1.1                          A bill for an act 
  1.2             relating to commerce; modifying provisions dealing 
  1.3             with motor vehicle dealer franchise transfers; 
  1.4             amending Minnesota Statutes 2000, section 80E.13. 
  1.5   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.6      Section 1.  Minnesota Statutes 2000, section 80E.13, is 
  1.7   amended to read: 
  1.8      80E.13 [UNFAIR PRACTICES BY MANUFACTURERS, DISTRIBUTORS, 
  1.9   FACTORY BRANCHES.] 
  1.10     It is unlawful and an unfair practice for a manufacturer, 
  1.11  distributor, or factory branch to engage in any of the following 
  1.12  practices:  
  1.13     (a) delay, refuse, or fail to deliver new motor vehicles or 
  1.14  new motor vehicle parts or accessories in reasonable time and in 
  1.15  reasonable quantity relative to the new motor vehicle dealer's 
  1.16  facilities and sales potential in the dealer's relevant market 
  1.17  area, after having accepted an order from a new motor vehicle 
  1.18  dealer having a franchise for the retail sale of any new motor 
  1.19  vehicle sold or distributed by the manufacturer or distributor, 
  1.20  if the new motor vehicle or new motor vehicle parts or 
  1.21  accessories are publicly advertised as being available for 
  1.22  delivery or actually being delivered.  This clause is not 
  1.23  violated, however, if the failure is caused by acts or causes 
  1.24  beyond the control of the manufacturer; 
  1.25     (b) refuse to disclose to any new motor vehicle dealer 
  2.1   handling the same line make, the manner and mode of distribution 
  2.2   of that line make within the relevant market area; 
  2.3      (c) obtain money, goods, service, or any other benefit from 
  2.4   any other person with whom the dealer does business, on account 
  2.5   of, or in relation to, the transaction between the dealer and 
  2.6   the other person, other than for compensation for services 
  2.7   rendered, unless the benefit is promptly accounted for, and 
  2.8   transmitted to, the new motor vehicle dealer; 
  2.9      (d) increase prices of new motor vehicles which the new 
  2.10  motor vehicle dealer had ordered for private retail consumers 
  2.11  prior to the dealer's receiving the written official price 
  2.12  increase notification.  A sales contract signed by a private 
  2.13  retail consumer shall constitute evidence of each order if the 
  2.14  vehicle is in fact delivered to that customer.  In the event of 
  2.15  manufacturer price reductions, the amount of any reduction 
  2.16  received by a dealer shall be passed on to the private retail 
  2.17  consumer by the dealer if the retail price was negotiated on the 
  2.18  basis of the previous higher price to the dealer; 
  2.19     (e) offer any refunds or other types of inducements to any 
  2.20  new motor vehicle dealer for the purchase of new motor vehicles 
  2.21  of a certain line make without making the same offer to all 
  2.22  other new motor vehicle dealers in the same line make within the 
  2.23  relevant market area; 
  2.24     (f) release to any outside party, except under subpoena or 
  2.25  in an administrative or judicial proceeding involving the 
  2.26  manufacturer or dealer, any business, financial, or personal 
  2.27  information which may be provided by the dealer to the 
  2.28  manufacturer, without the express written consent of the dealer 
  2.29  or unless pertinent to judicial or governmental administrative 
  2.30  proceedings or to arbitration proceedings of any kind; 
  2.31     (g) deny any new motor vehicle dealer the right of free 
  2.32  association with any other new motor vehicle dealer for any 
  2.33  lawful purpose; 
  2.34     (h) unfairly discriminate among its new motor vehicle 
  2.35  dealers with respect to warranty reimbursement or authority 
  2.36  granted its new vehicle dealers to make warranty adjustments 
  3.1   with retail customers; 
  3.2      (i) compete with a new motor vehicle dealer in the same 
  3.3   line make operating under an agreement or franchise from the 
  3.4   same manufacturer, distributor, or factory branch.  A 
  3.5   manufacturer, distributor, or factory branch is considered to be 
  3.6   competing when it has an ownership interest, other than a 
  3.7   passive interest held for investment purposes, in a dealership 
  3.8   of its line make located within the state.  A manufacturer, 
  3.9   distributor, or factory branch shall not, however, be deemed to 
  3.10  be competing: 
  3.11     (1) when operating a dealership, either temporarily or for 
  3.12  a reasonable period, which is for sale to any qualified 
  3.13  independent person at a fair and reasonable price, or when 
  3.14  involved in a bona fide relationship in which an independent 
  3.15  person has made a significant investment subject to loss in the 
  3.16  dealership and can reasonably expect to acquire full ownership 
  3.17  and full management and operational control of the dealership 
  3.18  within a reasonable time on reasonable terms and conditions~~,~~; or 
  3.19     (2) if it has an existing direct or indirect ownership 
  3.20  interest in a new motor vehicle dealer in this state as of 
  3.21  January 1, 2000, and has no more than four franchised dealers in 
  3.22  this state.  A manufacturer, distributor, or factory branch 
  3.23  described in this clause that has unaffiliated dealers of the 
  3.24  same line make in this state may acquire an interest in existing 
  3.25  dealers of that line make but it may not establish any new 
  3.26  dealership in which it would own an interest or approve an 
  3.27  additional location for the sale of new motor vehicles by an 
  3.28  affiliated dealership.  A manufacturer, distributor, or factory 
  3.29  branch described in this clause is permitted to alter its 
  3.30  ownership interest in a new motor vehicle dealer; 
  3.31     (j) prevent a new motor vehicle dealer from ~~receiving fair~~ 
  3.32  ~~and reasonable compensation for the value of the~~ transferring or 
  3.33  assigning a new motor vehicle dealership to a qualified 
  3.34  transferee.  There shall be no transfer, assignment of the 
  3.35  franchise, or major change in the executive management of the 
  3.36  dealership, except as is otherwise provided in sections 80E.01 
  4.1   to 80E.17, without consent of the manufacturer, which shall not 
  4.2   be ~~unreasonably~~ withheld without good cause.  In determining 
  4.3   whether good cause exists for withholding consent to a transfer 
  4.4   or assignment, the manufacturer, distributor, factory branch, or 
  4.5   importer has the burden of proving that the transferee is a 
  4.6   person who is not of good moral character or does not meet the 
  4.7   franchisor's existing and reasonable capital standards and, 
  4.8   considering the volume of sales and service of the new motor 
  4.9   vehicle dealer, reasonable business experience standards in the 
  4.10  market area.  Denial of the request must be in writing and 
  4.11  delivered to the new motor vehicle dealer within 60 days after 
  4.12  the manufacturer receives ~~the information necessary to evaluate~~ 
  4.13  ~~the proposed transfer~~ the completed application customarily used 
  4.14  by the manufacturer, distributor, factory branch, or importer 
  4.15  for dealer appointments.  If a denial is not sent within this 
  4.16  period, the manufacturer shall be deemed to have given its 
  4.17  consent to the proposed transfer or change~~;~~. 
  4.18     In the event of a proposed sale or transfer of a franchise, 
  4.19  the manufacturer, distributor, factory branch, or importer must 
  4.20  be permitted to exercise a right of first refusal to acquire the 
  4.21  franchisee's assets or ownership if: 
  4.22     (1) the franchise agreement permits the manufacturer, 
  4.23  distributor, factory branch, or importer to exercise a right of 
  4.24  first refusal to acquire the franchisee's assets or ownership in 
  4.25  the event of a proposed sale or transfer; 
  4.26     (2) the proposed transfer of the dealership or its assets 
  4.27  is of more than 50 percent of the ownership or assets; 
  4.28     (3) the manufacturer, distributor, factory branch, or 
  4.29  importer notifies the dealer in writing within 60 days of its 
  4.30  receipt of the complete written proposal for the proposed sale 
  4.31  or transfer on forms generally utilized by the manufacturer, 
  4.32  distributor, factory branch, or importer for these purposes and 
  4.33  containing the required information and all documents and 
  4.34  agreements relating to the proposed sale or transfer; 
  4.35     (4) the exercise of the right of first refusal will result 
  4.36  in the dealer and the dealer's owners receiving the same or 
  5.1   greater consideration with equivalent terms of sale as is 
  5.2   provided in the documents and agreements submitted to the 
  5.3   manufacturer, distributor, factory branch, or importer under 
  5.4   clause (3); 
  5.5      (5) the proposed change of 50 percent or more of the 
  5.6   ownership or of the dealership assets does not involve the 
  5.7   transfer or sale of assets or the transfer or issuance of stock 
  5.8   by the dealer or one or more dealer owners to a family member, 
  5.9   including a spouse, child, grandchild, spouse of a child or 
  5.10  grandchild, brother, sister, or parent of the dealer owner; to a 
  5.11  manager who has been employed in the dealership for at least 
  5.12  four years and is otherwise qualified as a dealer operator; or 
  5.13  to a partnership or corporation owned and controlled by one or 
  5.14  more of these persons; and 
  5.15     (6) the manufacturer, distributor, factory branch, or 
  5.16  importer agrees to pay the reasonable expenses, including 
  5.17  reasonable attorney fees that do not exceed the usual, 
  5.18  customary, and reasonable fees charged for similar work done for 
  5.19  other clients, incurred by the proposed new owner and transferee 
  5.20  in negotiating and implementing the contract for the proposed 
  5.21  change of ownership or transfer of dealership assets before the 
  5.22  manufacturer, distributor, factory branch, or importer exercises 
  5.23  its right of first refusal.  However, payment of these expenses 
  5.24  and attorney fees is not required if the dealer does not submit 
  5.25  an accounting of those expenses within 20 days after the 
  5.26  dealer's receipt of the manufacturer, distributor, factory 
  5.27  branch, or importer's written request for an accounting.  The 
  5.28  manufacturer, distributor, factory branch, or importer may 
  5.29  request an accounting before exercising its right of first 
  5.30  refusal. 
  5.31     The obligation created under clause (6) is enforceable by 
  5.32  the transferee; 
  5.33     (k) threaten to modify or replace or modify or replace a 
  5.34  franchise with a succeeding franchise that would adversely alter 
  5.35  the rights or obligations of a new motor vehicle dealer under an 
  5.36  existing franchise or that substantially impairs the sales or 
  6.1   service obligations or investments of the motor vehicle dealer; 
  6.2      (l) unreasonably deny the right to acquire factory program 
  6.3   vehicles to any dealer holding a valid franchise from the 
  6.4   manufacturer to sell the same line make of vehicles, provided 
  6.5   that the manufacturer may impose reasonable restrictions and 
  6.6   limitations on the purchase or resale of program vehicles to be 
  6.7   applied equitably to all of its franchised dealers.  For the 
  6.8   purposes of this paragraph, "factory program vehicle" has the 
  6.9   meaning given the term in section 80E.06, subdivision 2; 
  6.10     (m) fail or refuse to offer to its same line make 
  6.11  franchised dealers all models manufactured for that line make, 
  6.12  other than alternative fuel vehicles as defined in section 
  6.13  216C.01, subdivision 1b.  Failure to offer a model is not a 
  6.14  violation of this section if the failure is not arbitrary and is 
  6.15  due to a lack of manufacturing capacity, a strike, labor 
  6.16  difficulty, or other cause over which the manufacturer, 
  6.17  distributor, or factory branch has no control; 
  6.18     (n) require a dealer to pay an extra fee, or remodel, 
  6.19  renovate, or recondition the dealer's existing facilities, or 
  6.20  purchase unreasonable advertising displays, training, tools, or 
  6.21  other materials, or to require the dealer to establish exclusive 
  6.22  facilities or dedicated personnel as a prerequisite to receiving 
  6.23  a model or a series of vehicles.