Bill Text: MN SF679 | 2013-2014 | 88th Legislature | Engrossed
Bill Title: Motor vehicle manufacturers and distributors unfair practices provision and dealer licensing regulations modifications
Sponsorship: Moderate Partisan Bill (Democrat 4-1)
Status: (Introduced - Dead) 2013-02-28 - Comm report: To pass as amended and re-refer to Transportation and Public Safety [SF679 Detail]
Download: Minnesota-2013-SF679-Engrossed.html
1.2relating to transportation; motor vehicles; amending regulation of motor vehicle
1.3manufacturers and distributors;amending Minnesota Statutes 2012, sections
1.480E.13; 168.27, by adding a subdivision.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 80E.13, is amended to read:
1.780E.13 UNFAIR PRACTICES BY MANUFACTURERS, DISTRIBUTORS,
1.8FACTORY BRANCHES.
1.9It is unlawful and an unfair practice for a manufacturer, distributor, or factory branch
1.10to engage in any of the following practices:
1.11(a) delay, refuse, or fail to deliver new motor vehicles or new motor vehicle parts or
1.12accessories in reasonable time and in reasonable quantity relative to the new motor vehicle
1.13dealer's facilities and sales potential in the dealer's relevant market area, after having
1.14accepted an order from a new motor vehicle dealer having a franchise for the retail sale of
1.15any new motor vehicle sold or distributed by the manufacturer or distributor, if the new
1.16motor vehicle or new motor vehicle parts or accessories are publicly advertised as being
1.17available for delivery or actually being delivered. This clause is not violated, however, if
1.18the failure is caused by acts or causes beyond the control of the manufacturer;
1.19(b) refuse to disclose to any new motor vehicle dealer handling the same line make,
1.20the manner and mode of distribution of that line make within the relevant market area;
1.21(c) obtain money, goods, service, or any other benefit from any other person with
1.22whom the dealer does business, on account of, or in relation to, the transaction between
1.23the dealer and the other person, other than for compensation for services rendered, unless
1.24the benefit is promptly accounted for, and transmitted to, the new motor vehicle dealer;
2.1(d) increase prices of new motor vehicles which the new motor vehicle dealer had
2.2ordered for private retail consumers prior to the dealer's receiving the written official price
2.3increase notification. A sales contract signed by a private retail consumer shall constitute
2.4evidence of each order if the vehicle is in fact delivered to that customer. In the event of
2.5manufacturer price reductions, the amount of any reduction received by a dealer shall be
2.6passed on to the private retail consumer by the dealer if the retail price was negotiated on
2.7the basis of the previous higher price to the dealer;
2.8(e) offer any refunds or other types of inducements to any new motor vehicle dealer
2.9for the purchase of new motor vehicles of a certain line make without making the same
2.10offer to all other new motor vehicle dealers in the same line make within geographic areas
2.11reasonably determined by the manufacturer;
2.12(f) release to any outside party, except under subpoena or in an administrative or
2.13judicial proceeding involving the manufacturer or dealer, any business, financial, or
2.14personal information which may be provided by the dealer to the manufacturer, without
2.15the express written consent of the dealer or unless pertinent to judicial or governmental
2.16administrative proceedings or to arbitration proceedings of any kind;
2.17(g) deny any new motor vehicle dealer the right of free association with any other
2.18new motor vehicle dealer for any lawful purpose;
2.19(h) unfairly discriminate among its new motor vehicle dealers with respect to
2.20warranty reimbursement or authority granted its new vehicle dealers to make warranty
2.21adjustments with retail customers;
2.22(i)compete with a new motor vehicle dealer in the same line make operating under
2.23an agreement or franchise from the same manufacturer, distributor, or factory branch own
2.24or operate, either directly or indirectly through any subsidiary, parent company, or firm, a
2.25motor vehicle dealership or permanent facility for display of new vehicles located within the
2.26state of the same line make as any of the vehicles manufactured, assembled, or distributed
2.27by that manufacturer, distributor, or factory branch. A manufacturer, distributor, or factory
2.28branch is considered to becompeting in violation of this clause when it has an ownership
2.29interest, other than a passive interest held for investment purposes, in a dealership of its
2.30line make located within the state. A manufacturer, distributor, or factory branch shall not,
2.31however, be deemed to becompeting violating this clause when operating a dealership,
2.32either temporarily or for a reasonable period, which is for sale to any qualified independent
2.33person at a fair and reasonable price, or when involved in a bona fide relationship in which
2.34an independent person has made a significant investment subject to loss in the dealership
2.35and can reasonably expect to acquire full ownership and full management and operational
2.36control of the dealership within a reasonable time on reasonable terms and conditions. A
3.1new motor vehicle dealer licensed under section 168.27 is presumed to be injured and has
3.2standing to bring an action under section 80E.17 for a violation of this clause;
3.3(j) prevent a new motor vehicle dealer from transferring or assigning a new motor
3.4vehicle dealership to a qualified transferee. There shall be no transfer, assignment of the
3.5franchise, or major change in the executive management of the dealership, except as is
3.6otherwise provided in sections80E.01 to
80E.17 , without consent of the manufacturer,
3.7which shall not be withheld without good cause. In determining whether good cause exists
3.8for withholding consent to a transfer or assignment, the manufacturer, distributor, factory
3.9branch, or importer has the burden of proving that the transferee is a person who is not
3.10of good moral character or does not meet the franchisor's existing and reasonable capital
3.11standards and, considering the volume of sales and service of the new motor vehicle
3.12dealer, reasonable business experience standards in the market area. Denial of the request
3.13must be in writing and delivered to the new motor vehicle dealer within 60 days after the
3.14manufacturer receives the completed application customarily used by the manufacturer,
3.15distributor, factory branch, or importer for dealer appointments. If a denial is not sent
3.16within this period, the manufacturer shall be deemed to have given its consent to the
3.17proposed transfer or change. In the event of a proposed sale or transfer of a franchise, the
3.18manufacturer, distributor, factory branch, or importer shall be permitted to exercise a right
3.19of first refusal to acquire the franchisee's assets or ownership if:
3.20(1) the franchise agreement permits the manufacturer, distributor, factory branch, or
3.21importer to exercise a right of first refusal to acquire the franchisee's assets or ownership
3.22in the event of a proposed sale or transfer;
3.23(2) the proposed transfer of the dealership or its assets is of more than 50 percent of
3.24the ownership or assets;
3.25(3) the manufacturer, distributor, factory branch, or importer notifies the dealer in
3.26writing within 60 days of its receipt of the complete written proposal for the proposed sale
3.27or transfer on forms generally utilized by the manufacturer, distributor, factory branch,
3.28or importer for such purposes and containing the information required therein and all
3.29documents and agreements relating to the proposed sale or transfer;
3.30(4) the exercise of the right of first refusal will result in the dealer and dealer's
3.31owners receiving the same or greater consideration with equivalent terms of sale as is
3.32provided in the documents and agreements submitted to the manufacturer, distributor,
3.33factory branch, or importer under clause (3);
3.34(5) the proposed change of 50 percent or more of the ownership or of the dealership
3.35assets does not involve the transfer or sale of assets or the transfer or issuance of stock
3.36by the dealer or one or more dealer owners to a family member, including a spouse,
4.1child, stepchild, grandchild, spouse of a child or grandchild, brother, sister, or parent of
4.2the dealer owner; to a manager who has been employed in the dealership for at least four
4.3years and is otherwise qualified as a dealer operator; or to a partnership or corporation
4.4owned and controlled by one or more of such persons; and
4.5(6) the manufacturer, distributor, factory branch, or importer agrees to pay the
4.6reasonable expenses, including reasonable attorney fees, which do not exceed the usual
4.7customary and reasonable fees charged for similar work done for other clients incurred
4.8by the proposed new owner and transferee before the manufacturer, distributor, factory
4.9branch, or importer exercises its right of first refusal, in negotiating and implementing the
4.10contract for the proposed change of ownership or transfer of dealership assets. However,
4.11payment of such expenses and attorney fees shall not be required if the dealer has not
4.12submitted or caused to be submitted an accounting of those expenses within 20 days after
4.13the dealer's receipt of the manufacturer, distributor, factory branch, or importer's written
4.14request for such an accounting. The manufacturer, distributor, factory branch, or importer
4.15may request such an accounting before exercising its right of first refusal. The obligation
4.16created under this clause is enforceable by the transferee;
4.17(k) threaten to modify or replace or modify or replace a franchise with a succeeding
4.18franchise that would adversely alter the rights or obligations of a new motor vehicle dealer
4.19under an existing franchise or that substantially impairs the sales or service obligations or
4.20investments of the motor vehicle dealer;
4.21(l) unreasonably deny the right to acquire factory program vehicles to any dealer
4.22holding a valid franchise from the manufacturer to sell the same line make of vehicles,
4.23provided that the manufacturer may impose reasonable restrictions and limitations on the
4.24purchase or resale of program vehicles to be applied equitably to all of its franchised
4.25dealers. For the purposes of this paragraph, "factory program vehicle" has the meaning
4.26given the term in section80E.06, subdivision 2 ;
4.27(m) fail or refuse to offer to its same line make franchised dealers all models
4.28manufactured for that line make, other than alternative fuel vehicles as defined in section
4.29216C.01, subdivision 1b
. Failure to offer a model is not a violation of this section if
4.30the failure is not arbitrary and is due to a lack of manufacturing capacity, a strike, labor
4.31difficulty, or other cause over which the manufacturer, distributor, or factory branch has
4.32no control;
4.33(n) require a dealer to pay an extra fee, or remodel, renovate, or recondition the
4.34dealer's existing facilities, or purchase unreasonable advertising displays, training, tools,
4.35or other materials, or to require the dealer to establish exclusive facilities or dedicated
4.36personnel as a prerequisite to receiving a model or a series of vehicles;
5.1(o) require a dealer to adhere to performance standards that are not applied uniformly
5.2to other similarly situated dealers.
5.3A performance standard, sales objective, or program for measuring dealership performance
5.4that may have a material effect on a dealer, including the dealer's right to payment under
5.5any incentive or reimbursement program, and the application of the standard or program
5.6by a manufacturer, distributor, or factory branch must be fair, reasonable, equitable, and
5.7based on accurate information.
5.8A manufacturer, distributor, or factory branch has the burden of proving that the
5.9performance standard, sales objective, or program for measuring dealership performance
5.10is fair and reasonable under this subdivision; or
5.11(p) unreasonably reduce a dealer's area of sales effectiveness without giving at
5.12least 90 days' notice of the proposed reduction. The change may not take effect if the
5.13dealer commences a civil action to determine whether there is good cause for the change
5.14within the 90 days' notice period. The burden of proof in such an action shall be on the
5.15manufacturer or distributor.
5.16 Sec. 2. Minnesota Statutes 2012, section 168.27, is amended by adding a subdivision
5.17to read:
5.18 Subd. 8a. Manufacturers and distributors. (a) A motor vehicle manufacturer or
5.19distributor is not required to be licensed under this section to sell new motor vehicles
5.20solely to a licensed new motor vehicle dealer. A manufacturer or distributor of passenger
5.21automobiles or trucks may not obtain a new motor vehicle dealer license.
5.22(b) For purposes of this subdivision, "manufacturer or distributor of passenger
5.23automobiles or trucks" includes affiliates under common management and control, but
5.24does not include a manufacturer or distributor of:
5.25(1) new and unused motor vehicle bodies to be installed on incomplete motor vehicles;
5.26(2) neighborhood electric vehicles, as defined in section 169.011, subdivision 47; or
5.27(3) medium-speed electric vehicles, as defined in section 169.011, subdivision 39.
1.3manufacturers and distributors;amending Minnesota Statutes 2012, sections
1.480E.13; 168.27, by adding a subdivision.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2012, section 80E.13, is amended to read:
1.780E.13 UNFAIR PRACTICES BY MANUFACTURERS, DISTRIBUTORS,
1.8FACTORY BRANCHES.
1.9It is unlawful and an unfair practice for a manufacturer, distributor, or factory branch
1.10to engage in any of the following practices:
1.11(a) delay, refuse, or fail to deliver new motor vehicles or new motor vehicle parts or
1.12accessories in reasonable time and in reasonable quantity relative to the new motor vehicle
1.13dealer's facilities and sales potential in the dealer's relevant market area, after having
1.14accepted an order from a new motor vehicle dealer having a franchise for the retail sale of
1.15any new motor vehicle sold or distributed by the manufacturer or distributor, if the new
1.16motor vehicle or new motor vehicle parts or accessories are publicly advertised as being
1.17available for delivery or actually being delivered. This clause is not violated, however, if
1.18the failure is caused by acts or causes beyond the control of the manufacturer;
1.19(b) refuse to disclose to any new motor vehicle dealer handling the same line make,
1.20the manner and mode of distribution of that line make within the relevant market area;
1.21(c) obtain money, goods, service, or any other benefit from any other person with
1.22whom the dealer does business, on account of, or in relation to, the transaction between
1.23the dealer and the other person, other than for compensation for services rendered, unless
1.24the benefit is promptly accounted for, and transmitted to, the new motor vehicle dealer;
2.1(d) increase prices of new motor vehicles which the new motor vehicle dealer had
2.2ordered for private retail consumers prior to the dealer's receiving the written official price
2.3increase notification. A sales contract signed by a private retail consumer shall constitute
2.4evidence of each order if the vehicle is in fact delivered to that customer. In the event of
2.5manufacturer price reductions, the amount of any reduction received by a dealer shall be
2.6passed on to the private retail consumer by the dealer if the retail price was negotiated on
2.7the basis of the previous higher price to the dealer;
2.8(e) offer any refunds or other types of inducements to any new motor vehicle dealer
2.9for the purchase of new motor vehicles of a certain line make without making the same
2.10offer to all other new motor vehicle dealers in the same line make within geographic areas
2.11reasonably determined by the manufacturer;
2.12(f) release to any outside party, except under subpoena or in an administrative or
2.13judicial proceeding involving the manufacturer or dealer, any business, financial, or
2.14personal information which may be provided by the dealer to the manufacturer, without
2.15the express written consent of the dealer or unless pertinent to judicial or governmental
2.16administrative proceedings or to arbitration proceedings of any kind;
2.17(g) deny any new motor vehicle dealer the right of free association with any other
2.18new motor vehicle dealer for any lawful purpose;
2.19(h) unfairly discriminate among its new motor vehicle dealers with respect to
2.20warranty reimbursement or authority granted its new vehicle dealers to make warranty
2.21adjustments with retail customers;
2.22(i)
2.23
2.24or operate, either directly or indirectly through any subsidiary, parent company, or firm, a
2.25motor vehicle dealership or permanent facility for display of new vehicles located within the
2.26state of the same line make as any of the vehicles manufactured, assembled, or distributed
2.27by that manufacturer, distributor, or factory branch. A manufacturer, distributor, or factory
2.28branch is considered to be
2.29interest, other than a passive interest held for investment purposes, in a dealership of its
2.30line make located within the state. A manufacturer, distributor, or factory branch shall not,
2.31however, be deemed to be
2.32either temporarily or for a reasonable period, which is for sale to any qualified independent
2.33person at a fair and reasonable price, or when involved in a bona fide relationship in which
2.34an independent person has made a significant investment subject to loss in the dealership
2.35and can reasonably expect to acquire full ownership and full management and operational
2.36control of the dealership within a reasonable time on reasonable terms and conditions. A
3.1new motor vehicle dealer licensed under section 168.27 is presumed to be injured and has
3.2standing to bring an action under section 80E.17 for a violation of this clause;
3.3(j) prevent a new motor vehicle dealer from transferring or assigning a new motor
3.4vehicle dealership to a qualified transferee. There shall be no transfer, assignment of the
3.5franchise, or major change in the executive management of the dealership, except as is
3.6otherwise provided in sections
3.7which shall not be withheld without good cause. In determining whether good cause exists
3.8for withholding consent to a transfer or assignment, the manufacturer, distributor, factory
3.9branch, or importer has the burden of proving that the transferee is a person who is not
3.10of good moral character or does not meet the franchisor's existing and reasonable capital
3.11standards and, considering the volume of sales and service of the new motor vehicle
3.12dealer, reasonable business experience standards in the market area. Denial of the request
3.13must be in writing and delivered to the new motor vehicle dealer within 60 days after the
3.14manufacturer receives the completed application customarily used by the manufacturer,
3.15distributor, factory branch, or importer for dealer appointments. If a denial is not sent
3.16within this period, the manufacturer shall be deemed to have given its consent to the
3.17proposed transfer or change. In the event of a proposed sale or transfer of a franchise, the
3.18manufacturer, distributor, factory branch, or importer shall be permitted to exercise a right
3.19of first refusal to acquire the franchisee's assets or ownership if:
3.20(1) the franchise agreement permits the manufacturer, distributor, factory branch, or
3.21importer to exercise a right of first refusal to acquire the franchisee's assets or ownership
3.22in the event of a proposed sale or transfer;
3.23(2) the proposed transfer of the dealership or its assets is of more than 50 percent of
3.24the ownership or assets;
3.25(3) the manufacturer, distributor, factory branch, or importer notifies the dealer in
3.26writing within 60 days of its receipt of the complete written proposal for the proposed sale
3.27or transfer on forms generally utilized by the manufacturer, distributor, factory branch,
3.28or importer for such purposes and containing the information required therein and all
3.29documents and agreements relating to the proposed sale or transfer;
3.30(4) the exercise of the right of first refusal will result in the dealer and dealer's
3.31owners receiving the same or greater consideration with equivalent terms of sale as is
3.32provided in the documents and agreements submitted to the manufacturer, distributor,
3.33factory branch, or importer under clause (3);
3.34(5) the proposed change of 50 percent or more of the ownership or of the dealership
3.35assets does not involve the transfer or sale of assets or the transfer or issuance of stock
3.36by the dealer or one or more dealer owners to a family member, including a spouse,
4.1child, stepchild, grandchild, spouse of a child or grandchild, brother, sister, or parent of
4.2the dealer owner; to a manager who has been employed in the dealership for at least four
4.3years and is otherwise qualified as a dealer operator; or to a partnership or corporation
4.4owned and controlled by one or more of such persons; and
4.5(6) the manufacturer, distributor, factory branch, or importer agrees to pay the
4.6reasonable expenses, including reasonable attorney fees, which do not exceed the usual
4.7customary and reasonable fees charged for similar work done for other clients incurred
4.8by the proposed new owner and transferee before the manufacturer, distributor, factory
4.9branch, or importer exercises its right of first refusal, in negotiating and implementing the
4.10contract for the proposed change of ownership or transfer of dealership assets. However,
4.11payment of such expenses and attorney fees shall not be required if the dealer has not
4.12submitted or caused to be submitted an accounting of those expenses within 20 days after
4.13the dealer's receipt of the manufacturer, distributor, factory branch, or importer's written
4.14request for such an accounting. The manufacturer, distributor, factory branch, or importer
4.15may request such an accounting before exercising its right of first refusal. The obligation
4.16created under this clause is enforceable by the transferee;
4.17(k) threaten to modify or replace or modify or replace a franchise with a succeeding
4.18franchise that would adversely alter the rights or obligations of a new motor vehicle dealer
4.19under an existing franchise or that substantially impairs the sales or service obligations or
4.20investments of the motor vehicle dealer;
4.21(l) unreasonably deny the right to acquire factory program vehicles to any dealer
4.22holding a valid franchise from the manufacturer to sell the same line make of vehicles,
4.23provided that the manufacturer may impose reasonable restrictions and limitations on the
4.24purchase or resale of program vehicles to be applied equitably to all of its franchised
4.25dealers. For the purposes of this paragraph, "factory program vehicle" has the meaning
4.26given the term in section
4.27(m) fail or refuse to offer to its same line make franchised dealers all models
4.28manufactured for that line make, other than alternative fuel vehicles as defined in section
4.30the failure is not arbitrary and is due to a lack of manufacturing capacity, a strike, labor
4.31difficulty, or other cause over which the manufacturer, distributor, or factory branch has
4.32no control;
4.33(n) require a dealer to pay an extra fee, or remodel, renovate, or recondition the
4.34dealer's existing facilities, or purchase unreasonable advertising displays, training, tools,
4.35or other materials, or to require the dealer to establish exclusive facilities or dedicated
4.36personnel as a prerequisite to receiving a model or a series of vehicles;
5.1(o) require a dealer to adhere to performance standards that are not applied uniformly
5.2to other similarly situated dealers.
5.3A performance standard, sales objective, or program for measuring dealership performance
5.4that may have a material effect on a dealer, including the dealer's right to payment under
5.5any incentive or reimbursement program, and the application of the standard or program
5.6by a manufacturer, distributor, or factory branch must be fair, reasonable, equitable, and
5.7based on accurate information.
5.8A manufacturer, distributor, or factory branch has the burden of proving that the
5.9performance standard, sales objective, or program for measuring dealership performance
5.10is fair and reasonable under this subdivision; or
5.11(p) unreasonably reduce a dealer's area of sales effectiveness without giving at
5.12least 90 days' notice of the proposed reduction. The change may not take effect if the
5.13dealer commences a civil action to determine whether there is good cause for the change
5.14within the 90 days' notice period. The burden of proof in such an action shall be on the
5.15manufacturer or distributor.
5.16 Sec. 2. Minnesota Statutes 2012, section 168.27, is amended by adding a subdivision
5.17to read:
5.18 Subd. 8a. Manufacturers and distributors. (a) A motor vehicle manufacturer or
5.19distributor is not required to be licensed under this section to sell new motor vehicles
5.20solely to a licensed new motor vehicle dealer. A manufacturer or distributor of passenger
5.21automobiles or trucks may not obtain a new motor vehicle dealer license.
5.22(b) For purposes of this subdivision, "manufacturer or distributor of passenger
5.23automobiles or trucks" includes affiliates under common management and control, but
5.24does not include a manufacturer or distributor of:
5.25(1) new and unused motor vehicle bodies to be installed on incomplete motor vehicles;
5.26(2) neighborhood electric vehicles, as defined in section 169.011, subdivision 47; or
5.27(3) medium-speed electric vehicles, as defined in section 169.011, subdivision 39.
