HF 1717

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:53am

A bill for an act
relating to commerce; regulating motor vehicle sales and distribution; amending
Minnesota Statutes 2008, sections 80E.03, by adding a subdivision; 80E.09,
subdivisions 1, 3; 80E.12; 80E.135; 80E.14, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2008, section 80E.03, is amended by adding a
subdivision to read:

new text begin Subd. 10a. new text end

new text begin Line-make. new text end

new text begin "Line-make" means motor vehicles that are offered for sale,
lease, or distribution under a common name, trademark, service mark, or brand name of
the manufacturer, distributor, or factory branch.
new text end

Sec. 2.

Minnesota Statutes 2008, section 80E.09, subdivision 1, is amended to read:

Subdivision 1.

Requirements.

Upon the termination, cancellation, or nonrenewal of
any franchise, the new motor vehicle dealer shall, in the time prescribed, be allowed fair
and reasonable compensation by the manufacturer for the following items:

(a) new motor vehicle inventory which was originally acquired from the
manufacturer, as limited in clause (f);

(b) equipment and furnishings if the new motor vehicle dealer purchased them
from the manufacturer;

(c) special tools;

(d) supplies, including accessories and parts, purchased from the manufacturer;

(e) a sum equal to the current fair rental value of the dealership facilities as an
ongoing new motor vehicle dealership for a period of one year from the effective date
of the termination, cancellation, or nonrenewal, or until the facilities are leased or sold,
whichever is less, if the dealer owns the facilities. If the facilities are leased from a lessor
other than the manufacturer, a sum equivalent to rent for the remainder of the term of the
lease or one year, whichever is less. Payment under this clause shall not be required if the
termination, cancellation, or nonrenewal was for good cause based on a conviction or plea
of nolo contendere of the dealer or one of its principal owners for a crime which constitutes
a felony as described in section 609.02, subdivision 2, or if it has been demonstrated
that the dealer has exhibited a course of conduct constituting fraud with respect to the
manufacturer or the general public. Nothing in this subdivision relieves the dealer from
the obligation to mitigate damages upon termination, cancellation, or nonrenewal. Any
amount due under this paragraph is reduced to the extent the dealership makes other use
of the property, sells, leases or subleases the property, or secures release from a lease. If
the dealer rejects reduction of facility rental value compensation as described in this
paragraph, the manufacturer is entitled to use of the premises for the period for which
compensation is to be provided or the dealer may elect to receive no compensation;

(f) fair and reasonable compensation as applied to paragraphs (a) and (d) means the
manufacturer shall reimburse the dealer for 100 percent of the net cost to the dealer,
including transportation, of all new current model year motor vehicle inventory acquired
from the manufacturer which has not been materially altered or substantially damaged,
and all new motor vehicle inventory not of the current model year which has not been
materially altered or substantially damaged; provided the noncurrent model year vehicles
were acquired from the manufacturer and drafted on the dealer's financing source or
paid for within 120 days prior to the effective date of the termination, cancellation, or
nonrenewal. The manufacturer shall reimburse the dealer for 100 percent of the current
net prices on motor vehicle accessories and parts, including superseded parts listed in
current price lists or catalogues plus five percent of the current net price of all accessories
and parts returned to compensate the dealer for handling, packing, and loading the parts deleted text begin . deleted text end new text begin ;
new text end

new text begin (g) if the termination, cancellation, or nonrenewal of the dealer's franchise is the
result of the termination, elimination, or cessation of a line-make by the manufacturer,
distributor, or factory branch, the franchiser shall compensate the dealer an amount equal
to the fair market value of the franchise for the line-make as of the date the franchiser
announces the action that results in termination, cancellation, or nonrenewal.
new text end

Sec. 3.

Minnesota Statutes 2008, section 80E.09, subdivision 3, is amended to read:

Subd. 3.

Voluntary terminations, cancellations, or nonrenewals.

For the
purposes of reimbursement under this section, termination, cancellation, or nonrenewal
includes a voluntary termination, cancellation, or nonrenewal by the dealer, and the
compensation provided for in subdivision 1, except deleted text begin clause deleted text end new text begin clauses new text end (e) new text begin and (g) new text end thereof,
shall be paid to the dealer.

Sec. 4.

Minnesota Statutes 2008, section 80E.12, is amended to read:

80E.12 UNLAWFUL ACTS BY MANUFACTURERS, DISTRIBUTORS, OR
FACTORY BRANCHES.

It shall be unlawful for any manufacturer, distributor, or factory branch to require a
new motor vehicle dealer to do any of the following:

(a) order or accept delivery of any new motor vehicle, part or accessory thereof,
equipment, or any other commodity not required by law which has not been voluntarily
ordered by the new motor vehicle dealer, provided that this paragraph does not modify
or supersede reasonable provisions of the franchise requiring the dealer to market a
representative line of the new motor vehicles the manufacturer or distributor is publicly
advertising;

(b) order or accept delivery of any new motor vehicle, part or accessory thereof,
equipment, or any other commodity not required by law in order for the dealer to obtain
delivery of any other motor vehicle ordered by the dealer;

(c) order or accept delivery of any new motor vehicle with special features,
accessories, or equipment not included in the list price of the motor vehicles as publicly
advertised by the manufacturer or distributor;

(d) participate monetarily in an advertising campaign or contest, or to purchase any
promotional materials, showroom, or other display decorations or materials at the expense
of the new motor vehicle dealer;

(e) enter into any agreement with the manufacturer or to do any other act prejudicial
to the new motor vehicle dealer by threatening to cancel a franchise or any contractual
agreement existing between the dealer and the manufacturer. Notice in good faith to any
dealer of the dealer's violation of any terms of the franchise agreement shall not constitute
a violation of sections 80E.01 to 80E.17;

(f) change the capital structure of the new motor vehicle dealer or the means by or
through which the dealer finances the operation of the dealership; provided, that the new
motor vehicle dealer at all times meets any reasonable capital standards agreed to by the
dealer; and also provided, that no change in the capital structure shall cause a change in
the principal management or have the effect of a sale of the franchise without the consent
of the manufacturer or distributor as provided in section 80E.13, paragraph (j);

(g) prevent or attempt to prevent, by contract or otherwise, any motor vehicle dealer
from changing the executive management control of the new motor vehicle dealer unless
the franchisor proves that the change of executive management will result in executive
management control by a person who is not of good moral character or who does not meet
the franchisor's existing reasonable capital standards and, with consideration given to the
volume of sales and services of the new motor vehicle dealer, uniformly applied minimum
business experience standards in the market area; provided, that where the manufacturer,
distributor, or factory branch rejects a proposed change in executive management control,
the manufacturer, distributor, or factory branch shall give written notice of its reasons
to the dealer;

(h) refrain from participation in the management of, investment in, or the acquisition
of, any other line of new motor vehicle or related products new text begin or establishment of another
make or line of new motor vehicles in the same dealership facilities as those of the
manufacturer new text end ; provided, however, that this clause does not apply unless the new motor
vehicle dealer maintains a reasonable line of credit for each make or line of new motor
vehicle, and that the new motor vehicle dealer remains in substantial compliance with the
terms and conditions of the franchise and with any reasonable facilities requirements of
the manufacturer new text begin and that the acquisition or addition is not unreasonable in light of all
existing circumstances new text end new text begin , provided further that if a manufacturer determines to deny a
dealer's request for a change described in this paragraph, such denial must be in writing,
must offer an analysis of the grounds for the denial addressing the criteria contained in this
paragraph, and must be delivered to the new motor vehicle dealer within 60 days after
the manufacturer receives the completed application or documents customarily used by
the manufacturer for dealer actions described in this paragraph. If a denial that meets the
requirements of this paragraph is not sent within this period, the manufacturer shall be
deemed to have given its consent to the proposed change new text end ;

(i) during the course of the agreement, change the location of the new motor vehicle
dealership or make any substantial alterations to the dealership premises during the course
of the agreement, when to do so would be unreasonable; or

(j) prospectively assent to a release, assignment, novation, waiver, or estoppel
whereby a dealer relinquishes any rights under sections 80E.01 to 80E.17, or which would
relieve any person from liability imposed by sections 80E.01 to 80E.17 or to require
any controversy between a new motor vehicle dealer and a manufacturer, distributor, or
factory branch to be referred to any person or tribunal other than the duly constituted
courts of this state or the United States, if the referral would be binding upon the new
motor vehicle dealer.

Sec. 5.

Minnesota Statutes 2008, section 80E.135, is amended to read:

80E.135 WAIVERS AND MODIFICATIONS PROHIBITED.

new text begin Subdivision 1. new text end

new text begin Prohibition. new text end

No manufacturer, distributor, or factory branch shall,
before entering into a franchise with a new motor vehicle dealer or during the franchise
term, use any written instrument, agreement, or waiver, to attempt to nullify or modify
any provision of this chapter, new text begin restrict a dealer from participation in the management of,
investment in, or the acquisition or establishment of any other line of new motor vehicle
or related product as provided in section 80E.12, paragraph (h), new text end or prevent a new motor
vehicle dealer from bringing an action in a particular forum otherwise available under law.
These instruments, agreements, and waivers are null and void.

new text begin Subd. 2. new text end

new text begin Applicability. new text end

new text begin This section does not apply to an agreement between a
dealer and a manufacturer, distributor, or factory branch that restricts or prohibits a dealer
from participation in the management of, investment in, or the acquisition or establishment
of any other line of new motor vehicle or related product if the agreement:
new text end

new text begin (1) is voluntarily entered into by the dealer and its execution is not a condition of
approval of the transaction by a manufacturer, distributor, or factory branch;
new text end

new text begin (2) clearly and conspicuously discloses that the agreement is voluntary; and
new text end

new text begin (3) provides for a separate consideration to the dealer.
new text end

Sec. 6.

Minnesota Statutes 2008, section 80E.14, is amended by adding a subdivision
to read:

new text begin Subd. 3. new text end

new text begin Successor manufacturers. new text end

new text begin If an entity other than the original manufacturer
or distributor of a line-make becomes the manufacturer or distributor for the line-make
and intends to distribute motor vehicles of that line-make in this state, the entity shall
offer those dealers a new franchise agreement for the line-make on substantially similar
terms and conditions.
new text end

Sec. 7. new text begin EFFECTIVE DATE.
new text end

new text begin Section 4 applies to agreements entered into or renewed on or after August 1, 2009.
new text end