HF 1530

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to commerce; regulating outdoor power and 
  1.3             sport equipment dealerships; providing for 
  1.4             terminations, cancellations, and transfers; proposing 
  1.5             coding for new law in Minnesota Statutes, chapter 325E.
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [325E.60] [DEFINITIONS.] 
  1.8      Subdivision 1.  [SCOPE.] For purposes of sections 325E.60 
  1.9   to 325E.71, the terms defined in this section have the meanings 
  1.10  given them. 
  1.11     Subd. 2.  [DEALERSHIP AGREEMENT.] "Dealership agreement" 
  1.12  means an oral or written agreement of definite or indefinite 
  1.13  duration, between an outdoor power and sport equipment 
  1.14  manufacturer and an outdoor power and sport equipment dealer, 
  1.15  that enables the dealer to purchase equipment from the 
  1.16  manufacturer and provides for the rights and obligations of the 
  1.17  parties with respect to the purchase or sale of outdoor power 
  1.18  and sport equipment. 
  1.19     Subd. 3.  [OUTDOOR POWER AND SPORT EQUIPMENT.] "Outdoor 
  1.20  power and sport equipment" means recreational equipment, lawn 
  1.21  and garden equipment, and other consumer equipment including but 
  1.22  not limited to:  snowmobiles; all-terrain vehicles; personal 
  1.23  watercraft; lawnmowers; lawn tractors; snowblowers; garden, 
  1.24  nursery, and golf course tractors; and all attachments and 
  1.25  repair parts for all of this equipment including attachments and 
  2.1   repair parts used for off-road recreation and lawn and garden 
  2.2   care.  The term does not apply to self-propelled machines 
  2.3   designed primarily for the transportation of persons or property 
  2.4   on a street or highway.  
  2.5      Subd. 4.  [OUTDOOR POWER AND SPORT EQUIPMENT DEALER OR 
  2.6   DEALERSHIP.] "Outdoor power and sport equipment dealer or 
  2.7   dealership" means a person, partnership, corporation, 
  2.8   association, or other form of business enterprise engaged in 
  2.9   acquiring outdoor power and sport equipment from a manufacturer, 
  2.10  and reselling the outdoor power and sport equipment at wholesale 
  2.11  or retail.  
  2.12     Subd. 5.  [OUTDOOR POWER AND SPORT EQUIPMENT MANUFACTURER.] 
  2.13  "Outdoor power and sport equipment manufacturer" means a person, 
  2.14  partnership, corporation, association, or other form of business 
  2.15  enterprise engaged in the manufacturing, assembly, or wholesale 
  2.16  distribution of outdoor power and sport equipment.  The term 
  2.17  also includes a successor in interest of the outdoor power and 
  2.18  sport equipment manufacturer, including a purchaser of assets or 
  2.19  stock and a surviving corporation resulting from a merger or 
  2.20  liquidation, a receiver or assignee, or a trustee of the 
  2.21  original outdoor power and sport equipment manufacturer. 
  2.22     Sec. 2.  [325E.61] [TERMINATIONS OR CANCELLATIONS.] 
  2.23     No outdoor power and sport equipment manufacturer, 
  2.24  wholesaler, or supplier, directly or through an office, agent, 
  2.25  or employee, may terminate, cancel, fail to renew, or 
  2.26  substantially change the competitive circumstances of a 
  2.27  dealership agreement without good cause.  For purposes of this 
  2.28  section, "good cause" means failure by an outdoor power and 
  2.29  sport equipment dealer to substantially comply with essential 
  2.30  and reasonable requirements imposed upon the dealer by the 
  2.31  dealership agreement, if the requirements are not different from 
  2.32  those requirements imposed on other similarly situated dealers 
  2.33  by their terms.  In addition, good cause exists whenever: 
  2.34     (1) the outdoor power and sport equipment dealer has 
  2.35  transferred a controlling interest in the dealership without the 
  2.36  manufacturer's consent, or there has been a withdrawal from the 
  3.1   dealership of an individual, proprietor, partner, or major 
  3.2   shareholder, or a substantial reduction in interest of a partner 
  3.3   or major stockholder without the consent of a manufacturer.  
  3.4   Nothing in this clause may be construed as giving a manufacturer 
  3.5   a right to unreasonably withhold consent to a transfer or 
  3.6   assignment; 
  3.7      (2) the outdoor power and sport equipment dealer has filed 
  3.8   a voluntary petition in bankruptcy, or has had an involuntary 
  3.9   petition in bankruptcy filed against it, which has not been 
  3.10  charged within 30 days after filing, or there has been a 
  3.11  closeout or sale of a substantial part of the dealer's assets 
  3.12  related to the outdoor power and sport equipment business, or a 
  3.13  commencement of dissolution or liquidation of the dealer; 
  3.14     (3) there has been a change without prior written approval 
  3.15  of the manufacturer in the location of the dealer's principal 
  3.16  place of business under the dealership agreement; 
  3.17     (4) the outdoor power and sport equipment dealer has 
  3.18  defaulted under a chattel mortgage or other security agreement 
  3.19  between the dealer and the outdoor power and sport equipment 
  3.20  manufacturer or there has been revocation or discontinuance of a 
  3.21  guaranty of the dealer's present or future obligations to the 
  3.22  outdoor power and sport equipment manufacturer; 
  3.23     (5) the outdoor power and sport equipment dealer has failed 
  3.24  to operate in the normal course of business for 20 consecutive 
  3.25  days or has otherwise abandoned the business; 
  3.26     (6) the outdoor power and sport equipment dealer has 
  3.27  pleaded guilty to or has been convicted of a felony affecting 
  3.28  the relationship between the dealer and the manufacturer; 
  3.29     (7) the outdoor power and sport equipment dealer has 
  3.30  consistently failed for three consecutive years to meet the 
  3.31  manufacturer's written requirement for market penetration based 
  3.32  on the manufacturer's experience in other comparable market 
  3.33  areas.  Consideration shall be given to the relative size, 
  3.34  population, geographical location, number of retail outlets and 
  3.35  demand for the products applicable to the market area of the 
  3.36  dealer in question, and to comparable market areas; and 
  4.1      (8) in a dispute as to whether a supplier has acted with 
  4.2   good cause as required by this section, the supplier has the 
  4.3   burden of proof to establish that good cause existed. 
  4.4      Sec. 3.  [325E.62] [NOTICE OF TERMINATION.] 
  4.5      Except as otherwise provided in this section, an outdoor 
  4.6   power and sport equipment manufacturer shall provide an outdoor 
  4.7   power and sport equipment dealer at least 90 days' prior written 
  4.8   notice of termination, cancellation, or nonrenewal of the 
  4.9   dealership agreement.  This notice must state all reasons 
  4.10  constituting good cause for the action and must provide that the 
  4.11  dealer has 60 days in which to cure any claimed deficiency.  If 
  4.12  the deficiency is cured within 60 days, the notice is void.  The 
  4.13  notice and right to cure provisions under this section do not 
  4.14  apply if the reason for termination, cancellation, or nonrenewal 
  4.15  is for any reason set forth in section 325E.61. 
  4.16     Sec. 4.  [325E.63] [VIOLATIONS.] 
  4.17     (a) It is a violation of sections 325E.60 to 325E.71 for an 
  4.18  outdoor power and sport equipment manufacturer to coerce, or 
  4.19  attempt to coerce, an outdoor power and sport equipment dealer 
  4.20  to accept delivery of any products or merchandise or accessories 
  4.21  that the outdoor power and sport equipment dealer has not 
  4.22  voluntarily ordered. 
  4.23     (b) It is a violation of sections 325E.60 to 325E.71 for an 
  4.24  outdoor power and sport equipment manufacturer to: 
  4.25     (1) condition or attempt to condition the sale of outdoor 
  4.26  power and sport equipment on a requirement that the dealer also 
  4.27  purchase other goods or services, except that nothing in 
  4.28  sections 325E.60 to 325E.71 prohibits a manufacturer from 
  4.29  requiring the dealer to purchase all parts reasonably necessary 
  4.30  to maintain the quality of operation in the field or any 
  4.31  equipment used in the dealer's trade area; 
  4.32     (2) coerce or attempt to coerce an outdoor power and sport 
  4.33  equipment dealer into a refusal to purchase the outdoor power 
  4.34  and sport equipment manufactured by another outdoor power and 
  4.35  sport equipment manufacturer; 
  4.36     (3) discriminate in prices charged for outdoor power and 
  5.1   sport equipment of like grade and quality sold by the outdoor 
  5.2   power and sport equipment manufacturer to similarly situated 
  5.3   outdoor power and sport equipment dealers.  This clause does not 
  5.4   prevent the use of differentials that make only due allowance 
  5.5   for difference in cost of manufacture, sale, or delivery, or for 
  5.6   differing methods or quantities in which the outdoor power and 
  5.7   sport equipment is sold or delivered by the outdoor power and 
  5.8   sport equipment manufacturer; and 
  5.9      (4) attempt or threaten to terminate, cancel, fail to 
  5.10  renew, or substantially change the competitive circumstances of 
  5.11  the dealership agreement, if the attempt or threat is based on 
  5.12  the results of a natural disaster, including a sustained 
  5.13  negative weather situation in the dealership market area or 
  5.14  other circumstance beyond the dealer's control. 
  5.15     Sec. 5.  [325E.64] [INCONSISTENT AGREEMENTS.] 
  5.16     A term of a dealership agreement including a choice of law 
  5.17  provision, either expressed or implied, that is inconsistent 
  5.18  with sections 325E.60 to 325E.71 is void and unenforceable and 
  5.19  must not waive any rights that are provided to a person by 
  5.20  sections 325E.60 to 325E.71. 
  5.21     Sec. 6.  [325E.65] [REPURCHASE OF OUTDOOR POWER OR SPORT 
  5.22  EQUIPMENT, ATTACHMENTS, AND PARTS UPON TERMINATION OF CONTRACT.] 
  5.23     Subdivision 1.  [REQUIREMENT.] If a dealership agreement is 
  5.24  terminated by cancellation by either party, or nonrenewal by the 
  5.25  supplier, the supplier must repurchase equipment and parts in 
  5.26  the dealer's inventory.  The repurchase is subject to the 
  5.27  conditions in paragraphs (a) to (d). 
  5.28     (a) The supplier or manufacturer must pay to the dealer or 
  5.29  credit the dealer's account with 100 percent of the net cost of 
  5.30  all unused complete equipment, including attachments.  The 
  5.31  equipment must be in new condition and purchased by the 
  5.32  dealership from the manufacturer or supplier within 24 months 
  5.33  preceding notification by either party of an intent to terminate 
  5.34  the contract. 
  5.35     (b) The supplier or manufacturer must pay to the dealer or 
  5.36  credit the dealer's account with 90 percent of the net price for 
  6.1   repair parts, including superseded parts listed in the price 
  6.2   lists or catalogs in use by the supplier on the date of 
  6.3   termination.  The supplier or manufacturer shall also pay the 
  6.4   dealer or credit the dealer's account with five percent of the 
  6.5   net price on the date of termination on all parts returned for 
  6.6   the dealer's handling, packing, and loading of the parts to be 
  6.7   returned to the supplier or manufacturer.  The manufacturer or 
  6.8   supplier is not required to pay or credit five percent if the 
  6.9   manufacturer or supplier elects to perform the handling, 
  6.10  packing, and loading of the parts. 
  6.11     (c) As to any parts not listed in the current price lists 
  6.12  or catalogs, the supplier or manufacturer must pay to the dealer 
  6.13  or credit the dealer's account with 100 percent of the invoice 
  6.14  price of the repair part for which the retailer has an invoice 
  6.15  referring to the parts in question.  Also, these parts must have 
  6.16  previously been purchased by the dealer from the wholesaler, 
  6.17  manufacturer, or distributor, and are held by the dealer on the 
  6.18  date of termination, cancellation, or discontinuance of the 
  6.19  contract, or thereafter received by the dealer from the 
  6.20  wholesaler, manufacturer, or distributor. 
  6.21     (d) The supplier or manufacturer must pay to the dealer or 
  6.22  credit the dealer's account with 50 percent of the most recently 
  6.23  published price of all other parts, provided the price list or 
  6.24  catalog is not more than seven years old as of the date of the 
  6.25  cancellation or discontinuance of the contract. 
  6.26     Subd. 2.  [TRANSFER OF TITLE.] Upon payment or allowance of 
  6.27  a credit to the dealer's account as required in this section, 
  6.28  the title to the repurchased equipment is transferred to the 
  6.29  supplier or manufacturer making the repurchase, and the supplier 
  6.30  or manufacturer may take immediate possession of the repurchased 
  6.31  equipment. 
  6.32     Subd. 3.  [INTEREST RATE.] The supplier or manufacturer 
  6.33  must make payment or allowance of a credit as required under 
  6.34  this section no later than 60 days from the date that the 
  6.35  supplier or manufacturer takes possession of the repurchased 
  6.36  equipment.  If not paid within 60 days, the amount payable by 
  7.1   the supplier or manufacturer shall bear interest at the rate of 
  7.2   1-1/2 percent per month from the date the contract was 
  7.3   terminated, canceled, or discontinued, until the date payment is 
  7.4   received by the retailer. 
  7.5      Subd. 4.  [EXCEPTIONS.] This section does not require 
  7.6   repurchase from the dealer of repair parts that have limited 
  7.7   storage life or are otherwise subject to deterioration, 
  7.8   including, but not limited to, rubber items, gaskets, and 
  7.9   batteries.  This section also does not require repurchase from 
  7.10  the dealer of parts in broken or damaged packages, single repair 
  7.11  parts priced as a set of two or more items, or repair parts 
  7.12  which because of their condition are not resalable as new parts 
  7.13  without new packaging or reconditioning. 
  7.14     Sec. 7.  [325E.66] [SECURITY INTERESTS NOT AFFECTED.] 
  7.15     This chapter must not be construed to affect the existence 
  7.16  or enforcement of a security interest that a person, including a 
  7.17  supplier or financial institution, may have in the inventory of 
  7.18  the dealer.  The repurchase of inventory made under sections 
  7.19  325E.60 to 325E.71 is not subject to the bulk sales provision of 
  7.20  the Uniform Commercial Code, article 6, chapter 336. 
  7.21     Sec. 8.  [325E.67] [DEATH OR INCAPACITY OF DEALER.] 
  7.22     If the owner of a dealership, regardless of the form of the 
  7.23  business enterprise, dies or is incapacitated, the rights in 
  7.24  sections 325E.60 to 325E.71 may be exercised as an option by the 
  7.25  heirs or successors at law, if the owner died intestate, or by 
  7.26  the executor under the terms of the owner's will.  The heirs or 
  7.27  executor of the estate need to exercise this option within 12 
  7.28  months from the date of death of the owner.  
  7.29     Sec. 9.  [325E.68] [ASSIGNEES AND SUCCESSORS IN INTEREST.] 
  7.30     The obligations under sections 325E.60 to 325E.71 apply to 
  7.31  the suppliers, assignees, or successors in interest.  A 
  7.32  successor in interest includes, but is not limited to, a 
  7.33  purchaser of assets or stock, a surviving corporation resulting 
  7.34  from a merger or liquidation, a receiver, or a trustee of the 
  7.35  supplier. 
  7.36     Sec. 10.  [325E.69] [WARRANTY OBLIGATIONS TO DEALER.] 
  8.1      Subdivision 1.  [PROMPT PAYMENT.] Whenever a supplier or 
  8.2   manufacturer and a dealer enter into an agreement providing 
  8.3   consumer warranties, the supplier or manufacturer shall pay a 
  8.4   warranty claim made by the dealer for warranty parts or service 
  8.5   within 30 days after its receipt and approval.  The supplier or 
  8.6   manufacturer shall approve or disapprove a warranty claim within 
  8.7   30 days after its receipt.  If a claim is not specifically 
  8.8   disapproved in writing within 30 days after its receipt, it is 
  8.9   considered to be approved, and payment or credit shall be made 
  8.10  by the supplier or manufacturer within 30 days after its receipt.
  8.11     Subd. 2.  [MANUFACTURER'S LIABILITY.] A manufacturer who 
  8.12  makes an express warranty pursuant to a consumer sale and who 
  8.13  authorizes a retail seller within this state to perform services 
  8.14  or repairs under the terms of the express warranty is liable to 
  8.15  the retail seller in an amount equal to that which is charged by 
  8.16  the retail seller for the same service or repairs rendered to 
  8.17  retail consumers who are not entitled to warranty protection. 
  8.18     Subd. 3.  [INDEMNIFICATION.] Whenever a supplier or 
  8.19  manufacturer and a dealer enter into a dealer agreement, the 
  8.20  supplier or manufacturer shall indemnify and hold harmless the 
  8.21  dealer against a judgment for damages arising from breach of 
  8.22  warranty or rescission of the sale by the supplier or 
  8.23  manufacturer. 
  8.24     Sec. 11.  [325E.70] [CIVIL REMEDY.] 
  8.25     Notwithstanding an agreement to the contrary, upon a 
  8.26  violation by the supplier or manufacturer of any of the 
  8.27  provisions of sections 325E.60 to 325E.71, the dealer may seek 
  8.28  an injunction against further violations and may recover actual 
  8.29  damages incurred by the dealer, together with the costs of 
  8.30  action, including reasonable attorney fees. 
  8.31     Sec. 12.  [325E.71] [TRANSFER OF BUSINESS.] 
  8.32     Subdivision 1.  [DEALER SELECTED BY EXISTING DEALER.] No 
  8.33  supplier or manufacturer shall unreasonably withhold or delay 
  8.34  consent to a transfer of the dealer's business or the transfer 
  8.35  of the stock to other interest in a dealership, whenever the 
  8.36  dealer to be substituted meets the material and reasonable 
  9.1   qualifications and standards required of its dealers.  If a 
  9.2   supplier or manufacturer determines that a proposed transferee 
  9.3   does not meet its qualifications and standards, it shall give 
  9.4   the dealer written notice of that fact, stating the specific 
  9.5   reasons for withholding consent.  No prospective transferee 
  9.6   shall be disqualified to be a dealer because it is a publicly 
  9.7   held corporation.  A supplier or manufacturer has 45 days to 
  9.8   consider a dealer's request to make a transfer under this 
  9.9   section. 
  9.10     Subd. 2.  [DEALER SELECTED BY SUPPLIER OR MANUFACTURER.] If 
  9.11  the manufacturer or supplier selects another purchaser for the 
  9.12  dealership at a lesser sale price, the difference in sale price 
  9.13  for the dealership must be negotiated by the manufacturer or 
  9.14  supplier with the existing dealer.  Payment for the negotiated 
  9.15  and agreed difference in selling price then becomes the 
  9.16  responsibility of the supplier or manufacturer to pay upon the 
  9.17  conclusion of the sale for the dealership. 
  9.18     Subd. 3.  [TRANSFER TO FAMILY MEMBERS.] Notwithstanding 
  9.19  subdivision 1, no supplier or manufacturer shall withhold 
  9.20  consent to, or in any manner retain a right of prior approval 
  9.21  of, the transfer of the dealer's business to a member or members 
  9.22  of the family of the dealer or the principal owner of the 
  9.23  dealer.  As used in this section, "family" means and includes a 
  9.24  spouse, parent, sibling, children, stepchildren, and lineal 
  9.25  descendants, including those by adoption, of the dealer or 
  9.26  principal owner of the dealer. 
  9.27     Subd. 4.  [OBLIGATIONS OF TRANSFEREE.] Whenever a transfer 
  9.28  of a dealer's business occurs, the transferee shall assume all 
  9.29  the obligations imposed on, and succeed to all the rights held 
  9.30  by, the selling dealer by virtue of any agreement, consistent 
  9.31  with sections 325E.60 to 325E.71, between the selling dealer and 
  9.32  one or more suppliers or manufacturers entered into before the 
  9.33  transfer. 
  9.34     Subd. 5.  [DENIAL OF CONSENT; BURDEN OF PROOF.] In any 
  9.35  dispute as to whether a supplier has denied consent in violation 
  9.36  of this section, the supplier or manufacturer has the burden of 
 10.1   proving a substantial and reasonable justification for the 
 10.2   denial or consent.