Bill Text: TX SB529 | 2011-2012 | 82nd Legislature | Engrossed
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to the regulation of motor vehicle dealers, manufacturers, distributors, and representatives.
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2011-05-27 - Effective on 9/1/11 [SB529 Detail]
Download: Texas-2011-SB529-Engrossed.html
Bill Title: Relating to the regulation of motor vehicle dealers, manufacturers, distributors, and representatives.
Spectrum: Moderate Partisan Bill (Republican 6-1)
Status: (Passed) 2011-05-27 - Effective on 9/1/11 [SB529 Detail]
Download: Texas-2011-SB529-Engrossed.html
By: Huffman, Van de Putte | S.B. No. 529 |
|
||
|
||
relating to the regulation of motor vehicle dealers, manufacturers, | ||
distributors, and representatives. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 2301.002, Occupations Code, is amended | ||
by adding Subdivision (27-a) to read as follows: | ||
(27-a) "Property use agreement" means a contract, | ||
other than a franchise, between a franchised dealer and a | ||
manufacturer, distributor, or representative that grants the | ||
manufacturer, distributor, or representative the right to regulate | ||
the franchised dealer's use of the dealership and other facilities | ||
covered by the franchise. | ||
SECTION 2. Section 2301.359, Occupations Code, is amended | ||
by amending Subsection (e) and adding Subsections (g), (h), and (i) | ||
to read as follows: | ||
(e) A manufacturer or distributor may not unreasonably | ||
withhold approval of an application filed under Subsection (a). | ||
[ |
||
|
||
|
||
|
||
|
||
|
||
(g) In determining whether to approve an application filed | ||
under Subsection (a), a manufacturer or distributor may consider: | ||
(1) the prospective transferee's financial and | ||
operational performance as a franchised dealer, if the prospective | ||
transferee is or has been a franchised dealer; | ||
(2) the prospective transferee's moral character; or | ||
(3) the extent to which a prospective transferee | ||
satisfies any criteria developed by the manufacturer or distributor | ||
and made available to the prospective transferee, specifically to | ||
determine the business experience and financial qualifications of a | ||
prospective transferee. | ||
(h) A manufacturer or distributor may consider the criteria | ||
developed under Subsection (g)(3) only if the criteria are in | ||
writing, are reasonable, and are uniformly applied in similar | ||
situations. | ||
(i) It is unreasonable for a manufacturer or distributor to | ||
reject a prospective transferee who is of good moral character and | ||
who satisfies the criteria developed under Subsection (g)(3). | ||
SECTION 3. Subsection (b), Section 2301.465, Occupations | ||
Code, is amended to read as follows: | ||
(b) Notwithstanding the terms of any franchise, after the | ||
termination of a franchise, a manufacturer, distributor, or | ||
representative shall pay to a franchised dealer or any lienholder, | ||
in accordance with the interest of each, the following amounts: | ||
(1) the dealer cost of each new motor vehicle in the | ||
dealer's inventory with mileage of 5,000 miles or less, exclusive | ||
of mileage placed on the vehicle before it was delivered to the | ||
dealer, reduced by the net discount value of each vehicle, except | ||
that if a vehicle cannot be reduced by the net discount value, the | ||
manufacturer or distributor shall pay the dealer the net cost of the | ||
vehicle; | ||
(2) the dealer cost of each new, unused, undamaged, | ||
and unsold part or accessory that: | ||
(A) is in the current parts catalogue and is | ||
still in the original, resalable merchandising package and in an | ||
unbroken lot, except in the case of sheet metal, a comparable | ||
substitute for the original package may be used; and | ||
(B) was purchased by the dealer either directly | ||
from the manufacturer or distributor or from an outgoing authorized | ||
dealer as a part of the dealer's initial inventory; | ||
(3) the fair market value of each undamaged sign owned | ||
by the dealer that bears a trademark or tradename used or claimed by | ||
the manufacturer, distributor, or representative and that was | ||
purchased from or at the request of the manufacturer, distributor, | ||
or representative; | ||
(4) the fair market value of all special tools, data | ||
processing equipment, and automotive service equipment owned by the | ||
dealer that: | ||
(A) were recommended in writing and designated as | ||
special tools and equipment; | ||
(B) were purchased from or at the request of the | ||
manufacturer, distributor, or representative; and | ||
(C) are in usable and good condition except for | ||
reasonable wear and tear; [ |
||
(5) the cost of transporting, handling, packing, | ||
storing, and loading any property subject to repurchase under this | ||
section; and | ||
(6) the depreciated value of computer software that | ||
was recommended and required in writing by the manufacturer, | ||
distributor, or representative. | ||
SECTION 4. Subchapter J, Chapter 2301, Occupations Code, is | ||
amended by adding Section 2301.4651 to read as follows: | ||
Sec. 2301.4651. ADDITIONAL PAYMENT TO FRANCHISED DEALER IN | ||
CERTAIN SITUATIONS. (a) This section applies to a manufacturer, | ||
distributor, or representative that: | ||
(1) terminates or discontinues a franchise by any | ||
means without complying with Section 2301.453; or | ||
(2) regardless of whether the manufacturer, | ||
distributor, or representative complies with Section 2301.453, | ||
terminates or discontinues a franchise by: | ||
(A) discontinuing a line-make; | ||
(B) ceasing to do business in this state; or | ||
(C) changing the distributor or method of | ||
distribution of its products in this state. | ||
(b) In addition to the duties placed on a manufacturer, | ||
distributor, or representative by Section 2301.465, a | ||
manufacturer, distributor, or representative to whom this section | ||
applies shall pay to the franchised dealer the following amounts as | ||
applicable: | ||
(1) either: | ||
(A) the dealer's construction costs for a new | ||
dealership completed in the two years preceding the date of the | ||
termination or discontinuance described by Subsection (a); or | ||
(B) if the dealer does not have any costs | ||
described by Paragraph (A), the fair monthly rental value of the | ||
dealership payable in cash each month beginning on the first day of | ||
the first month following the date of the termination or | ||
discontinuance described by Subsection (a) and ending on the | ||
earlier of: | ||
(i) the first anniversary of the | ||
termination or discontinuance date; or | ||
(ii) the date on which the dealer no longer | ||
owns the dealership; | ||
(2) the dealer's costs for upgrading or substantially | ||
altering a dealership if the upgrades or alterations were completed | ||
or added in the two years preceding the date of the termination or | ||
discontinuance described by Subsection (a); and | ||
(3) an amount equal to the value of the goodwill | ||
associated with the franchise as it existed on the day before the | ||
earlier of: | ||
(A) the date of the termination or discontinuance | ||
described by Subsection (a); or | ||
(B) the date on which the manufacturer, | ||
distributor, or representative announced its intention to | ||
terminate or discontinue the franchise in a manner described by | ||
Subsection (a). | ||
(c) A franchised dealer receiving money under Subsection | ||
(b)(1)(B) shall: | ||
(1) make a reasonable effort to earn income from a | ||
dealership after a termination or discontinuance described by | ||
Subsection (a); and | ||
(2) inform the manufacturer, distributor, or | ||
representative of the dealer's efforts under Subdivision (1) and of | ||
any income earned from the dealership. | ||
(d) The amounts to be paid under Subsection (b)(1) or (2) to | ||
the dealer by a manufacturer, distributor, or representative shall | ||
be based on the percentage of the total square footage of the | ||
dealership attributable to sales, service, and parts suggested by a | ||
manufacturer or distributor and allocated to the franchise being | ||
terminated or discontinued at the time of the termination or | ||
discontinuance. | ||
(e) A franchised dealer receiving money under Subsection | ||
(b)(1) or (2) shall mitigate damages by listing the dealership for | ||
lease or sublease with a real estate broker licensed under Chapter | ||
1101 not later than the 30th day after the effective date of the | ||
termination or discontinuance described by Subsection (a) and shall | ||
reasonably cooperate with the broker in the performance of the | ||
broker's duties. | ||
(f) A manufacturer, distributor, or representative may | ||
reduce the amount of a payment made to a franchised dealer under | ||
Subsection (b)(1)(B) by the amount of any income earned by the | ||
dealer from the dealership during the month preceding the payment. | ||
(g) The manufacturer, distributor, or representative, as | ||
appropriate, shall pay any amount described by Subsection | ||
(b)(1)(A), (b)(2), or (b)(3) not later than the 90th day after the | ||
date of the termination or discontinuance described by Subsection | ||
(a). | ||
(h) An amount payable under Subsection (b)(1)(A) or (b)(2) | ||
does not include any tax depreciation benefit received by the | ||
franchised dealer or any amount previously paid to the franchised | ||
dealer by the manufacturer, distributor, or representative to | ||
subsidize the costs incurred by the dealer in performing the | ||
activities described by Subsection (b)(1)(A) or (b)(2). | ||
SECTION 5. Section 2301.467, Occupations Code, is amended | ||
by amending Subsections (b) and (c) and adding Subsections (b-1) | ||
and (b-2) to read as follows: | ||
(b) Notwithstanding the terms of any franchise, a | ||
manufacturer, distributor, or representative may not unreasonably | ||
require a franchised dealer to relocate, or to replace or | ||
substantially change, alter, or remodel the dealer's facilities. | ||
Except as provided by Subsections (b-1) and (b-2) [ |
||
|
||
of current and reasonably foreseeable projections of economic | ||
conditions, financial expectations, and the market for new motor | ||
vehicles in the relevant market area. | ||
(b-1) Except as necessary to comply with health or safety | ||
laws or to comply with technology requirements necessary to sell or | ||
service a line-make, it is unreasonable for a manufacturer, | ||
distributor, or representative to require a franchised dealer to | ||
construct a new dealership or to substantially change, alter, or | ||
remodel an existing dealership before the 10th anniversary of the | ||
date the construction of the dealership at that location was | ||
completed if the construction was in substantial compliance with | ||
standards or plans provided by a manufacturer, distributor, or | ||
representative or through a subsidiary or agent of the | ||
manufacturer, distributor, or representative. | ||
(b-2) Except as necessary to comply with health or safety | ||
laws or to comply with technology requirements necessary to sell or | ||
service a line-make, it is unreasonable for a manufacturer, | ||
distributor, or representative to require a franchised dealer to | ||
substantially change, alter, or remodel an existing dealership | ||
before the 10th anniversary of the date that a prior change, | ||
alteration, or remodel of the dealership at that location was | ||
completed if the change, alteration, or remodel was in substantial | ||
compliance with standards or plans provided by a manufacturer, | ||
distributor, or representative or through a subsidiary or agent of | ||
the manufacturer, distributor, or representative. | ||
(c) This [ |
||
[ |
||
representative and: | ||
(1) a current franchisee of the manufacturer, | ||
distributor, or representative; [ |
||
(2) a successor of a current franchisee of the | ||
manufacturer, distributor, or representative; or | ||
(3) a franchised dealer who is seeking to become a | ||
franchisee of the manufacturer, distributor, or representative. | ||
SECTION 6. Subchapter J, Chapter 2301, Occupations Code, is | ||
amended by adding Section 2301.4671 to read as follows: | ||
Sec. 2301.4671. FRANCHISE PROVISION ESTABLISHING | ||
RESTRICTION ON DEALER'S USE OF DEALERSHIP PROPERTY. | ||
Notwithstanding the terms of any franchise, a manufacturer, | ||
distributor, or representative may not: | ||
(1) unreasonably limit or impair the ability of a | ||
franchised dealer to use the dealership property as the dealer | ||
considers appropriate; | ||
(2) control the use of the dealership property after | ||
the franchise is terminated or discontinued; or | ||
(3) at any time exercise exclusive control over the | ||
use of the dealership property. | ||
SECTION 7. Section 2301.468, Occupations Code, is amended | ||
to read as follows: | ||
Sec. 2301.468. INEQUITABLE TREATMENT OF [ |
||
|
||
franchise, a [ |
||
not[ |
||
[ |
||
|
||
|
||
differently as a result of the application of a formula or other | ||
computation or process intended to gauge the performance of a | ||
dealership or otherwise enforce standards or guidelines applicable | ||
to its franchised dealers in the sale of motor vehicles if, in the | ||
application of the standards or guidelines, the franchised dealers | ||
are treated unfairly or inequitably[ |
||
[ |
||
|
||
manufacturer or distributor. | ||
SECTION 8. Subchapter J, Chapter 2301, Occupations Code, is | ||
amended by adding Section 2301.4749 to read as follows: | ||
Sec. 2301.4749. MANUFACTURER OR DISTRIBUTOR INCENTIVE | ||
PROGRAMS: PAYMENT TO DEALER. (a) A manufacturer or distributor | ||
shall pay a dealer's claim filed under a manufacturer or | ||
distributor incentive program not later than the 30th day after the | ||
date the claim is approved. | ||
(b) A claim is considered approved unless a manufacturer or | ||
distributor rejects the claim not later than the 31st day after the | ||
date of receipt of the claim by the manufacturer or distributor. | ||
(c) The manufacturer or distributor shall provide the | ||
dealer with written notice of a rejection of a claim and the reasons | ||
for the rejection. | ||
SECTION 9. The heading to Section 2301.475, Occupations | ||
Code, is amended to read as follows: | ||
Sec. 2301.475. MANUFACTURER OR DISTRIBUTOR INCENTIVE | ||
PROGRAMS: AUDIT OR CHARGEBACK. | ||
SECTION 10. Subsection (a), Section 2301.475, Occupations | ||
Code, is amended to read as follows: | ||
(a) Except as provided by Subsection (b), after the first | ||
anniversary of the [ |
||
pays a claim under Section 2301.4749, the [ |
||
manufacturer or distributor may not: | ||
(1) charge back to a dealer money paid by the | ||
manufacturer or distributor as a result of the incentive program; | ||
(2) charge back to a dealer the cash value of a prize | ||
or other thing of value awarded to the dealer as a result of the | ||
incentive program; or | ||
(3) audit the records of a dealer to determine | ||
compliance with the terms of the incentive program, unless the | ||
manufacturer or distributor has reasonable grounds to believe the | ||
dealer committed fraud with respect to the incentive program. | ||
SECTION 11. Subchapter J, Chapter 2301, Occupations Code, | ||
is amended by adding Sections 2301.480, 2301.481, and 2301.482 to | ||
read as follows: | ||
Sec. 2301.480. DISCLOSURE OF CERTAIN INFORMATION. A | ||
manufacturer, distributor, or representative may not require that a | ||
franchised dealer provide to the manufacturer, distributor, or | ||
representative information regarding a customer, except to the | ||
extent that a specific item of information is necessary: | ||
(1) for the sale or delivery of a new motor vehicle to | ||
a customer; | ||
(2) for reasonable marketing purposes; | ||
(3) to validate a claim and make payment under an | ||
incentive program; | ||
(4) to support a dealer's claim for reimbursement for | ||
repairs performed under a manufacturer's warranty; or | ||
(5) to satisfy a product recall or safety obligation. | ||
Sec. 2301.481. PROPERTY USE AGREEMENT. (a) A | ||
manufacturer, distributor, or representative may not require that a | ||
dealer enter into a property use agreement as a condition of the | ||
manufacturer, distributor, or representative: | ||
(1) entering into a franchise; | ||
(2) approving a franchised dealer's application to add | ||
a line-make; | ||
(3) approving a franchised dealer's application to | ||
relocate a franchise; or | ||
(4) approving a sale or transfer of a dealer, | ||
dealership, or franchise. | ||
(b) The following provisions in a property use agreement are | ||
void and unenforceable: | ||
(1) a limitation on the franchised dealer's ability to | ||
add a line-make; or | ||
(2) a provision that binds a franchised dealer's | ||
successor. | ||
(c) A property use agreement expires on the earlier of: | ||
(1) the date provided by the property use agreement; | ||
or | ||
(2) the termination of the franchise between the | ||
parties to the property use agreement. | ||
(d) This section applies to a subsidiary of, or a person | ||
controlled by, a manufacturer, distributor, or representative. | ||
Sec. 2301.482. CERTAIN PROPERTY USE AGREEMENTS. | ||
(a) Notwithstanding Section 2301.481(b)(1), and subject to this | ||
section, a dealer may enter into a property use agreement for cash | ||
consideration that grants the manufacturer or distributor the | ||
exclusive rights to direct the use of the dealership. | ||
(b) In the event the dealer breaches the terms of the | ||
property use agreement described by Subsection (a) by altering the | ||
use of the property during the term of the agreement in violation of | ||
the agreement, the property use agreement is terminated and the | ||
dealer must reimburse the manufacturer or distributor in an amount | ||
determined by dividing the amount of the manufacturer's or | ||
distributor's cash consideration provided under Subsection (a) by | ||
the market value of the property identified in the original | ||
property use agreement at the time any necessary real estate has | ||
been purchased and any necessary construction has been completed, | ||
and multiplying the resulting quotient by the market value of the | ||
property at the time of the breach. | ||
(c) For purposes of this section, the market value of | ||
property is to be determined by three appraisers chosen as follows: | ||
(1) one selected by the affected manufacturer or | ||
distributor; | ||
(2) one selected by the affected dealer; and | ||
(3) one selected by mutual agreement of the | ||
manufacturer or distributor and the dealer. | ||
SECTION 12. Subsection (a), Section 2301.522, Occupations | ||
Code, is amended to read as follows: | ||
(a) In an action brought against a manufacturer or | ||
distributor under Subchapter J [ |
||
franchised dealer whose franchise provides for arbitration in | ||
compliance with this chapter, the board shall order the parties to | ||
submit the dispute to mediation in the manner provided by this | ||
subchapter. | ||
SECTION 13. Subsection (b), Section 2301.652, Occupations | ||
Code, is amended to read as follows: | ||
(b) Except as provided by Subsection (c) and Sections | ||
2301.6521 and 2301.6522, a person has standing under this section | ||
to protest an application to establish or relocate a dealership if | ||
the person filing the protest is a franchised dealer of the same | ||
line-make whose dealership is located: | ||
(1) in the county in which the proposed dealership is | ||
to be located; or | ||
(2) within a 15-mile radius of the proposed | ||
dealership. | ||
SECTION 14. Subchapter N, Chapter 2301, Occupations Code, | ||
is amended by adding Sections 2301.6521 and 2301.6522 to read as | ||
follows: | ||
Sec. 2301.6521. RIGHT TO PROTEST: CERTAIN RELOCATIONS. | ||
(a) In this section, "affected county" means: | ||
(1) a county with a population of one million or more; | ||
or | ||
(2) a county with a population of 500,000 or more but | ||
less than one million that is adjacent to a county with a population | ||
of one million or more. | ||
(b) Notwithstanding any other provision of this chapter and | ||
except as provided by Subsection (d), a franchised dealer may | ||
protest an application to relocate a dealership from a location in | ||
an affected county to a location within the same affected county or | ||
an adjacent affected county only if the dealer is: | ||
(1) a dealer of the same line-make as the relocating | ||
dealership and is in the affected county where the proposed | ||
dealership is being relocated and is nearest to the proposed | ||
relocation site, if no dealership of the same line-make as the | ||
relocating dealership is located within 15 miles of the proposed | ||
relocation site; or | ||
(2) a dealer of the same line-make as the relocating | ||
dealership whose dealership location is within 15 miles of the | ||
proposed relocation site. | ||
(c) If more than one dealership location is an equal | ||
distance from the proposed relocation site and each dealer and | ||
dealership location satisfies the requirements of Subsection | ||
(b)(1), each dealer may protest the relocation under Subsection | ||
(b)(1). | ||
(d) A dealer may not protest an application to relocate a | ||
dealership under this section if the proposed relocation site is | ||
two miles or less from the dealership's current location. | ||
Sec. 2301.6522. RIGHT TO PROTEST: ECONOMICALLY IMPAIRED | ||
DEALER. (a) In this section, "economically impaired dealer" means | ||
a franchised dealer whose profitability has been, or is reasonably | ||
expected to be, substantially reduced at the dealer's current | ||
location, with no reasonable expectation of substantial | ||
improvement at that location, due to: | ||
(1) a natural disaster; | ||
(2) the exercise of eminent domain authority with | ||
respect to the dealership; or | ||
(3) the sale of all or part of the dealership to a | ||
governmental entity under threat of the exercise of eminent domain | ||
authority. | ||
(b) Notwithstanding any other provision of this chapter and | ||
except as provided by Subsections (c) and (d), a dealer may not | ||
protest the relocation of an economically impaired dealer if: | ||
(1) the relocation is reasonably expected to be | ||
completed before the first anniversary of the date of the event | ||
described by Subsection (a); and | ||
(2) the proposed relocation site is two miles or less | ||
from the economically impaired dealer's current location. | ||
(c) A dealer of the same line-make as an economically | ||
impaired dealer whose dealership is nearest to the proposed | ||
relocation site of the economically impaired dealer may protest the | ||
relocation if the proposed relocation site is more than two miles | ||
closer to the protesting dealer's dealership than the site of the | ||
economically impaired dealer's current location. | ||
(d) If more than one dealership location is an equal | ||
distance from the proposed relocation site and each dealer and | ||
dealership location satisfies the requirements of Subsection (c), | ||
each dealer may protest the relocation under Subsection (c). | ||
SECTION 15. Subsection (a), Section 2301.805, Occupations | ||
Code, is amended to read as follows: | ||
(a) Notwithstanding any other law, including Subchapter E, | ||
Chapter 17, Business & Commerce Code, in addition to the other | ||
remedies provided by this subchapter, a person may institute an | ||
action under Subchapter E, Chapter 17, Business & Commerce Code, or | ||
any successor statute to that subchapter, and is entitled to any | ||
procedure or remedy under that subchapter, if the person: | ||
(1) has sustained damages as a result of a violation of | ||
Sections 2301.351-2301.354 or Section 2301.357; or | ||
(2) is a franchised dealer who has sustained damages | ||
as a result of a violation of: | ||
(A) Subchapter J of this chapter [ |
||
|
||
(B) Subchapter E, Chapter 17, Business & Commerce | ||
Code. | ||
SECTION 16. The change in law made by this Act applies only | ||
to an agreement entered into or renewed under Chapter 2301, | ||
Occupations Code, on or after the effective date of this Act. An | ||
agreement entered into or renewed before the effective date of this | ||
Act is governed by the law in effect on the date the agreement was | ||
entered into or renewed, and the former law is continued in effect | ||
for that purpose. | ||
SECTION 17. This Act takes effect September 1, 2011. |