Bill Text: IN HB1049 | 2010 | Regular Session | Introduced
Bill Title: Unfair practices of motor vehicle franchises.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2010-01-05 - First reading: referred to Committee on Courts and Criminal Code [HB1049 Detail]
Download: Indiana-2010-HB1049-Introduced.html
Citations Affected: IC 9-13-2; IC 9-23-1-8; IC 9-23-3.
Synopsis: Unfair practices of motor vehicle franchises. Revises
provisions concerning unfair practices related to motor vehicle dealer
franchise agreements.
Effective: Upon passage; July 1, 2010.
January 5, 2010, read first time and referred to Committee on Courts and Criminal Code.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
motor vehicles.
powers:
(1) To consult with and advise the secretary of state.
(2) To suggest rules, including the following:
(A) The contents of forms.
(B) Methods and procedures for the investigation and
evaluation of the qualifications of applicants for licenses.
(C) The criteria upon which to issue, deny, suspend, and
revoke licenses.
(D) Procedures for the investigation into and conduct of
hearings on unfair practices, including determinations of
good cause to terminate a franchise agreement under
IC 9-23-3-27(d)(3).
(1) requiring that the dealer establish or maintain exclusive dealership facilities; or
(2) restricting the ability of the dealer, or the ability of the lessor of the dealer if the dealership facility is being leased, to transfer, sell, lease, or change the use of the dealership premises, whether by sublease, lease, collateral pledge of lease, or other similar agreement.
The term "site control agreement" or "exclusive use agreement" also means an agreement allowing a manufacturer to restrict the ability of a dealer to transfer, sell, or lease the dealership premises by the right of first refusal to purchase or lease, an option to purchase, or an option to lease if the transfer, sale, or lease of the dealership premises is to an individual who is a designated family member (as defined in section 22(c)(3)(A) of this chapter) of the dealer.
(b) Notwithstanding the terms, provisions, or conditions of any agreement or waiver, it is an unfair practice for a manufacturer, distributor, wholesale dealer, distributor branch, distributor representative, factory branch, factory representative, or their officers, agents, or other representatives, to directly or indirectly condition the:
(1) awarding of a franchise to a prospective new motor vehicle dealer;
(2) addition of a line make or franchise to an existing motor vehicle dealer;
(3) renewal of a franchise of an existing motor vehicle dealer;
(4) approval of the relocation of the facility of an existing motor vehicle dealer; or
(5) approval of the sale or transfer of the ownership of a franchise;
on the willingness of a motor vehicle dealer, proposed new motor vehicle dealer, or owner of an interest in the dealership facility to enter into a site control agreement or exclusive use agreement unless separate and reasonable consideration is offered and accepted for the agreement.
(c) If a manufacturer exercises a right of first refusal to purchase or lease or option to purchase or lease with regard to a transfer, sale, or lease of the dealership premises to a person who is not a designated family member of the dealer:
(1) the manufacturer shall notify the dealer of its intent to exercise the right of first refusal to purchase or lease or option to purchase or lease within sixty (60) days from the receipt of:
(A) the completed application forms generally used by a manufacturer to conduct its review; and
(B) copies of all agreements regarding the proposed transfer; and
(2) the exercise of the right of first refusal to purchase or lease or option to purchase or lease must result in the dealer receiving consideration, terms, and conditions that are either the same as or greater than the parties have contracted to receive in connection with the proposed transfer, sale, or lease of the dealership premises.
(d) A provision contained in an agreement entered into after June 30, 2010, that is inconsistent with subsection (c) is voidable at the election of the affected dealer, prospective dealer, or owner of an interest in the dealership facility.
(1) entered into a termination agreement or deferred termination agreement with the manufacturer or successor manufacturer related to the franchise; or
(2) had the franchise canceled, terminated, not renewed, discontinued, rejected, nonassumed, or otherwise ended.
(b) As used in this section, "successor manufacturer" means a
motor vehicle manufacturer that on or after January 1, 2009,
acquires, succeeds to, or assumes any part of the business of
another manufacturer, as the result of any of the following:
(1) A change in ownership, operation, or control of the other
manufacturer, by sale or transfer of assets, corporate stock or
other equity interest, assignment, merger consolidation, joint
venture, redemption, court approved sale, operation of law,
or otherwise.
(2) The termination, suspension, or cessation of a part or all
of the business operations of the other manufacturer.
(3) The discontinuance of the sale of the line make.
(4) A change in the distribution system by the other
manufacturer, whether through a change in distributor or the
other manufacturer's decision to cease conducting business
through a distributor altogether.
(c) Subsection (d) applies for a period of three (3) years after the
latest of the following dates:
(1) The date that a successor manufacturer:
(A) acquires;
(B) succeeds to; or
(C) assumes;
a part of the business of another manufacturer.
(2) The last day that a former franchisee is authorized to
remain in business as a franchise dealer with respect to a
particular franchise under a termination agreement or
deferred termination agreement with another manufacturer
or a successor manufacturer.
(3) The last day that a former franchisee whose franchise was
canceled, terminated, not renewed, discontinued, rejected,
nonassumed, or otherwise ended by another manufacturer or
a successor manufacturer is authorized to remain in business
as a franchised dealer with respect to a particular franchise.
(4) July 1, 2010.
(d) It is an unfair practice for a successor manufacturer to enter
into a same line make franchise with a person or to permit the
relocation of an existing same line make franchise, for a line make
of another manufacturer that would be located or relocated within
the relevant market area of a former franchisee that owned or
leased a dealership facility in that relevant market area without
first offering the additional or relocated franchise to the former
franchisee, or the designated successor of the former franchisee if
the former franchisee is deceased or disabled, at no cost and
without any requirements or restrictions other than those generally
imposed on the manufacturer's other franchisees at that time,
unless one (1) of the following applies:
(1) As a result of the former franchisee's cancellation,
termination, or nonrenewal of the franchise or failure to
continue in business, the other manufacturer had consolidated
the line make with another of its line make for which the other
manufacturer had a franchise with a then existing dealership
facility located within that relevant market area.
(2) The successor manufacturer has paid the former
franchisee, or the designated successor of the former
franchisee if the former franchisee is deceased or disabled, the
highest fair market value of the former franchisee's franchise
on:
(A) the date on which the franchisor announced the action
that resulted in the termination, cancellation, or
nonrenewal of the franchise;
(B) the date on which the addition that resulted in
termination, cancellation, or nonrenewal first became
general knowledge; or
(C) the day twelve (12) months before the date on which
the notice of termination, cancellation, or nonrenewal of
the franchise was issued.
Payment is due within ninety (90) days of the effective date of
the termination, cancellation, or nonrenewal of the franchise.
If the termination, cancellation, or nonrenewal of the
franchise is due to a manufacturer's change in distributors,
the manufacturer may avoid paying fair market value to the
dealer if the new distributor of the manufacturer offers the
dealer a franchise agreement with terms acceptable to the
dealer.
(3) The successor manufacturer proves that it would have had
good cause to terminate the franchise agreement of the
former franchisee, or the successor of the former franchisee,
under IC 9-23-5-3. The determination of whether the
successor manufacturer would have had good cause to
terminate the franchise agreement of the former franchisee,
or the successor of the former franchisee, shall be determined
as required by rules suggested by the advisory board under
IC 9-23-1-8(2)(D) and adopted and enforced by the secretary
of state under IC 4-5-1-11. No successor dealer, other than the
former franchisee, may be appointed or franchised by the
successor manufacturer within the relevant market area of
the former franchisee until the determination of good cause to
terminate the franchise agreement has been decided.
If a successor manufacturer attempts to enter into a same line
make franchise with any person or to permit the relocation of any
existing line make franchise at a location that is within the relevant
market area of two (2) or more former franchisees, the successor
manufacturer may not offer the franchise to any person other than
one (1) of those former franchisees unless the successor
manufacturer can prove that at least one (1) of the exceptions
contained in subdivision (1), (2), or (3) applies to each of those
former franchisees.
(b) This SECTION expires on the earlier of the following:
(1) The date rules suggested under IC 9-23-1-8(2)(D), as amended by this act, are adopted under IC 9-23-3-27, as added by this act, and IC 4-5-1-11.
(2) December 31, 2011.
