HF 774

1st Engrossment - 88th Legislature (2013 - 2014) Posted on 03/06/2013 06:03pm

A bill for an act
relating to transportation; motor vehicles; amending regulation of motor vehicle
manufacturers and distributors; amending Minnesota Statutes 2012, sections
80E.13; 168.27, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2012, 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 geographic areas
reasonably determined by the manufacturer;

(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) deleted text begin 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 deleted text end new text begin own
or operate, either directly or indirectly through any subsidiary, parent company, or firm, a
motor vehicle dealership or permanent facility for display of new vehicles located within the
state of the same line make as any of the vehicles manufactured, assembled, or distributed
by that manufacturer, distributor, or factory branch new text end . A manufacturer, distributor, or factory
branch is considered to be deleted text begin competing deleted text end new text begin in violation of this clause new text end 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 deleted text begin competing deleted text end new text begin violating this clause new text end 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 new text begin . A
new motor vehicle dealer licensed under section 168.27 is presumed to be injured and has
standing to bring an action under section 80E.17 for a violation of this clause new text end ;

(j) prevent a new motor vehicle dealer from 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 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 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;

(o) require a dealer to adhere to performance standards that are not applied uniformly
to other similarly situated dealers.

A performance standard, sales objective, or program for measuring dealership performance
that may have a material effect on a dealer, including the dealer's right to payment under
any incentive or reimbursement program, and the application of the standard or program
by a manufacturer, distributor, or factory branch must be fair, reasonable, equitable, and
based on accurate information.

A manufacturer, distributor, or factory branch has the burden of proving that the
performance standard, sales objective, or program for measuring dealership performance
is fair and reasonable under this subdivision; or

(p) unreasonably reduce a dealer's area of sales effectiveness without giving at
least 90 days' notice of the proposed reduction. The change may not take effect if the
dealer commences a civil action to determine whether there is good cause for the change
within the 90 days' notice period. The burden of proof in such an action shall be on the
manufacturer or distributor.

Sec. 2.

Minnesota Statutes 2012, section 168.27, is amended by adding a subdivision
to read:

new text begin Subd. 8a. new text end

new text begin Manufacturers and distributors. new text end

new text begin (a) A motor vehicle manufacturer or
distributor is not required to be licensed under this section to sell new motor vehicles
solely to a licensed new motor vehicle dealer. A manufacturer or distributor of passenger
automobiles or trucks may not obtain a new motor vehicle dealer license.
new text end

new text begin (b) For purposes of this subdivision, "manufacturer or distributor of passenger
automobiles or trucks" includes affiliates under common management and control, but
does not include a manufacturer or distributor of:
new text end

new text begin (1) new and unused motor vehicle bodies to be installed on incomplete motor vehicles;
new text end

new text begin (2) medium-speed electric vehicles, as defined in section 169.011, subdivision 39; or
new text end

new text begin (3) neighborhood electric vehicles, as defined in section 169.011, subdivision 47.
new text end