HF 413

1st Unofficial Engrossment - 85th Legislature (2007 - 2008)

Posted on 12/15/2009 12:00 a.m.

1.1A bill for an act 1.2relating to commerce; regulating franchise agreements between outdoor sport 1.3equipment dealers, manufacturers, and distributors;proposing coding for new 1.4law as Minnesota Statutes, chapter 80G. 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.6    Section 1. new text begin [80G.01] DEFINITIONS. new text end 1.7     new text begin Subdivision 1. new text end new text begin Scope. new text end new text begin For the purposes of sections 80G.01 to new text end new text begin , the terms new text end 1.8 new text begin defined in this section have the meanings given them. new text end 1.9     new text begin Subd. 2. new text end new text begin Dealership agreement. new text end new text begin "Dealership agreement" means a written new text end 1.10 new text begin agreement of definite or indefinite duration between an outdoor sport equipment new text end 1.11 new text begin manufacturer and an outdoor sport equipment dealer or distributor that enables the dealer new text end 1.12 new text begin to purchase equipment from the manufacturer or dealer and provides for the rights and new text end 1.13 new text begin obligations of the parties with respect to the purchase or sale of outdoor sport equipment. new text end 1.14     new text begin Subd. 3. new text end new text begin Designated successor. new text end new text begin "Designated successor" means one or more persons new text end 1.15 new text begin nominated by the dealer, in a written document filed by the dealer with the manufacturer new text end 1.16 new text begin or distributor at the time the dealership agreement is executed, to succeed the dealer in the new text end 1.17 new text begin event of the dealer's death or incapacity. new text end 1.18     new text begin Subd. 4. new text end new text begin Outdoor sport equipment. new text end new text begin "Outdoor sport equipment" means new text end 1.19 new text begin snowmobiles as defined in section new text end new text begin , subdivision 3; all-terrain vehicles as defined in new text end 1.20 new text begin section new text end new text begin , subdivision 8; personal watercraft as defined in section 86B.005, subdivision new text end 1.21 new text begin 14a; watercraft as defined in section 86C.01; and off-highway motorcycles, as defined in new text end 1.22 new text begin section 84.787, subdivision 7, and all attachments and repair parts for all of this equipment. new text end 2.1     new text begin Subd. 5. new text end new text begin Outdoor sport equipment dealer or dealer. new text end new text begin "Outdoor sport equipment new text end 2.2 new text begin dealer" or "dealer" means a person engaged in acquiring outdoor sport equipment from a new text end 2.3 new text begin manufacturer and reselling the outdoor sport equipment at wholesale or retail. new text end 2.4     new text begin Subd. 6. new text end new text begin Outdoor sport equipment distributor or distributor. new text end new text begin "Outdoor sport new text end 2.5 new text begin equipment distributor" means a person, other than a manufacturer, who offers for sale, new text end 2.6 new text begin sells, or distributes outdoor sport equipment to an outdoor sport equipment dealer or who new text end 2.7 new text begin maintains a factory representative, or who controls a person who offers for sale, sells, new text end 2.8 new text begin or distributes outdoor equipment to an outdoor sport equipment dealer. "Distributor" new text end 2.9 new text begin includes a wholesaler. new text end 2.10     new text begin Subd. 7. new text end new text begin Outdoor sport equipment manufacturer or manufacturer. new text end new text begin "Outdoor new text end 2.11 new text begin sport equipment manufacturer" or "manufacturer" means a person engaged in the new text end 2.12 new text begin manufacture or assembly of outdoor sport equipment. The term also includes any new text end 2.13 new text begin successor in interest of the outdoor sport equipment manufacturer, including any purchaser new text end 2.14 new text begin of assets or stock, any surviving corporation resulting from a merger or liquidation, any new text end 2.15 new text begin receiver or assignee, or any trustee of the original outdoor sport equipment manufacturer. new text end 2.16     new text begin Subd. 8. new text end new text begin Person. new text end new text begin "Person" means an individual, partnership, limited partnership, new text end 2.17 new text begin corporation, limited liability company, trustee of a trust, personal representative of an new text end 2.18 new text begin estate, or any other type of business entity. new text end 2.19     new text begin Subd. 9. new text end new text begin Proposed outdoor sport equipment dealer. new text end new text begin "Proposed outdoor sport new text end 2.20 new text begin equipment dealer" or "proposed dealer" means a person who has an application for a new new text end 2.21 new text begin dealership agreement pending with a manufacturer or distributor. Proposed dealer does new text end 2.22 new text begin not include a person whose dealership agreement is being renewed or continued. new text end 2.23    Sec. 2. new text begin [80G.02] DEALERSHIP AGREEMENT AND COMPLIANCE new text end 2.24 new text begin REQUIRED FOR SALE OR PURCHASE OF OUTDOOR SPORT EQUIPMENT. new text end 2.25     new text begin A manufacturer or distributor shall not offer for sale to a new outdoor sport new text end 2.26 new text begin equipment dealer, and a new or proposed new outdoor sport equipment dealer shall not new text end 2.27 new text begin offer to purchase from a manufacturer, new outdoor sport equipment without first entering new text end 2.28 new text begin into a written dealership agreement and complying with all other applicable provisions of new text end 2.29 new text begin this act. The written agreement may provide for certain types of routine transactions to new text end 2.30 new text begin be done orally. new text end 2.31    Sec. 3. new text begin [80G.03] CONTENTS OF DEALERSHIP AGREEMENT. new text end 2.32     new text begin Each dealership agreement shall include, but is not limited to, all of the following: new text end 2.33     new text begin (1) the territory or market area; new text end 2.34     new text begin (2) the period of time covered by the dealership agreement; new text end 3.1     new text begin (3) performance and marketing standards; new text end 3.2     new text begin (4) notice provisions for termination, cancellation, or nonrenewal; new text end 3.3     new text begin (5) obligations in the preparation and delivery of product and warranty service; new text end 3.4     new text begin (6) disposition obligations upon termination, cancellation, or nonrenewal relating to new text end 3.5 new text begin inventory, equipment, furnishings, special tools, and required signs acquired within the 18 new text end 3.6 new text begin months immediately prior to the date of termination, cancellation, or nonrenewal; and new text end 3.7     new text begin (7) dispute resolution procedures. new text end 3.8    Sec. 4. new text begin [80G.04] SALE, TRANSFER, EXCHANGE OF DEALERSHIP; new text end 3.9 new text begin CONSENT; CRITERIA; PROHIBITED CONDUCT. new text end 3.10     new text begin (a) A manufacturer or distributor shall not unreasonably withhold consent to the new text end 3.11 new text begin sale, transfer, or exchange of a dealership to a person who meets the criteria, if any, set new text end 3.12 new text begin forth in the dealership agreement. new text end 3.13     new text begin (b) Failure by a manufacturer or distributor to respond within 60 days after receipt of new text end 3.14 new text begin a written request by the dealer to the manufacturer or distributor for consent to the sale, new text end 3.15 new text begin transfer, or exchange of a dealership shall be considered consent to the request. new text end 3.16    Sec. 5. new text begin [80G.05] INABILITY OF DESIGNATED SUCCESSOR TO SUCCEED new text end 3.17 new text begin OUTDOOR SPORT EQUIPMENT DEALER. new text end 3.18     new text begin If a designated successor is not able to succeed the outdoor sport equipment dealer new text end 3.19 new text begin because of the designated successor's death or legal incapacity, the dealer may, at any time new text end 3.20 new text begin after that death or incapacity, execute and deliver to the manufacturer or distributor a new new text end 3.21 new text begin document nominating a designated successor. new text end 3.22    Sec. 6. new text begin [80G.06] DESIGNATED SUCCESSOR OF DECEASED OR new text end 3.23 new text begin INCAPACITATED SPORT EQUIPMENT DEALER; NOTICE OF INTENT; new text end 3.24 new text begin EXISTING DEALERSHIP AGREEMENT; PERSONAL AND FINANCIAL DATA; new text end 3.25 new text begin NOTICE OF REFUSAL TO APPROVE SUCCESSION. new text end 3.26     new text begin (a) A designated successor of a deceased or incapacitated new sport equipment new text end 3.27 new text begin dealer may succeed the dealer in the ownership or operation of the dealership under new text end 3.28 new text begin the existing dealership agreement if the designated successor gives the manufacturer new text end 3.29 new text begin or distributor written notice of the designated successor's intention to succeed to the new text end 3.30 new text begin dealership within 60 days after the dealer's death or incapacity and agrees to be bound by new text end 3.31 new text begin all of the terms and conditions of the dealership agreement. A manufacturer or distributor new text end 3.32 new text begin may refuse to honor the existing dealer agreement with the designated successor for good new text end 3.33 new text begin cause or on the basis of criteria agreed to in the existing dealership agreement. new text end 4.1     new text begin (b) The manufacturer or distributor may request from a designated successor the new text end 4.2 new text begin personal and financial data necessary to determine whether the existing dealership new text end 4.3 new text begin agreement should be honored with the designated successor. Upon request, the designated new text end 4.4 new text begin successor shall supply the personal and financial data. new text end 4.5     new text begin (c) Within 60 days after receiving the notice of the designated successor's intent new text end 4.6 new text begin to succeed the dealer in the ownership and operation of the dealership or within 60 new text end 4.7 new text begin days after receiving the requested personal and financial data, whichever occurs last, if new text end 4.8 new text begin a manufacturer or distributor believes that good cause or other criteria agreed to in the new text end 4.9 new text begin existing dealership agreement exist for refusing to honor the succession, the manufacturer new text end 4.10 new text begin or distributor may provide written notice to the designated successor of its refusal to new text end 4.11 new text begin approve the succession. new text end 4.12    Sec. 7. new text begin [80G.07] CANCELLATION AND ALTERATION OF DEALERSHIPS. new text end 4.13     new text begin Subdivision 1. new text end new text begin Termination by manufacturer or distributor. new text end new text begin (a) No manufacturer new text end 4.14 new text begin or distributor, directly or through any officer, agent, or employee, may terminate, cancel, new text end 4.15 new text begin or fail to renew a dealership agreement without good cause. new text end 4.16     new text begin (b) The burden of proving good cause is on the manufacturer or distributor. new text end 4.17     new text begin (c) For purposes of this section, "good cause" means: new text end 4.18     new text begin (1) failure by the dealer to comply substantially with essential and reasonable new text end 4.19 new text begin requirements imposed or sought to be imposed by the manufacturer or distributor, new text end 4.20 new text begin which requirements are not discriminatory as compared to requirements imposed by the new text end 4.21 new text begin manufacturer or distributor on other similarly situated dealers, either by the terms or in new text end 4.22 new text begin the manner of their enforcement; new text end 4.23     new text begin (2) a substantial breach of the dealership agreement that the dealer has not cured new text end 4.24 new text begin within a reasonable time after notice of the breach by the manufacturer; new text end 4.25     new text begin (3) without the consent of the outdoor sport equipment manufacturer, who shall not new text end 4.26 new text begin withhold consent unreasonably: new text end 4.27     new text begin (i) the outdoor sport equipment dealer has transferred an interest in the outdoor new text end 4.28 new text begin sport equipment dealership; new text end 4.29     new text begin (ii) there has been a withdrawal from the dealership of an individual proprietor, new text end 4.30 new text begin partner, major shareholder, or the manager of the dealership; or new text end 4.31     new text begin (iii) there has been a substantial reduction in interest of a partner or major new text end 4.32 new text begin stockholder; new text end 4.33     new text begin (4) the outdoor sport equipment dealer has filed a voluntary petition in bankruptcy or new text end 4.34 new text begin has had an involuntary petition in bankruptcy filed against it that has not been discharged new text end 4.35 new text begin within 30 days after the filing, there has been a closeout or other sale of a substantial part new text end 5.1 new text begin of the dealer's assets related to the outdoor sport equipment business, or there has been a new text end 5.2 new text begin commencement of dissolution or liquidation of the dealer; new text end 5.3     new text begin (5) there has been a change without the prior written approval of the manufacturer, new text end 5.4 new text begin in the location of the dealer's principal place of business under the dealership agreement; new text end 5.5     new text begin (6) the outdoor sport equipment dealer has defaulted under a chattel mortgage new text end 5.6 new text begin or other security agreement between the dealer and the outdoor sport equipment new text end 5.7 new text begin manufacturer, or there has been a revocation or discontinuance of a guarantee of the new text end 5.8 new text begin dealer's present or future obligations to the outdoor sport equipment manufacturer; new text end 5.9     new text begin (7) the outdoor sport equipment dealer has failed to operate in the normal course of new text end 5.10 new text begin business for seven consecutive days or has otherwise abandoned the business; new text end 5.11     new text begin (8) the outdoor sport equipment dealer has pleaded guilty to or has been convicted of new text end 5.12 new text begin a felony affecting the relationship between the dealer and manufacturer; new text end 5.13     new text begin (9) the outdoor sport equipment dealer has engaged in conduct that is injurious or new text end 5.14 new text begin detrimental to the dealer's customers or to the public welfare; or new text end 5.15     new text begin (10) the outdoor sport equipment dealer, after receiving notice from the manufacturer new text end 5.16 new text begin of its requirements for reasonable market penetration based on the manufacturer's new text end 5.17 new text begin experience in other comparable marketing areas, fails to meet the manufacturer's market new text end 5.18 new text begin penetration requirements. new text end 5.19     new text begin Subd. 2. new text end new text begin Termination by dealer. new text end new text begin A dealer shall not terminate, cancel, or fail to new text end 5.20 new text begin renew a dealership agreement except on 90 days written notice to the manufacturer or new text end 5.21 new text begin distributor, unless a shorter period is agreed upon by the parties. This prohibition does not new text end 5.22 new text begin apply to a termination, cancellation, or failure to renew due to the death of the dealer or new text end 5.23 new text begin the death of an individual who is at least a 50 percent owner of the dealership. new text end 5.24    Sec. 8. new text begin [80G.08] REPURCHASE OF INVENTORY REQUIRED. new text end 5.25     new text begin (a) If a manufacturer or distributor terminates a dealer agreement as a result of any new text end 5.26 new text begin action, except for good cause under section 80G.07, the manufacturer or distributor shall new text end 5.27 new text begin repurchase the inventory as provided in this section. The dealer may keep part or all of the new text end 5.28 new text begin inventory if it desires to do so, and the manufacturer agrees in writing. If the dealer has an new text end 5.29 new text begin outstanding debt to the manufacturer or distributor, then the repurchase amount may be new text end 5.30 new text begin adjusted by the manufacturer to take into account those unpaid debts. new text end 5.31     new text begin (b) After written notice by the dealer to the manufacturer or distributor in person new text end 5.32 new text begin or by registered or certified mail or by a commercial delivery service, return receipt new text end 5.33 new text begin requested, provided by the dealer within 30 days after termination of the dealer agreement, new text end 5.34 new text begin the manufacturer or distributor shall, within 30 days after receiving the notice, repurchase new text end 6.1 new text begin that inventory previously purchased from the manufacturer or distributor as provided in new text end 6.2 new text begin this section except as otherwise provided in paragraph (a). new text end 6.3     new text begin (c) Upon payment within a reasonable time of the repurchase amount to the dealer, new text end 6.4 new text begin the title, if any, and the right of possession to the repurchased inventory transfers to the new text end 6.5 new text begin manufacturer or distributor. new text end 6.6     new text begin (d) The repurchase amount for the inventory must be at least the amount the dealer new text end 6.7 new text begin paid for the inventory. new text end 6.8    Sec. 9. new text begin [80G.09] WARRANTIES. new text end 6.9     new text begin Subdivision 1. new text end new text begin Application. new text end new text begin This section applies to all warranty claims submitted new text end 6.10 new text begin by a dealer to an outdoor sport equipment manufacturer in which the outdoor sport new text end 6.11 new text begin equipment dealer has complied with the policies and procedures contained in the outdoor new text end 6.12 new text begin sport equipment manufacturer's warranty. new text end 6.13     new text begin Subd. 2. new text end new text begin Prompt payment. new text end new text begin Claims filed for payment under warranty agreements new text end 6.14 new text begin must be approved or disapproved within 30 days after receipt by the outdoor sport new text end 6.15 new text begin equipment manufacturer. Unless the outdoor sport equipment dealer agrees to a later date, new text end 6.16 new text begin approved claims for payment must be paid within 30 days after approval. When a claim is new text end 6.17 new text begin disapproved, the outdoor sport equipment manufacturer shall notify the dealer within the new text end 6.18 new text begin 30-day period stating the specific grounds on which the disapproval is based. Any claim new text end 6.19 new text begin not specifically disapproved within 30 days of receipt is deemed approved and must be new text end 6.20 new text begin paid within 30 days after the deemed approval. new text end 6.21     new text begin Subd. 3. new text end new text begin Post-termination claims. new text end new text begin If, after termination of a dealership agreement, a new text end 6.22 new text begin dealer submits a warranty claim for warranty work performed before the effective date new text end 6.23 new text begin of the termination, the outdoor sport equipment manufacturer shall handle the claim as new text end 6.24 new text begin provided in subdivision 2. new text end 6.25     new text begin Subd. 4. new text end new text begin Compensation for warranty work. new text end new text begin Warranty work performed by the new text end 6.26 new text begin dealer must be compensated in accordance with the reasonable and customary amount new text end 6.27 new text begin of time required to complete the work, expressed in hours and fractions of hours new text end 6.28 new text begin multiplied by the dealer's established customer hourly retail labor rate, which the dealer new text end 6.29 new text begin shall communicate to the outdoor sport equipment manufacturer before performing the new text end 6.30 new text begin warranty work. new text end 6.31     new text begin Subd. 5. new text end new text begin Expenses. new text end new text begin Expenses expressly excluded under the outdoor sport equipment new text end 6.32 new text begin manufacturer's warranty to the customer must not be included in claims and are not new text end 6.33 new text begin required to be paid on requests for compensation from the dealer for warranty work new text end 6.34 new text begin performed. new text end 7.1     new text begin Subd. 6. new text end new text begin Compensation for parts. new text end new text begin Payment for all parts used by the dealer in new text end 7.2 new text begin performing warranty work must be paid to the dealer in the amount equal to the dealer's new text end 7.3 new text begin net price for the parts, plus a minimum of 15 percent to reimburse the dealer for reasonable new text end 7.4 new text begin costs of doing business in performing warranty service on the outdoor sport equipment new text end 7.5 new text begin manufacturer's behalf, including, but not limited to, freight and handling costs. new text end 7.6     new text begin Subd. 7. new text end new text begin Adjustment for errors. new text end new text begin The outdoor sport equipment manufacturer may new text end 7.7 new text begin adjust for errors discovered during audit, and if necessary, adjust claims paid in error. new text end 7.8     new text begin Subd. 8. new text end new text begin Alternate terms and conditions. new text end new text begin A dealer may choose to accept alternate new text end 7.9 new text begin reimbursement terms and conditions in lieu of the requirements of subdivisions 2 to 7, new text end 7.10 new text begin provided there is a written dealership agreement between the outdoor sport equipment new text end 7.11 new text begin manufacturer and the dealer providing for compensation to the dealer for warranty labor new text end 7.12 new text begin costs either as: new text end 7.13     new text begin (1) a discount in the pricing of the equipment to the dealer; or new text end 7.14     new text begin (2) a lump-sum payment to the dealer. new text end 7.15 new text begin The discount or lump sum must be no less than five percent of the suggested retail price new text end 7.16 new text begin of the equipment. If the requirements of this subdivision are met and alternate terms new text end 7.17 new text begin and conditions are in place, subdivisions 2 to 7 do not apply and the alternate terms and new text end 7.18 new text begin conditions are enforceable. new text end 7.19     new text begin Subd. 9. new text end new text begin Warranty work on units not sold by the dealer. new text end new text begin Upon request of the new text end 7.20 new text begin manufacturer or distributor, the dealer shall perform warranty repair work on units that new text end 7.21 new text begin were not sold by the dealer. Compensation for that work must be on the same terms and new text end 7.22 new text begin conditions otherwise required in this section. new text end 7.23    Sec. 10. new text begin [80G.10] STATUS OF INCONSISTENT AGREEMENTS. new text end 7.24     new text begin A term of a dealership agreement either expressed or implied, including a choice new text end 7.25 new text begin of law provision that is inconsistent with sections new text end new text begin to new text end new text begin or that purports to new text end 7.26 new text begin waive an outdoor sport equipment manufacturer's or distributor's compliance with sections new text end 7.27 new text begin to new text end new text begin is void and unenforceable and does not waive any rights provided to new text end 7.28 new text begin a person by sections 80G.01 to new text end new text begin . new text end 7.29    Sec. 11. new text begin [80G.11] REMEDIES. new text end 7.30     new text begin If either party to a dealership agreement violates any provision of sections new text end new text begin new text end 7.31 new text begin to new text end new text begin , the other party may bring an action against the alleged violator in a court new text end 7.32 new text begin of competent jurisdiction for damages sustained by the allegedly wronged party as a new text end 7.33 new text begin consequence of the violation, and the allegedly wronged party may also be granted new text end 8.1 new text begin injunctive relief against any action or inaction prohibited under sections 80G.01 to 80G.11. new text end 8.2 new text begin The remedies in this section are in addition to any other remedies permitted by law. new text end 8.3    Sec. 12. new text begin [80G.12] APPLICABILITY. new text end 8.4     new text begin Sections new text end new text begin to new text end new text begin are effective August 1, 2008, and apply to all dealership new text end 8.5 new text begin agreements entered into, amended, or renewed on or after that date. Any dealership new text end 8.6 new text begin agreement in force and effect on August 1, 2008, that has a stated expiration date after new text end 8.7 new text begin that date and is not renewed or amended on or after August 1, 2008, is not subject to new text end 8.8 new text begin sections 80G.01 to 80G.11. Sections 80G.01 to 80G.11 apply as of August 1, 2008, to any new text end 8.9 new text begin dealership agreement then in effect that has no stated expiration date. new text end