1.1                          A bill for an act 
  1.2             relating to commerce; regulating motor vehicle sales 
  1.3             and distribution; regulating American flag sales; 
  1.4             amending Minnesota Statutes 2002, sections 80E.12; 
  1.5             80E.135; proposing coding for new law in Minnesota 
  1.6             Statutes, chapter 325E. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 2002, section 80E.12, is 
  1.9   amended to read: 
  1.10     80E.12 [UNLAWFUL ACTS BY MANUFACTURERS, DISTRIBUTORS, OR 
  1.11  FACTORY BRANCHES.] 
  1.12     It shall be unlawful for any manufacturer, distributor, or 
  1.13  factory branch to require a new motor vehicle dealer to do any 
  1.14  of the following:  
  1.15     (a) order or accept delivery of any new motor vehicle, part 
  1.16  or accessory thereof, equipment, or any other commodity not 
  1.17  required by law which has not been voluntarily ordered by the 
  1.18  new motor vehicle dealer, provided that this paragraph does not 
  1.19  modify or supersede reasonable provisions of the franchise 
  1.20  requiring the dealer to market a representative line of the new 
  1.21  motor vehicles the manufacturer or distributor is publicly 
  1.22  advertising; 
  1.23     (b) order or accept delivery of any new motor vehicle, part 
  1.24  or accessory thereof, equipment, or any other commodity not 
  1.25  required by law in order for the dealer to obtain delivery of 
  1.26  any other motor vehicle ordered by the dealer; 
  2.1      (c) order or accept delivery of any new motor vehicle with 
  2.2   special features, accessories, or equipment not included in the 
  2.3   list price of the motor vehicles as publicly advertised by the 
  2.4   manufacturer or distributor; 
  2.5      (d) participate monetarily in an advertising campaign or 
  2.6   contest, or to purchase any promotional materials, showroom, or 
  2.7   other display decorations or materials at the expense of the new 
  2.8   motor vehicle dealer; 
  2.9      (e) enter into any agreement with the manufacturer or to do 
  2.10  any other act prejudicial to the new motor vehicle dealer by 
  2.11  threatening to cancel a franchise or any contractual agreement 
  2.12  existing between the dealer and the manufacturer.  Notice in 
  2.13  good faith to any dealer of the dealer's violation of any terms 
  2.14  of the franchise agreement shall not constitute a violation of 
  2.15  sections 80E.01 to 80E.17; 
  2.16     (f) change the capital structure of the new motor vehicle 
  2.17  dealer or the means by or through which the dealer finances the 
  2.18  operation of the dealership; provided, that the new motor 
  2.19  vehicle dealer at all times meets any reasonable capital 
  2.20  standards agreed to by the dealer; and also provided, that no 
  2.21  change in the capital structure shall cause a change in the 
  2.22  principal management or have the effect of a sale of the 
  2.23  franchise without the consent of the manufacturer or distributor 
  2.24  as provided in section 80E.13, paragraph (j); 
  2.25     (g) prevent or attempt to prevent, by contract or 
  2.26  otherwise, any motor vehicle dealer from changing the executive 
  2.27  management control of the new motor vehicle dealer unless the 
  2.28  franchisor proves that the change of executive management will 
  2.29  result in executive management control by a person who is not of 
  2.30  good moral character or who does not meet the franchisor's 
  2.31  existing reasonable capital standards and, with consideration 
  2.32  given to the volume of sales and services of the new motor 
  2.33  vehicle dealer, uniformly applied minimum business experience 
  2.34  standards in the market area; provided, that where the 
  2.35  manufacturer, distributor, or factory branch rejects a proposed 
  2.36  change in executive management control, the manufacturer, 
  3.1   distributor, or factory branch shall give written notice of its 
  3.2   reasons to the dealer; 
  3.3      (h) refrain from participation in the management of, 
  3.4   investment in, or the acquisition of, any other line of new 
  3.5   motor vehicle or related products or establishment of another 
  3.6   make or line of new motor vehicles in the same dealership 
  3.7   facilities as those of the manufacturer; provided, however, that 
  3.8   this clause does not apply unless the new motor vehicle dealer 
  3.9   maintains a reasonable line of credit for each make or line of 
  3.10  new motor vehicle, and that the new motor vehicle dealer remains 
  3.11  in substantial compliance with the terms and conditions of the 
  3.12  franchise and with any reasonable facilities requirements of the 
  3.13  manufacturer; provided further that if a manufacturer denies a 
  3.14  dealer's request for a change described in this paragraph, the 
  3.15  denial must be in writing, must offer an analysis of the grounds 
  3.16  for the denial addressing the criteria contained in this 
  3.17  paragraph, and must be delivered to the new motor vehicle dealer 
  3.18  within 60 days after the manufacturer receives the completed 
  3.19  application or documents customarily used by the manufacturer 
  3.20  for dealer actions described in this paragraph.  If a denial 
  3.21  which meets the requirements of this paragraph is not sent 
  3.22  within this period, the manufacturer shall be deemed to have 
  3.23  consented to the proposed change; 
  3.24     (i) during the course of the agreement, change the location 
  3.25  of the new motor vehicle dealership or make any substantial 
  3.26  alterations to the dealership premises during the course of the 
  3.27  agreement, when to do so would be unreasonable; or 
  3.28     (j) prospectively assent to a release, assignment, 
  3.29  novation, waiver, or estoppel whereby a dealer relinquishes any 
  3.30  rights under sections 80E.01 to 80E.17, or which would relieve 
  3.31  any person from liability imposed by sections 80E.01 to 80E.17 
  3.32  or to require any controversy between a new motor vehicle dealer 
  3.33  and a manufacturer, distributor, or factory branch to be 
  3.34  referred to any person or tribunal other than the duly 
  3.35  constituted courts of this state or the United States, if the 
  3.36  referral would be binding upon the new motor vehicle dealer.  
  4.1      Sec. 2.  Minnesota Statutes 2002, section 80E.135, is 
  4.2   amended to read: 
  4.3      80E.135 [WAIVERS AND MODIFICATIONS PROHIBITED.] 
  4.4      Subdivision 1.  [PROHIBITIONS.] No manufacturer, 
  4.5   distributor, or factory branch shall, before entering into a 
  4.6   franchise with a new motor vehicle dealer or during the 
  4.7   franchise term, use any written instrument, agreement, or 
  4.8   waiver, to attempt to nullify or modify any provision of this 
  4.9   chapter, restrict a dealer from participation in the management 
  4.10  of, investment in, or the acquisition or establishment of any 
  4.11  other line of new motor vehicle or related product as provided 
  4.12  in section 80E.12, paragraph (h), or prevent a new motor vehicle 
  4.13  dealer from bringing an action in a particular forum otherwise 
  4.14  available under law.  These instruments, agreements, and waivers 
  4.15  are null and void. 
  4.16     Subd. 2.  [NONAPPLICATION.] This section does not apply to 
  4.17  an agreement between a dealer and a manufacturer, distributor, 
  4.18  or factory branch which restricts or prohibits a dealer from 
  4.19  participation in the management of, investment in, or the 
  4.20  acquisition or establishment of any other line of new motor 
  4.21  vehicle or related product if the agreement: 
  4.22     (1) is voluntarily entered into by the dealer and its 
  4.23  execution is not a condition of approval of the transaction by a 
  4.24  manufacturer, distributor, or factory branch; 
  4.25     (2) clearly and conspicuously discloses that the agreement 
  4.26  is voluntary; and 
  4.27     (3) provides for a separate consideration to the dealer. 
  4.28     Sec. 3.  [325E.60] [SALE OF AMERICAN FLAGS.] 
  4.29     No person may sell or offer for sale in this state an 
  4.30  American flag unless the flag is manufactured in the United 
  4.31  States of America. 
  4.32     Sec. 4.  [EFFECTIVE DATE.] 
  4.33     Sections 1 and 2 are effective August 1, 2003, and apply to 
  4.34  contracts entered into or renewed on or after that date.  
  4.35  Section 3 is effective the day following final enactment.