Minnesota Session Laws - 1991, Regular Session

  

                         Laws of Minnesota 1991 

                         CHAPTER 69-H.F.No. 274 
           An act relating to commerce; motor vehicle sales and 
          distribution; regulating franchises; proscribing 
          certain acts; providing remedies; amending Minnesota 
          Statutes 1990, sections 80E.04, subdivision 1, and by 
          adding a subdivision; 80E.05; 80E.06, subdivision 2; 
          80E.12; and 80E.13. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 80E.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS.] Each new motor vehicle 
manufacturer shall specify in writing to each of its new motor 
vehicle dealers licensed in this state the dealer's obligations 
for preparation, delivery, and warranty service on its 
products.  The manufacturer shall also compensate the new motor 
vehicle dealer for warranty service and parts required of the 
dealer by the manufacturer, and shall provide the dealer the 
schedule of compensation to be paid the dealer for parts, work, 
and service in connection with warranty services, and the time 
allowance for the performance of the work and service.  This 
section applies to all repair services performed by the dealer 
for the manufacturer or with the approval of the manufacturer 
and for which the dealer receives compensation or reimbursement 
from the manufacturer.  
    Sec. 2.  Minnesota Statutes 1990, section 80E.04, is 
amended by adding a subdivision to read: 
    Subd. 6.  For purposes of this section, the terms 
"manufacturer" and "dealer" include manufacturers and 
distributors of motor vehicle engines and their dealers. 
    Sec. 3.  Minnesota Statutes 1990, section 80E.05, is 
amended to read: 
    80E.05 [INDEMNIFICATION REQUIRED.] 
    Notwithstanding the terms of any franchise agreement to the 
contrary, it shall be a violation of sections 80E.01 to 80E.17 
for any new motor vehicle manufacturer to fail to indemnify and 
hold harmless its franchised dealers against any judgment for 
damages, including, but not limited to, those based on strict 
liability, negligence, misrepresentation, warranty (express or 
implied), or revocation of acceptance as is defined in section 
336.2-608, where the complaint, claim, or lawsuit relates solely 
to the alleged defective or negligent manufacture, assembly, or 
design of new motor vehicles, parts or accessories or other 
functions by the manufacturer, beyond the control of the dealer. 
Indemnification under this section must include court costs, 
reasonable attorney fees, and expert witness fees incurred by 
the motor vehicle dealer. 
    Sec. 4.  Minnesota Statutes 1990, section 80E.06, 
subdivision 2, is amended to read: 
    Subd. 2.  [CIRCUMSTANCES CONSTITUTING GOOD CAUSE.] 
Notwithstanding the terms of any franchise agreement or waiver 
to the contrary, good cause exists for the purposes of a 
termination, cancellation, or nonrenewal, when the new motor 
vehicle dealer fails to comply with a provision of the franchise 
which is both reasonable and of material significance to the 
franchise relationship; provided, that the dealer has been 
notified in writing of the failure within 180 days after the 
manufacturer first acquired knowledge of the failure. 
     If failure by the new motor vehicle dealer relates to the 
performance of the new motor vehicle dealer in sales or service, 
then good cause shall be defined as the failure of the new motor 
vehicle dealer to comply with reasonable performance criteria 
established by the manufacturer; provided, that the new motor 
vehicle dealer was apprised by the manufacturer in writing of 
the failure; the notification stated that notice was provided 
for failure of performance pursuant to sections 80E.01 to 
80E.17; the new motor vehicle dealer was afforded a reasonable 
opportunity in no event less than six months to comply with the 
criteria; and the dealer did not demonstrate substantial 
progress toward compliance with the manufacturer's performance 
criteria during the period.  
    To rebut allegations of good cause for a proposed 
termination, a dealer may present evidence including, but not 
limited to, a showing that the grounds for termination resulted 
from acts or circumstances beyond the control of the dealer and 
which were communicated to the manufacturer, or that in 
evaluating the dealer's compliance with reasonable sales 
criteria, the manufacturer failed to consider the dealer's sales 
of factory program vehicles.  For the purposes of this 
subdivision, "factory program vehicle" means a vehicle of the 
current model year offered for sale and resold by the 
manufacturer directly or at a factory sponsored or authorized 
auction and purchased by a dealer holding a current franchise 
from the manufacturer for that same line make. 
    Sec. 5.  Minnesota Statutes 1990, 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 or to qualify for 
or participate in any rebate, refund, or similar program offered 
by the manufacturer; 
    (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; 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; 
     (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. 6.  Minnesota Statutes 1990, section 80E.13, is 
amended to read: 
     80E.13 [UNFAIR PRACTICES BY MANUFACTURERS, DISTRIBUTORS, 
FACTORY BRANCHES.] 
     It is unlawful and an unfair practice for a manufacturer, 
distributor, or factory branch to engage in any of the following 
practices:  
     (a) To delay, refuse, or fail to deliver new motor vehicles 
or new motor vehicle parts or accessories in reasonable time and 
in reasonable quantity relative to the new motor vehicle 
dealer's facilities and sales potential in the dealer's relevant 
market area, after having accepted an order from a new motor 
vehicle dealer having a franchise for the retail sale of any new 
motor vehicle sold or distributed by the manufacturer or 
distributor, if the new motor vehicle or new motor vehicle parts 
or accessories are publicly advertised as being available for 
delivery or actually being delivered.  This clause is not 
violated, however, if the failure is caused by acts or causes 
beyond the control of the manufacturer; 
     (b) To refuse to disclose to any new motor vehicle dealer 
handling the same line make, the manner and mode of distribution 
of that line make within the relevant market area; 
     (c) To obtain money, goods, service, or any other benefit 
from any other person with whom the dealer does business, on 
account of, or in relation to, the transaction between the 
dealer and the other person, other than for compensation for 
services rendered, unless the benefit is promptly accounted for, 
and transmitted to, the new motor vehicle dealer; 
    (d) To increase prices of new motor vehicles which the new 
motor vehicle dealer had ordered for private retail consumers 
prior to the dealer's receiving the written official price 
increase notification.  A sales contract signed by a private 
retail consumer shall constitute evidence of each order if the 
vehicle is in fact delivered to that customer.  In the event of 
manufacturer price reductions, the amount of any reduction 
received by a dealer shall be passed on to the private retail 
consumer by the dealer if the retail price was negotiated on the 
basis of the previous higher price to the dealer; 
    (e) To offer any refunds or other types of inducements to 
any new motor vehicle dealer for the purchase of new motor 
vehicles of a certain line make to be sold to the state or any 
political subdivision thereof without making the same offer to 
all other new motor vehicle dealers in the same line make within 
the relevant market area; 
    (f) To release to any outside party, except under subpoena 
or in an administrative or judicial proceeding involving the 
manufacturer or dealer, any business, financial, or personal 
information which may be provided by the dealer to the 
manufacturer, without the express written consent of the dealer 
or unless pertinent to judicial or governmental administrative 
proceedings or to arbitration proceedings of any kind; 
    (g) To deny any new motor vehicle dealer the right of free 
association with any other new motor vehicle dealer for any 
lawful purpose; 
    (h) To unfairly discriminate among its new motor vehicle 
dealers with respect to warranty reimbursement or authority 
granted its new vehicle dealers to make warranty adjustments 
with retail customers; 
    (i) To compete with a new motor vehicle dealer in the same 
line make operating under an agreement or franchise from the 
same manufacturer in the relevant market area.  A manufacturer 
shall not, however, be deemed to be competing when operating a 
dealership, either temporarily or for a reasonable period, or in 
a bona fide retail operation which is for sale to any qualified 
independent person at a fair and reasonable price, or when 
involved in a bona fide relationship in which an independent 
person has made a significant investment subject to loss in the 
dealership and can reasonably expect to acquire full ownership 
of the dealership on reasonable terms and conditions; 
    (j) To prevent a new motor vehicle dealer from receiving 
fair and reasonable compensation for the value of the new motor 
vehicle dealership.  There shall be no transfer, assignment of 
the franchise, or major change in the executive management of 
the dealership, except as is otherwise provided in sections 
80E.01 to 80E.17, without consent of the manufacturer, which 
shall not be unreasonably withheld.  Denial of the request must 
be in writing and delivered to the new motor vehicle dealer 
within 60 days after the manufacturer receives the information 
necessary to evaluate the proposed transfer.  If a denial is not 
sent within this period, the manufacturer shall be deemed to 
have given its consent to the proposed transfer or change; or 
    (k) To threaten to modify or replace or modify or replace a 
franchise with a succeeding franchise that would adversely alter 
the rights or obligations of a new motor vehicle dealer under an 
existing franchise or that substantially impairs the sales or 
service obligations or investments of the motor vehicle dealer; 
    (l) To unreasonably deny the right to acquire factory 
program vehicles to any dealer holding a valid franchise from 
the manufacturer to sell the same line make of vehicles, 
provided that the manufacturer may impose reasonable 
restrictions and limitations on the purchase or resale of 
program vehicles to be applied equitably to all of its 
franchised dealers.  For the purposes of this paragraph, 
"factory program vehicle" has the meaning given the term in 
section 4. 
    Presented to the governor May 7, 1991 
    Signed by the governor May 10, 1991, 9:13 a.m.