HOUSE BILL No. 4740 May 1, 1997, Introduced by Reps. Alley, Rhead, Olshove, Middaugh, Green, McManus, Griffin, Parks, Stallworth, Palamara and Profit and referred to the Committee on Commerce. 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 6, 13, 14, 16, and 17 (MCL 445.1566, 445.1573, 445.1574, 445.1576, and 445.1577), sections 6, 16, and 17 as amended by 1983 PA 188, and by adding section 20a. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 6. "Relevant market area" means: 2 (a) For a proposed new motor vehicle dealer or a new motor 3 vehicle dealer who plans to relocate his or her place of business 4 in a county having a population which is greater than 25,000, the 5 area within a radius of610 miles of the intended site of the 6 proposed or relocated dealer. The6-mile10-MILE distance 02928'97 TJS 2 1 shall be determined by measuring the distance between the nearest 2 surveyed boundary of the existing new motor vehicle dealer's 3 principal place of business and the nearest surveyed boundary 4 line of the proposed or relocated new motor vehicle dealer's 5 principal place of business. 6 (b) For a proposed new motor vehicle dealer or a new motor 7 vehicle dealer who plans to relocate his or her place of business 8 in a county having a population which is not greater than 25,000, 9 the area within a radius of1020 miles of the intended site of 10 the proposed or relocated dealer, or the county line, whichever 11 is closer to the intended site. The10-mile20-MILE distance 12 shall be determined by measuring the distance between the nearest 13 surveyed boundary line of the existing new motor vehicle dealer's 14 principal place of business and the nearest surveyed boundary 15 line of the proposed or relocated new motor vehicle dealer's 16 principal place of business. 17 Sec. 13. A manufacturer or distributor shall not require 18 any new motor vehicle dealer in this state to do any of the 19 following: 20 (a) Order, PURCHASE, or accept delivery of any new motor 21 vehicle, OR part or accessorythereofOF A NEW MOTOR VEHICLE, 22 equipment, TOOLS, MACHINERY, APPLIANCES, or any other commodity 23 notrequired by law which was notvoluntarily ordered by the 24 new motor vehicle dealer IF THE PURCHASE, ORDER, OR DELIVERY 25 WOULD NOT BE JUSTIFIED BY REASONABLE BUSINESS PRACTICES OF THE 26 NEW MOTOR VEHICLE DEALER. This sectionshallDOES notbe27construed toprevent the manufacturer or distributor from 02928'97 3 1 requiring that new motor vehicle dealers carry a reasonable 2 inventory of models offered for sale by the manufacturer or 3 distributor. 4 (b) Order or accept delivery of any new motor vehicle with 5 special features, accessories, or equipment not included in the 6 list price of the new motor vehicle as publicly advertised by the 7 manufacturer or distributor. 8 (c) Participate monetarily in any advertising campaign or 9 contest, or purchase any promotional materials, display devices, 10 or display decorations or materials at the expense of the new 11 motor vehicle dealer OR PAY OR ASSUME, DIRECTLY OR INDIRECTLY, 12 ANY PART OF THE COST OF A REFUND, REBATE, DISCOUNT, OR OTHER 13 FINANCIAL ADJUSTMENT MADE BY OR LAWFULLY IMPOSED BY THE MANUFAC- 14 TURER OR DISTRIBUTOR TO OR IN FAVOR OF, A CUSTOMER, UNLESS VOLUN- 15 TARILY AGREED TO BY THE DEALER. 16 (d) Enter into any agreement with the manufacturer or dis- 17 tributor or do any other act prejudicial to the new motor vehicle 18 dealer by threatening to terminate a dealer agreement or any con- 19 tractual agreement or understanding existing between the dealer 20 and the manufacturer or distributor. Notice in good faith to any 21 dealer of the dealer's violation of any terms or provisions of 22 the dealer agreement shall not constitute a violation of this 23 act. 24 (e) Change the capital structure of the new motor vehicle 25 dealership or the means by or through which the dealer finances 26 the operation of the dealership, if the dealership at all times 02928'97 4 1 meets any reasonable capital standards determined by the 2 manufacturer in accordance with uniformly applied criteria. 3 (f) Refrain from participation in the management of, invest- 4 ment in, or the acquisition of, any other line of new motor vehi- 5 cle or related products, provided that the dealer maintains a 6 reasonable line of credit for each make or line of vehicle, 7 remains in compliance with reasonable facilities requirements, 8 and makes no change in the principal management of the dealer. 9 (g) Change the location of the new motor vehicle dealership 10or make any substantial alterations to the dealership premises,11 where to do so would be unreasonable OR REFUSE TO CHANGE THE 12 LOCATION OF A NEW MOTOR VEHICLE DEALER WITHIN 2 MILES OF THE 13 EXISTING LOCATION BY THE EXISTING DEALER OR BY A PROPOSED SALE. 14 (H) EXPAND, CONSTRUCT, OR SIGNIFICANTLY MODIFY EXISTING 15 FACILITIES OF A NEW MOTOR VEHICLE DEALER WITHOUT WRITTEN ASSUR- 16 ANCES THAT THE MANUFACTURER OR DISTRIBUTOR WILL PROVIDE A REASON- 17 ABLE SUPPLY OF NEW MOTOR VEHICLES WITHIN AND OVER A REASONABLE 18 TIME SO AS TO JUSTIFY SUCH AN EXPANSION, IN LIGHT OF THE MARKET 19 AND ECONOMIC CONDITIONS. 20 (I) ESTABLISH OR MAINTAIN EXCLUSIVE FACILITIES, PERSONNEL, 21 OR DISPLAY SPACE WHERE SUCH REQUIREMENTS WOULD NOT BE JUSTIFIED 22 BY REASONABLE BUSINESS REQUIREMENTS. 23 (J)(h)Prospectively assent to a release, assignment, 24 novation, waiver, or estoppel which would relieve any person from 25 liability imposed by this act.; or require any controversy26between a new motor vehicle dealer and a manufacturer or27distributor to be referred to a person other than the duly02928'97 5 1constituted courts of the state or the United States, if the2referral would be binding upon the new motor vehicle dealer.3 Sec. 14. (1) A manufacturer or distributor shall not do any 4 of the following: 5 (A) ESTABLISH A SYSTEM OF ALLOCATION OR DISTRIBUTION OF 6 MOTOR VEHICLES TO 1 OR MORE OF ITS DEALERS THAT IS UNFAIR, INEQ- 7 UITABLE, DISCRIMINATORY, OR NOT SUPPORTABLE BY REASON AND GOOD 8 CAUSE AFTER CONSIDERING THE EQUITIES OF THE AFFECTED NEW MOTOR 9 VEHICLE DEALER OR DEALERS. 10 (B)(a)Fail to deliver new motor vehicles or new motor 11 vehicle parts or accessories within a reasonable time and in rea- 12 sonable quantities relative to the new motor vehicle dealer's 13 market area and facilities, unless the failure is caused by acts 14 or occurrences beyond the control of the manufacturer or distrib- 15 utor, or unless the failure results from an order by the new 16 motor vehicle dealer in excess of quantities reasonably and 17 fairly allocated by the manufacturer or distributor. 18 (C)(b)Refuse to disclose to a new motor vehicle dealer 19 the method and manner of distribution of new motor vehicles by 20 the manufacturer or distributor. 21 (D)(c)Refuse to disclose to a new motor vehicle dealer 22 the total number of new motor vehicles of a given model AND ON A 23 PER DEALER ALLOCATION, which the manufacturer or distributor has 24 sold TO DEALERS during the current model year within the 25dealer's marketing district, zone, or region, whichever geo-26graphical area is the smallestGEOGRAPHIC AREA COMPRISING THE 02928'97 6 1 BRANCH, DISTRICT, ZONE, OR REGION OF THE MANUFACTURER TO WHICH 2 THE DEALER HAS BEEN ASSIGNED. 3 (E) REFUSE TO DELIVER ANY VEHICLE OR MODEL OF VEHICLE DIS- 4 TRIBUTED BY THE MANUFACTURER OR DISTRIBUTOR TO A NEW MOTOR VEHI- 5 CLE DEALER BASED SOLELY ON THE RESULTS OF A CUSTOMER SATISFACTION 6 SURVEY PERFORMED BY THE MANUFACTURER OR DISTRIBUTOR OR A THIRD 7 PARTY. 8 (F)(d)Increase prices of new motor vehicles which the 9 new motor vehicle dealer had ordered and then eventually deliv- 10 ered to, the same retail consumer for whom the vehicle was 11 ordered, if the order was made prior to the dealer's receipt of 12 the written official price increase notification. A sales con- 13 tract signed by a private retail consumer and binding on the 14 dealer shall constitute evidence of each order. In the event of 15 manufacturer or distributor price reductions or cash rebates, the 16 amount of any reduction or rebate received by a dealer shall be 17 passed on to the private retail consumer by the dealer. Any 18 price reduction in excess of $5.00 shall apply to all vehicles in 19 the dealer's inventory which were subject to the price 20 reduction. A price difference applicable to new model or series 21 motor vehicles at the time of the introduction of the new models 22 or the series shall not be considered a price increase or price 23 decrease. This subdivision shall not apply to price changes 24 caused by the following: 25 (i) The addition to a motor vehicle of required or optional 26 equipment pursuant to state or federal law. 02928'97 7 1 (ii) In the case of foreign made vehicles or components, 2 revaluation of the United States dollar. 3 (iii) Any increase in transportation charges due to an 4 increase in rates charged by a common carrier and transporters. 5 (G)(e)Offer any refunds or other types of inducements to 6 any dealer for the purchase of new motor vehicles of a certain 7 line make to be sold to this state or any political subdivision 8 of this state without making the same offer available upon 9 request to all other new motor vehicle dealers of the same line 10 make. 11 (H)(f)Release to an outside party, except under subpoena 12 or in an administrative or judicial proceeding to which the new 13 motor vehicle dealer or the manufacturer or distributor are par- 14 ties, any business, financial, or personal information which has 15 been provided by the dealer to the manufacturer or distributor, 16 unless the new motor vehicle dealer gives his or her written 17 consent. 18 (I)(g)Deny a new motor vehicle dealer the right to asso- 19 ciate with another new motor vehicle dealer for any lawful 20 purpose. 21 (J)(h)Establish a dealership which would unfairly com- 22 pete with a new motor vehicle dealer of the same line make oper- 23 ating under a dealer agreement with the manufacturer or distribu- 24 tor in the relevant market area. A manufacturer or distributor 25 shall not be considered to be unfairly competing if the manufac- 26 turer or distributor is: 02928'97 8 1 (i) Operating a dealership temporarily for a reasonable 2 period. 3 (ii) Operating a dealership which is for sale at a reason- 4 able price. 5 (iii) Operating a dealership with another person who has 6 made a significant investment in the dealership and who will 7 acquire full ownership of the dealership under reasonable terms 8 and conditions. 9 (K) PREVENT OR ATTEMPT TO PREVENT BY CONTRACT OR OTHERWISE 10 ANY NEW MOTOR VEHICLE DEALER FROM CHANGING THE EXECUTIVE MANAGE- 11 MENT CONTROL OF A NEW MOTOR VEHICLE DEALER UNLESS THE MANUFAC- 12 TURER OR DISTRIBUTOR, HAVING THE BURDEN OF PROOF, CAN SHOW THAT 13 THE CHANGE OF EXECUTIVE MANAGEMENT WILL RESULT IN EXECUTIVE MAN- 14 AGEMENT CONTROL BY A PERSON OR PERSONS WHO ARE NOT OF GOOD MORAL 15 CHARACTER OR WHO DO NOT MEET REASONABLE, PREEXISTING, AND, WITH 16 CONSIDERATION TO THE VOLUME OF SALES AND SERVICE OF THE DEALER- 17 SHIP, UNIFORMLY APPLIED MINIMUM BUSINESS EXPERIENCE STANDARDS. 18 IF A MANUFACTURER OR DISTRIBUTOR REJECTS A PROPOSED CHANGE IN THE 19 EXECUTIVE MANAGEMENT CONTROL, THE MANUFACTURER OR DISTRIBUTOR 20 SHALL GIVE WRITTEN NOTICE OF ITS REASONS TO THE DEALER WITHIN 60 21 DAYS AFTER NOTICE BY THE DEALER OF THE PROPOSED CHANGE OR THE 22 CHANGE IN EXECUTIVE MANAGEMENT CONTROL SHALL BE CONSIDERED 23 APPROVED. 24 (l) REFRAIN FROM PARTICIPATION IN THE MANAGEMENT OF, INVEST- 25 MENT IN, OR THE ACQUISITION OF, ANY OTHER LINE OF NEW MOTOR VEHI- 26 CLE OR RELATED PRODUCTS, IF THE DEALER MAINTAINS A REASONABLE 27 LINE OF CREDIT FOR EACH MAKE OR LINE OF VEHICLE, REMAINS IN 02928'97 9 1 COMPLIANCE WITH REASONABLE FACILITIES REQUIREMENTS, AND MAKES NO 2 CHANGE IN THE PRINCIPAL EXECUTIVE MANAGEMENT OF THE DEALER. 3 (M)(i)Unreasonably withhold consent to the sale, trans- 4 fer, or exchange of the dealership to a qualified buyer capable 5 of being licensed as a new motor vehicle dealer in this state. 6 (N)(j)Fail to respond in writing to a request for con- 7 sent to a sale, transfer, or exchange of a dealership within 60 8 days after receipt of a written application from the new motor 9 vehicle dealer on the forms generally utilized by the manufac- 10 turer or distributor for such purpose and containing the informa- 11 tion required therein. Failure to respond to the request within 12 the 60 days shall bedeemed to beCONSIDERED consent. 13 (O)(k)Unfairly prevent a new motor vehicle dealer from 14 receiving reasonable compensation for the value of the new motor 15 vehicle dealership. 16 (P) IF A FRANCHISE AGREEMENT CONTAINS A RIGHT OF FIRST 17 REFUSAL FOR A TRANSFER OR SALE, A MANUFACTURER OR DISTRIBUTOR 18 SHALL BE PERMITTED TO EXERCISE THE RIGHT OF FIRST REFUSAL TO 19 ACQUIRE THE NEW MOTOR VEHICLE DEALER'S ASSETS OR OWNERSHIP IN THE 20 EVENT OF A PROPOSED CHANGE OF ALL, OR SUBSTANTIALLY ALL, OWNER- 21 SHIP OR TRANSFER OF ALL, OR SUBSTANTIALLY ALL, DEALERSHIP ASSETS, 22 IF ALL OF THE FOLLOWING REQUIREMENTS ARE MET: 23 (i) THE MANUFACTURER OR DISTRIBUTOR MUST NOTIFY THE DEALER 24 IN WRITING WITHIN 30 DAYS AFTER WRITTEN APPLICATION OF THE 25 REQUESTED TRANSFER. 26 (ii) TO EXERCISE THE RIGHT OF FIRST REFUSAL WILL RESULT IN 27 THE DEALER AND DEALER'S OWNERS RECEIVING THE SAME OR GREATER 02928'97 10 1 CONSIDERATION AS THEY HAVE CONTRACTED TO RECEIVE IN CONNECTION 2 WITH THE PROPOSED CHANGE OF ALL, OR SUBSTANTIALLY ALL, OWNERSHIP 3 OR TRANSFER OF ALL, OR SUBSTANTIALLY ALL, DEALERSHIP ASSETS. 4 (iii) THE PROPOSED CHANGE OF ALL, OR SUBSTANTIALLY ALL, 5 OWNERSHIP OR TRANSFER OF ALL, OR SUBSTANTIALLY ALL, DEALERSHIP 6 ASSETS DOES NOT INVOLVE THE TRANSFER OF ASSETS OR THE TRANSFER OR 7 ISSUANCE OF STOCK BY THE DEALER OR 1 OR MORE DEALER OWNERS TO A 8 DESIGNATED FAMILY MEMBER OR MEMBERS, SPOUSE, CHILD, OR GRAND- 9 CHILD, SPOUSE OF A CHILD OR GRANDCHILD, BROTHER, SISTER OR PARENT 10 OF THE DEALER OWNER, OF 1 OR MORE DEALER OWNERS OR TO A QUALIFIED 11 MANAGER OR TO A PARTNERSHIP OR CORPORATION CONTROLLED BY 1 OR 12 MORE OF THESE PERSONS. 13 (iv) THE MANUFACTURER OR DISTRIBUTOR AGREES TO PAY THE REA- 14 SONABLE EXPENSES, INCLUDING REASONABLE ATTORNEY FEES WHICH DO NOT 15 EXCEED THE USUAL, CUSTOMARY, AND REASONABLE FEES CHARGED FOR SIM- 16 ILAR WORK DONE FOR OTHER CLIENTS, INCURRED BY THE PROPOSED NEW 17 OWNER AND TRANSFEREE BEFORE THE MANUFACTURER'S OR DISTRIBUTOR'S 18 EXERCISE OF ITS RIGHT OF FIRST REFUSAL IN NEGOTIATING AND IMPLE- 19 MENTING THE CONTRACT FOR THE PROPOSED CHANGE OF ALL, OR SUBSTAN- 20 TIALLY ALL, OWNERSHIP OR TRANSFER OF ALL, OR SUBSTANTIALLY ALL, 21 DEALERSHIP ASSETS. HOWEVER, PAYMENT OF SUCH EXPENSES AND ATTOR- 22 NEY FEES SHALL NOT BE REQUIRED IF THE DEALER HAS NOT SUBMITTED OR 23 CAUSED TO BE SUBMITTED AN ACCOUNTING OF THOSE EXPENSES WITHIN 20 24 DAYS AFTER THE DEALER'S RECEIPT OF THE MANUFACTURER'S OR 25 DISTRIBUTOR'S WRITTEN REQUEST FOR SUCH AN ACCOUNTING. SUCH AN 26 ACCOUNTING MAY BE REQUESTED BY THE MANUFACTURER OR DISTRIBUTOR 27 BEFORE EXERCISING ITS RIGHT OF FIRST REFUSAL. 02928'97 11 1 (Q) IMPOSE STANDARDS OF PERFORMANCE UPON A MOTOR VEHICLE 2 DEALER. 3 (R) ENGAGE IN ANY ACTION WHICH IS ARBITRARY, IN BAD FAITH, 4 OR UNCONSCIONABLE AND WHICH CAUSES DAMAGE TO A NEW MOTOR VEHICLE 5 DEALER OR TO THE PUBLIC. 6 (2) A manufacturer or distributor, either directly or 7 through any subsidiary, shall not terminate, cancel, fail to 8 renew, or discontinue any lease of the new motor vehicle dealer's 9 established place of business except for a material breach of the 10 lease. 11 (3) A MANUFACTURER OR DISTRIBUTOR SHALL NOT MODIFY OR 12 REPLACE A DEALER AGREEMENT WITH A SUCCEEDING DEALER AGREEMENT 13 WHICH WOULD ADVERSELY ALTER THE RIGHTS OR OBLIGATIONS OF A NEW 14 MOTOR VEHICLE DEALER UNDER AN EXISTING DEALER AGREEMENT OR WHICH 15 SUBSTANTIALLY IMPAIRS THE SALES, SERVICE OBLIGATIONS, OR INVEST- 16 MENT OF A NEW MOTOR VEHICLE DEALER. 17 (4) A MANUFACTURER OR DISTRIBUTOR SHALL NOT REQUIRE A SEPA- 18 RATE DEALER AGREEMENT WITH A NEW MOTOR VEHICLE DEALER ALREADY A 19 PARTY TO A DEALER AGREEMENT WITH THE SAME MANUFACTURER OR DIS- 20 TRIBUTOR FOR THE RETAIL SALE OF ANY PARTICULAR NEW DEALER MOTOR 21 VEHICLE MODEL MADE OR DISTRIBUTED BY THAT MANUFACTURER OR DIS- 22 TRIBUTOR WHEN THE NEW MOTOR VEHICLE MODEL OFFERED FOR SALE, 23 LEASE, OR DISTRIBUTION WILL UNDER THE COMMON NAME, TRADEMARK, OR 24 SERVICE MARK OF THE EXISTING DEALER AGREEMENT. 25 (5) A MANUFACTURER OR DISTRIBUTOR SHALL NOT REFUSE TO DIS- 26 CLOSE TO A NEW MOTOR VEHICLE DEALER ALL INFORMATION IN THEIR 27 DEALER FILE MAINTAINED BY THE MANUFACTURER. MANUFACTURERS OR 02928'97 12 1 DISTRIBUTORS UPON REQUEST OF A NEW MOTOR VEHICLE DEALER SHALL 2 PROVIDE A COPY OF INFORMATION IN THE DEALER FILE. A REASONABLE 3 CHARGE FOR A COPY MAY BE REQUESTED BY THE MANUFACTURER OR DIS- 4 TRIBUTOR FROM THE DEALER. IN THE EVENT OF A DISPUTE BETWEEN A 5 MANUFACTURER OR A DISTRIBUTOR AND A DEALER, INFORMATION NOT PRO- 6 VIDED TO A DEALER AT THE TIME OF REQUEST CANNOT BE USED. 7 Sec. 16. (1) As used in this section, "relocate" and 8 "relocation" shall not include the relocation of a new motor 9 vehicle dealer within 2 miles of its established place of 10 business, IF THE MOTOR VEHICLE DEALER OR HIS OR HER PREDECESSOR 11 HAD CONDUCTED BUSINESS AT THE PLACE OF BUSINESS FOR NOT LESS THAN 12 10 YEARS. 13 (2) Before a manufacturer or distributor enters into a 14 dealer agreement establishing or relocating a new motor vehicle 15 dealer within a relevant market area where the same line make is 16 represented, the manufacturer or distributor shall give written 17 notice to each new motor vehicle dealer of the same line make in 18 the relevant market area of its intention to establish an addi- 19 tional dealer or to relocate an existing dealer within that rele- 20 vant market area. HOWEVER, A MANUFACTURER OR DISTRIBUTOR SHALL 21 NOT ESTABLISH A NEW OR RELOCATE AN EXISTING DEALERSHIP WITHIN 10 22 MILES OF A MOTOR VEHICLE DEALER WITH THE SAME LINE MAKE IN A 23 COUNTY WITH A POPULATION MORE THAN 25,000, OR WITHIN 15 MILES OF 24 A MOTOR VEHICLE DEALER WITH THE SAME LINE MAKE IN A COUNTY WITH A 25 POPULATION OF 25,000 OR LESS. 26 (3) Within 30 days after receiving the notice provided for 27 in subsection (2), or within 30 days after the end of any appeal 02928'97 13 1 procedure provided by the manufacturer or distributor, a new 2 motor vehicle dealer may bring a declaratory judgment action in 3 the circuit court for the county in which the new motor vehicle 4 dealer is located to determine whether good cause exists for the 5 establishing or relocating of a proposed new motor vehicle 6 dealer. Once an action has been filed, the manufacturer or dis- 7 tributor shall not establish or relocate the proposed new motor 8 vehicle dealer until the circuit court has rendered a decision on 9 the matter. An action brought pursuant to this section shall be 10 given precedence over all other civil matters on the court's 11 docket. 12 (4) This section shall not apply to the reopening or 13 replacement in a relevant market area of a closed dealership that 14 has been closed within the preceding year, if the established 15 place of business of the reopened or replacement dealer is within 16 2 miles of the established place of business of the closed 17 dealership. 18 (5) In determining whether good cause exists for establish- 19 ing or relocating an additional new motor vehicle dealer for the 20 same line make, the court shall take into consideration the 21 existing circumstances, including, but not limited to, the 22 following: 23(a) Permanency of the investment.24(b) Effect on the retail new motor vehicle business and the25consuming public in the relevant market area.26(c) Whether it is injurious or beneficial to the public27welfare.02928'97 14 1(d) Whether the new motor vehicle dealers of the same line2make in that relevant market area are providing adequate competi-3tion and convenient consumer care for the motor vehicles of that4line make in the market area, including the adequacy of motor5vehicle sales and qualified service personnel.6(e) Whether the establishment or relocation of the new motor7vehicle dealer would promote competition.8(f) Growth or decline of the population and the number of9new motor vehicle registrations in the relevant market area.10(g) The effect on the relocating dealer of a denial of its11relocation into the relevant market area.12 (A) THE IMPACT OF THE ESTABLISHMENT OF THE PROPOSED OR RELO- 13 CATED DEALER ON THE CONSUMERS, PUBLIC INTEREST, EXISTING DEALERS, 14 AND THE LICENSEE. HOWEVER, FINANCIAL IMPACT MAY ONLY BE CONSID- 15 ERED WITH RESPECT TO THE PROTESTING DEALER OR DEALERS. 16 (B) THE SIZE AND PERMANENCY OF THE INVESTMENT REASONABLY 17 MADE AND REASONABLE OBLIGATIONS INCURRED BY THE EXISTING DEALER 18 OR DEALERS TO PERFORM THEIR OBLIGATIONS UNDER THE DEALER 19 AGREEMENT. 20 (C) THE REASONABLY EXPECTED MARKET PENETRATION OF THE 21 LINE-MAKE MOTOR VEHICLE FOR THE COMMUNITY OR TERRITORY INVOLVED, 22 AFTER CONSIDERATION OF ALL FACTORS WHICH MAY AFFECT MARKET PENE- 23 TRATION, INCLUDING, BUT NOT LIMITED TO, DEMOGRAPHIC FACTORS SUCH 24 AS AGE, INCOME, EDUCATION, SIZE CLASS PREFERENCE, PRODUCT POPU- 25 LARITY, RETAIL LEASE TRANSACTIONS, OR OTHER FACTORS AFFECTING 26 SALES TO CONSUMERS OF THE COMMUNITY OR TERRITORY. 02928'97 15 1 (D) ANY ACTIONS BY THE MANUFACTURER OR DISTRIBUTOR IN 2 DENYING ITS EXISTING DEALER OR DEALERS OF THE SAME LINE MAKE THE 3 OPPORTUNITY FOR REASONABLE GROWTH, MARKET EXPANSION, OR RELOCA- 4 TION, INCLUDING THE AVAILABILITY OF LINE-MAKE VEHICLES IN KEEPING 5 WITH THE REASONABLE EXPECTATIONS OF THE MANUFACTURER OR DISTRIBU- 6 TOR IN PROVIDING AN ADEQUATE NUMBER OF DEALERS IN THE COMMUNITY 7 OR TERRITORY. 8 (E) ANY ATTEMPTS BY THE MANUFACTURER OR DISTRIBUTOR TO 9 COERCE THE EXISTING DEALER OR DEALERS INTO CONSENTING TO ADDI- 10 TIONAL OR RELOCATED FRANCHISES OF THE SAME LINE MAKE IN THE COM- 11 MUNITY OR TERRITORY. 12 (F) DISTANCE, TRAVEL TIME, TRAFFIC PATTERNS, AND ACCESSIBIL- 13 ITY BETWEEN THE EXISTING DEALER OR DEALERS, OF THE SAME LINE MAKE 14 AND THE LOCATION OF THE PROPOSED ADDITIONAL OR RELOCATED DEALER. 15 (G) WHETHER BENEFITS TO CONSUMERS WILL LIKELY OCCUR FROM THE 16 ESTABLISHMENT OR RELOCATION OF THE DEALERSHIP WHICH THE PROTEST- 17 ING DEALER OR DEALERS PROVE CANNOT BE OBTAINED BY OTHER GEO- 18 GRAPHIC OR DEMOGRAPHIC CHANGES OR EXPECTED CHANGES IN THE COMMU- 19 NITY OR TERRITORY. 20 (H) WHETHER THE PROTESTING DEALER OR DEALERS ARE IN SUBSTAN- 21 TIAL COMPLIANCE WITH THEIR DEALER AGREEMENT. 22 (I) WHETHER THERE IS ADEQUATE INTER-BRAND AND INTRA-BRAND 23 COMPETITION WITH RESPECT TO THAT LINE MAKE IN THE COMMUNITY OR 24 TERRITORY AND ADEQUATELY CONVENIENT CONSUMER CARE FOR THE MOTOR 25 VEHICLES OF THE LINE MAKE, INCLUDING THE ADEQUACY OF SALES AND 26 SERVICE FACILITIES. 02928'97 16 1 (J) WHETHER THE ESTABLISHMENT OR RELOCATION OF THE PROPOSED 2 DEALERSHIP APPEARS TO BE WARRANTED AND JUSTIFIED BASED ON 3 ECONOMIC OR MARKETING CONDITIONS PERTINENT TO DEALERS COMPETING 4 IN THE COMMUNITY OR TERRITORY, INCLUDING ANTICIPATED FUTURE 5 CHANGES. 6 (K) THE VOLUME OF REGISTRATIONS AND SERVICE BUSINESS TRANS- 7 ACTED BY THE EXISTING DEALER OR DEALERS OF THE SAME LINE MAKE IN 8 THE RELEVANT COMMUNITY OR TERRITORY OF THE PROPOSED DEALERSHIP. 9 Sec. 17. (1) Each new motor vehicle manufacturer or dis- 10 tributor shall specify in writing to each of its new motor vehi- 11 cle dealers licensed in this state the dealer's obligations for 12 preparation, delivery, and warranty service on its products. The 13 manufacturer or distributor shall compensate the new motor vehi- 14 cle dealer for warranty service required of the dealer by the 15 manufacturer or distributor. The manufacturer or distributor 16 shall provide the new motor vehicle dealer with the schedule of 17 compensation to be paid to the dealer for parts, work, and serv- 18 ice, and the time allowance for the performance of the work and 19 service. 20 (2) The schedule of compensation shall include reasonable 21 compensation for diagnostic work, as well as repair service and 22 labor. Time allowances for the diagnosis and performance of war- 23 ranty work and service shall be reasonable and adequate for the 24 work to be performed. In the determination of what constitutes 25 reasonable compensation under this section, the principal factor 26 to be given consideration shall be the prevailing wage rates 27 being paid by dealers in the community in which the dealer is 02928'97 17 1 doing business, and in no event shall the compensation of a 2 dealer for warranty labor be less than the rates charged by the 3 dealer for like service to retail customers for nonwarranty serv- 4 ice and repairs, provided that such rates are reasonable. 5 (3) A manufacturer or distributor shall not: 6 (a) Fail to perform any warranty obligation. 7 (b) Fail to include in written notices of factory recalls to 8 new motor vehicle owners and dealers the expected date by which 9 necessary parts and equipment will be available to dealers for 10 the correction of the defects. 11 (c) Fail to compensate any of the new motor vehicle dealers 12 licensed in this state for repairs effected by the recall. 13 (4) All claims made by a new motor vehicle dealer pursuant 14 to this section for labor and parts shall be paid within 30 days 15 after their approval. All claims shall be either approved or 16 disapproved by the manufacturer or distributor within 30 days 17 after their receipt on a proper form generally used by the manu- 18 facturer or distributor and containing the usually required 19 information therein. Any claim not specifically disapproved in 20 writing within 30 days after the receipt of the form shall be 21 considered to be approved and payment shall be made within 30 22 days. A claim which has been approved and paid may not be 23 charged back to the dealer unless the manufacturer can show that 24 the claim was fraudulent, false, or unsubstantiated, except that 25 a charge back for false or fraudulent claims shall not be made 26 more than 2 years after payment, and a charge back for 27 unsubstantiated claims shall not be made more than 15 months 02928'97 18 1 after payment. A new motor vehicle dealer shall maintain all 2 records of warranty repairs, including the related time records 3 of its employees, for at least 2 years following payment of any 4 warranty claim. 5 (5) A manufacturer or distributor shall compensate the new 6 motor vehicle dealer for manufacturer or distributor sponsored 7 sales or service promotion events, programs, or activities in 8 accordance with established guidelines for such events, programs, 9 or activities. 10 (6) A MANUFACTURER OR DISTRIBUTOR SHALL FAIRLY COMPENSATE 11 THE NEW MOTOR VEHICLE DEALER FOR A MANUFACTURER OR DISTRIBUTOR 12 SPONSORED EMPLOYEE VENDOR SALES PROGRAM OR ACTIVITY. "FAIRLY 13 COMPENSATE" MEANS TO PAY A SUM EQUAL TO THE GROSS PROFITS PER 14 UNIT AS DETERMINED BY THE NATIONAL RETAIL SALES FOR THAT UNIT AS 15 REPORTED TO THE MANUFACTURER OR DISTRIBUTOR BY ITS MOTOR VEHICLE 16 DEALERS. IN LIEU OF FAIRLY COMPENSATING A NEW MOTOR VEHICLE 17 DEALER FOR A MANUFACTURER OR DISTRIBUTOR EMPLOYEE VENDOR SALES 18 PROGRAM, A MANUFACTURER OR DISTRIBUTOR MAY ELECT TO PAY TO THE 19 NEW VEHICLE DEALER A SUM BASED ON THE DEALER'S COST OF THE PRO- 20 DUCTS SOLD TO THE EMPLOYEE OR VENDOR PLUS A SUM EQUAL TO 6-1/2% 21 OF THE COST OF THE PRODUCTS SOLD TO AN EMPLOYEE OR VENDOR OF ALL 22 VEHICLES SUBJECT TO PURCHASE UNDER THAT PROGRAM. 23 (7)(6)All claims made by a new motor vehicle dealer pur- 24 suant to subsection (5) OR (6) for promotion events, programs, or 25 activities shall be paid within 10 days after their approval. 26 All claims shall be either approved or disapproved by the 27 manufacturer or distributor within 30 days after their receipt on 02928'97 19 1 a proper form generally used by the manufacturer or distributor 2 and containing the usually required information therein. Any 3 claim not specifically disapproved in writing within 30 days 4 after the receipt of the form shall be considered to be approved 5 and payment shall be made within 30 days. The manufacturer has 6 the right to charge back any claim for 6 months after the later 7 of either the close of the promotion event, program, or activity, 8 or the date of the payment. 9 (8) IF A MANUFACTURER OR DISTRIBUTOR CHARGES AN AMOUNT TO A 10 DEALER FOR THE ACQUISITION OF A PRODUCT WHICH AMOUNT IS TO BE 11 RETURNED TO THE DEALER AT A LATER DATE, REFERRED TO AS A HOLD- 12 BACK, THAT AMOUNT SHALL NOT BE RETAINED BY THE MANUFACTURER OR 13 DISTRIBUTOR FOR MORE THAN 120 DAYS AFTER THE PRODUCT IS INVOICED 14 TO THE DEALER. 15 (9) IF PAYMENT IS NOT MADE WITHIN 120 DAYS AS PROVIDED IN 16 SUBSECTION (8), INTEREST SHALL ACCRUE ON THE AMOUNT DUE TO THE 17 NEW MOTOR VEHICLE DEALER AT AN ANNUAL RATE OF 12%. 18 SEC. 20A. (1) A MANUFACTURER OR A DISTRIBUTOR SHALL NOT 19 REQUIRE A NEW MOTOR VEHICLE DEALER TO AGREE TO A TERM OR CONDI- 20 TION IN A DEALER AGREEMENT, OR IN ANY LEASE OR AGREEMENT ANCIL- 21 LARY OR COLLATERAL TO A DEALER AGREEMENT, AS A CONDITION TO THE 22 OFFER, GRANT, OR RENEWAL OF A DEALER AGREEMENT THAT: 23 (A) REQUIRES THE DEALER TO WAIVE TRIAL BY JURY IN ACTIONS 24 INVOLVING THE MANUFACTURER OR DISTRIBUTOR. 25 (B) SPECIFIES THE JURISDICTION, VENUE, OR TRIBUNAL, IN WHICH 26 DISPUTES ARISING WITH RESPECT TO A DEALER AGREEMENT, LEASE, OR 27 ANCILLARY AGREEMENT SHALL OR SHALL NOT BE SUBMITTED FOR 02928'97 20 1 RESOLUTION, OR OTHERWISE PROHIBITS A NEW MOTOR VEHICLE DEALER 2 FROM BRINGING AN ACTION IN A PARTICULAR FORUM OTHERWISE AVAILABLE 3 UNDER THE LAWS OF THIS STATE. 4 (C) REQUIRES THAT DISPUTES BETWEEN A MANUFACTURER OR DIS- 5 TRIBUTOR AND A NEW MOTOR VEHICLE DEALER BE SUBMITTED TO ARBITRA- 6 TION OR TO ANY OTHER BINDING ALTERNATIVE DISPUTE RESOLUTION 7 PROCEDURE. 8 (2) A MANUFACTURER OR DISTRIBUTOR AND A NEW VEHICLE DEALER 9 MAY AGREE TO ALTERNATIVE DISPUTE RESOLUTION WITHOUT VIOLATING 10 THIS ACT. 02928'97 Final page. TJS