Bill Text: MI HB6498 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Trade; vehicles; regulation of motor vehicle manufacturers and dealers and requirements for dealer agreements; revise. Amends secs. 1, 2, 3, 4, 6, 7, 8, 13, 14, 15, 16, 17, 19 & 22a of 1981 PA 118 (MCL 445.1561 et seq.) & adds secs. 14b, 17a & 17b.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-12-31 - Assigned Pa 668'18 With Immediate Effect [HB6498 Detail]
Download: Michigan-2017-HB6498-Engrossed.html
HB-6498, As Passed Senate, December 19, 2018
SUBSTITUTE FOR
HOUSE BILL NO. 6498
A bill to amend 1981 PA 118, entitled
"An act to regulate motor vehicle manufacturers, distributors,
wholesalers, dealers, and their representatives; to regulate
dealings between manufacturers and distributors or wholesalers and
their dealers; to regulate dealings between manufacturers,
distributors, wholesalers, dealers, and consumers; to prohibit
unfair practices; to provide remedies and penalties; and to repeal
certain acts and parts of acts,"
by amending sections 1, 2, 3, 4, 6, 7, 8, 13, 14, 15, 16, 17, 19,
and 22a (MCL 445.1561, 445.1562, 445.1563, 445.1564, 445.1566,
445.1567, 445.1568, 445.1573, 445.1574, 445.1575, 445.1576,
445.1577, 445.1579, and 445.1582a), sections 2, 3, and 4 as amended
by 2010 PA 140, section 6 as amended by 2010 PA 139, section 13 as
amended by 2010 PA 141, section 14 as amended by 2014 PA 354,
sections 15 and 17 as amended by 2010 PA 138, sections 16 and 19 as
amended by 1983 PA 188, and section 22a as added by 1998 PA 456,
and by adding sections 14b, 17a, and 17b.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) This act shall be known and may be cited as the
"motor vehicle franchise act".
(2) For the purposes of this act, the words and phrases
defined in sections 2 to 6 have the meanings ascribed to them in
those sections, except where the context clearly indicates a
different meaning.
Sec. 2. (1) "Closed dealership" means a new motor vehicle
dealer whose dealer agreement has been terminated, canceled,
discontinued, or not renewed.
(2) "Coerce" means to compel or attempt to compel a person to
act in a given manner or to refrain from acting in a given manner
by pressure, intimidation, or threat of harm, damage, breach of
contract, or other adverse consequences, including, but not limited
to, the loss of any benefit available to other new motor vehicle
dealers
of the same line make line-make
in this state. The term
does not include any of the following actions by a manufacturer:
(a) Without conditions, making a good faith recommendation,
exposition, or argument or persuading or attempting to persuade a
person.
(b) Giving notice in good faith to a new motor vehicle dealer
of that dealer's violation of the terms or provisions of a dealer
agreement.
(c) Engaging in any conduct the manufacturer is permitted to
engage in under this act.
(3) "Dealer agreement" means an agreement or contract in
writing between a distributor and a new motor vehicle dealer,
between a manufacturer and a distributor or a new motor vehicle
dealer, or between an importer and a distributor or a new motor
vehicle dealer, that purports to establish the legal rights and
obligations of the parties to the agreement or contract and under
which the dealer purchases and resells new motor vehicles and
conducts service operations. The term includes the sales and
service agreement, regardless of the terminology used to describe
that agreement, and any addenda to the dealer agreement, including
all schedules, attachments, exhibits, and agreements incorporated
by reference into the dealer agreement.
(4) "Designated family member" means any of the following:
(a) If a new motor vehicle dealer who dies or becomes
incapacitated has designated a successor under section 15(6), that
designated successor.
(b) If a new motor vehicle owner dies and has not designated a
successor under section 15(6), the spouse or a child, grandchild,
parent, brother, or sister of a deceased new motor vehicle dealer,
who is entitled to inherit the deceased dealer's ownership interest
in the new motor vehicle dealership under the terms of the dealer's
will, who has otherwise been designated in writing by a deceased
dealer to succeed the deceased dealer in the new motor vehicle
dealership, or who is entitled to inherit under the laws of
intestate succession of this state or the appointed and qualified
personal representative or testamentary trustee of the deceased new
motor vehicle dealer.
(c) If a new motor vehicle dealer becomes incapacitated and
has not designated a successor under section 15(6), the person
appointed by the court as the legal representative of the dealer.
Sec. 3. (1) "Distributor" means any person, including
importer, that is located in or outside of this state and is
engaged in the business of offering for sale, selling, or
distributing new and unaltered motor vehicles to a new motor
vehicle dealer under a dealer agreement, that maintains a factory
representative that is located in or outside of this state for
purposes of conducting that business, or that controls a person
that is located in or outside of this state and offers for sale,
sells, or distributes new and unaltered motor vehicles to a new
motor vehicle dealer. Distributor does not include a person that
alters or converts motor vehicles for sale to a new motor vehicle
dealer.
(2) "Established place of business" means a permanent,
enclosed commercial building located in this state that is easily
accessible and open to the public at all reasonable times and at
which a new motor vehicle dealer may legally conduct business,
including the display and repair of motor vehicles, in compliance
with the terms of all applicable buildings codes, zoning, and other
land-use regulatory ordinances.
(3)
"Executive manager" means an any of the following:
(a) An individual who is employed by a new motor vehicle
dealer in an executive capacity and who has a written employment
agreement with the dealer that includes a right for the executive
manager to purchase a controlling interest in the dealership at a
future time or on the death or incapacity of the dealer.
(b) An individual who is designated by the new motor vehicle
dealer, in an addendum to the dealer agreement, as having authority
and responsibility to operate the dealership on a day-to-day basis.
(4) "Factory branch" means an office maintained by a
manufacturer or distributor for the purpose of selling or offering
to sell vehicles to a distributor, wholesaler, or new motor vehicle
dealer or for directing or supervising any factory or distributor
representatives. The term includes any sales promotion organization
maintained by a manufacturer or distributor that is engaged in
promoting the sale of a particular make of new motor vehicles in
this state to new motor vehicle dealers.
(5) "Factory representative" means an agent or employee of a
manufacturer, distributor, or factory branch retained or employed
for the purpose of making or promoting the sale of new motor
vehicles or for supervising or contracting with new motor vehicle
dealers or proposed motor vehicle dealers.
Sec. 4. (1) "Good faith" means that term as defined in section
2103
1201 of the uniform commercial code, 1962 PA 174, MCL
440.2103.440.1201.
(2) "Good moral character" means good moral character as
defined in and determined under 1974 PA 381, MCL 338.41 to 338.47.
(3) "Line-make" means a collection of models, a series, or a
group of motor vehicles manufactured by or for a particular
manufacturer, distributor, or importer that are offered for sale,
lease, or distribution under a common brand name or mark. All of
the following apply to the term "line-make":
(a) Multiple brand names or marks may constitute a single
line-make, but only if they are included in a common dealer
agreement and the manufacturer, distributor, or importer offers all
of the vehicles that bear the multiple names or marks to its
authorized dealers together, and not separately.
(b) Motor vehicles that share a common brand name or mark may
constitute separate line-makes if those vehicles are of different
vehicle types or are intended for different types of use, and
either of the following applies:
(i) The manufacturer has expressly defined or covered the
subject line-makes of vehicles as separate and distinct line-makes
in the applicable dealer agreements.
(ii) The manufacturer has consistently characterized the
subject vehicles as constituting separate and distinct line-makes
to its dealer network.
(4) "Local market conditions" means certain relevant and
material conditions, criteria, data, and facts, beyond the control
or influence of a new motor vehicle dealer, that have a material
impact on the new motor vehicle dealer's sales performance in the
assigned market area in which the new motor vehicle dealer offers
vehicles for sale or lease. The term may include, but is not
limited to, any of the following:
(a) Demographics in a new motor vehicle dealer's market area.
(b) Geographical and market characteristics in a new motor
vehicle dealer's market area.
(c) Local economic circumstances.
(d) The preferences of motor vehicle purchasers or lessees.
(e) Customer drive distance from a new motor vehicle dealer.
(5) (2)
"Manufacturer" means a
person that manufactures or
assembles new motor vehicles or a distributor, factory branch, or
factory representative.
(6) (3)
"Motor vehicle" means
that term as defined in section
33 of the Michigan vehicle code, 1949 PA 300, MCL 257.33, but does
not include a bus, a tractor, or farm equipment.
(7) (4)
"Motor vehicle service and
repair facility" means a
motor vehicle repair facility, as defined in section 2 of the motor
vehicle service and repair act, 1974 PA 300, MCL 257.1302. The term
does not include a motor vehicle dealer performing maintenance,
diagnosis, vehicle body work, repairs, or other service or repair
work on motor vehicles under the terms of a dealer agreement.
Sec. 6. (1) "Relevant market area" means 1 of the following:
(a) In a county that has a population of more than 150,000,
the area within a radius of 9 miles of the site of the intended
place of business of a proposed new vehicle dealer or the intended
place of business of a new vehicle dealer that plans to relocate
its place of business. For purposes of this section, the 9-mile
distance is determined by measuring the distance between the
nearest surveyed boundary of an existing new motor vehicle dealer's
principal place of business and the nearest surveyed boundary line
of the proposed or relocated new motor vehicle dealer's principal
place of business.
(b) In a county that has a population of 150,000 or fewer, the
area within a radius of 15 miles of the site of the intended place
of business of a proposed new vehicle dealer or the intended place
of business of a new vehicle dealer that plans to relocate its
place of business. For purposes of this section, the 15-mile
distance is determined by measuring the distance between the
nearest surveyed boundary line of an existing new motor vehicle
dealer's principal place of business and the nearest surveyed
boundary line of the proposed or relocated new motor vehicle
dealer's principal place of business.
(2) "Stop-sale order" means a notification issued by a
manufacturer to its franchised new motor vehicle dealers stating
that certain used vehicles in inventory shall not be driven, sold,
or leased, at either retail or wholesale, due to a federal safety
recall or manufacturer issued recall for a defect or a
noncompliance, or a federal emissions recall.
(3) (2)
"Successor manufacturer"
means a manufacturer that
acquires, succeeds to, or assumes any part of the business of
another manufacturer as the result of any of the following:
(a) A change in ownership, operation, or control of a
predecessor manufacturer by sale or transfer of assets, corporate
stock, or other equity interest, assignment, merger, consolidation,
combination, joint venture, redemption, court-approved sale,
operation of law, or any other means.
(b) Termination, suspension, or cessation of a part or all of
the business operations of a predecessor manufacturer.
(c) Discontinuance of the sale of a product line.
(d) A change in distribution system by a predecessor
manufacturer, whether through a change in distributor or the
predecessor manufacturer's decision to cease conducting any
business through a particular distributor.
(4) (3)
"Used motor vehicle"
means a motor vehicle that is not
a new motor vehicle.
(5) (4)
"Used motor vehicle
dealer" means a person that is
engaged in the business of purchasing, selling, exchanging, or
dealing in used motor vehicles and that has an established place of
business in this state at which it conducts that business. The term
does not include a new motor vehicle dealer purchasing, selling,
exchanging, or dealing in used motor vehicles as part of its
business of purchasing, selling, exchanging, or dealing in new
motor vehicles.
Sec. 7. (1) Notwithstanding any agreement, a manufacturer or
distributor shall not cancel, terminate, fail to renew, or refuse
to continue any dealer agreement with a new motor vehicle dealer
unless
the manufacturer or distributor has complied with meets all
of the following:
(a)
Satisfied Has satisfied the notice requirement of section
10.
(b)
Acted Has acted in good faith.
(c) Has good cause for the cancellation, termination,
nonrenewal, or discontinuance.
(2)
Notwithstanding any agreement, good cause shall exist
exists for the purposes of a termination, cancellation, nonrenewal,
or discontinuance under subsection (1)(c) when both of the
following occur:
(a) there There is a failure by the
new motor vehicle dealer
to comply with a provision of the dealer agreement and the
provision is both reasonable and of material significance to the
relationship between the manufacturer or distributor and the new
motor
vehicle dealer. and
(b) the manufacturer or distributor first
acquired actual or
constructive
knowledge of the failure not more than 2 years prior
to
the date on which notification was given pursuant to section
10.Unless otherwise agreed or if the dealer is
participating in a
performance improvement plan or program, the manufacturer or
distributor provided the required notification under section 10 not
more than 2 years after the date on which the manufacturer first
acquired actual or constructive knowledge of the failure.
(3)
If the failure by the of a
new motor vehicle dealer to
comply with a provision of the dealer agreement relates to the
performance of the new motor vehicle dealer in sales or service,
good
cause shall exist exists for the purposes of a termination,
cancellation, nonrenewal, or discontinuance under subsection (1)
when the new motor vehicle dealer fails to effectively carry out
the performance provisions of the dealer agreement if all of the
following have occurred:
(a) The new motor vehicle dealer was given written notice by
the manufacturer or distributor of the failure.
(b) The notification stated that the notice of failure of
performance
was provided pursuant to under
this act and, if
requested in writing by the dealer, the manufacturer provided
written information indicating the methodology and data the
manufacturer or distributor used to measure the new motor vehicle
dealer's performance. However, this subdivision does not require
the manufacturer to disclose any proprietary or confidential
information or other information if disclosure is prohibited by
law.
(c) The new motor vehicle dealer was afforded a reasonable
opportunity to exert good faith efforts to carry out the dealer
agreement.
(d) The failure continued for more than 180 days after the
date
notification was given pursuant to under subdivision (a).
(e) The new motor vehicle dealer was afforded a reasonable
opportunity to present evidence to the manufacturer or distributor
demonstrating the effect of local market conditions that materially
and adversely affected the dealer's performance.
(f) If the manufacturer used a survey or index to measure the
performance of a new motor vehicle dealer, the survey or index was
based on a reasonable sampling of the measured performance
criteria.
(4) Before a final determination by a manufacturer or
distributor that a new motor vehicle dealer has failed to achieve
any performance criteria that are the basis to cancel, terminate,
fail to renew, or refuse to continue any dealer agreement under
this section, the manufacturer or distributor must provide the new
motor vehicle dealer an opportunity to present, in writing,
evidence that demonstrates the effect of local market conditions
that materially and adversely affected the dealer's performance.
(5) If a manufacturer makes a final decision to terminate,
cancel, nonrenew, or discontinue a dealer agreement without
complying with subsection (3)(b) or (e), or does not in good faith
evaluate the effect of the local market conditions presented by the
dealer in writing, good cause does not exist for purposes of
terminating, canceling, nonrenewing, or discontinuing a dealer
agreement.
Sec. 8. Notwithstanding any agreement, the following alone
shall not constitute good cause for the termination, cancellation,
nonrenewal, or discontinuance of a dealer agreement under section
7(1)(c):
(a) A change in ownership of the new motor vehicle dealer's
dealership. This subdivision does not authorize any change in
ownership
which that would have the effect of a sale or an
assignment of the dealer agreement or a change in the principal
management of the dealership without the manufacturer's or
distributor's prior written consent.
(b) The refusal of the new motor vehicle dealer to purchase or
accept delivery of any new motor vehicle parts, accessories, or any
other commodity or services not ordered by the new motor vehicle
dealer.
(c) The fact that the new motor vehicle dealer owns, has an
investment in, participates in the management of, or holds a dealer
agreement for the sale of another make or line of new motor
vehicles, or that the new motor vehicle dealer has established
another make or line of new motor vehicles in the same dealership
facilities as those of the manufacturer or distributor, provided
that the new motor vehicle dealer maintains a reasonable line of
credit for each make or line of new motor vehicles, and that the
new motor vehicle dealer remains in substantial compliance with the
terms and conditions of the dealer agreement and with the
reasonable facilities' requirements of the manufacturer or
distributor.
(d) The fact that the new motor vehicle dealer sells or
transfers ownership of the dealership or sells or transfers capital
stock in the dealership to the new motor vehicle dealer's spouse,
son,
or daughter. , provided that the However, a sale or transfer
shall
described in this subdivision
does not have the effect of a
sale or an assignment of the dealer agreement or a change in the
principal management of the dealership without the manufacturer's
or distributor's prior written consent.
(e) For purposes of this section, the failure of the new motor
vehicle dealer to achieve any performance standard or criteria that
are unreasonable, inequitable, or discriminatory.
Sec. 13. (1) A manufacturer shall not require any new motor
vehicle dealer in this state to do any of the following:
(a) Order or accept delivery of any new motor vehicle, a part
or accessory of a new motor vehicle, equipment, or any other
commodity not required by law that is not voluntarily ordered by
the new motor vehicle dealer. This section does not prevent the
manufacturer from requiring that new motor vehicle dealers carry a
reasonable inventory of models offered for sale by the
manufacturer.
(b) Order or accept delivery of any new motor vehicle with
special features, accessories, or equipment not included in the
list price of the new motor vehicle as publicly advertised by the
manufacturer.
(c) Participate monetarily in any advertising campaign or
contest, purchase any promotional materials, display devices, or
display decorations or materials, or pay or assume directly in
connection with the sale of a new motor vehicle any part of the
cost of a refund, rebate, or discount made by or lawfully imposed
by the manufacturer to or in favor of a consumer, unless
voluntarily agreed to by the dealer.
(d) Enter into any agreement with the manufacturer or do any
other act prejudicial to the new motor vehicle dealer by
threatening to terminate a dealer agreement or any contractual
agreement
or understanding existing between the dealer and the
manufacturer. Notice in good faith to any dealer of the dealer's
violation of any terms or provisions of the dealer agreement does
not constitute a violation of this act.
(e) Change the capital structure of the new motor vehicle
dealership or the means by or through which the dealer finances the
operation of the dealership, if the dealership at all times meets
any reasonable capital standards determined by the manufacturer in
accordance with uniformly applied criteria.
(f) Refrain from participation in the management of,
investment in, or the acquisition of, any other line of new motor
vehicles or related products at or in any of the following:
(i) At a location different from the location used by the
dealer for the sale or service of new motor vehicles or related
products of the manufacturer, if the dealer maintains a reasonable
line of credit for each make or line of vehicle, remains in
compliance with reasonable facilities requirements, remains in
substantial compliance with capital requirements, and makes no
change in the principal management of the dealer.
(ii) In facilities at the same location as, but separated
from, the facilities used by the dealer for the sale or service of
new motor vehicles or related products of the manufacturer, if the
dealer maintains a reasonable line of credit for each make or line
of vehicle, remains in compliance with minimum space requirements
and reasonable facilities requirements, remains in substantial
compliance with capital requirements, and does not make a change in
the principal management of the dealer.
(iii) Unless the manufacturer otherwise objects based on other
reasonable business considerations, in the same facilities used by
the dealer for the sale or service of new motor vehicles or related
products of the manufacturer, if the dealer maintains a reasonable
line of credit for each make or line of vehicle, remains in
compliance with reasonable facilities requirements, remains in
substantial compliance with capital requirements, and does not make
a change in the principal management of the dealer. The
manufacturer has the burden of proving reasonable business
considerations for purposes of this subparagraph.
(g) Change the location of the new motor vehicle dealership or
make any substantial alterations to the dealership premises, if
changing the location or making the alterations is unreasonable.
(h) Prospectively assent to a release, assignment, novation,
waiver, or estoppel that would relieve any person from liability
imposed by this act; require that any dealer agreement be governed
by the laws of a state other than this state; or require referral
of any controversy between a new motor vehicle dealer and a
manufacturer to a person other than the duly constituted courts of
this state, or of the United States located in this state, if the
referral would be binding on the new motor vehicle dealer. This
subdivision does not apply to an agreement between the parties,
made at the time of a controversy, to refer the controversy to a
court of the United States located outside this state or agree at
the time of an arbitration to conduct the arbitration either in or
outside of this state. A provision in a dealer agreement that
violates this subdivision is void and unenforceable.
(i) Construct or substantially alter a facility or premises if
the same item or design component, consisting of interior or
exterior elements of the sales, service, administrative, or parts
components, was constructed or substantially altered within the
previous 10 years and that construction or alteration was required
and approved by the manufacturer or distributor.
(j) Subject to subsection (3), require a new motor vehicle
dealer to purchase goods or services to make improvements to the
dealer's facilities from a vendor that is selected, identified, or
designated by the manufacturer or an affiliate of the manufacturer,
unless the dealer is allowed to obtain the goods or services from a
vendor chosen by the dealer if all of the following are met:
(i) The goods or services offered by the vendor chosen by the
dealer are of the same material, quality, and overall design.
(ii) The vendor chosen by the dealer is approved by the
manufacturer. A manufacturer shall not unreasonably withhold its
consent for purposes of this subparagraph.
(iii) The manufacturer is not providing substantial
House Bill No. 6498 as amended December 13, 2018
reimbursement or compensation to the dealer for the goods or
services.
(k) Subject to subsection (3), require a new motor vehicle
dealer to lease signs, except for signs that contain the
manufacturer's intellectual property or free-standing signs that
are not directly attached to a building, or other manufacturer
image or design elements or trade dress, from a vendor selected,
identified, or designated by the manufacturer, unless the dealer is
allowed to purchase the signs or other image or design elements or
trade dress from a vendor chosen by the dealer if all of the
following are met:
(i) The signs offered by the vendor chosen by the dealer are
of the same material, quality, and overall design.
(ii) The signs are approved by the manufacturer. A
manufacturer shall not unreasonably withhold its consent for
purposes of this subparagraph.
(l) Except as required by the manufacturer for warranty
repairs, recall repairs, or other services or programs paid for by
the manufacturer, or unless otherwise agreed, require a new motor
vehicle dealer to purchase fluids or lubricants from a particular
vendor, if fluids or lubricants of the same material and quality
are available from another vendor.
(2) If, during the 10-year period described in subsection
(1)(i), [ ] a manufacturer establishes a new program, standard,
policy, bonus, incentive, rebate, or other benefit, a new motor
vehicle dealer is eligible for the new program, standard, policy,
bonus, incentive, rebate, or other benefit if the dealer fully
House Bill No. 6498 as amended December 13, 2018
complies with the new standards set by the manufacturer in the new
program, standard, policy, bonus, incentive, or other benefit.
(3) Subsection (1)(j) and subsection (1)(k) do not allow a new
motor vehicle dealer or a vendor chosen by the dealer to impair,
infringe upon, or eliminate, directly or indirectly, the
intellectual property rights of the manufacturer, including, but
not limited to, the manufacturer's intellectual property rights in
any trademarks or trade dress, or other intellectual property
interests owned or controlled by the manufacturer, or to permit a
new motor vehicle dealer to erect or maintain signs that do not
conform to the manufacturer's intellectual property rights or
trademark or trade dress usage guidelines.
(4) As used in this section:
[(A) "Construction" means the construction of new sales or service facilities by a new motor vehicle dealer, or the substantial remodeling, improvement, renovation, expansion, replacement, or alteration of a dealer's existing sales or service facilities. the term does not include installation of signs or other image elements that are subject to the intellectual property rights of the manufacturer, including logos, trademarks, trade dress, patents, or other intellectual propertY.]
(B) "Goods" does not include movable displays, brochures, and
promotional materials containing material that is subject to the
intellectual property rights of a manufacturer.
(C) "Substantial reimbursement" means an amount equal to or
greater than the cost savings that would result if a new motor
vehicle dealer utilized a vendor of the dealer's own selection
instead of using the vendor selected, identified, or designated by
the manufacturer or an affiliate of the manufacturer.
(D) "Substantial alteration" means an alteration that has a
major impact on the architectural features, characteristics,
appearance, or integrity of a structure or lot. The term does not
include routine maintenance that is reasonably necessary to
maintain a dealership facility in attractive condition and does not
include any changes to items protected by federal intellectual
property rights.
Sec. 14. (1) A manufacturer shall not do any of the following:
(a) Adopt, change, establish, or implement a plan or system
for the allocation and distribution of new motor vehicles to new
motor vehicle dealers that is arbitrary or capricious or based on
unreasonable sales and service standards, or modify an existing
plan or system that causes the plan or system to be arbitrary or
capricious or based on unreasonable sales and service standards.
(b) If requested in writing by a new motor vehicle dealer,
fail or refuse to advise or disclose to the dealer the basis on
which
new motor vehicles of the same line make line-make are
allocated or distributed to new motor vehicle dealers in this state
and the basis on which the current allocation or distribution is
being made or will be made to that new motor vehicle dealer.
(c) Refuse to deliver to a new motor vehicle dealer in
reasonable quantities and within a reasonable time after receipt of
the dealer's order, any new motor vehicles that are covered by the
dealer agreement and specifically publicly advertised in this state
by the manufacturer as available for immediate delivery. However,
the failure to deliver any motor vehicle is not considered a
violation of this act if the failure is due to an act of God, a
work stoppage or delay due to a strike or labor difficulty, a
shortage of materials, a lack of manufacturing capacity, a freight
embargo, or other cause over which the manufacturer has no control.
If a manufacturer requires a new motor vehicle dealer to purchase
essential service tools with a purchase price in the aggregate of
more than $7,500.00 in order to receive a specific model of
vehicle, the manufacturer shall on written request provide the
dealer with a good faith estimate in writing of the number of
vehicles of that specific model the dealer will be allocated in the
model year in which the dealer is required to purchase the tool.
(d) Increase the price of a new motor vehicle that the new
motor vehicle dealer had ordered, and then eventually delivered to,
the same retail consumer for whom the vehicle was ordered, if the
order was made before the dealer's receipt of a written official
price increase notification. A sales contract signed by a private
retail consumer and binding on the dealer constitutes evidence of a
vehicle order. In the event of manufacturer price reductions or
cash rebates, the dealer shall pass on the amount of any reduction
or rebate received by the dealer to the private retail consumer.
Any price reduction in excess of $5.00 shall apply to all vehicles
in the dealer's inventory that were subject to the price reduction.
A price difference applicable to new model or series motor vehicles
at the time of the introduction of the new models or the series is
not considered a price increase or price decrease. This subdivision
does not apply to price changes caused by any of the following:
(i) The addition to a motor vehicle of required or optional
equipment under state or federal law.
(ii) In the case of foreign made vehicles or components,
revaluation of the United States dollar.
(iii) Any increase in transportation charges due to an
increase in rates charged by a common carrier or transporter.
(e) Offer any of the following to any new motor vehicle dealer
of
a specific line make line-make
without making the same offer
available
to all other new motor vehicle dealers of the same line
make:line-make:
(i) Any specific model or series of new motor vehicles
manufactured
for that line make.line-make.
(ii) Any incentives, rebates, bonuses, promotional items, or
other similar benefits payable to the new motor vehicle dealer for
selling new motor vehicles or purchasing new motor vehicles from
the manufacturer.
(iii) Any consumer rebates, vehicle price reductions, or
interest rate reductions or other changes to finance terms that
benefit the consumer.
(iv) Any program that provides marketing and sales assistance
to new motor vehicle dealers, including, but not limited to,
internet listings, sales leads, marketing programs, and dealer
recognition programs.
(f) Release to an outside party, except under subpoena or in
an administrative or judicial proceeding to which the new motor
vehicle dealer or the manufacturer are parties, any business,
financial, or personal information that has been provided by the
dealer to the manufacturer, unless the new motor vehicle dealer
gives written consent.
(g) Deny a new motor vehicle dealer the right to associate
with another new motor vehicle dealer for any lawful purpose.
(h) Directly or indirectly own, operate, or control a new
motor vehicle dealer, including, but not limited to, a new motor
vehicle dealer engaged primarily in performing warranty repair
services on motor vehicles under the manufacturer's warranty, or a
used motor vehicle dealer. This subdivision does not apply to any
of the following:
(i) The ownership, operation, or control by a manufacturer of
a new motor vehicle dealer for a period of not more than 24 months
during the transition from 1 owner or operator to another. The
circuit court may extend the 24-month time period for an additional
12 months upon receipt of an application from a manufacturer and a
showing of good cause.
(ii) The ownership, operation, or control of a new motor
vehicle dealer or a used motor vehicle dealer by a manufacturer
while it is being sold under a bona fide contract or purchase
option to the operator of the new motor vehicle dealer or the used
motor vehicle dealer.
(iii) The direct or indirect ownership by a manufacturer of an
entity that owns, operates, or controls a new motor vehicle dealer
of
the same line make line-make
franchised by the manufacturer, if
all of the following conditions are met:
(A) As of May 1, 2000, the manufacturer for a period of not
less than 12 months has continuously owned, directly or indirectly,
1 or more new motor vehicle dealers in this state.
(B) All of the new motor vehicle dealers selling the
manufacturer's motor vehicles in this state trade exclusively in
the
manufacturer's line make.line-make.
(C) As of January 1, 2000, not fewer than 1/2 of the new motor
vehicle
dealers of the line make line-make
within this state own
and operate 2 or more new motor vehicle dealer facilities in the
geographic territory or area covered by the franchise agreement
with the manufacturer.
(D) For a manufacturer or any entity in which the manufacturer
has more than a 45% ownership interest, the manufacturer or entity
has not acquired, operated, or controlled a new motor vehicle
dealer that the manufacturer did not directly or indirectly own as
of May 1, 2000.
(iv) The acquisition by a manufacturer of a used motor vehicle
dealer's license for the purpose of selling motor vehicles to
nonretail buyers.
(i) Sell any new motor vehicle directly to a retail customer
other than through franchised dealers, unless the retail customer
is a nonprofit organization or a federal, state, or local
government or agency. This subdivision does not prohibit a
manufacturer from providing information to a consumer for the
purpose of marketing or facilitating the sale of new motor vehicles
or from establishing a program to sell or offer to sell new motor
vehicles through franchised new motor vehicle dealers that sell and
service new motor vehicles produced by the manufacturer.
(j) Prevent or attempt to prevent by contract or otherwise any
new motor vehicle dealer from changing the executive management of
a new motor vehicle dealer unless the manufacturer, having the
burden of proof, can show that the change of executive management
will result in executive management by a person or persons who are
not of good moral character or who do not meet reasonable,
preexisting, and equitably applied standards of the manufacturer.
If a manufacturer rejects a proposed change in the executive
management, the manufacturer shall give written notice of its
reasons
to the dealer within 60 75
days after receiving written
notice from the dealer of the proposed change and all related
information reasonably requested by the manufacturer, or the change
in executive management is considered approved.
(k) Unreasonably withhold consent to the sale, transfer, or
exchange of a new motor vehicle dealership to a qualified buyer
that meets the manufacturer's uniformly applied requirements and
criteria to be a new motor vehicle dealer and that is capable of
being licensed as a new motor vehicle dealer in this state.
(l) Fail to respond in writing to a request for
consent to a
sale,
transfer, or exchange of a new motor vehicle dealership
within
60 days after receiving a written application from the new
motor
vehicle dealer on the forms generally utilized by the
manufacturer
for that purpose and containing the information
required
in that application. Failure to respond to a request for
consent
within the 60-day period is considered consent to the sale,
transfer,
or exchange.to a written
request from a new motor vehicle
dealer that has submitted an agreement for the sale, transfer, or
exchange of a new motor vehicle dealership. The manufacturer shall
provide the dealer with all forms generally utilized and requested
by the manufacturer for the approval of a sale, transfer, or
exchange of a new motor vehicle dealership not later than 30 days
after receiving a written request from the dealer for the forms. A
manufacturer shall have 75 days after the date the manufacturer
receives all the properly completed forms and information generally
utilized and requested by the manufacturer to approve or disapprove
the sale, transfer, or exchange of the new motor vehicle
dealership. The failure of the manufacturer to approve or
disapprove the sale, transfer, or exchange within the 75-day time
period is considered approval.
(m) Unfairly prevent a new motor vehicle dealer that sells,
transfers, or exchanges a new motor vehicle dealership from
receiving reasonable compensation for the value of the new motor
vehicle dealership.
(n)
Unless Subject to section
13(1)(i) and (2), unless the
manufacturer enters into a written agreement with the new motor
vehicle dealer that clearly states the amount of the incentive
payments and the period of time during which the incentive payments
are paid, offer incentive payments to a new motor vehicle dealer in
consideration for a new motor vehicle dealer's promise to do any of
the following:
(i) Make material alterations to any facilities at the
dealer's place of business.
(ii) Construct new facilities for the conduct of the business
of the dealership.
(o) Require unreasonable improvements to a facility as a
condition to entering into or renewing a dealer agreement.
(p) Authorize a motor vehicle service and repair facility to
perform motor vehicle warranty repairs and recall work, unless the
work meets any of the following:
(i) Is required for emergency service of a vehicle.
(ii) Is work performed at a service center owned or operated
by a manufacturer on a manufacturer-owned vehicle.
(iii) Is work performed by employees of a fleet operator on
its own vehicles.
(q) Own a motor vehicle service and repair facility, except
that a manufacturer may own a service and repair facility for the
repair of manufacturer-owned vehicles.
(r) Engage in conduct that meets all of the following:
(i) Materially affects a new motor vehicle dealer.
(ii) Is capricious, is not in good faith, or is
unconscionable.
(iii) Causes material damage to a new motor vehicle dealer.
(s)
Impose unreasonable standards of performance on a new
motor
vehicle dealer or require, Require,
attempt to require,
coerce, or attempt to coerce a new motor vehicle dealer to adhere
to unreasonable performance standards that are not applied
uniformly to other similarly situated new motor vehicle dealers.
(t) Use or consider the performance of a new motor vehicle
dealer in selling the manufacturer's vehicles or the new motor
vehicle dealer's ability to satisfy any minimum sales or market
share quota or responsibility relating to the sale of the new motor
vehicles in determining any of the following:
(i) The new motor vehicle dealer's eligibility to purchase
program, certified, or other used motor vehicles from the
manufacturer.
(ii) The volume, type, or model of program, certified, or
other used motor vehicles that a new motor vehicle dealer is
eligible to purchase from the manufacturer.
(iii) The price of any program, certified, or other used motor
vehicle that the new motor vehicle dealer purchases from the
manufacturer.
(iv) The availability or amount of any discount, credit,
rebate, or sales incentive that the new motor vehicle dealer is
eligible to receive from the manufacturer in connection with any
program, certified, or other used motor vehicle offered for sale by
the manufacturer.
(u) Require that a new motor vehicle dealer provide its
customer lists or service files to the manufacturer, unless
necessary for the sale and delivery of a new motor vehicle to a
consumer, to validate and pay consumer or dealer incentives, or in
connection with the submission of a claim to the manufacturer for
services supplied by the new motor vehicle dealer for any claim for
warranty repairs. This section does not limit a manufacturer's
authority to require or use customer information to satisfy any
safety or recall obligation.
(v) Establish a performance standard or program for measuring
new motor vehicle dealer performance that may have a material and
adverse impact on a new motor vehicle dealer that is not fair,
reasonable, and equitable. For purposes of this subdivision, all of
the following apply if a manufacturer does not provide a complete
program description explaining the performance standard or program
details to a new motor vehicle dealer on or before the beginning of
the program:
(i) Within 10 days after receiving a request from the new
motor vehicle dealer, the manufacturer shall provide the new motor
vehicle dealer with a written description of how a performance
standard or program is designed.
(ii) Within 30 days after receiving a written request from the
new motor vehicle dealer, the manufacturer shall provide
information
relating to how the performance standard or program
applies
to the new motor vehicle dealer.all
of the following to the
dealer:
(A) The specific information relied on by the manufacturer
relating to how the performance standard or program was applied to
the new motor vehicle dealer. The manufacturer is not required to
disclose any proprietary or confidential information for purposes
of this sub-subparagraph. However, the result of the application of
a performance standard or program to a particular new motor vehicle
dealer is not considered proprietary or confidential as between the
manufacturer and that particular new motor vehicle dealer.
(B) An explanation as to how the manufacturer applies a
performance standard or program to a new motor vehicle dealer's
performance.
(iii) On written request, a manufacturer or a new motor
vehicle dealer shall meet with the other party, in person or
telephonically, under reasonable circumstances and as agreed to by
both parties, to present, explain, or discuss information the
manufacturer is required to provide under subparagraph (ii)(A) and
(B).
(w) If a new motor vehicle dealer sold or leased a new motor
vehicle to a customer that exported the motor vehicle to a foreign
country or resold the motor vehicle, and at the time of delivery to
the customer the vehicle was titled and registered in this state or
another state of the United States by the dealer, refuse to
allocate, sell, or deliver new motor vehicles to the dealer; charge
back or withhold payments or other things of value for which the
dealer is otherwise eligible under a sales promotion, program, or
contest; prevent a new motor vehicle dealer from participating in
any sales promotion, program, or contest; or take or threaten to
take any other adverse action against a new motor vehicle dealer,
including, but not limited to, reducing vehicle allocations or
terminating or threatening to terminate a dealer agreement, unless
the manufacturer proves that the new motor vehicle dealer knew or
reasonably should have known that the customer intended to export
or resell the motor vehicle. In an action by a new motor vehicle
dealer for a violation of this subdivision, there is a rebuttable
presumption that a new motor vehicle dealer did not know or should
not reasonably have known of its customer's intent to export or
resell a motor vehicle if the vehicle was titled and registered in
the United States, and the manufacturer bears the burden of
rebutting that presumption.
(x) If a new motor vehicle dealer is a party to a dealer
agreement on August 4, 2010, and the dealer agreement provides for
sale
of a competing line make line-make
of new motor vehicles at
the
same place of business where the manufacturer's line make line-
make is sold, require or otherwise coerce the new motor vehicle
dealer to remove the sale or servicing of new motor vehicles of
that
competing line make line-make
from that place of business.
(y) Prevent, attempt to prevent, prohibit, coerce, or attempt
to coerce a new motor vehicle dealer from charging a consumer any
documentary preparation fee allowed to be charged by the dealer
under the laws of this state or require the disclosure of the
documentary preparation fee in a written format that is not
otherwise required by law.
(z) Prohibit, prevent, or attempt to prevent a new motor
vehicle dealer from transferring a dealership to or naming a
spouse, child, or executive manager as dealership successor to own
and operate the dealership unless the manufacturer, having the
burden of proof, can show that at the time the successor is named
or the dealership is transferred, the successor spouse, child, or
executive manager of the dealer is not of good moral character, has
a felony conviction, does not meet the manufacturer's uniformly
applied requirements and criteria to be a dealer, or is otherwise
disqualified from holding a license as a new motor vehicle dealer
under any applicable statute of this state. All of the following
apply for purposes of this subdivision:
(i) The manufacturer is required to provide the new motor
vehicle dealer, in writing, with its current uniformly applied
requirements and criteria to be a dealer within 30 days of
receiving the new motor vehicle dealer's written request for the
uniformly applied requirements and criteria to be a dealer.
(ii) Within 75 days after receiving the manufacturer's current
uniformly applied written requirements and criteria to be a dealer
from the manufacturer, the new motor vehicle dealer may submit a
written request to the manufacturer for a meeting, in person or
telephonically, with the manufacturer, under reasonable
circumstances as agreed to by both parties, to address the
requirements and criteria. The parties shall meet, in person or
telephonically, within 45 days after the new motor vehicle dealer's
request for a meeting, unless otherwise agreed. During the meeting,
the manufacturer shall provide the dealer an opportunity to
present, in writing, facts, data, and evidence that establish that
there are factors beyond the reasonable control or influence of the
new motor vehicle dealer that materially and adversely impact the
proposed transferee's ability to meet the manufacturer's current
uniformly applied written requirements to be a dealer. If the
manufacturer does not provide the new motor vehicle dealer an
opportunity to present, in writing, facts, data, and evidence, or
does not in good faith evaluate the effect of the facts, data, and
evidence presented by the dealer, then the manufacturer may not
prohibit or prevent the new motor vehicle dealer from transferring
the dealership to a spouse, child, or executive manager, or naming
a spouse, child, or executive manager as the dealership successor
to own and operate the dealership.
(iii) The manufacturer must make any decision to decline the
new motor vehicle dealer's request to transfer a new motor vehicle
dealership to a spouse, child, or executive manager, or name a
spouse, child, or executive manager as dealership successor, in
good faith, including the opportunity for a meeting, in person or
telephonically as provided in subparagraph (ii). If requested by
the new motor vehicle dealer in writing, the manufacturer must
provide the new motor vehicle dealer with the information that it
relied on when concluding that the spouse, child, or executive
manager did not satisfy the uniformly required requirements and
criteria to be a new motor vehicle dealer. However, the
manufacturer is not required to disclose proprietary or
confidential information and is not required to disclose any
information if disclosure is prohibited by law.
(aa) Make any material change in a dealer agreement without
giving the new motor vehicle dealer written notice of the change at
least 30 days before the effective date of the change. In any
dispute under this subdivision, the new motor vehicle dealer has
the burden of proving the modification is sufficiently significant
and material to require notice under this subdivision.
(bb) Unless otherwise agreed, require a new motor vehicle
dealer to sell or offer to sell an extended service contract or
extended maintenance plan offered, sold, backed by, or sponsored by
the manufacturer.
(2) A manufacturer, either directly or through any subsidiary,
shall not terminate, cancel, fail to renew, or discontinue any
lease of a new motor vehicle dealer's established place of business
except for a material breach of the lease.
(3) Within 30 days after receiving a written request from the
dealer, a manufacturer shall provide a new motor vehicle dealer
that is seeking to sell, transfer, or exchange a new motor vehicle
dealership with all forms generally utilized and requested by the
manufacturer in connection with the sale, transfer, or exchange of
a new motor vehicle dealership.
(4) A failure by a manufacturer or distributor to approve or
disapprove a dealer's request to sell, transfer, or exchange its
new motor vehicle dealership within the 75-day period after it
receives a completed application, including all required
House Bill No. 6498 as amended December 13, 2018
documentation and information requested by the manufacturer or
distributor, is considered approval by the manufacturer [of] the
sale, transfer, or exchange of the dealership.
(5) (3)
This section applies to a
manufacturer that sells,
services, displays, or advertises its new motor vehicles in this
state.
Sec. 14b. (1) A manufacturer shall not exercise a right of
first refusal or other right to acquire a new motor vehicle
dealership from a new motor vehicle dealer, unless the manufacturer
does all of the following:
(a) Within 75 days after the manufacturer receives a complete
written application, including all required documentation and
information requested by the manufacturer or distributor from a new
motor vehicle dealer for a proposed sale, transfer, or exchange of
a new motor vehicle dealership by the new motor vehicle dealer,
submitted on the forms generally utilized by the manufacturer for
that purpose and containing all of the information required by the
manufacturer, notifies the dealer in writing that it intends to
exercise the right to acquire the dealership.
(b) Pays to the dealer the same or greater consideration as
the dealer has contracted to receive in connection with the
proposed transfer or sale of all or substantially all of the
dealership assets, stock, or other ownership interest, including,
but not limited to, the purchase of, lease of, or assignment or
transfer of any leased interest in, real property or improvements
related to the transfer or sale of the dealership.
(c) Assumes all of the duties, obligations, and liabilities
concerning the manufacturer's line-makes that the proposed
transferee was to assume in the agreements between the proposed
transferee and the dealer and with respect to which the
manufacturer exercised the right of first refusal or other right to
acquire the new motor vehicle dealership.
(d) Reimburses the proposed transferee for all reasonable
expenses incurred in evaluating, investigating, and negotiating the
transfer of the dealership before the manufacturer's exercise of
its right of first refusal to acquire the dealership. All of the
following apply for purposes of this subdivision:
(i) The proposed transferee shall submit an itemized list of
its expenses to the manufacturer not later than 60 days after the
manufacturer exercises its right of first refusal to acquire the
motor vehicle franchise. However, if requested by the manufacturer,
the proposed transferee must provide the list before the
manufacturer exercises its right of first refusal.
(ii) The manufacturer must reimburse the proposed transferee
for its reasonable expenses not later than 60 days after it
receives the itemized list described in subparagraph (i).
(2) Except as provided in this section, a manufacturer that
exercises its right of first refusal under this section and the new
motor vehicle dealer are not liable to any person as a result of a
manufacturer exercising its right of first refusal.
(3) A manufacturer that exercises a right of first refusal
under this section may assign the lease or convey the real property
of the new motor vehicle dealership.
(4) As used in this section:
(a) "Proposed transferee" means the person to which a new
motor vehicle dealership would have been transferred, or was
proposed to be transferred, if the manufacturer did not exercise a
right of first refusal to acquire the dealership from a new motor
vehicle dealer.
(b) "Reasonable expenses" includes the usual and customary
legal and accounting fees charged for similar work, as well as
expenses associated with the evaluation and investigation of any
real property on which a new motor vehicle dealership is operated.
Sec.
15. (1) Any designated family member of a deceased or
incapacitated
new motor vehicle dealer or an If
a new motor vehicle
dealer dies or becomes incapacitated, any designated family member
of the dealer or executive manager of the dealership may succeed
the dealer in the ownership or operation of the dealership under
the existing dealer agreement if the designated family member or
executive manager gives the manufacturer written notice of his or
her intention to succeed to the dealership within 120 days after
the dealer's death or incapacity, agrees to be bound by all of the
terms
and conditions of the existing dealer agreement, and meets
the
current criteria generally applied by the manufacturer in
qualifying
new motor vehicle dealers. is
designated a successor in
a written instrument filed with the manufacturer, and meets the
manufacturer's uniformly applied requirements and criteria to be a
dealer. A manufacturer may refuse to continue the existing dealer
agreement with the designated family member or executive manager
only for good cause.
(2) A manufacturer may request from a designated family member
or executive manager described in subsection (1) a completed
application form and any personal and financial information that is
reasonably necessary to determine whether the existing dealer
agreement should continue. The designated family member or
executive manager shall supply the completed application form and
personal and financial information promptly on request. As used in
this subsection and subsection (3), "application form" means the
application form generally used by the manufacturer in connection
with a proposal to continue a dealer agreement under this section.
(3) If a manufacturer believes that good cause exists for
refusing to continue a dealer agreement under this section with a
designated family member or executive manager described in
subsection
(1), the manufacturer may, within 60 75 days after
receiving notice of the designated family member's or executive
manager's intent to succeed the dealer in the ownership and
operation
of the dealership, or within 60 75
days after receiving
the requested personal and financial information and completed
application form, whichever is later if both occur, serve on the
designated family member or executive manager notice of its refusal
to approve the succession.
(4) A notice of refusal served by a manufacturer under
subsection (3) shall state the specific grounds for the refusal to
approve the succession and that discontinuance of the agreement
shall
take effect not fewer than on
a date specified in the notice
that is at least 90 days after the date the notice is served.
(5) If a notice of refusal described in subsection (3) is not
served
within the 60-day 75-day period described in subsection (3),
the dealer agreement shall continue in effect and is subject to
termination only as otherwise permitted under this act.
(6)
This Subject to section
14(z), this section does not
preclude a new motor vehicle dealer from designating any person as
his
or her the dealer's successor by written instrument filed with
the
manufacturer. If the dealer files an instrument described in
this
subsection, it alone shall determine the succession rights to
the
management and operation of the dealership.filing a written
instrument with the manufacturer designating any person as the
dealer's successor. A written instrument filed under this
subsection shall determine the succession rights to the management,
ownership, and operation of the dealership if, at the time of
succession, the person designated in the written instrument meets
the manufacturer's uniformly applied requirements and criteria to
be
a dealer.
Sec. 16. (1) As used in this section, "relocate" and
"relocation" shall not include the relocation of a new motor
vehicle dealer within 2 miles of its established place of business.
(2) Before a manufacturer or distributor enters into a dealer
agreement establishing or relocating a new motor vehicle dealer
within
in a relevant market area where the same line make line-make
is
represented, the manufacturer or distributor shall give provide
written
notice to each new motor vehicle dealer of the same line
make
in the relevant market area of its
intention to establish an
additional
dealer or to relocate an existing dealer within in that
relevant market area to each new motor vehicle dealer that
represents that line-make in the relevant market area on the date
the notice is provided.
(3) Within 30 days after receiving the notice provided for in
subsection (2), or within 30 days after the end of any appeal
procedure provided by the manufacturer or distributor, a new motor
vehicle dealer may bring a declaratory judgment action in the
circuit court for the county in which the new motor vehicle dealer
is located to determine whether good cause exists for the
establishing or relocating of a proposed new motor vehicle dealer.
Once
an action has been is filed, the manufacturer or distributor
shall not establish or relocate the proposed new motor vehicle
dealer until the circuit court has rendered a decision on the
matter.
An A court shall give
precedence to an action brought
pursuant
to under this section shall be given precedence over
all
other civil matters on the court's docket.
(4)
This section shall does not apply to the reopening or
replacement in a relevant market area of a closed dealership that
has been closed within the preceding year, if the established place
of business of the reopened or replacement dealer is within 2 miles
of the established place of business of the closed dealership.
(5) In determining whether good cause exists for establishing
or relocating an additional new motor vehicle dealer for the same
line
make, line-make, the court shall take into consideration the
existing circumstances, including, but not limited to, the
following:
(a) Permanency of the investment.
(b) Effect on the retail new motor vehicle business and the
consuming public in the relevant market area.
(c) Whether it is injurious or beneficial to the public
welfare.
(d)
Whether the new motor vehicle dealers of the same line
make
line-make in that relevant market area are providing adequate
competition and convenient consumer care for the motor vehicles of
that
line make line-make in the market area, including the adequacy
of motor vehicle sales and qualified service personnel.
(e) Whether the establishment or relocation of the new motor
vehicle dealer would promote competition.
(f) Growth or decline of the population and the number of new
motor vehicle registrations in the relevant market area.
(g) The effect on the relocating dealer of a denial of its
relocation into the relevant market area.
Sec.
17. (1) Each new motor vehicle A
manufacturer shall
specify in writing to each of its new motor vehicle dealers
licensed in this state the dealer's obligations for preparation,
delivery, recall service, and warranty service on its products. A
manufacturer shall compensate a new motor vehicle dealer for recall
or warranty service required of the dealer by the manufacturer. A
manufacturer shall provide a new motor vehicle dealer with the
schedule of compensation to be paid to the dealer for parts, work,
and service, and the time allowance for the performance of the work
and service. A manufacturer shall also include in the schedule of
compensation a reasonable time allowance for labor for diagnostic
work and repair work, included in the manufacturer's labor time
allowance or listed as a separate compensable item. A dealer may
submit a request for an additional time allowance for either
diagnostic or repair time, that includes any information and
documentation reasonably required by the manufacturer, and a
manufacturer shall not unreasonably deny that request. The schedule
of compensation shall include reasonable compensation for parts
reimbursement and labor rates as determined under section 17a(1).
(2)
A schedule of compensation described in subsection (1)
shall
include reasonable compensation for diagnostic work and
repair
service and labor. Time allowances for the diagnosis and
performance
of warranty work and service shall be reasonable and
adequate
for the work to be performed. In determining what
constitutes
reasonable compensation under this section, the
principal
factor to be given consideration is the prevailing wage
rates
being paid by dealers in the community in which the dealer is
doing
business, and the compensation of a dealer for warranty labor
shall
not be less than the rates charged by the dealer for like
service
to retail customers for nonwarranty service and repairs, if
those
rates are reasonable.
(2) (3)
A manufacturer shall not do any of
the following:
(a) Fail to perform any recall or warranty obligation.
(b) Fail to include in written notices of factory recalls to
new motor vehicle owners and dealers the expected date by which
necessary parts and equipment will be available to dealers for the
correction of the defects.
(c) Fail to compensate a new motor vehicle dealer licensed in
this state for repairs made in connection with the recall.
(3) (4)
A manufacturer shall pay a claim
made by a new motor
vehicle dealer under this section for labor and parts within 30
days after its approval. A manufacturer shall either approve or
disapprove a claim within 30 days after receiving the claim,
submitted on the form generally used by the manufacturer and
containing the information usually required in the form. Any claim
not specifically disapproved in writing within 30 days after the
manufacturer receives the claim form is considered approved, and
the manufacturer shall pay the claim within 30 days.
(4) (5)
Subject to subsection (10), subsections (5) and (10),
if a manufacturer has approved and paid a new motor vehicle dealer
for a claim, the manufacturer may only charge the claim back to the
dealer if 1 of the following is met:
(a)
The manufacturer shows that the claim is fraudulent. or
false.
However, the manufacturer may not
charge back the amount
paid
if the claim is found to be false or fraudulent more than 2 6
years after payment.
(b) The manufacturer shows that the claim is false,
unsubstantiated, lacks proper documentation, or shows an improper
diagnosis process or improper repair procedures. However, the
manufacturer may not charge back the amount paid if the claim is
found to be false, unsubstantiated, to lack proper documentation,
or show an improper diagnosis process or repair procedures more
than 12 months after payment.
(5) If a manufacturer seeks to charge back a claim under
subsection (4) on the basis that the claim is false,
unsubstantiated, or lacks proper documentation, or shows an
improper diagnosis process or improper repair procedures, a new
motor vehicle dealer has 14 days after the date the new motor
vehicle dealer receives notice of the chargeback to supply
documentation that meets the manufacturer's requirements to support
the validity of the claim, and if the claim is valid, the
manufacturer shall not charge back the claim to the new motor
vehicle dealer.
(6) A manufacturer may not deny a claim made under this
section because of a new motor vehicle dealer's incidental failure
to comply with a specific claim processing requirement, such as a
clerical error, that does not call into question the legitimacy of
the claim.
(7) A new motor vehicle dealer shall maintain all records of
warranty repairs, including the related time records of its
employees, for at least 2 years following payment of any warranty
claim.
(8) A manufacturer shall compensate a new motor vehicle dealer
for any sales or service promotion events, incentives, programs, or
activities sponsored by the manufacturer, in accordance with
established guidelines for those events, incentives, programs, or
activities.
(9) A manufacturer shall pay a claim for compensation owed to
a new motor vehicle dealer under subsection (8) for a promotion
event,
incentive, program, or activity within 10 15 days
after its
approval. A manufacturer shall either approve or disapprove a claim
for compensation described in this subsection within 30 days after
receiving the claim, submitted on the form generally used by the
manufacturer and containing the information usually required in the
form. Any claim for compensation the manufacturer does not
specifically disapprove in writing within 30 days after receiving
the claim form is considered approved, and the manufacturer shall
pay the amount of the claim within 30 days. A manufacturer may only
charge
back a claim for compensation within 12 months after the
date
of payment, or within 12 months after the end of a program if
the
duration of the program is 1 year or less.described in this
subsection under subsection (4).
(10) A manufacturer may not charge a claim back to a new motor
vehicle dealer after the claim is paid unless a representative of
the manufacturer first meets in person or by video teleconference
or telephone with an officer or employee of the dealer designated
by the new motor vehicle dealer, or responds in writing to any
dealer written request for information. All of the following apply
if a meeting is held under this subsection:
(a) At the meeting, the manufacturer shall provide a detailed
explanation, with supporting documentation, of the basis for each
proposed chargeback of a claim to the dealer and a written
statement containing the basis on which the claim or claims of the
dealer were selected for audit or review by the manufacturer.
However, the manufacturer is not required to disclose proprietary
or confidential information about a customer or other dealer under
this subdivision, and is not required to disclose any information
if disclosure is prohibited by law.
(b) After the meeting, the manufacturer shall provide the
motor vehicle dealer's representative a reasonable period of time
of at least 45 days to respond to the proposed chargebacks. The
manufacturer shall provide a longer period of time for the dealer
to respond if warranted by the volume of proposed chargebacks.
(c) An unexcused failure or refusal of the dealer or
designated officer or employee of the dealer to schedule, attend,
or participate in the meeting with the manufacturer relieves the
manufacturer from any further obligation under this subsection.
(11) A manufacturer may conduct an audit of the records of a
new motor vehicle dealer relating to a warranty or promotion claim
submitted by a new motor vehicle dealer under this section, but the
manufacturer may only conduct that audit in the time periods
allowed for warranty or promotional claim chargebacks under this
section.
Sec. 17a. (1) The principal factors in determining what
constitutes reasonable compensation for parts reimbursement and
labor rates for purposes of section 17(1) are as follows:
(a) The retail price charged for parts by other similarly
situated new motor vehicle dealers in a comparable geographic area
in this state that offer the same line-make of vehicles.
(b) The retail labor rates of other similarly situated
new motor vehicle dealers in a comparable geographic area in this
state that offer the same line-make of vehicles.
(2) All of the following apply for purposes of subsection (1):
(a) A new motor vehicle dealer that is demanding warranty
compensation from a manufacturer at a rate that exceeds the agreed-
upon rates shall establish the retail rate it customarily charges
for parts by submitting to the manufacturer 100 consecutive and
sequential nonwarranty customer-paid service repair orders that
contain repairs for like services or all nonwarranty customer-paid
service repair orders covering a period of 90 consecutive days,
whichever is less. A dealer shall not submit a service repair order
under this subsection that covers repairs made more than 180 days
before the date of the submission.
(b) If a manufacturer determines from any set of repair orders
submitted under subdivision (a) that the calculated retail markup
rate for parts or the retail labor rate is substantially higher or
lower than the rate currently on record with the manufacturer, the
manufacturer may request additional documentation for a period of
either 60 days before or 60 days after the time period for which
the repair orders were submitted for purposes of an adjustment.
(c) A new motor vehicle dealer's retail rate percentage for
parts is calculated by determining the dealer's total parts sales
in the submitted repair orders and dividing that amount by the
dealer's total cost for the purchase of those parts, subtracting 1
from that amount, and then multiplying by 100. The manufacturer
must approve or disapprove the declared retail rate within 45 days
after the date of submission by the dealer. The declared retail
rate is effective beginning 30 days after approval by the
manufacturer, unless the manufacturer disapproves and timely
contests the dealer's declared rate. If a manufacturer fails to
disapprove within 45 days following submission by the dealer, the
declared retail rate is considered approved. A new motor vehicle
dealer's retail rate for labor is calculated by determining the
dealer's total labor sales from the submitted repair orders and
dividing that amount by the total number of hours that generated
those sales. The manufacturer must approve or disapprove the
declared retail rate within 45 days after the date the dealer
submits the repair orders. The declared retail labor rate is
effective beginning 30 days after approval by the manufacturer,
unless the manufacturer disapproves and timely contests the
dealer's declared rate.
(d) A manufacturer may contest a new motor vehicle dealer's
declared retail markup rate for parts or retail labor rate not
later than 45 days after submission and declaration of the retail
markup rate for parts or retail labor rate by the dealer by
reasonably substantiating that the rate is inaccurate, incomplete,
or unreasonable in light of the factors described in subsection
(1). In contesting a new motor vehicle dealer's declared rate, a
manufacturer shall provide a written explanation of the reasons for
disagreement with the declared rate. If the declared retail markup
rate for parts or retail labor rate is contested, then the
manufacturer shall propose an adjustment of the rate. If the
manufacturer contests the dealer's declared parts or labor rate,
the parties shall attempt to resolve the dispute through an
internal dispute resolution procedure of the manufacturer, if
available, provided that the dispute resolution procedure occurs
within a reasonable amount of time that does not exceed 45 days
after notification of disagreement with the dealer's declared rate.
(e) If an internal dispute resolution procedure described in
subdivision (d) is unsuccessful or does not occur in a timely
manner, a new motor vehicle dealer may file a complaint in the
circuit court for the county in which the new motor vehicle dealer
is located, within 60 days after it receives the adjustment
proposed by the manufacturer or within 30 days after conclusion of
the internal dispute resolution procedure, whichever is later. In
an action under this subdivision, the manufacturer has the burden
of proof to demonstrate that the retail markup rate for parts or
retail labor rate declared by the dealer is inaccurate, incomplete,
or unreasonable.
(3) The following work shall not be considered in calculating
the retail rate customarily charged by a new motor vehicle dealer
for parts and labor under this section:
(a) Repairs for manufacturer special events, specials, or
promotional discounts for retail customer repairs.
(b) Parts sold at wholesale.
(c) Routine maintenance not covered under any retail customer
warranty, such as oil changes, fluids, filters, or belts not
provided in the course of repairs.
(d) Nuts, bolts, or fasteners or similar items that do not
have an individual part number.
(e) Tires, tire repair, tire rotation, or other tire services.
(f) Vehicle reconditioning.
(g) Installation or repair of accessories.
(h) Repairs of vehicle body damage caused by a collision, a
road hazard, the force of the elements, vandalism, or theft.
(i) Vehicle emission or safety inspections required by law.
(j) Manufacturer approved and reimbursed goodwill or policy
repairs or replacements.
(k) Repairs for which volume discounts have been negotiated
with government agencies.
(4) If a manufacturer furnishes a part or component to a new
motor vehicle dealer to use in performing repairs under a recall,
campaign service action, or warranty repair at no cost to the
dealer, the manufacturer shall compensate the dealer for the
authorized repair part or component in the same manner as warranty
parts compensation under section 17 by paying the dealer the retail
rate markup on the cost for the part or component as listed in the
price schedule of the manufacturer less the cost for the part or
component.
(5) A manufacturer shall not require a new motor vehicle
dealer to establish the retail rate customarily charged by the
dealer for parts and labor by an unduly burdensome or time-
consuming method or by requiring information that is unduly
burdensome or time consuming to provide, including, but not limited
to, part-by-part or transaction-by-transaction calculations. A
dealer shall not declare a retail rate for parts or labor or both
more than once in a calendar year.
(6) A manufacturer shall not limit access to sales or service
promotion events, incentives, programs, or activities sponsored by
the manufacturer or limit allocation of vehicles or parts to a new
motor vehicle dealer based solely on the new motor vehicle dealer's
exercise of its rights under this section. This subsection does not
prohibit a manufacturer from increasing the price of a motor
vehicle or part in the normal course of business.
Sec. 17b. (1) A manufacturer shall compensate its new motor
vehicle dealers a reasonable amount for all labor and parts
required by the manufacturer to perform recall repairs.
(2) If parts or a remedy are not reasonably available to
perform a recall service or repair on a used vehicle held for sale
by a new motor vehicle dealer authorized to sell and service new
vehicles of the same line-make within 30 days of the manufacturer
issuing the initial notice of recall, and the manufacturer has
issued a stop-sale order on the vehicle, the manufacturer shall
compensate the dealer at a prorated rate of at least 1% of the
value of the vehicle per month beginning on the date that is 30
days after the date on which the stop-sale order was provided to
the dealer, until the earlier of either of the following occurs:
(a) The date the recall or remedy parts are made available.
(b) The date the dealer sells, trades, or otherwise disposes
of the affected used motor vehicle.
(3) For purposes of subsection (2), the value of a used motor
vehicle is the average trade-in value for used vehicles as
indicated in an independent third-party guide for the year, make,
and model of the recalled vehicle.
(4) This section applies only to the following:
(a) A used motor vehicle that is subject to safety or
emissions recalls under, and recalled in accordance with, federal
law, if a stop-sale order has been issued and repair parts or
remedy remains unavailable for 30 days or longer.
(b) A new motor vehicle dealer that holds an affected used
vehicle for sale that meets both of the following:
(i) Is in inventory at the time the stop-sale order was
issued, or was taken in the used vehicle inventory of the dealer as
a consumer trade-in in connection with the purchase of a new motor
vehicle from the dealer after the stop-sale order was issued.
(ii) Is of the same line-make as a new motor vehicle that the
dealer is authorized by a manufacturer to sell or on which the
dealer is authorized to perform recall repairs.
(5) A manufacturer shall not reduce the amount of compensation
otherwise owed to a new motor vehicle dealer, whether through a
chargeback, removal of the dealer from an incentive program, or
reduction in amount owed under an incentive program, solely because
the new motor vehicle dealer has submitted a claim for
reimbursement under this section. This subsection does not apply to
an action by a manufacturer that is applied uniformly among all new
motor vehicle dealers of the same line-make in this state.
(6) All reimbursement claims made by new motor vehicle dealers
under this section for recall remedies or repairs, or for
compensation if a part or repair is not reasonably available and
the vehicle is subject to a stop-sale order, are subject to the
same limitations and requirements as a warranty reimbursement claim
made under section 17. In the alternative, a manufacturer may
compensate its new motor vehicle dealers under a national recall
compensation program if the compensation under the program is equal
to or greater than that provided under this section, or the
manufacturer and dealer otherwise agree.
(7) A manufacturer may direct the manner and method the dealer
must use to demonstrate the inventory status of an affected used
motor vehicle to determine eligibility under this section, if that
manner and method is not unduly burdensome and does not require
information that is unduly burdensome to provide.
(8) This section does not require a manufacturer to provide
total compensation to a new motor vehicle dealer that would exceed
the total average trade-in value of the affected used motor vehicle
as originally determined under subsection (3).
(9) Any remedy provided to a dealer under this section is
exclusive and may not be combined with any other state or federal
recall compensation remedy.
Sec. 19. (1) Notwithstanding the terms, provisions, or
conditions of any dealer agreement, a manufacturer or distributor
shall indemnify and hold harmless its new motor vehicle dealers
against any judgment for damages or settlement agreed to in writing
by the manufacturer, including, but not limited to, court costs and
reasonable attorney's fees of the new motor vehicle dealer arising
solely
out of the complaints, claims, or actions from defects ,
which
that relate to the manufacture, assembly, or design of
vehicles, parts, or accessories, or other functions by the
manufacturer or distributor, that are beyond the control of the
dealer, including, without limitation, the selection by the
manufacturer or distributor of parts or components for the vehicle,
or any damages to merchandise occurring in transit to the dealer if
the carrier is designated by the manufacturer or distributor. If
the
a complaint, claim, or action contains independent
allegations
against the new motor vehicle dealer, the manufacturer shall pay
only that portion of the costs, fees, and judgment or settlement
which
that is directly related to the manufacture, assembly, or
design
of the vehicle, parts, or accessories , or other functions
of the manufacturer that are beyond the control of the dealer.
(2) A manufacturer must respond to a request for
indemnification under this section within 30 days after the date
the new motor vehicle dealer submits all documents necessary to
support its request to the manufacturer.
(3) (2)
A dealer shall have no does not have a right to
indemnification
or attorney's attorney fees as provided in under
subsection (1) unless the dealer has given reasonable notice in
writing of the complaint, claim, or action to the manufacturer or
distributor.
Sec. 22a. (1) The 1998 amendments to this act that added this
section
apply to agreements in existence on the effective date of
this
section December 30, 1998 and to agreements entered into or
renewed
after the effective date of this section.December 30, 1998.
(2) The amendments to this act made by the amendatory act that
added this subsection apply to dealer agreements entered into or
renewed, or existing dealer agreements that are materially and
substantially amended, after the effective date of this subsection.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
