Minnesota Session Laws - 2001, Regular Session

                             CHAPTER 62-H.F.No. 779 
                  An act relating to commerce; modifying provisions 
                  dealing with motor vehicle dealer franchise transfers; 
                  amending Minnesota Statutes 2000, section 80E.13. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2000, 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) 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) 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) 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) 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) 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 without making the same offer to all 
        other new motor vehicle dealers in the same line make within the 
        relevant market area; 
           (f) 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) deny any new motor vehicle dealer the right of free 
        association with any other new motor vehicle dealer for any 
        lawful purpose; 
           (h) 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) compete with a new motor vehicle dealer in the same 
        line make operating under an agreement or franchise from the 
        same manufacturer, distributor, or factory branch.  A 
        manufacturer, distributor, or factory branch is considered to be 
        competing when it has an ownership interest, other than a 
        passive interest held for investment purposes, in a dealership 
        of its line make located within the state.  A manufacturer, 
        distributor, or factory branch shall not, however, be deemed to 
        be competing: 
           (1) when operating a dealership, either temporarily or for 
        a reasonable period, 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 
        and full management and operational control of the dealership 
        within a reasonable time on reasonable terms and conditions,; or 
           (2) if it has an existing direct or indirect ownership 
        interest in a new motor vehicle dealer in this state as of 
        January 1, 2000, and has no more than four franchised dealers in 
        this state.  A manufacturer, distributor, or factory branch 
        described in this clause that has unaffiliated dealers of the 
        same line make in this state may acquire an interest in existing 
        dealers of that line make but it may not establish any new 
        dealership in which it would own an interest or approve an 
        additional location for the sale of new motor vehicles by an 
        affiliated dealership.  A manufacturer, distributor, or factory 
        branch described in this clause is permitted to alter its 
        ownership interest in a new motor vehicle dealer; 
           (j) prevent a new motor vehicle dealer from receiving fair 
        and reasonable compensation for the value of the transferring or 
        assigning a new motor vehicle dealership to a qualified 
        transferee.  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 without good cause.  In determining 
        whether good cause exists for withholding consent to a transfer 
        or assignment, the manufacturer, distributor, factory branch, or 
        importer has the burden of proving that the transferee is a 
        person who is not of good moral character or does not meet the 
        franchisor's existing and reasonable capital standards and, 
        considering the volume of sales and service of the new motor 
        vehicle dealer, reasonable business experience standards in the 
        market area.  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 the completed application customarily used 
        by the manufacturer, distributor, factory branch, or importer 
        for dealer appointments.  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.  In the event of a 
        proposed sale or transfer of a franchise, the manufacturer, 
        distributor, factory branch, or importer shall be permitted to 
        exercise a right of first refusal to acquire the franchisee's 
        assets or ownership if: 
           (1) the franchise agreement permits the manufacturer, 
        distributor, factory branch, or importer to exercise a right of 
        first refusal to acquire the franchisee's assets or ownership in 
        the event of a proposed sale or transfer; 
           (2) the proposed transfer of the dealership or its assets 
        is of more than 50 percent of the ownership or assets; 
           (3) the manufacturer, distributor, factory branch, or 
        importer notifies the dealer in writing within 60 days of its 
        receipt of the complete written proposal for the proposed sale 
        or transfer on forms generally utilized by the manufacturer, 
        distributor, factory branch, or importer for such purposes and 
        containing the information required therein and all documents 
        and agreements relating to the proposed sale or transfer; 
           (4) the exercise of the right of first refusal will result 
        in the dealer and dealer's owners receiving the same or greater 
        consideration with equivalent terms of sale as is provided in 
        the documents and agreements submitted to the manufacturer, 
        distributor, factory branch, or importer under clause (3); 
           (5) the proposed change of 50 percent or more of the 
        ownership or of the dealership assets does not involve the 
        transfer or sale of assets or the transfer or issuance of stock 
        by the dealer or one or more dealer owners to a family member, 
        including a spouse, child, stepchild, grandchild, spouse of a 
        child or grandchild, brother, sister, or parent of the dealer 
        owner; to a manager who has been employed in the dealership for 
        at least four years and is otherwise qualified as a dealer 
        operator; or to a partnership or corporation owned and 
        controlled by one or more of such persons; and 
           (6) the manufacturer, distributor, factory branch, or 
        importer agrees to pay the reasonable expenses, including 
        reasonable attorney fees, which do not exceed the usual 
        customary and reasonable fees charged for similar work done for 
        other clients incurred by the proposed new owner and transferee 
        before the manufacturer, distributor, factory branch, or 
        importer exercises its right of first refusal, in negotiating 
        and implementing the contract for the proposed change of 
        ownership or transfer of dealership assets.  However, payment of 
        such expenses and attorney fees shall not be required if the 
        dealer has not submitted or caused to be submitted an accounting 
        of those expenses within 20 days after the dealer's receipt of 
        the manufacturer, distributor, factory branch, or importer's 
        written request for such an accounting.  The manufacturer, 
        distributor, factory branch, or importer may request such an 
        accounting before exercising its right of first refusal.  The 
        obligation created under this clause is enforceable by the 
        transferee; 
           (k) 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) 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 80E.06, subdivision 2; 
           (m) fail or refuse to offer to its same line make 
        franchised dealers all models manufactured for that line make, 
        other than alternative fuel vehicles as defined in section 
        216C.01, subdivision 1b.  Failure to offer a model is not a 
        violation of this section if the failure is not arbitrary and is 
        due to a lack of manufacturing capacity, a strike, labor 
        difficulty, or other cause over which the manufacturer, 
        distributor, or factory branch has no control; 
           (n) require a dealer to pay an extra fee, or remodel, 
        renovate, or recondition the dealer's existing facilities, or 
        purchase unreasonable advertising displays, training, tools, or 
        other materials, or to require the dealer to establish exclusive 
        facilities or dedicated personnel as a prerequisite to receiving 
        a model or a series of vehicles. 
           Presented to the governor April 27, 2001 
           Signed by the governor April 30, 2001, 3:03 p.m.