafter provided; or, to
20 offer a renewal, replacement or succeeding franchise or
21 selling agreement containing terms and provisions the
22 effect of which is to substantially change or modify the
23 sales and service obligations or capital requirements of
24 the motor vehicle dealer arbitrarily and without good cause
25 and without giving notice as hereinafter provided
26 notwithstanding any term or provision of a franchise or

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1 selling agreement.
2 (A) If a manufacturer, distributor, wholesaler,
3 distributor branch or division, factory branch or
4 division or wholesale branch or division intends to
5 cancel or terminate a franchise or selling agreement or
6 intends not to extend or renew a franchise or selling
7 agreement on its expiration, it shall send a letter by
8 certified mail, return receipt requested, to the
9 affected franchisee at least 60 days before the
10 effective date of the proposed action, or not later
11 than 10 days before the proposed action when the reason
12 for the action is based upon either of the following:
13 (i) the business operations of the franchisee
14 have been abandoned or the franchisee has failed to
15 conduct customary sales and service operations
16 during customary business hours for at least 7
17 consecutive business days unless such closing is
18 due to an act of God, strike or labor difficulty or
19 other cause over which the franchisee has no
20 control; or
21 (ii) the conviction of or plea of nolo
22 contendere by the motor vehicle dealer or any
23 operator thereof in a court of competent
24 jurisdiction to an offense punishable by
25 imprisonment for more than two years.
26 Each notice of proposed action shall include a

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1 detailed statement setting forth the specific grounds
2 for the proposed cancellation, termination, or refusal
3 to extend or renew and shall state that the dealer has
4 only 30 days from receipt of the notice to file with
5 the Motor Vehicle Review Board a written protest
6 against the proposed action.
7 (B) If a manufacturer, distributor, wholesaler,
8 distributor branch or division, factory branch or
9 division or wholesale branch or division intends to
10 change substantially or modify the sales and service
11 obligations or capital requirements of a motor vehicle
12 dealer as a condition to extending or renewing the
13 existing franchise or selling agreement of such motor
14 vehicle dealer, it shall send a letter by certified
15 mail, return receipt requested, to the affected
16 franchisee at least 60 days before the date of
17 expiration of the franchise or selling agreement. Each
18 notice of proposed action shall include a detailed
19 statement setting forth the specific grounds for the
20 proposed action and shall state that the dealer has
21 only 30 days from receipt of the notice to file with
22 the Motor Vehicle Review Board a written protest
23 against the proposed action.
24 (C) Within 30 days from receipt of the notice under
25 subparagraphs (A) and (B), the franchisee may file with
26 the Board a written protest against the proposed

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1 action.
2 When the protest has been timely filed, the Board
3 shall enter an order, fixing a date (within 60 days of
4 the date of the order), time, and place of a hearing on
5 the protest required under Sections 12 and 29 of this
6 Act, and send by certified mail, return receipt
7 requested, a copy of the order to the manufacturer that
8 filed the notice of intention of the proposed action
9 and to the protesting dealer or franchisee.
10 The manufacturer shall have the burden of proof to
11 establish that good cause exists to cancel or
12 terminate, or fail to extend or renew the franchise or
13 selling agreement of a motor vehicle dealer or
14 franchisee, and to change substantially or modify the
15 sales and service obligations or capital requirements
16 of a motor vehicle dealer as a condition to extending
17 or renewing the existing franchise or selling
18 agreement. The determination whether good cause exists
19 to cancel, terminate, or refuse to renew or extend the
20 franchise or selling agreement, or to change or modify
21 the obligations of the dealer as a condition to offer
22 renewal, replacement, or succession shall be made by
23 the Board under subsection (d) of Section 12 of this
24 Act.
25 (D) Notwithstanding the terms, conditions, or
26 provisions of a franchise or selling agreement, the

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1 following shall not constitute good cause for
2 cancelling or terminating or failing to extend or renew
3 the franchise or selling agreement: (i) the change of
4 ownership or executive management of the franchisee's
5 dealership; or (ii) the fact that the franchisee or
6 owner of an interest in the franchise owns, has an
7 investment in, participates in the management of, or
8 holds a license for the sale of the same or any other
9 line make of new motor vehicles.
10 (E) The manufacturer may not cancel or terminate,
11 or fail to extend or renew a franchise or selling
12 agreement or change or modify the obligations of the
13 franchisee as a condition to offering a renewal,
14 replacement, or succeeding franchise or selling
15 agreement before the hearing process is concluded as
16 prescribed by this Act, and thereafter, if the Board
17 determines that the manufacturer has failed to meet its
18 burden of proof and that good cause does not exist to
19 allow the proposed action;
20 (7) notwithstanding the terms of any franchise
21 agreement, to fail to indemnify and hold harmless its
22 franchised dealers against any judgment or settlement for
23 damages, including, but not limited to, court costs, expert
24 witness fees, reasonable attorneys' fees of the new motor
25 vehicle dealer, and other expenses incurred in the
26 litigation, so long as such fees and costs are reasonable,

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1 arising out of complaints, claims or lawsuits including,
2 but not limited to, strict liability, negligence,
3 misrepresentation, warranty (express or implied), or
4 rescission recision of the sale as defined in Section 2-608
5 of the Uniform Commercial Code, to the extent that the
6 judgment or settlement relates to the alleged defective or
7 negligent manufacture, assembly or design of new motor
8 vehicles, parts or accessories or other functions by the
9 manufacturer, beyond the control of the dealer; provided
10 that, in order to provide an adequate defense, the
11 manufacturer receives notice of the filing of a complaint,
12 claim, or lawsuit within 60 days after the filing;
13 (8) to require or otherwise coerce a motor vehicle
14 dealer to underutilize the motor vehicle dealer's
15 facilities by requiring or otherwise coercing the motor
16 vehicle dealer to exclude or remove from the motor vehicle
17 dealer's facilities operations for selling or servicing of
18 any vehicles for which the motor vehicle dealer has a
19 franchise agreement with another manufacturer,
20 distributor, wholesaler, distribution branch or division,
21 or officer, agent, or other representative thereof;
22 provided, however, that, in light of all existing
23 circumstances, (i) the motor vehicle dealer maintains a
24 reasonable line of credit for each make or line of new
25 motor vehicle, (ii) the new motor vehicle dealer remains in
26 compliance with any reasonable facilities requirements of

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1 the manufacturer, (iii) no change is made in the principal
2 management of the new motor vehicle dealer, and (iv) the
3 addition of the make or line of new motor vehicles would be
4 reasonable. The reasonable facilities requirement set
5 forth in item (ii) of subsection (d)(8) shall not include
6 any requirement that a franchisee establish or maintain
7 exclusive facilities, personnel, or display space. Any
8 decision by a motor vehicle dealer to sell additional makes
9 or lines at the motor vehicle dealer's facility shall be
10 presumed to be reasonable, and the manufacturer shall have
11 the burden to overcome that presumption. A motor vehicle
12 dealer must provide a written notification of its intent to
13 add a make or line of new motor vehicles to the
14 manufacturer. If the manufacturer does not respond to the
15 motor vehicle dealer, in writing, objecting to the addition
16 of the make or line within 60 days after the date that the
17 motor vehicle dealer sends the written notification, then
18 the manufacturer shall be deemed to have approved the
19 addition of the make or line; or
20 (9) to use or consider the performance of a motor
21 vehicle dealer relating to the sale of the manufacturer's,
22 distributor's, or wholesaler's vehicles or the motor
23 vehicle dealer's ability to satisfy any minimum sales or
24 market share quota or responsibility relating to the sale
25 of the manufacturer's, distributor's, or wholesaler's new
26 vehicles in determining:

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1 (A) the motor vehicle dealer's eligibility to
2 purchase program, certified, or other used motor
3 vehicles from the manufacturer, distributor, or
4 wholesaler;
5 (B) the volume, type, or model of program,
6 certified, or other used motor vehicles that a motor
7 vehicle dealer is eligible to purchase from the
8 manufacturer, distributor, or wholesaler;
9 (C) the price of any program, certified, or other
10 used motor vehicle that the dealer is eligible to
11 purchase from the manufacturer, distributor, or
12 wholesaler; or
13 (D) the availability or amount of any discount,
14 credit, rebate, or sales incentive that the dealer is
15 eligible to receive from the manufacturer,
16 distributor, or wholesaler for the purchase of any
17 program, certified, or other used motor vehicle
18 offered for sale by the manufacturer, distributor, or
19 wholesaler; .
20 (10) to take or threaten to take any adverse action
21 against a dealer pursuant to an export or sale-for-resale
22 prohibition because the dealer sold or leased a vehicle to
23 a customer who either exported the vehicle to a foreign
24 country or resold the vehicle in violation of the
25 prohibition, unless the export or sale-for-resale
26 prohibition policy was provided to the dealer in writing

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1 prior to the sale or lease, and the dealer knew of the
2 customer's intent to export or resell the vehicle in
3 violation of the prohibition at the time of the sale or
4 lease. If the dealer causes the vehicle to be registered in
5 this or any other state, and collects or causes to be
6 collected any applicable sales or use tax to this State, a
7 rebuttable presumption is established that the dealer did
8 not have reason to know of the customer's intent to resell
9 the vehicle;
10 (11) to coerce or require any dealer, whether by
11 agreement, program, incentive provision, or otherwise, to
12 construct improvements to its facilities or to install new
13 signs or other franchiser image elements that replace or
14 substantially alter those improvements, signs, or
15 franchiser image elements completed within the preceding
16 10 years that were required and approved by the
17 manufacturer or one of its affiliates. If a manufacturer
18 offers incentives or other payments to a consumer or
19 dealer, paid on individual vehicle sales under a program
20 offered after the effective date of this amendatory Act of
21 the 100th General Assembly and available to more than one
22 dealer in the State, that are premised, wholly or in part,
23 on dealer facility improvements or installation of
24 franchiser image elements required by and approved by the
25 manufacturer and completed within 10 years preceding the
26 offer, the dealer shall be deemed to be in compliance with

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1 the program requirements pertaining to construction of
2 facilities or installation of signs or other franchiser
3 image elements that would replace or substantially alter
4 those previously constructed or installed with that
5 10-year period. This paragraph does not apply to a program
6 that is in effect with more than one dealer in the State on
7 the effective date of this amendatory Act of the 100th
8 General Assembly, nor to any renewal of such a program, nor
9 to a modification that is not a substantial modification of
10 a material term or condition of such a program; or
11 (12) to require a dealer to purchase goods or services
12 to make improvement to the dealer's facilities from a
13 vendor selected, identified, or designated by a
14 manufacturer or one of its affiliates by agreement,
15 program, incentive provision, or otherwise without making
16 available to the dealer the option to obtain the goods or
17 services of substantially similar quality and overall
18 design from a vendor chosen by the dealer and approved by
19 the manufacturer; however, approval by the manufacturer
20 shall not be unreasonably withheld, and the dealer's option
21 to select a vendor shall not be available if the
22 manufacturer provides substantial reimbursement for the
23 goods or services offered. "Substantial reimbursement"
24 means at least 65% of the cost, which shall not be greater
25 than the cost of reasonably available similar goods and
26 services in close proximity to the dealer's relevant market

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1 area. If signs or other franchiser image or design elements
2 or trade dress are to be leased to the dealer by a vendor
3 selected, identified, or designated by the manufacturer,
4 the dealer has the right to purchase the signs or other
5 franchiser image or design elements or trade dress of
6 substantially similar quality from a vendor selected by the
7 dealer if the signs, images, design elements, or trade
8 dress are approved by the manufacturer. Approval by the
9 manufacturer shall not be unreasonably withheld. This
10 paragraph shall not be construed to allow a dealer to
11 impair or eliminate the intellectual property rights of the
12 manufacturer, nor to permit a dealer to erect or maintain
13 signs that do not conform to the manufacturer's
14 intellectual property usage guidelines.
15 (e) It shall be deemed a violation for a manufacturer, a
16distributor, a wholesaler, a distributor branch or division or
17officer, agent or other representative thereof:
18 (1) to resort to or use any false or misleading
19 advertisement in connection with his business as such
20 manufacturer, distributor, wholesaler, distributor branch
21 or division or officer, agent or other representative
22 thereof;
23 (2) to offer to sell or lease, or to sell or lease, any
24 new motor vehicle to any motor vehicle dealer at a lower
25 actual price therefor than the actual price offered to any
26 other motor vehicle dealer for the same model vehicle

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1 similarly equipped or to utilize any device including, but
2 not limited to, sales promotion plans or programs which
3 result in such lesser actual price or fail to make
4 available to any motor vehicle dealer any preferential
5 pricing, incentive, rebate, finance rate, or low interest
6 loan program offered to competing motor vehicle dealers in
7 other contiguous states. However, the provisions of this
8 paragraph shall not apply to sales to a motor vehicle
9 dealer for resale to any unit of the United States
10 Government, the State or any of its political subdivisions;
11 (3) to offer to sell or lease, or to sell or lease, any
12 new motor vehicle to any person, except a wholesaler,
13 distributor or manufacturer's employees at a lower actual
14 price therefor than the actual price offered and charged to
15 a motor vehicle dealer for the same model vehicle similarly
16 equipped or to utilize any device which results in such
17 lesser actual price. However, the provisions of this
18 paragraph shall not apply to sales to a motor vehicle
19 dealer for resale to any unit of the United States
20 Government, the State or any of its political subdivisions;
21 (4) to prevent or attempt to prevent by contract or
22 otherwise any motor vehicle dealer or franchisee from
23 changing the executive management control of the motor
24 vehicle dealer or franchisee unless the franchiser, having
25 the burden of proof, proves that such change of executive
26 management will result in executive management control by a

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1 person or persons who are not of good moral character or
2 who do not meet the franchiser's existing and, with
3 consideration given to the volume of sales and service of
4 the dealership, uniformly applied minimum business
5 experience standards in the market area. However where the
6 manufacturer rejects a proposed change in executive
7 management control, the manufacturer shall give written
8 notice of his reasons to the dealer within 60 days of
9 notice to the manufacturer by the dealer of the proposed
10 change. If the manufacturer does not send a letter to the
11 franchisee by certified mail, return receipt requested,
12 within 60 days from receipt by the manufacturer of the
13 proposed change, then the change of the executive
14 management control of the franchisee shall be deemed
15 accepted as proposed by the franchisee, and the
16 manufacturer shall give immediate effect to such change;
17 (5) to prevent or attempt to prevent by contract or
18 otherwise any motor vehicle dealer from establishing or
19 changing the capital structure of his dealership or the
20 means by or through which he finances the operation
21 thereof; provided the dealer meets any reasonable capital
22 standards agreed to between the dealer and the
23 manufacturer, distributor or wholesaler, who may require
24 that the sources, method and manner by which the dealer
25 finances or intends to finance its operation, equipment or
26 facilities be fully disclosed;

SB1687- 23 -LRB100 07840 JLS 17909 b
1 (6) to refuse to give effect to or prevent or attempt
2 to prevent by contract or otherwise any motor vehicle
3 dealer or any officer, partner or stockholder of any motor
4 vehicle dealer from selling or transferring any part of the
5 interest of any of them to any other person or persons or
6 party or parties unless such sale or transfer is to a
7 transferee who would not otherwise qualify for a new motor
8 vehicle dealers license under the "The Illinois Vehicle
9 Code" or unless the franchiser, having the burden of proof,
10 proves that such sale or transfer is to a person or party
11 who is not of good moral character or does not meet the
12 franchiser's existing and reasonable capital standards
13 and, with consideration given to the volume of sales and
14 service of the dealership, uniformly applied minimum
15 business experience standards in the market area. However,
16 nothing herein shall be construed to prevent a franchiser
17 from implementing affirmative action programs providing
18 business opportunities for minorities or from complying
19 with applicable federal, State or local law:
20 (A) If the manufacturer intends to refuse to
21 approve the sale or transfer of all or a part of the
22 interest, then it shall, within 60 days from receipt of
23 the completed application forms generally utilized by
24 a manufacturer to conduct its review and a copy of all
25 agreements regarding the proposed transfer, send a
26 letter by certified mail, return receipt requested,

SB1687- 24 -LRB100 07840 JLS 17909 b
1 advising the franchisee of any refusal to approve the
2 sale or transfer of all or part of the interest and
3 shall state that the dealer only has 30 days from the
4 receipt of the notice to file with the Motor Vehicle
5 Review Board a written protest against the proposed
6 action. The notice shall set forth specific criteria
7 used to evaluate the prospective transferee and the
8 grounds for refusing to approve the sale or transfer to
9 that transferee. Within 30 days from the franchisee's
10 receipt of the manufacturer's notice, the franchisee
11 may file with the Board a written protest against the
12 proposed action.
13 When a protest has been timely filed, the Board
14 shall enter an order, fixing the date (within 60 days
15 of the date of such order), time, and place of a
16 hearing on the protest, required under Sections 12 and
17 29 of this Act, and send by certified mail, return
18 receipt requested, a copy of the order to the
19 manufacturer that filed notice of intention of the
20 proposed action and to the protesting franchisee.
21 The manufacturer shall have the burden of proof to
22 establish that good cause exists to refuse to approve
23 the sale or transfer to the transferee. The
24 determination whether good cause exists to refuse to
25 approve the sale or transfer shall be made by the Board
26 under subdivisions (6)(B). The manufacturer shall not

SB1687- 25 -LRB100 07840 JLS 17909 b
1 refuse to approve the sale or transfer by a dealer or
2 an officer, partner, or stockholder of a franchise or
3 any part of the interest to any person or persons
4 before the hearing process is concluded as prescribed
5 by this Act, and thereafter if the Board determines
6 that the manufacturer has failed to meet its burden of
7 proof and that good cause does not exist to refuse to
8 approve the sale or transfer to the transferee.
9 (B) Good cause to refuse to approve such sale or
10 transfer under this Section is established when such
11 sale or transfer is to a transferee who would not
12 otherwise qualify for a new motor vehicle dealers
13 license under the "The Illinois Vehicle Code" or such
14 sale or transfer is to a person or party who is not of
15 good moral character or does not meet the franchiser's
16 existing and reasonable capital standards and, with
17 consideration given to the volume of sales and service
18 of the dealership, uniformly applied minimum business
19 experience standards in the market area.
20 (7) to obtain money, goods, services, anything of
21 value, or any other benefit from any other person with whom
22 the motor vehicle dealer does business, on account of or in
23 relation to the transactions between the dealer and the
24 other person as compensation, except for services actually
25 rendered, unless such benefit is promptly accounted for and
26 transmitted to the motor vehicle dealer;

SB1687- 26 -LRB100 07840 JLS 17909 b
1 (8) to grant an additional franchise in the relevant
2 market area of an existing franchise of the same line make
3 or to relocate an existing motor vehicle dealership within
4 or into a relevant market area of an existing franchise of
5 the same line make. However, if the manufacturer wishes to
6 grant such an additional franchise to an independent person
7 in a bona fide relationship in which such person is
8 prepared to make a significant investment subject to loss
9 in such a dealership, or if the manufacturer wishes to
10 relocate an existing motor vehicle dealership, then the
11 manufacturer shall send a letter by certified mail, return
12 receipt requested, to each existing dealer or dealers of
13 the same line make whose relevant market area includes the
14 proposed location of the additional or relocated franchise
15 at least 60 days before the manufacturer grants an
16 additional franchise or relocates an existing franchise of
17 the same line make within or into the relevant market area
18 of an existing franchisee of the same line make. Each
19 notice shall set forth the specific grounds for the
20 proposed grant of an additional or relocation of an
21 existing franchise and shall state that the dealer has only
22 30 days from the date of receipt of the notice to file with
23 the Motor Vehicle Review Board a written protest against
24 the proposed action. Unless the parties agree upon the
25 grant or establishment of the additional or relocated
26 franchise within 30 days from the date the notice was

SB1687- 27 -LRB100 07840 JLS 17909 b
1 received by the existing franchisee of the same line make
2 or any person entitled to receive such notice, the
3 franchisee or other person may file with the Board a
4 written protest against the grant or establishment of the
5 proposed additional or relocated franchise.
6 When a protest has been timely filed, the Board shall
7 enter an order fixing a date (within 60 days of the date of
8 the order), time, and place of a hearing on the protest,
9 required under Sections 12 and 29 of this Act, and send by
10 certified or registered mail, return receipt requested, a
11 copy of the order to the manufacturer that filed the notice
12 of intention to grant or establish the proposed additional
13 or relocated franchise and to the protesting dealer or
14 dealers of the same line make whose relevant market area
15 includes the proposed location of the additional or
16 relocated franchise.
17 When more than one protest is filed against the grant
18 or establishment of the additional or relocated franchise
19 of the same line make, the Board may consolidate the
20 hearings to expedite disposition of the matter. The
21 manufacturer shall have the burden of proof to establish
22 that good cause exists to allow the grant or establishment
23 of the additional or relocated franchise. The manufacturer
24 may not grant or establish the additional franchise or
25 relocate the existing franchise before the hearing process
26 is concluded as prescribed by this Act, and thereafter if

SB1687- 28 -LRB100 07840 JLS 17909 b
1 the Board determines that the manufacturer has failed to
2 meet its burden of proof and that good cause does not exist
3 to allow the grant or establishment of the additional
4 franchise or relocation of the existing franchise.
5 The determination whether good cause exists for
6 allowing the grant or establishment of an additional
7 franchise or relocated existing franchise, shall be made by
8 the Board under subsection (c) of Section 12 of this Act.
9 If the manufacturer seeks to enter into a contract,
10 agreement or other arrangement with any person,
11 establishing any additional motor vehicle dealership or
12 other facility, limited to the sale of factory repurchase
13 vehicles or late model vehicles, then the manufacturer
14 shall follow the notice procedures set forth in this
15 Section and the determination whether good cause exists for
16 allowing the proposed agreement shall be made by the Board
17 under subsection (c) of Section 12, with the manufacturer
18 having the burden of proof.
19 A. (Blank).
20 B. For the purposes of this Section, appointment of
21 a successor motor vehicle dealer at the same location
22 as its predecessor, or within 2 miles of such location,
23 or the relocation of an existing dealer or franchise
24 within 2 miles of the relocating dealer's or
25 franchisee's existing location, shall not be construed
26 as a grant, establishment or the entering into of an

SB1687- 29 -LRB100 07840 JLS 17909 b
1 additional franchise or selling agreement, or a
2 relocation of an existing franchise. The reopening of a
3 motor vehicle dealership that has not been in operation
4 for 18 months or more shall be deemed the grant of an
5 additional franchise or selling agreement.
6 C. This Section does not apply to the relocation of
7 an existing dealership or franchise in a county having
8 a population of more than 300,000 persons when the new
9 location is within the dealer's current relevant
10 market area, provided the new location is more than 7
11 miles from the nearest dealer of the same line make.
12 This Section does not apply to the relocation of an
13 existing dealership or franchise in a county having a
14 population of less than 300,000 persons when the new
15 location is within the dealer's current relevant
16 market area, provided the new location is more than 12
17 miles from the nearest dealer of the same line make. A
18 dealer that would be farther away from the new location
19 of an existing dealership or franchise of the same line
20 make after a relocation may not file a written protest
21 against the relocation with the Motor Vehicle Review
22 Board.
23 D. Nothing in this Section shall be construed to
24 prevent a franchiser from implementing affirmative
25 action programs providing business opportunities for
26 minorities or from complying with applicable federal,

SB1687- 30 -LRB100 07840 JLS 17909 b
1 State or local law;
2 (9) to require a motor vehicle dealer to assent to a
3 release, assignment, novation, waiver or estoppel which
4 would relieve any person from liability imposed by this
5 Act;
6 (10) to prevent or refuse to give effect to the
7 succession to the ownership or management control of a
8 dealership by any legatee under the will of a dealer or to
9 an heir under the laws of descent and distribution of this
10 State unless the franchisee has designated a successor to
11 the ownership or management control under the succession
12 provisions of the franchise. Unless the franchiser, having
13 the burden of proof, proves that the successor is a person
14 who is not of good moral character or does not meet the
15 franchiser's existing and reasonable capital standards
16 and, with consideration given to the volume of sales and
17 service of the dealership, uniformly applied minimum
18 business experience standards in the market area, any
19 designated successor of a dealer or franchisee may succeed
20 to the ownership or management control of a dealership
21 under the existing franchise if:
22 (i) The designated successor gives the
23 franchiser written notice by certified mail,
24 return receipt requested, of his or her intention
25 to succeed to the ownership of the dealer within 60
26 days of the dealer's death or incapacity; and

SB1687- 31 -LRB100 07840 JLS 17909 b
1 (ii) The designated successor agrees to be
2 bound by all the terms and conditions of the
3 existing franchise.
4 Notwithstanding the foregoing, in the event the motor
5 vehicle dealer or franchisee and manufacturer have duly
6 executed an agreement concerning succession rights prior
7 to the dealer's death or incapacitation, the agreement
8 shall be observed.
9 (A) If the franchiser intends to refuse to honor
10 the successor to the ownership of a deceased or
11 incapacitated dealer or franchisee under an existing
12 franchise agreement, the franchiser shall send a
13 letter by certified mail, return receipt requested, to
14 the designated successor within 60 days from receipt of
15 a proposal advising of its intent to refuse to honor
16 the succession and to discontinue the existing
17 franchise agreement and shall state that the
18 designated successor only has 30 days from the receipt
19 of the notice to file with the Motor Vehicle Review
20 Board a written protest against the proposed action.
21 The notice shall set forth the specific grounds for the
22 refusal to honor the succession and discontinue the
23 existing franchise agreement.
24 If notice of refusal is not timely served upon the
25 designated successor, the franchise agreement shall
26 continue in effect subject to termination only as

SB1687- 32 -LRB100 07840 JLS 17909 b
1 otherwise permitted by paragraph (6) of subsection (d)
2 of Section 4 of this Act.
3 Within 30 days from the date the notice was
4 received by the designated successor or any other
5 person entitled to notice, the designee or other person
6 may file with the Board a written protest against the
7 proposed action.
8 When a protest has been timely filed, the Board
9 shall enter an order, fixing a date (within 60 days of
10 the date of the order), time, and place of a hearing on
11 the protest, required under Sections 12 and 29 of this
12 Act, and send by certified mail, return receipt
13 requested, a copy of the order to the franchiser that
14 filed the notice of intention of the proposed action
15 and to the protesting designee or such other person.
16 The manufacturer shall have the burden of proof to
17 establish that good cause exists to refuse to honor the
18 succession and discontinue the existing franchise
19 agreement. The determination whether good cause exists
20 to refuse to honor the succession shall be made by the
21 Board under subdivision (B) of this paragraph (10). The
22 manufacturer shall not refuse to honor the succession
23 or discontinue the existing franchise agreement before
24 the hearing process is concluded as prescribed by this
25 Act, and thereafter if the Board determines that it has
26 failed to meet its burden of proof and that good cause

SB1687- 33 -LRB100 07840 JLS 17909 b
1 does not exist to refuse to honor the succession and
2 discontinue the existing franchise agreement.
3 (B) No manufacturer shall impose any conditions
4 upon honoring the succession and continuing the
5 existing franchise agreement with the designated
6 successor other than that the franchisee has
7 designated a successor to the ownership or management
8 control under the succession provisions of the
9 franchise, or that the designated successor is of good
10 moral character or meets the reasonable capital
11 standards and, with consideration given to the volume
12 of sales and service of the dealership, uniformly
13 applied minimum business experience standards in the
14 market area;
15 (11) to prevent or refuse to approve a proposal to
16 establish a successor franchise at a location previously
17 approved by the franchiser when submitted with the
18 voluntary termination by the existing franchisee unless
19 the successor franchisee would not otherwise qualify for a
20 new motor vehicle dealer's license under the Illinois
21 Vehicle Code or unless the franchiser, having the burden of
22 proof, proves that such proposed successor is not of good
23 moral character or does not meet the franchiser's existing
24 and reasonable capital standards and, with consideration
25 given to the volume of sales and service of the dealership,
26 uniformly applied minimum business experience standards in

SB1687- 34 -LRB100 07840 JLS 17909 b
1 the market area. However, when such a rejection of a
2 proposal is made, the manufacturer shall give written
3 notice of its reasons to the franchisee within 60 days of
4 receipt by the manufacturer of the proposal. However,
5 nothing herein shall be construed to prevent a franchiser
6 from implementing affirmative action programs providing
7 business opportunities for minorities, or from complying
8 with applicable federal, State or local law;
9 (12) to prevent or refuse to grant a franchise to a
10 person because such person owns, has investment in or
11 participates in the management of or holds a franchise for
12 the sale of another make or line of motor vehicles within 7
13 miles of the proposed franchise location in a county having
14 a population of more than 300,000 persons, or within 12
15 miles of the proposed franchise location in a county having
16 a population of less than 300,000 persons; or
17 (13) to prevent or attempt to prevent any new motor
18 vehicle dealer from establishing any additional motor
19 vehicle dealership or other facility limited to the sale of
20 factory repurchase vehicles or late model vehicles or
21 otherwise offering for sale factory repurchase vehicles of
22 the same line make at an existing franchise by failing to
23 make available any contract, agreement or other
24 arrangement which is made available or otherwise offered to
25 any person; or .
26 (14) to exercise a right of first refusal or other

SB1687- 35 -LRB100 07840 JLS 17909 b
1 right to acquire a franchise from a dealer, unless the
2 manufacturer:
3 (A) notifies the dealer and the proposed
4 transferee in writing that it intends to exercise its
5 right to acquire the franchise not later than 60 days
6 after the manufacturer or distributor's receipt of a
7 notice of the proposed transfer from the dealer or the
8 proposed transferee and all information and documents
9 reasonably and customarily required by the
10 manufacturer supporting the proposed transfer. For the
11 purpose of this paragraph, "proposed transferee" means
12 the person to whom the franchise would have been
13 transferred to, or was proposed to be transferred to,
14 had the right of first refusal or other right to
15 acquire the franchise not been exercised by the
16 manufacturer or distributor;
17 (B) pays to the dealer the same or greater
18 consideration as the dealer has contracted to receive
19 in connection with the proposed transfer or sale of all
20 or substantially all of the dealership assets, stock,
21 or other ownership interest, including the purchase or
22 lease of all real property, leasehold, or improvements
23 related to the transfer or sale of the dealership. Upon
24 exercise of the right of first refusal or such other
25 right, the manufacturer or distributor shall have the
26 right to assign the lease or to convey the real

SB1687- 36 -LRB100 07840 JLS 17909 b
1 property;
2 (C) assumes all of the duties, obligations, and
3 liabilities contained in the agreements that were to be
4 assumed by the proposed transferee and with respect to
5 which the manufacturer or distributor exercised the
6 right of first refusal or other right to acquire the
7 franchise;
8 (D) reimburses the proposed transferee for all
9 reasonable expenses incurred in evaluating,
10 investigating, negotiating, and pursuing the
11 acquisition of the dealership prior to the
12 manufacturer or distributor's exercise of its right of
13 first refusal or other right to acquire the dealership.
14 For purposes of this paragraph, "reasonable expenses"
15 includes the usual and customary legal and accounting
16 fees charged for similar work, as well as expenses
17 associated with the evaluation and investigation of
18 any real property on which the dealership is operated.
19 The proposed transferee shall submit an itemized list
20 of its expenses to the manufacturer or distributor not
21 later than 30 days after the manufacturer or
22 distributor's exercise of the right of first refusal or
23 other right to acquire the motor vehicle franchise. The
24 manufacturer or distributor shall reimburse the
25 proposed transferee for its expenses not later than 30
26 days after receipt of the itemized list. A manufacturer

SB1687- 37 -LRB100 07840 JLS 17909 b
1 or distributor may request to be provided with the
2 itemized list of expenses before exercising the
3 manufacturer's right of first refusal;
4 (E) assumes the defense of the selling dealer for
5 any claim by the proposed transferee arising from the
6 exercise of the right of first refusal. The dealer
7 shall not have any liability to any person as a result
8 of a manufacturer's exercising its right of first
9 refusal.
10 (f) It is deemed a violation for a manufacturer, a
11distributor, a wholesaler, a distributor branch or division, a
12factory branch or division, or a wholesale branch or division,
13or officer, agent, employee, broker, shareholder, except a
14shareholder of 1% or less of the outstanding shares of any
15class of securities of a manufacturer, distributor, or
16wholesaler which is a publicly traded corporation, or other
17representative, directly or indirectly, to own or operate a
18place of business as a motor vehicle dealer, motor vehicle
19franchisee, or motor vehicle financing affiliate, and it is a
20violation for a manufacturer to sell a vehicle directly to a
21retail customer other than through a franchised dealer, except
22that, this subsection shall not prohibit:
23 (1) the ownership or operation of a place of business
24 by a manufacturer, distributor, or wholesaler for a period,
25 not to exceed 18 months, during the transition from one
26 motor vehicle franchisee to another;

SB1687- 38 -LRB100 07840 JLS 17909 b
1 (2) the investment in a motor vehicle franchisee by a
2 manufacturer, distributor, or wholesaler if the investment
3 is for the sole purpose of enabling a partner or
4 shareholder in that motor vehicle franchisee to acquire an
5 interest in that motor vehicle franchisee and that partner
6 or shareholder is not otherwise employed by or associated
7 with the manufacturer, distributor, or wholesaler and
8 would not otherwise have the requisite capital investment
9 funds to invest in the motor vehicle franchisee, and has
10 the right to purchase the entire equity interest of the
11 manufacturer, distributor, or wholesaler in the motor
12 vehicle franchisee within a reasonable period of time not
13 to exceed 5 years; or
14 (3) the ownership or operation of a place of business
15 by a manufacturer that manufactures only diesel engines for
16 installation in trucks having a gross vehicle weight rating
17 of more than 16,000 pounds that are required to be
18 registered under the Illinois Vehicle Code, provided that:
19 (A) the manufacturer does not otherwise
20 manufacture, distribute, or sell motor vehicles as
21 defined under Section 1-217 of the Illinois Vehicle
22 Code;
23 (B) the manufacturer owned a place of business and
24 it was in operation as of January 1, 2016;
25 (C) the manufacturer complies with all obligations
26 owed to dealers that are not owned, operated, or

SB1687- 39 -LRB100 07840 JLS 17909 b
1 controlled by the manufacturer, including, but not
2 limited to those obligations arising pursuant to
3 Section 6;
4 (D) to further avoid any acts or practices, the
5 effect of which may be to lessen or eliminate
6 competition, the manufacturer provides to dealers on
7 substantially equal terms access to all support for
8 completing repairs, including, but not limited to,
9 parts and assemblies, training, and technical service
10 bulletins, and other information concerning repairs
11 that the manufacturer provides to facilities that are
12 owned, operated, or controlled by the manufacturer;
13 and
14 (E) the manufacturer does not require that
15 warranty repair work be performed by a
16 manufacturer-owned repair facility and the
17 manufacturer provides any dealer that has an agreement
18 with the manufacturer to sell and perform warranty
19 repairs on the manufacturer's engines the opportunity
20 to perform warranty repairs on those engines,
21 regardless of whether the dealer sold the truck into
22 which the engine was installed.
23 (g) Notwithstanding the terms, provisions, or conditions
24of any agreement or waiver, it shall be deemed a violation for
25a manufacturer, a distributor, a wholesaler, a distributor
26branch or division, a factory branch or division, or a

SB1687- 40 -LRB100 07840 JLS 17909 b
1wholesale branch or division, or officer, agent or other
2representative thereof, to directly or indirectly condition
3the awarding of a franchise to a prospective new motor vehicle
4dealer, the addition of a line make or franchise to an existing
5dealer, the renewal of a franchise of an existing dealer, the
6approval of the relocation of an existing dealer's facility, or
7the approval of the sale or transfer of the ownership of a
8franchise on the willingness of a dealer, proposed new dealer,
9or owner of an interest in the dealership facility to enter
10into a site control agreement or exclusive use agreement unless
11separate and reasonable consideration was offered and accepted
12for that agreement.
13 For purposes of this subsection (g), the terms "site
14control agreement" and "exclusive use agreement" include any
15agreement that has the effect of either (i) requiring that the
16dealer establish or maintain exclusive dealership facilities;
17or (ii) restricting the ability of the dealer, or the ability
18of the dealer's lessor in the event the dealership facility is
19being leased, to transfer, sell, lease, or change the use of
20the dealership premises, whether by sublease, lease,
21collateral pledge of lease, or other similar agreement. "Site
22control agreement" and "exclusive use agreement" also include a
23manufacturer restricting the ability of a dealer to transfer,
24sell, or lease the dealership premises by right of first
25refusal to purchase or lease, option to purchase, or option to
26lease if the transfer, sale, or lease of the dealership

SB1687- 41 -LRB100 07840 JLS 17909 b
1premises is to a person who is an immediate family member of
2the dealer. For the purposes of this subsection (g), "immediate
3family member" means a spouse, parent, son, daughter,
4son-in-law, daughter-in-law, brother, and sister.
5 If a manufacturer exercises any right of first refusal to
6purchase or lease or option to purchase or lease with regard to
7a transfer, sale, or lease of the dealership premises to a
8person who is not an immediate family member of the dealer,
9then (1) within 60 days from the receipt of the completed
10application forms generally utilized by a manufacturer to
11conduct its review and a copy of all agreements regarding the
12proposed transfer, the manufacturer must notify the dealer of
13its intent to exercise the right of first refusal to purchase
14or lease or option to purchase or lease and (2) the exercise of
15the right of first refusal to purchase or lease or option to
16purchase or lease must result in the dealer receiving
17consideration, terms, and conditions that either are the same
18as or greater than that which they have contracted to receive
19in connection with the proposed transfer, sale, or lease of the
20dealership premises.
21 Any provision contained in any agreement entered into on or
22after November 25, 2009 (the effective date of Public Act
2396-824) this amendatory Act of the 96th General Assembly that
24is inconsistent with the provisions of this subsection (g)
25shall be voidable at the election of the affected dealer,
26prospective dealer, or owner of an interest in the dealership

SB1687- 42 -LRB100 07840 JLS 17909 b
1facility.
2 (h) For purposes of this subsection:
3 "Successor manufacturer" means any motor vehicle
4manufacturer that, on or after January 1, 2009, acquires,
5succeeds to, or assumes any part of the business of another
6manufacturer, referred to as the "predecessor manufacturer",
7as the result of any of the following:
8 (i) A change in ownership, operation, or control of the
9 predecessor manufacturer by sale or transfer of assets,
10 corporate stock or other equity interest, assignment,
11 merger, consolidation, combination, joint venture,
12 redemption, court-approved sale, operation of law or
13 otherwise.
14 (ii) The termination, suspension, or cessation of a
15 part or all of the business operations of the predecessor
16 manufacturer.
17 (iii) The discontinuance of the sale of the product
18 line.
19 (iv) A change in distribution system by the predecessor
20 manufacturer, whether through a change in distributor or
21 the predecessor manufacturer's decision to cease
22 conducting business through a distributor altogether.
23 "Former Franchisee" means a new motor vehicle dealer that
24has entered into a franchise with a predecessor manufacturer
25and that has either:
26 (i) entered into a termination agreement or deferred

SB1687- 43 -LRB100 07840 JLS 17909 b
1 termination agreement with a predecessor or successor
2 manufacturer related to such franchise; or
3 (ii) has had such franchise canceled, terminated,
4 nonrenewed, noncontinued, rejected, nonassumed, or
5 otherwise ended.
6 For a period of 3 years from: (i) the date that a successor
7manufacturer acquires, succeeds to, or assumes any part of the
8business of a predecessor manufacturer; (ii) the last day that
9a former franchisee is authorized to remain in business as a
10franchised dealer with respect to a particular franchise under
11a termination agreement or deferred termination agreement with
12a predecessor or successor manufacturer; (iii) the last day
13that a former franchisee that was cancelled, terminated,
14nonrenewed, noncontinued, rejected, nonassumed, or otherwise
15ended by a predecessor or successor manufacturer is authorized
16to remain in business as a franchised dealer with respect to a
17particular franchise; or (iv) November 25, 2009 (the effective
18date of Public Act 96-824) this amendatory Act of the 96th
19General Assembly, whichever is latest, it shall be unlawful for
20such successor manufacturer to enter into a same line make
21franchise with any person or to permit the relocation of any
22existing same line make franchise, for a line make of the
23predecessor manufacturer that would be located or relocated
24within the relevant market area of a former franchisee who
25owned or leased a dealership facility in that relevant market
26area without first offering the additional or relocated

SB1687- 44 -LRB100 07840 JLS 17909 b
1franchise to the former franchisee, or the designated successor
2of such former franchisee in the event the former franchisee is
3deceased or a person with a disability, at no cost and without
4any requirements or restrictions other than those imposed
5generally on the manufacturer's other franchisees at that time,
6unless one of the following applies:
7 (1) As a result of the former franchisee's
8 cancellation, termination, noncontinuance, or nonrenewal
9 of the franchise, the predecessor manufacturer had
10 consolidated the line make with another of its line makes
11 for which the predecessor manufacturer had a franchisee
12 with a then-existing dealership facility located within
13 that relevant market area.
14 (2) The successor manufacturer has paid the former
15 franchisee, or the designated successor of such former
16 franchisee in the event the former franchisee is deceased
17 or a person with a disability, the fair market value of the
18 former franchisee's franchise on (i) the date the
19 franchisor announces the action which results in the
20 termination, cancellation, or nonrenewal; or (ii) the date
21 the action which results in termination, cancellation, or
22 nonrenewal first became general knowledge; or (iii) the day
23 12 months prior to the date on which the notice of
24 termination, cancellation, or nonrenewal is issued,
25 whichever amount is higher. Payment is due within 90 days
26 of the effective date of the termination, cancellation, or

SB1687- 45 -LRB100 07840 JLS 17909 b
1 nonrenewal. If the termination, cancellation, or
2 nonrenewal is due to a manufacturer's change in
3 distributors, the manufacturer may avoid paying fair
4 market value to the dealer if the new distributor or the
5 manufacturer offers the dealer a franchise agreement with
6 terms acceptable to the dealer.
7 (3) The successor manufacturer proves that it would
8 have had good cause to terminate the franchise agreement of
9 the former franchisee, or the successor of the former
10 franchisee under item (e)(10) in the event that the former
11 franchisee is deceased or a person with a disability. The
12 determination of whether the successor manufacturer would
13 have had good cause to terminate the franchise agreement of
14 the former franchisee, or the successor of the former
15 franchisee, shall be made by the Board under subsection (d)
16 of Section 12. A successor manufacturer that seeks to
17 assert that it would have had good cause to terminate a
18 former franchisee, or the successor of the former
19 franchisee, must file a petition seeking a hearing on this
20 issue before the Board and shall have the burden of proving
21 that it would have had good cause to terminate the former
22 franchisee or the successor of the former franchisee. No
23 successor dealer, other than the former franchisee, may be
24 appointed or franchised by the successor manufacturer
25 within the relevant market area of the former franchisee
26 until the Board has held a hearing and rendered a

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1 determination on the issue of whether the successor
2 manufacturer would have had good cause to terminate the
3 former franchisee.
4 In the event that a successor manufacturer attempts to
5enter into a same line make franchise with any person or to
6permit the relocation of any existing line make franchise under
7this subsection (h) at a location that is within the relevant
8market area of 2 or more former franchisees, then the successor
9manufacturer may not offer it to any person other than one of
10those former franchisees unless the successor manufacturer can
11prove that at least one of the 3 exceptions in items (1), (2),
12and (3) of this subsection (h) applies to each of those former
13franchisees.
14(Source: P.A. 99-143, eff. 7-27-15; 99-844, eff. 8-19-16;
15revised 10-27-16.)
16 (815 ILCS 710/12) (from Ch. 121 1/2, par. 762)
17 Sec. 12. Arbitration; administrative proceedings; civil
18actions; determining good cause.
19 (a) The franchiser and franchisee may agree to submit a
20dispute involving Section 4, 5, 6, 7, 9, 10.1, or 11 to
21arbitration. Any such proceeding shall be conducted under the
22provisions of the Uniform Arbitration Act by a 3 member panel
23composed of one member appointed by the franchisee and one
24member appointed by the franchiser who together shall choose
25the third member.

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1 An arbitration proceeding hereunder for a remedy under
2paragraph (6) of subsection (d) or paragraph (6), (8), (10) or
3(11) of subsection (e) of Section 4 of this Act shall be
4commenced by written notice to the franchiser by the objecting
5franchisee within 30 days from the date the dealer received
6notice to cancel, terminate, modify or not extend or renew an
7existing franchise or selling agreement or refusal to honor
8succession to ownership or refusal to honor a sale or transfer
9or to grant or enter into the additional franchise or selling
10agreement, or to relocate an existing motor vehicle dealer; or
11within 60 days of the date the franchisee received notice in
12writing by the franchiser of its determination under any
13provision of Section 4 (other than paragraph (6) of subsection
14(d) or paragraph (6), (8), (10) or (11) of subsection (e) of
15Section 4), 5, 6, 7, 9, 10.1, or 11 of this Act; however, if
16notice of the provision under which the determination has been
17made is not given by the franchiser, then the proceeding shall
18be commenced as provided by Section 14 of this Act.
19 The franchiser and the franchisee shall appoint their
20respective arbitrators and they shall select the third
21arbitrator within 14 days of receipt of such notice by the
22franchiser. The arbitrators shall commence hearings within 60
23days after all the arbitrators have been appointed and a
24decision shall be rendered within 30 days after completion of
25the hearing.
26 During the pendency of the arbitration, any party may apply

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1to a court of competent jurisdiction which shall have power to
2modify or stay the effective date of a proposed additional
3franchise or selling agreement, or the effective date of a
4proposed motor vehicle dealership relocation or the effective
5date of a cancellation, termination or modification or refusal
6to honor succession or refusal to allow a sale or transfer or
7extend the expiration date of a franchise or selling agreement
8pending a final determination of the issues raised in the
9arbitration hearing upon such terms as the court may determine.
10Any such modification or stay shall not be effective for more
11than 60 days unless extended by the court for good cause or
12unless the arbitration hearing is then in progress.
13 (b) If the franchiser and the franchisee have not agreed to
14submit a dispute involving Section 4, 5, 6, 7, 9, 10.1, or 11
15of this Act to arbitration under subsection (a), then a
16proceeding before the Motor Vehicle Review Board as prescribed
17by subsection (c) or (d) of Section 12 and Section 29 of this
18Act for a remedy other than damages under paragraph (6) of
19subsection (d) or paragraph (6), (8), (10), or (11) of
20subsection (e) of Section 4 of this Act shall be commenced upon
21receipt by the Motor Vehicle Review Board of a timely notice of
22protest or within 60 days of the date the franchisee received
23notice in writing by the franchiser of its determination under
24any provision of those Sections other than paragraph (6) of
25subsection (d) or paragraph (6), (8), (10), or (11) of
26subsection (e) of Section 4 of this Act; however, if notice of

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1the provision under which the determination has been made is
2not given by the franchiser, then the proceeding shall be
3commenced as provided by Section 14 of this Act.
4 During the pendency of a proceeding under this Section, a
5party may apply to a court of competent jurisdiction that shall
6have power to modify or stay the effective date of a proposed
7additional franchise or selling agreement, or the effective
8date of a proposed motor vehicle dealership relocation, or the
9effective date of a cancellation, termination, or
10modification, or extend the expiration date of a franchise or
11selling agreement or refusal to honor succession to ownership
12or refusal to approve a sale or transfer pending a final
13determination of the issues raised in the hearing upon such
14terms as the court may determine. Any modification or stay
15shall not be effective for more than 60 days unless extended by
16the court for good cause or unless the hearing is then in
17progress.
18 (c) In proceedings under (a) or (b), when determining
19whether good cause has been established for granting such
20proposed additional franchise or selling agreement, or for
21relocating an existing motor vehicle dealership, the
22arbitrators or Board shall consider all relevant circumstances
23in accordance with subsection (v) of Section 2 of this Act,
24including but not limited to:
25 (1) whether the establishment of such additional
26 franchise or the relocation of such motor vehicle

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1 dealership is warranted by economic and marketing
2 conditions including anticipated future changes;
3 (2) the retail sales and service business transacted by
4 the objecting motor vehicle dealer or dealers and other
5 motor vehicle dealers of the same line make with a place of
6 business in the relevant market area to be served by the
7 additional franchise or the relocated motor vehicle
8 dealership during the 5 year period immediately preceding
9 such notice as compared to the business available to them;
10 (3) the investment necessarily made and obligations
11 incurred by the objecting motor vehicle dealer or dealers
12 and other motor vehicle dealers of the same line make with
13 a place of business in the relevant market area to be
14 served by the additional franchise or the relocated motor
15 vehicle dealership to perform their obligations under
16 existing franchises or selling agreements; and, the
17 manufacturer shall give reasonable credit for sales of
18 factory repurchase vehicles purchased by the objecting
19 motor vehicle dealer or dealers and other motor vehicle
20 dealers of the same line make with the place of business in
21 the relevant market area to be served by the additional
22 franchise or the relocated motor vehicle dealership, or the
23 additional motor vehicle dealership or other facility
24 limited to the sale of factory repurchase or late model
25 vehicles, at manufacturer authorized or sponsored auctions
26 in determining performance of obligations under existing

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1 franchises or selling agreements relating to total new
2 vehicle sales;
3 (4) the permanency of the investment of the objecting
4 motor vehicle dealer or dealers and other motor vehicle
5 dealers of the same line make with a place of business in
6 the relevant market area to be served by the additional
7 franchise or the relocated motor vehicle dealership;
8 (5) whether it is beneficial or injurious to the public
9 welfare for an additional franchise or relocated motor
10 vehicle dealership to be established;
11 (6) whether the objecting motor vehicle dealer or
12 dealers and other motor vehicle dealers of the same line
13 make with a place of business in the relevant market area
14 to be served by the additional franchisee or relocated
15 motor vehicle dealership are providing adequate
16 competition and convenient consumer care for the motor
17 vehicles of the same line make owned or operated in the
18 area to be served by the additional franchise or relocated
19 motor vehicle dealership;
20 (7) whether the objecting motor vehicle dealer or
21 dealers and other motor vehicle dealers of the same line
22 make with a place of business in the relevant market area
23 to be served by the additional franchisee or the relocated
24 motor vehicle dealership have adequate motor vehicle sales
25 and service facilities, equipment, vehicle parts and
26 qualified personnel to reasonably provide for the needs of

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1 the customer; provided, however, that good cause shall not
2 be shown solely by a desire for further market penetration;
3 (8) whether the establishment of an additional
4 franchise or the relocation of a motor vehicle dealership
5 would be in the public interest;
6 (9) whether there has been a material breach by a motor
7 vehicle dealer of the existing franchise agreement which
8 creates a substantially detrimental effect upon the
9 distribution of the franchiser's motor vehicles in the
10 affected motor vehicle dealer's relevant market area or
11 fraudulent claims for warranty work, insolvency or
12 inability to pay debts as they mature;
13 (10) the effect of an additional franchise or relocated
14 motor vehicle dealership upon the existing motor vehicle
15 dealers of the same line make in the relevant market area
16 to be served by the additional franchisee or relocated
17 motor vehicle dealership; and
18 (11) whether the manufacturer has given reasonable
19 credit to the objecting motor vehicle dealer or dealers and
20 other motor vehicle dealers of the same line make with a
21 place of business in the relevant market area to be served
22 by the additional franchise or relocated motor vehicle
23 dealership or additional motor vehicle dealership or other
24 facility limited to the sale of factory repurchase or late
25 model vehicles, for retail sales of factory repurchase
26 vehicles purchased by the motor vehicle dealer or dealers

SB1687- 53 -LRB100 07840 JLS 17909 b
1 at manufacturer authorized or sponsored auctions.
2 (d) In proceedings under subsection (a) or (b), when
3determining whether good cause has been established for
4cancelling, terminating, refusing to extend or renew, or
5changing or modifying the obligations of the motor vehicle
6dealer as a condition to offering a renewal, replacement, or
7succeeding franchise or selling agreement, the arbitrators or
8Board shall consider all relevant circumstances in accordance
9with subsection (v) of Section 2 of this Act, including but not
10limited to:
11 (1) The amount of retail sales transacted by the
12 franchisee during a 5-year period immediately before the
13 date of the notice of proposed action as compared to the
14 business available to the franchisee.
15 (2) The investment necessarily made and obligations
16 incurred by the franchisee to perform its part of the
17 franchise.
18 (3) The permanency of the franchisee's investment.
19 (4) Whether it is injurious to the public interest for
20 the franchise to be cancelled or terminated or not extended
21 or modified, or the business of the franchise disrupted.
22 (5) Whether the franchisee has adequate motor vehicle
23 sales and service facilities, equipment, vehicle parts,
24 and service personnel to reasonably provide for the need of
25 the customers for the same line make of motor vehicles
26 handled by the franchisee.

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1 (6) Whether the franchisee fails to fulfill the
2 warranty obligations of the manufacturer required to be
3 performed by the franchisee.
4 (7) The extent and materiality of the franchisee's
5 failure to comply with the terms of the franchise and the
6 reasonableness and fairness of those terms.
7 (8) Whether the owners of the franchise had actual
8 knowledge of the facts and circumstances upon which
9 cancellation or termination, failure to extend or renew, or
10 changing or modification of the obligations of the
11 franchisee as a condition to offering a renewal,
12 replacement, or succeeding franchise or selling agreement.
13 (9) The extent to which local market factors in the
14 dealer's relevant market area impacted the dealers sales.
15 For the purpose of this paragraph (9), "local market
16 factors" includes, but is not limited to, the following:
17 (i) the popularity of vehicle brand sold by the dealer as
18 compared to the popularity of competing brands within the
19 dealer's relevant market area; (ii) local demographics;
20 (iii) the proximity of same line-make dealer; (iv) the
21 proximity of motor vehicle manufacturers to the dealer's
22 market; and (v) distance and drive time for customers in
23 the dealer's market area to the dealership impacted the
24 dealer's sales.
25 (e) If the franchiser and the franchisee have not agreed to
26submit a dispute to arbitration, and the dispute did not arise

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1under paragraph (6) of subsection (d) or paragraph (6), (8),
2(10), or (11) of subsection (e) of Section 4 of this Act, then
3a proceeding for a remedy other than damages may be commenced
4by the objecting franchisee in the circuit court of the county
5in which the objecting franchisee has its principal place of
6business, within 60 days of the date the franchisee received
7notice in writing by the franchiser of its determination under
8any provision of this Act other than paragraph (6) of
9subsection (d) or paragraph (6), (8), (10), or (11) of
10subsection (e) of Section 4 of this Act; however, if notice of
11the provision under which the determination has been made is
12not given by the franchiser, then the proceeding shall be
13commenced as provided by Section 14 of this Act.
14 (f) The changes to this Section made by this amendatory Act
15of the 92nd General Assembly (i) apply only to causes of action
16accruing on or after its effective date and (ii) are intended
17to provide only an additional venue for dispute resolution
18without changing any substantive rights under this Act.
19(Source: P.A. 92-272, eff. 1-1-02.)
20 Section 99. Effective date. This Act takes effect upon
21becoming law.
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