SF 1960

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 franchise agreements 
  1.3             between outdoor power and sport equipment dealers and 
  1.4             manufacturers; proposing coding for new law as 
  1.5             Minnesota Statutes, chapter 80G. 
  1.6   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.7      Section 1.  [80G.01] [DEFINITIONS.] 
  1.8      Subdivision 1.  [DEFINITIONS.] As used in this chapter, the 
  1.9   following terms have the meanings given them.  
  1.10     Subd. 2.  [DESIGNATED SUCCESSOR.] "Designated successor" 
  1.11  means: 
  1.12     (1) the spouse, biological or adopted child, grandchild, 
  1.13  parent, brother, or sister of the owner of an outdoor power and 
  1.14  sport equipment dealership who, in the case of the owner's 
  1.15  death, is entitled to inherit the ownership interest in the 
  1.16  outdoor power and sport equipment dealership under the terms of 
  1.17  the owner's will or similar document, and if there is no such 
  1.18  will or similar document, then under applicable intestate laws; 
  1.19     (2) a qualified person experienced in the business of an 
  1.20  outdoor power and sport equipment dealer who has been nominated 
  1.21  by the owner of an outdoor power and sport equipment dealership 
  1.22  as the successor in a written, notarized, and witnessed 
  1.23  instrument submitted to the manufacturer; or 
  1.24     (3) in the case of an incapacitated owner of an outdoor 
  1.25  power and sport equipment dealership, the person who has been 
  2.1   appointed by a court as the legal representative of the 
  2.2   incapacitated owner's property.  
  2.3      Subd. 3.  [FRANCHISE.] "Franchise" means one or more 
  2.4   agreements, whether oral or written, between a manufacturer and 
  2.5   an outdoor power and sport equipment dealer, under which the 
  2.6   outdoor power and sport equipment dealer is authorized to sell, 
  2.7   service, and repair new outdoor power and sport equipment, 
  2.8   parts, and accessories under a common name, trade name, 
  2.9   trademark, or service mark of the manufacturer. 
  2.10     Franchise includes an oral or written contract and includes 
  2.11  a dealer agreement, either expressed or implied, between a 
  2.12  manufacturer and an outdoor power and sport equipment dealer 
  2.13  that purports to fix the legal rights and liabilities between 
  2.14  the parties and under which: 
  2.15     (1) the dealer is granted the right to purchase and resell 
  2.16  outdoor power and sport equipment manufactured, distributed, or 
  2.17  imported by the manufacturer; 
  2.18     (2) the dealer's business is associated with the trademark, 
  2.19  trade name, commercial symbol, or advertisement designating the 
  2.20  franchisor or the products distributed by the manufacturer; and 
  2.21     (3) the dealer's business relies on the manufacturer for a 
  2.22  continued supply of outdoor power and sport equipment, parts, 
  2.23  and accessories.  
  2.24     Subd. 4.  [GOOD FAITH.] "Good faith" means honesty in fact 
  2.25  and fair dealing in the trade as defined and interpreted in 
  2.26  section 336.2-103, clause (1)(b).  
  2.27     Subd. 5.  [MANUFACTURER.] "Manufacturer" means a person, 
  2.28  firm, association, corporation, or trust, resident or 
  2.29  nonresident, who manufactures or assembles new and unused 
  2.30  outdoor power and sport equipment or remanufactures outdoor 
  2.31  power and sport equipment in whole or in part and further 
  2.32  includes the terms: 
  2.33     (1) "distributor," which means a person, firm, association, 
  2.34  corporation, or trust, resident or nonresident, who in whole or 
  2.35  in part offers for sale, sells, or distributes new and unused 
  2.36  outdoor power and sport equipment to dealers or who maintains 
  3.1   factory representatives; 
  3.2      (2) "factory branch," which means a branch office 
  3.3   maintained by a manufacturer for the purpose of selling or 
  3.4   offering for sale, outdoor power and sport equipment to a 
  3.5   distributor, wholesaler, or dealer, or for directing or 
  3.6   supervising in whole or in part factory or distributor 
  3.7   representatives, and further includes a sales promotion 
  3.8   organization, whether a person, firm, or corporation, that is 
  3.9   engaged in promoting the sale of new and unused outdoor power 
  3.10  and sport equipment in this state of a particular brand or make 
  3.11  to dealers; and 
  3.12     (3) "factory representative," which means a representative 
  3.13  employed by a manufacturer, distributor, or factory branch for 
  3.14  the purpose of making or promoting for the sale of their outdoor 
  3.15  power and sport equipment or for supervising or contracting with 
  3.16  their dealers or prospective dealers.  
  3.17     Subd. 6.  [OUTDOOR POWER AND SPORT EQUIPMENT.] "Outdoor 
  3.18  power and sport equipment" means recreational equipment and lawn 
  3.19  and garden equipment, including, but not limited to:  
  3.20  snowmobiles as defined in section 84.81, subdivision 3, and 
  3.21  snowmobile trailers; all-terrain vehicles as defined in section 
  3.22  84.92, subdivision 8; personal watercraft as defined in section 
  3.23  86B.005, subdivision 14a, and personal watercraft motors; 
  3.24  lawnmowers; chainsaws; tillers; generators; weed and brush 
  3.25  cutters; leaf blowers; chippers; log splitters; snowblowers; 
  3.26  lawn, garden, nursery, and golf course tractors; and all 
  3.27  attachments and repair parts for all of this equipment, 
  3.28  including attachments and repair parts used for off-road 
  3.29  recreation and lawn and garden care.  
  3.30     Subd. 7.  [OUTDOOR POWER AND SPORT EQUIPMENT 
  3.31  DEALER.] "Outdoor power and sport equipment dealer" or "dealer" 
  3.32  means a person engaged in the business of buying, selling, 
  3.33  exchanging, or otherwise dealing in new outdoor power and sport 
  3.34  equipment or new and used outdoor power and sport equipment at 
  3.35  an established place of business under a franchise, sales and 
  3.36  service agreement, or any other contract with a manufacturer of 
  4.1   any one or more types of new outdoor power and sport equipment.  
  4.2      Subd. 8.  [OWNER.] "Owner" means a person holding an 
  4.3   ownership interest in the business entity operating as an 
  4.4   outdoor power and sport equipment dealer and who is the 
  4.5   designated dealer in the outdoor power and sport equipment 
  4.6   franchise agreement.  
  4.7      Subd. 9.  [PERSON.] "Person" means a natural person, 
  4.8   partnership, stock company, corporation, trust, agency, or any 
  4.9   other legal entity, as well as any individual officers, 
  4.10  directors, or other persons in active control of the activities 
  4.11  of the entity.  
  4.12     Subd. 10.  [PLACE OF BUSINESS.] "Place of business" means a 
  4.13  permanent, enclosed commercial building, situated within this 
  4.14  state, and the real property on which it is located, at which 
  4.15  the business of an outdoor power and sport equipment dealer, 
  4.16  including the display and repair of outdoor power and sport 
  4.17  equipment, may be lawfully conducted in accordance with the 
  4.18  terms of all applicable laws and at which the public may contact 
  4.19  the outdoor power and sport equipment dealer and employees at 
  4.20  all reasonable times.  
  4.21     Subd. 11.  [RELEVANT MARKET AREA.] "Relative market area" 
  4.22  means the geographic area within the radius of ten miles around 
  4.23  the existing, proposed new, or relocated place of business for 
  4.24  the dealership.  
  4.25     Sec. 2.  [80G.02] [TERMINATION, CANCELLATION, NONRENEWAL OF 
  4.26  FRANCHISE RESTRICTED.] 
  4.27     Notwithstanding the terms of a franchise and 
  4.28  notwithstanding the terms of a waiver, no manufacturer may 
  4.29  terminate, cancel, or fail to renew a franchise with an outdoor 
  4.30  power and sport equipment dealer, unless there is good cause for 
  4.31  the termination, cancellation, or nonrenewal of the franchise 
  4.32  and the manufacturer has acted in good faith regarding the 
  4.33  termination, cancellation, or nonrenewal.  
  4.34     Sec. 3.  [80G.03] [GOOD CAUSE.] 
  4.35     (a) Notwithstanding the terms of a franchise or the terms 
  4.36  of a waiver, good cause exists for termination, cancellation, or 
  5.1   nonrenewal of a franchise when there is a failure by the dealer 
  5.2   to comply with a provision of the franchise that is both 
  5.3   reasonable and of material significance to the franchise 
  5.4   relationship, if the dealer was notified of the failure within 
  5.5   180 days after the manufacturer first acquired knowledge of the 
  5.6   failure, and the dealer did not correct the failure after being 
  5.7   requested to do so.  
  5.8      If, however, the failure of the dealer relates to the 
  5.9   performance of the dealer in sales, service, or level of 
  5.10  customer satisfaction, good cause is the failure of the dealer 
  5.11  to comply with reasonable performance standards determined by 
  5.12  the manufacturer in accordance with uniformly applied criteria, 
  5.13  and: 
  5.14     (1) the dealer was advised, in writing, by the manufacturer 
  5.15  of the failure; 
  5.16     (2) the notice under this paragraph stated that notice was 
  5.17  provided of a failure of performance under this section; 
  5.18     (3) the manufacturer provided the dealer with specific, 
  5.19  reasonable goals or reasonable performance standards with which 
  5.20  the dealer must comply, together with a suggested timetable or 
  5.21  program for attaining those goals or standards, and the dealer 
  5.22  was given a reasonable opportunity, for a period of not more 
  5.23  than 90 days, to comply with the goals or standards; and 
  5.24     (4) the dealer did not substantially comply with the 
  5.25  manufacturer's performance standards during that period and the 
  5.26  failure to demonstrate substantial compliance was not due to 
  5.27  market or economic factors within the dealer's relevant market 
  5.28  area that were beyond the control of the dealer.  
  5.29     (b) The manufacturer has the burden of proof of 
  5.30  establishing good cause and good faith for the termination, 
  5.31  cancellation, or nonrenewal of the franchise under this section. 
  5.32     Sec. 4.  [80G.04] [NOTICE OF TERMINATION, CANCELLATION, OR 
  5.33  NONRENEWAL.] 
  5.34     Before the termination, cancellation, or nonrenewal of a 
  5.35  franchise, the manufacturer shall give written notification to 
  5.36  the dealer.  The notice must be by certified mail or personally 
  6.1   delivered to the outdoor power and sport equipment dealer and 
  6.2   must state the intention to terminate, cancel, or not renew the 
  6.3   franchise, the reasons for the termination, cancellation, or 
  6.4   nonrenewal, and the effective date of the termination, 
  6.5   cancellation, or nonrenewal.  The notice must be given: 
  6.6      (1) not less than 90 days, which runs concurrently with the 
  6.7   90-day period provided in section 80G.03, paragraph (a), clause 
  6.8   (3), before the effective date of the termination, cancellation, 
  6.9   or nonrenewal; 
  6.10     (2) not less than 15 days before the effective date of the 
  6.11  termination, cancellation, or nonrenewal with respect to any of 
  6.12  the following that constitute good cause for termination, 
  6.13  cancellation, or nonrenewal: 
  6.14     (i) insolvency of the dealer or the filing of any petition 
  6.15  by or against the dealer under bankruptcy or receivership law; 
  6.16     (ii) failure of the dealer to conduct sales and service 
  6.17  operations during customary business hours for seven consecutive 
  6.18  business days, except for acts of God or circumstances beyond 
  6.19  the direct control of the dealer; 
  6.20     (iii) conviction of the dealer, or principal operator of 
  6.21  the dealership, of a felony punishable by imprisonment; or 
  6.22     (iv) suspension or revocation of a license that the dealer 
  6.23  is required to have to operate the dealership where the 
  6.24  suspension or revocation is for a period in excess of 30 days; 
  6.25  and 
  6.26     (3) not less than 180 days before the effective date of 
  6.27  termination, cancellation, or nonrenewal, where the manufacturer 
  6.28  intends to discontinue sale and distribution of the new outdoor 
  6.29  power and sport equipment line.  
  6.30     Sec. 5.  [80G.05] [PAYMENTS BY MANUFACTURER TO DEALER UPON 
  6.31  TERMINATION, CANCELLATION, OR NONRENEWAL.] 
  6.32     (a) Upon the termination, cancellation, or nonrenewal of a 
  6.33  franchise by the manufacturer under this chapter, the 
  6.34  manufacturer shall pay the dealer, at a minimum:  
  6.35     (1) dealer cost, less all allowances paid or credited to 
  6.36  the dealer by the manufacturer, of unused, undamaged, and unsold 
  7.1   new outdoor power and sport equipment in the dealer's inventory 
  7.2   that were acquired from the manufacturer or another dealer of 
  7.3   the same line or make; 
  7.4      (2) dealer cost for all unused, undamaged, and unsold 
  7.5   supplies, parts, and accessories in original packaging, except 
  7.6   that in the case of sheet metal, a comparable substitute for 
  7.7   original packaging may be used, if the supply, part, or 
  7.8   accessory was acquired from the manufacturer or from another 
  7.9   dealer ceasing operations as a part of the dealer's initial 
  7.10  inventory, as long as the supplies, parts, and accessories 
  7.11  appear in the manufacturer's current parts catalog, list, or 
  7.12  current offering; 
  7.13     (3) dealer cost for all unused, undamaged, and unsold 
  7.14  inventory, whether vehicles, parts, or accessories, the purchase 
  7.15  of which was required by the manufacturer; 
  7.16     (4) the fair market value of each undamaged sign owned by 
  7.17  the dealer that bears a common name, trade name, or trademark of 
  7.18  the manufacturer, if acquisition of the sign was recommended or 
  7.19  required by the manufacturer and the sign is in good and usable 
  7.20  condition less reasonable wear and tear, and has not been 
  7.21  depreciated by the dealer more than 50 percent of the value of 
  7.22  the sign; and 
  7.23     (5) the fair market value of all special tools owned or 
  7.24  leased by the dealer that were acquired from the manufacturer or 
  7.25  persons approved by the manufacturer, and that were required by 
  7.26  the manufacturer and are in good and usable condition, less 
  7.27  reasonable wear and tear.  However, if the tools are leased by 
  7.28  the dealer, the manufacturer shall pay the dealer such amounts 
  7.29  that are required by the lessor to terminate the lease under the 
  7.30  terms of the lease agreement.  
  7.31     (b) To the extent the franchise agreement provides for 
  7.32  payment or reimbursement to the dealer in excess of that 
  7.33  specified in this section, the provisions of the franchise 
  7.34  agreement will control.  
  7.35     (c) The manufacturer shall pay the dealer the sums 
  7.36  specified in paragraph (a) within 90 days after the tender of 
  8.1   the property, if the dealer has clear title to the property and 
  8.2   is in a position to convey that title to the manufacturer.  
  8.3      Sec. 6.  [80G.06] [WARRANTY WORK.] 
  8.4      (a) Each manufacturer shall specify in its franchise 
  8.5   agreement or in a separate written agreement, with each of its 
  8.6   dealers in this state, the dealer's obligation to perform 
  8.7   warranty work or service on the manufacturer's products.  Each 
  8.8   manufacturer shall provide each of its dealers with a schedule 
  8.9   of compensation to be paid to the dealer for any warranty work 
  8.10  or service, including parts, labor, and diagnostic work, 
  8.11  required of the dealer by the manufacturer in connection with 
  8.12  the manufacturer's products, and for work on and preparation of 
  8.13  outdoor power and sport equipment received from the 
  8.14  manufacturer.  The compensation may not be less than the rates 
  8.15  reasonably charged by the dealer for like services and parts to 
  8.16  retail customers.  The compensation may not be reduced by the 
  8.17  manufacturer for any reason or made conditional on an activity 
  8.18  outside the performance of warranty work.  
  8.19     (b) All claims for warranty work for parts and labor made 
  8.20  by dealers under this section must be paid by the manufacturer 
  8.21  within 30 days after approval, and must be approved or denied 
  8.22  within 30 days of receipt by the manufacturer.  Denial of a 
  8.23  claim must be in writing with the specific grounds for denial.  
  8.24  The manufacturer may audit claims for warranty work and charge 
  8.25  the dealer for any unsubstantiated, incorrect, or false claims 
  8.26  for a period of one year after payment.  However, the 
  8.27  manufacturer may audit and charge the dealer for any fraudulent 
  8.28  claims during any period for which an action for fraud may be 
  8.29  commenced under applicable state law.  
  8.30     (c) All claims submitted by dealers on the forms and in the 
  8.31  manner specified by the manufacturer must be either approved or 
  8.32  disapproved within 30 days after their receipt.  The 
  8.33  manufacturer shall notify the dealer in writing of a disapproved 
  8.34  claim, and shall set forth the reasons why the claim was not 
  8.35  approved.  A claim not specifically disapproved in writing 
  8.36  within 30 days after receipt is approved, and the manufacturer 
  9.1   is required to pay that claim within 30 days of receipt of the 
  9.2   claim.  
  9.3      Sec. 7.  [80G.07] [DESIGNATED SUCCESSOR TO FRANCHISE 
  9.4   OWNERSHIP.] 
  9.5      (a) Notwithstanding the terms of a franchise, an owner may 
  9.6   appoint a designated successor to succeed to the ownership of 
  9.7   the dealer franchise upon the owner's death or incapacity.  
  9.8      (b) Notwithstanding the terms of a franchise, a designated 
  9.9   successor of a deceased or incapacitated owner of a dealer 
  9.10  franchise may succeed to the ownership interest of the owner 
  9.11  under the existing franchise, if: 
  9.12     (1) in the case of a designated successor who meets the 
  9.13  definition of a designated successor under section 80G.01, 
  9.14  subdivision 2, but who is not experienced in the business of a 
  9.15  new outdoor power and sport equipment dealer, the person will 
  9.16  employ an individual who is qualified and experienced in the 
  9.17  business of a new outdoor power and sport equipment dealer to 
  9.18  help manage the day-to-day operations of the dealership; or in 
  9.19  the case of a designated successor who meets the definition of a 
  9.20  designated successor under section 80G.01, subdivision 2, clause 
  9.21  (2) or (3), the person is qualified and experienced in the 
  9.22  business of a new outdoor power and sport equipment dealer and 
  9.23  meets the normal, reasonable, and uniformly applied standards 
  9.24  for grant of an application as a dealer by the manufacturer; 
  9.25     (2) the designated successor furnishes written notice to 
  9.26  the manufacturer of his or her intention to succeed to the 
  9.27  ownership of the dealership within 60 days after the owner's 
  9.28  death or incapacity; and 
  9.29     (3) the designated successor agrees to be bound by all 
  9.30  terms and conditions of the franchise.  
  9.31     (c) The manufacturer may request, and the designated 
  9.32  successor shall promptly provide, such personal and financial 
  9.33  information as is reasonably necessary to determine whether the 
  9.34  succession should be honored.  
  9.35     (d) A manufacturer may refuse to honor the succession to 
  9.36  the ownership of a dealer franchise by a designated successor if 
 10.1   the manufacturer establishes that good cause exists for its 
 10.2   refusal to honor the succession.  If the designated successor of 
 10.3   a deceased or incapacitated owner of a dealer franchise fails to 
 10.4   meet the requirements set forth in paragraph (b), clauses (1) to 
 10.5   (3), good cause for refusing to honor the succession is presumed 
 10.6   to exist.  If a manufacturer believes that good cause exists for 
 10.7   refusing to honor the succession to the ownership of a dealer 
 10.8   franchise by a designated successor, the manufacturer shall 
 10.9   serve written notice on the designated successor of its refusal 
 10.10  to honor the succession no earlier than 60 days from the date 
 10.11  the notice is served.  The notice must be served no later than 
 10.12  60 days after the manufacturer's receipt of:  
 10.13     (1) notice of the designated successor's intent to succeed 
 10.14  to the ownership interest of the dealer's franchise; or 
 10.15     (2) any personal or financial information requested by the 
 10.16  manufacturer.  
 10.17     (e) The notice in paragraph (d) must state the specific 
 10.18  grounds for the refusal to honor the succession.  If the notice 
 10.19  of refusal is not timely and properly served, the designated 
 10.20  successor may continue the franchise in full force and effect, 
 10.21  subject to termination only as otherwise provided under this 
 10.22  chapter.  
 10.23     (f) This section does not preclude the owner of a dealer 
 10.24  franchise from designating any person as his or her successor by 
 10.25  a written, notarized, and witnessed instrument filed with the 
 10.26  manufacturer.  In the event of a conflict between this section 
 10.27  and such a written instrument that has not been revoked by 
 10.28  written notice from the owner to the manufacturer, the written 
 10.29  instrument governs.  
 10.30     Sec. 8.  [80G.08] [RELEVANT MARKET AREA; NEW OR RELOCATED 
 10.31  DEALERSHIPS.] 
 10.32     Subdivision 1.  [NOTICE.] Notwithstanding the terms of a 
 10.33  franchise and notwithstanding the terms of a waiver, if a 
 10.34  manufacturer intends or proposes to enter into a franchise to 
 10.35  establish an additional dealer or to relocate an existing dealer 
 10.36  within or into a relevant market area in which the same line or 
 11.1   make of outdoor power and sport equipment is then represented, 
 11.2   the manufacturer shall provide at least ten days' advance 
 11.3   written notice to each dealer of the same line or make in the 
 11.4   relevant market area, of the manufacturer's intention to 
 11.5   establish an additional dealer or to relocate an existing dealer 
 11.6   within or into the relevant market area.  The notice must be 
 11.7   sent by certified mail to each such party and include the 
 11.8   following information:  
 11.9      (1) the specific location at which the additional or 
 11.10  relocated dealer will be established; 
 11.11     (2) the date on or after which the additional or relocated 
 11.12  dealer intends to commence business at the proposed location; 
 11.13     (3) the identity of all dealers who are franchised to sell 
 11.14  the same line or make outdoor power and sport equipment as the 
 11.15  proposed dealer and who have licensed locations within the 
 11.16  relevant market area; 
 11.17     (4) the names and addresses, if available, of the owners of 
 11.18  and principal investors in the proposed additional or relocated 
 11.19  dealership; and 
 11.20     (5) the specific grounds or reasons for the proposed 
 11.21  establishment of an additional dealer or relocation of an 
 11.22  existing dealer.  
 11.23     Subd. 2.  [FACTORS CONSIDERED BY COURT.] (a) Within 30 days 
 11.24  of receiving the notice or within 30 days after the end of any 
 11.25  appeal procedure provided by the manufacturer, the dealer may 
 11.26  commence a civil action in a court of competent jurisdiction 
 11.27  under section 80G.12 challenging the establishment or relocation 
 11.28  of the outdoor power and sport equipment dealership.  
 11.29     An action brought under this section must be placed on the 
 11.30  calendar ahead of other court action to be heard and determined 
 11.31  as expeditiously as possible.  Thereafter, the manufacturer 
 11.32  shall not establish or relocate the proposed outdoor power and 
 11.33  sport equipment dealership unless the court has determined that 
 11.34  there is good cause for the action.  
 11.35     (b) In determining whether good cause has been established 
 11.36  for the proposed establishment or relocation of a dealer of the 
 12.1   same line or make, the factors the court shall consider must 
 12.2   include, but are not limited to, the following: 
 12.3      (1) the extent, nature, and permanency of the investment of 
 12.4   both the existing dealers of the same line or make in the 
 12.5   relevant market area and the proposed additional or relocating 
 12.6   dealer, including obligations reasonably incurred by the 
 12.7   existing dealers to perform their obligations under their 
 12.8   respective franchises; 
 12.9      (2) the growth or decline in population and new outdoor 
 12.10  power and sport equipment registrations during the past five 
 12.11  years in the relevant market area; 
 12.12     (3) the effect on the consuming public; 
 12.13     (4) the effect on the existing dealers in the relevant 
 12.14  market area, including any adverse financial impact; 
 12.15     (5) the reasonably expected or anticipated outdoor power 
 12.16  and sport equipment market for the relevant market area, 
 12.17  including demographic factors such as age of population, income, 
 12.18  education, size class preference, product popularity, retail 
 12.19  lease transaction, or other factors affecting sales to consumers 
 12.20  in the relevant market area; 
 12.21     (6) whether it is injurious or beneficial to the public 
 12.22  welfare for an additional dealership to be established; 
 12.23     (7) whether the dealers of the same line or make in the 
 12.24  relevant market area are providing adequate competition and 
 12.25  convenient customer care for the outdoor power and sport 
 12.26  equipment of the same line or make in the relevant market area, 
 12.27  including the adequacy of outdoor power and sport equipment 
 12.28  sales and service facilities, equipment, supply of parts, and 
 12.29  qualified service personnel; 
 12.30     (8) whether the establishment of an additional dealer would 
 12.31  increase competition and be in the public interest; 
 12.32     (9) whether the manufacturer is motivated principally by 
 12.33  good faith to establish an additional or new dealer and not by 
 12.34  noneconomic considerations; 
 12.35     (10) whether the manufacturer has denied its existing 
 12.36  dealers of the same line or make the opportunity for reasonable 
 13.1   growth, market expansion, or relocation; 
 13.2      (11) whether the protesting dealer or dealers are in 
 13.3   substantial compliance with their dealer agreements or 
 13.4   franchises; and 
 13.5      (12) whether the manufacturer has complied with the 
 13.6   requirements of this chapter.  
 13.7      Subd. 3.  [EXCEPTIONS.] This section does not apply: 
 13.8      (1) to the sale or transfer of the ownership or assets of 
 13.9   an existing dealer where the transferee proposes to engage in 
 13.10  business representing the same line or make at the same location 
 13.11  or within two miles of that location; 
 13.12     (2) to the relocation of an existing dealer within the 
 13.13  dealer's relevant market area, if the relocation is not at a 
 13.14  site within eight miles of any dealer of the same line or make; 
 13.15     (3) if the proposed dealer is to be established at or 
 13.16  within two miles of a location at which a former dealer of the 
 13.17  same line or make had ceased operating within the previous 24 
 13.18  months; 
 13.19     (4) where the proposed relocation is two miles or less from 
 13.20  the existing location of the relocating dealer; or 
 13.21     (5) where the proposed relocation is to be farther away 
 13.22  from all other existing dealers of the same line or make in the 
 13.23  relevant market area.  
 13.24     Sec. 9.  [80G.09] [UNFAIR PRACTICES.] 
 13.25     Subdivision 1.  [PROHIBITIONS.] Notwithstanding the terms 
 13.26  of a franchise agreement, a manufacturer, distributor, factory 
 13.27  branch, or factory representative, or an agent, officer, parent 
 13.28  company, wholly or partially owned subsidiary, affiliated 
 13.29  entity, or other person controlled by or under common control 
 13.30  with a manufacturer, distributor, factory branch, or factory 
 13.31  representative, shall not:  
 13.32     (1) discriminate between dealers by selling or offering to 
 13.33  sell like outdoor power or sport equipment to one dealer at a 
 13.34  lower actual price than the actual price offered to another 
 13.35  dealer for the same model similarly equipped; 
 13.36     (2) discriminate between dealers by selling or offering to 
 14.1   sell parts or accessories to one dealer at a lower actual price 
 14.2   than the actual price offered to another dealer; 
 14.3      (3) discriminate between dealers by using a promotion plan, 
 14.4   marketing plan, or other similar device that results in a lower 
 14.5   actual price on vehicles, parts, or accessories being charged to 
 14.6   one dealer over another dealer; 
 14.7      (4) discriminate between dealers by adopting a method, or 
 14.8   changing an existing method, for the allocation, scheduling, or 
 14.9   delivery of new outdoor power and sport equipment, parts, or 
 14.10  accessories to its dealers that is not fair, reasonable, and 
 14.11  equitable.  Upon the request of a dealer, a manufacturer shall 
 14.12  disclose in writing to the dealer the method by which new 
 14.13  outdoor power and sport equipment, parts, and accessories are 
 14.14  allocated, scheduled, or delivered to its dealers handling the 
 14.15  same line or make of outdoor power and sport equipment; 
 14.16     (5) give preferential treatment to some dealers over others 
 14.17  by refusing or failing to deliver, in reasonable quantities and 
 14.18  within a reasonable time after receipt of an order, to a dealer 
 14.19  holding a franchise for a line or make of outdoor power and 
 14.20  sport equipment sold or distributed by the manufacturer, new 
 14.21  outdoor power and sport equipment, parts, or accessories, if the 
 14.22  outdoor power and sport equipment, parts, or accessories are 
 14.23  being delivered to other dealers, or require a dealer to 
 14.24  purchase unreasonable advertising displays or other materials, 
 14.25  or unreasonably require a dealer to remodel or renovate existing 
 14.26  facilities as a prerequisite to receiving a model or series of 
 14.27  outdoor power and sport equipment; 
 14.28     (6) compete with a dealer by acting in the capacity of a 
 14.29  dealer, or by owning, operating, or controlling, whether 
 14.30  directly or indirectly, a dealership in this state.  It is not, 
 14.31  however, a violation of this subdivision for a manufacturer to 
 14.32  own or operate a dealership for a temporary period, not to 
 14.33  exceed two years, during the transition from one owner of the 
 14.34  dealership to another where the dealership was previously owned 
 14.35  by a franchised dealer and is currently for sale to any 
 14.36  qualified independent person at a fair and reasonable price; 
 15.1      (7) compete with a dealer by owning, operating, or 
 15.2   controlling, whether directly or indirectly, a service facility 
 15.3   in this state for the repair or maintenance of outdoor power and 
 15.4   sport equipment under the manufacturer's new outdoor power and 
 15.5   sport equipment warranty and extended warranty.  Nothing in this 
 15.6   clause, however, prohibits a manufacturer from owning or 
 15.7   operating a service facility for the purpose of providing or 
 15.8   performing maintenance, repair, or service work on outdoor power 
 15.9   and sport equipment that is owned by the manufacturer; 
 15.10     (8) use confidential or proprietary information obtained 
 15.11  from a dealer to unfairly compete with the dealer without the 
 15.12  prior written consent of the dealer; 
 15.13     (9) coerce, threaten, intimidate, or require, either 
 15.14  directly or indirectly, a dealer to accept, buy, or order any 
 15.15  outdoor power and sport equipment, part, or accessory, or any 
 15.16  other commodity or service not voluntarily ordered, or 
 15.17  requested, or to buy, order, or pay anything of value for such 
 15.18  items in order to obtain outdoor power and sport equipment, a 
 15.19  part, accessory, or other commodity that has been voluntarily 
 15.20  ordered or requested; 
 15.21     (10) coerce, threaten, intimidate, or require, either 
 15.22  directly or indirectly, a dealer to enter into any agreement 
 15.23  that violates this chapter; 
 15.24     (11) require a change in capital structure or means of 
 15.25  financing for the dealership if the dealer at all times meets 
 15.26  the reasonable, written, and uniformly applied capital standards 
 15.27  determined by the manufacturer; 
 15.28     (12) prevent or attempt to prevent a dealer from making 
 15.29  reasonable changes in the capital structure of a dealership or 
 15.30  the means by which the dealership is financed if the dealer 
 15.31  meets the reasonable, written, and uniformly applied capital 
 15.32  requirements determined by the manufacturer; 
 15.33     (13) unreasonably require the dealer to change the location 
 15.34  or require any substantial alterations to the place of business; 
 15.35     (14) condition a renewal or extension of the franchise on 
 15.36  the dealer's substantial renovation of the existing place of 
 16.1   business or on the construction, purchase, acquisition, or 
 16.2   re-lease of a new place of business unless written notice is 
 16.3   first provided 180 days before the date of renewal or extension 
 16.4   and the manufacturer demonstrates the reasonableness of the 
 16.5   requested actions.  The manufacturer shall agree to supply the 
 16.6   dealer with an adequate quantity of outdoor power and sport 
 16.7   equipment, parts, and accessories to meet the sales level 
 16.8   necessary to support the overhead resulting from substantial 
 16.9   construction, acquisition, or lease of a new place of business; 
 16.10     (15) coerce, threaten, intimidate, or require, either 
 16.11  directly or indirectly, a dealer to order or accept delivery of 
 16.12  outdoor power and sport equipment with special features, 
 16.13  accessories, or equipment not included in the list price of the 
 16.14  outdoor power and sport equipment as advertised by the 
 16.15  manufacturer, except items that have been voluntarily requested 
 16.16  or ordered by the dealer, and except items required by law; 
 16.17     (16) fail to hold harmless and indemnify a dealer against 
 16.18  losses, including lawsuits and court costs, arising from: 
 16.19     (i) the manufacture or performance of outdoor power and 
 16.20  sport equipment, a part, or accessory if the lawsuit involves 
 16.21  representations by the manufacturer on the manufacture or 
 16.22  performance of outdoor power and sport equipment without 
 16.23  negligence on the part of the dealer; 
 16.24     (ii) damage to merchandise in transit where the 
 16.25  manufacturer specifies the carrier; 
 16.26     (iii) the manufacturer's failure to jointly defend product 
 16.27  liability suits concerning the outdoor power and sport 
 16.28  equipment, part, or accessory provided to the dealer; or 
 16.29     (iv) any other act performed by the manufacturer; 
 16.30     (17) unfairly prevent or attempt to prevent a dealer from 
 16.31  receiving reasonable compensation for the value of outdoor power 
 16.32  and sport equipment; 
 16.33     (18) fail to pay to a dealer, within a reasonable time 
 16.34  after receipt of a valid claim, a payment agreed to be made by 
 16.35  the manufacturer on grounds that new outdoor power and sport 
 16.36  equipment, or a prior year's model of such equipment, is in the 
 17.1   dealer's inventory at the time of introduction of a new model of 
 17.2   outdoor power and sport equipment; 
 17.3      (19) deny a dealer the right of free association with any 
 17.4   other dealer for any lawful purpose; 
 17.5      (20) charge increased prices without having given written 
 17.6   notice to the dealer at least 15 days before the effective date 
 17.7   of the price increases; 
 17.8      (21) permit factory authorized warranty service to be 
 17.9   performed upon outdoor power and sport equipment or accessories 
 17.10  by persons other than their franchised dealers; 
 17.11     (22) require or coerce a dealer to sell, assign, or 
 17.12  transfer a retail sales installment contract, or require the 
 17.13  dealer to act as an agent for a manufacturer, in the securing of 
 17.14  a promissory note, a security agreement given in connection with 
 17.15  the sale of outdoor power and sport equipment, or securing of a 
 17.16  policy of insurance for outdoor power and sport equipment.  The 
 17.17  manufacturer may not condition delivery of any outdoor power and 
 17.18  sport equipment, parts, or accessories upon the dealer's 
 17.19  assignment, sale, or other transfer of sales installment 
 17.20  contracts to specific finance companies; or 
 17.21     (23) require or coerce a dealer to grant a manufacturer a 
 17.22  right of first refusal or other preference to purchase the 
 17.23  dealer's franchise or place of business, or both.  
 17.24     Subd. 2.  [DEFINITIONS.] The following definitions apply to 
 17.25  this section. 
 17.26     (a) "Actual price" means the price to be paid by the dealer 
 17.27  less any incentive paid by the manufacturer, whether paid to the 
 17.28  dealer or the ultimate purchaser of the outdoor power and sport 
 17.29  equipment.  
 17.30     (b) "Control" or "controlling" means: 
 17.31     (1) the possession of, title to, or control of ten percent 
 17.32  or more of the voting equity interest in a person, whether 
 17.33  directly or indirectly through a fiduciary, agent, or other 
 17.34  intermediary; or 
 17.35     (2) the possession, direct or indirect, of the power to 
 17.36  direct or cause the direction of the management or policies of a 
 18.1   person, whether through the ownership of voting securities, 
 18.2   through director control, by contract, or otherwise, except as 
 18.3   expressly provided under the franchise agreement.  
 18.4      (c) "Operate" means to manage a dealership, whether 
 18.5   directly or indirectly.  
 18.6      (d) "Own" or "ownership" means to hold the beneficial 
 18.7   ownership of one percent or more of any class of equity interest 
 18.8   in a dealership, whether the interest is that of a shareholder, 
 18.9   partner, limited liability company member, or otherwise.  To 
 18.10  hold an ownership interest means to have possession of, title 
 18.11  to, or control of the ownership interest, whether directly or 
 18.12  indirectly through a fiduciary, agent, or other intermediary.  
 18.13     Sec. 10.  [80G.10] [SALE, TRANSFER, OR EXCHANGE OF 
 18.14  FRANCHISE.] 
 18.15     (a) Notwithstanding the terms of a franchise, a 
 18.16  manufacturer may not unreasonably withhold consent to the sale, 
 18.17  transfer, or exchange of a franchise to a qualified buyer who 
 18.18  meets the normal, reasonable, and uniformly applied standards 
 18.19  established by the manufacturer for the appointment of a dealer. 
 18.20  A manufacturer's failure to respond in writing to a request for 
 18.21  consent under this paragraph within 60 days after receipt of a 
 18.22  written request on the forms, if any, generally used by the 
 18.23  manufacturer containing the information and reasonable promises 
 18.24  required by a manufacturer, is deemed to be consent to the 
 18.25  request.  A manufacturer may request, and, if so requested, the 
 18.26  applicant for a franchise: 
 18.27     (1) shall promptly provide such personal and financial 
 18.28  information as is reasonably necessary to determine whether the 
 18.29  sale, transfer, or exchange should be approved; and 
 18.30     (2) shall agree to be bound by all reasonable terms and 
 18.31  conditions of the franchise.  
 18.32     (b) If a manufacturer refuses to approve the sale, 
 18.33  transfer, or exchange of a franchise, the manufacturer shall 
 18.34  serve written notice on the applicant, and the transferring, 
 18.35  selling, or exchanging dealer, of its refusal to approve the 
 18.36  transfer of the franchise no later than 60 days after the date 
 19.1   the manufacturer receives the written request from the dealer.  
 19.2   If the manufacturer has requested personal or financial 
 19.3   information from the applicant under paragraph (a), the notice 
 19.4   must be served no later than 60 days after the receipt of all 
 19.5   such documents.  Service of all notices under this section must 
 19.6   be made by personal service or by certified mail, return receipt 
 19.7   requested. 
 19.8      (c) The notice in paragraph (b) must state the specific 
 19.9   grounds for the refusal to approve the sale, transfer, or 
 19.10  exchange of the franchise.  
 19.11     (d) In determining whether the manufacturer unreasonably 
 19.12  withheld its approval to the sale, transfer, or exchange, the 
 19.13  manufacturer has the burden of proof that it acted reasonably.  
 19.14  A manufacturer's refusal to accept or approve a proposed buyer 
 19.15  who otherwise meets the normal, reasonable, and uniformly 
 19.16  applied standards established by the manufacturer for the 
 19.17  appointment of a new dealer, or who otherwise is capable of 
 19.18  operating as a dealer in this state, is presumed to be 
 19.19  unreasonable.  
 19.20     Sec. 11.  [80G.11] [ENFORCEMENT.] 
 19.21     Subdivision 1.  [CIVIL PENALTY.] Any person who violates 
 19.22  this chapter is subject to a fine of not more than $2,000 for 
 19.23  each violation.  Any person who fails to comply with a final 
 19.24  judgment or order rendered by a court of competent jurisdiction, 
 19.25  issued for a violation of this chapter, is subject to a fine of 
 19.26  not more than $25,000.  The fines authorized by this subdivision 
 19.27  must be imposed in a civil action brought by the attorney 
 19.28  general on behalf of the state of Minnesota, and must be 
 19.29  deposited into the state treasury.  
 19.30     Subd. 2.  [REMEDIES CUMULATIVE.] Nothing in this section 
 19.31  shall be construed to limit the power of the state to punish any 
 19.32  person for any conduct that is unlawful under any other law.  
 19.33     Sec. 12.  [80G.12] [CIVIL REMEDIES.] 
 19.34     Notwithstanding the terms of any franchise agreement or 
 19.35  waiver to the contrary, any person whose business or property is 
 19.36  injured by a violation of this chapter, or any person injured 
 20.1   because of the refusal to accede to a proposal for an 
 20.2   arrangement which, if consummated, would be in violation of this 
 20.3   chapter, may bring a civil action to enjoin further violations 
 20.4   and to recover the actual damages sustained, together with costs 
 20.5   and disbursements, including reasonable attorney fees.  
 20.6      Sec. 13.  [80G.13] [NO RETROACTIVE APPLICATION.] 
 20.7      The provisions of this chapter do not apply to any action 
 20.8   to terminate or cancel a motor vehicle franchise if the notice 
 20.9   to terminate or cancel was given before July 1, 2004.  Any such 
 20.10  action to terminate or cancel is governed by the laws and rules 
 20.11  of the state of Minnesota in effect on the day notice to 
 20.12  terminate or cancel was given.  
 20.13     Sec. 14.  [EFFECTIVE DATE.] 
 20.14     This act is effective July 1, 2004.