HB-6498, As Passed House, December 21, 2018

HB-6498, As Passed Senate, December 19, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 6498

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1981 PA 118, entitled

 

"An act to regulate motor vehicle manufacturers, distributors,

wholesalers, dealers, and their representatives; to regulate

dealings between manufacturers and distributors or wholesalers and

their dealers; to regulate dealings between manufacturers,

distributors, wholesalers, dealers, and consumers; to prohibit

unfair practices; to provide remedies and penalties; and to repeal

certain acts and parts of acts,"

 

by amending sections 1, 2, 3, 4, 6, 7, 8, 13, 14, 15, 16, 17, 19,

 

and 22a (MCL 445.1561, 445.1562, 445.1563, 445.1564, 445.1566,

 

445.1567, 445.1568, 445.1573, 445.1574, 445.1575, 445.1576,

 

445.1577, 445.1579, and 445.1582a), sections 2, 3, and 4 as amended

 

by 2010 PA 140, section 6 as amended by 2010 PA 139, section 13 as

 

amended by 2010 PA 141, section 14 as amended by 2014 PA 354,

 

sections 15 and 17 as amended by 2010 PA 138, sections 16 and 19 as

 

amended by 1983 PA 188, and section 22a as added by 1998 PA 456,

 


and by adding sections 14b, 17a, and 17b.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. (1) This act shall be known and may be cited as the

 

"motor vehicle franchise act".

 

     (2) For the purposes of this act, the words and phrases

 

defined in sections 2 to 6 have the meanings ascribed to them in

 

those sections, except where the context clearly indicates a

 

different meaning.

 

     Sec. 2. (1) "Closed dealership" means a new motor vehicle

 

dealer whose dealer agreement has been terminated, canceled,

 

discontinued, or not renewed.

 

     (2) "Coerce" means to compel or attempt to compel a person to

 

act in a given manner or to refrain from acting in a given manner

 

by pressure, intimidation, or threat of harm, damage, breach of

 

contract, or other adverse consequences, including, but not limited

 

to, the loss of any benefit available to other new motor vehicle

 

dealers of the same line make line-make in this state. The term

 

does not include any of the following actions by a manufacturer:

 

     (a) Without conditions, making a good faith recommendation,

 

exposition, or argument or persuading or attempting to persuade a

 

person.

 

     (b) Giving notice in good faith to a new motor vehicle dealer

 

of that dealer's violation of the terms or provisions of a dealer

 

agreement.

 

     (c) Engaging in any conduct the manufacturer is permitted to

 

engage in under this act.

 

     (3) "Dealer agreement" means an agreement or contract in

 


writing between a distributor and a new motor vehicle dealer,

 

between a manufacturer and a distributor or a new motor vehicle

 

dealer, or between an importer and a distributor or a new motor

 

vehicle dealer, that purports to establish the legal rights and

 

obligations of the parties to the agreement or contract and under

 

which the dealer purchases and resells new motor vehicles and

 

conducts service operations. The term includes the sales and

 

service agreement, regardless of the terminology used to describe

 

that agreement, and any addenda to the dealer agreement, including

 

all schedules, attachments, exhibits, and agreements incorporated

 

by reference into the dealer agreement.

 

     (4) "Designated family member" means any of the following:

 

     (a) If a new motor vehicle dealer who dies or becomes

 

incapacitated has designated a successor under section 15(6), that

 

designated successor.

 

     (b) If a new motor vehicle owner dies and has not designated a

 

successor under section 15(6), the spouse or a child, grandchild,

 

parent, brother, or sister of a deceased new motor vehicle dealer,

 

who is entitled to inherit the deceased dealer's ownership interest

 

in the new motor vehicle dealership under the terms of the dealer's

 

will, who has otherwise been designated in writing by a deceased

 

dealer to succeed the deceased dealer in the new motor vehicle

 

dealership, or who is entitled to inherit under the laws of

 

intestate succession of this state or the appointed and qualified

 

personal representative or testamentary trustee of the deceased new

 

motor vehicle dealer.

 

     (c) If a new motor vehicle dealer becomes incapacitated and


has not designated a successor under section 15(6), the person

 

appointed by the court as the legal representative of the dealer.

 

     Sec. 3. (1) "Distributor" means any person, including

 

importer, that is located in or outside of this state and is

 

engaged in the business of offering for sale, selling, or

 

distributing new and unaltered motor vehicles to a new motor

 

vehicle dealer under a dealer agreement, that maintains a factory

 

representative that is located in or outside of this state for

 

purposes of conducting that business, or that controls a person

 

that is located in or outside of this state and offers for sale,

 

sells, or distributes new and unaltered motor vehicles to a new

 

motor vehicle dealer. Distributor does not include a person that

 

alters or converts motor vehicles for sale to a new motor vehicle

 

dealer.

 

     (2) "Established place of business" means a permanent,

 

enclosed commercial building located in this state that is easily

 

accessible and open to the public at all reasonable times and at

 

which a new motor vehicle dealer may legally conduct business,

 

including the display and repair of motor vehicles, in compliance

 

with the terms of all applicable buildings codes, zoning, and other

 

land-use regulatory ordinances.

 

     (3) "Executive manager" means an any of the following:

 

     (a) An individual who is employed by a new motor vehicle

 

dealer in an executive capacity and who has a written employment

 

agreement with the dealer that includes a right for the executive

 

manager to purchase a controlling interest in the dealership at a

 

future time or on the death or incapacity of the dealer.


     (b) An individual who is designated by the new motor vehicle

 

dealer, in an addendum to the dealer agreement, as having authority

 

and responsibility to operate the dealership on a day-to-day basis.

 

     (4) "Factory branch" means an office maintained by a

 

manufacturer or distributor for the purpose of selling or offering

 

to sell vehicles to a distributor, wholesaler, or new motor vehicle

 

dealer or for directing or supervising any factory or distributor

 

representatives. The term includes any sales promotion organization

 

maintained by a manufacturer or distributor that is engaged in

 

promoting the sale of a particular make of new motor vehicles in

 

this state to new motor vehicle dealers.

 

     (5) "Factory representative" means an agent or employee of a

 

manufacturer, distributor, or factory branch retained or employed

 

for the purpose of making or promoting the sale of new motor

 

vehicles or for supervising or contracting with new motor vehicle

 

dealers or proposed motor vehicle dealers.

 

     Sec. 4. (1) "Good faith" means that term as defined in section

 

2103 1201 of the uniform commercial code, 1962 PA 174, MCL

 

440.2103.440.1201.

 

     (2) "Good moral character" means good moral character as

 

defined in and determined under 1974 PA 381, MCL 338.41 to 338.47.

 

     (3) "Line-make" means a collection of models, a series, or a

 

group of motor vehicles manufactured by or for a particular

 

manufacturer, distributor, or importer that are offered for sale,

 

lease, or distribution under a common brand name or mark. All of

 

the following apply to the term "line-make":

 

     (a) Multiple brand names or marks may constitute a single


line-make, but only if they are included in a common dealer

 

agreement and the manufacturer, distributor, or importer offers all

 

of the vehicles that bear the multiple names or marks to its

 

authorized dealers together, and not separately.

 

     (b) Motor vehicles that share a common brand name or mark may

 

constitute separate line-makes if those vehicles are of different

 

vehicle types or are intended for different types of use, and

 

either of the following applies:

 

     (i) The manufacturer has expressly defined or covered the

 

subject line-makes of vehicles as separate and distinct line-makes

 

in the applicable dealer agreements.

 

     (ii) The manufacturer has consistently characterized the

 

subject vehicles as constituting separate and distinct line-makes

 

to its dealer network.

 

     (4) "Local market conditions" means certain relevant and

 

material conditions, criteria, data, and facts, beyond the control

 

or influence of a new motor vehicle dealer, that have a material

 

impact on the new motor vehicle dealer's sales performance in the

 

assigned market area in which the new motor vehicle dealer offers

 

vehicles for sale or lease. The term may include, but is not

 

limited to, any of the following:

 

     (a) Demographics in a new motor vehicle dealer's market area.

 

     (b) Geographical and market characteristics in a new motor

 

vehicle dealer's market area.

 

     (c) Local economic circumstances.

 

     (d) The preferences of motor vehicle purchasers or lessees.

 

     (e) Customer drive distance from a new motor vehicle dealer.


     (5) (2) "Manufacturer" means a person that manufactures or

 

assembles new motor vehicles or a distributor, factory branch, or

 

factory representative.

 

     (6) (3) "Motor vehicle" means that term as defined in section

 

33 of the Michigan vehicle code, 1949 PA 300, MCL 257.33, but does

 

not include a bus, a tractor, or farm equipment.

 

     (7) (4) "Motor vehicle service and repair facility" means a

 

motor vehicle repair facility, as defined in section 2 of the motor

 

vehicle service and repair act, 1974 PA 300, MCL 257.1302. The term

 

does not include a motor vehicle dealer performing maintenance,

 

diagnosis, vehicle body work, repairs, or other service or repair

 

work on motor vehicles under the terms of a dealer agreement.

 

     Sec. 6. (1) "Relevant market area" means 1 of the following:

 

     (a) In a county that has a population of more than 150,000,

 

the area within a radius of 9 miles of the site of the intended

 

place of business of a proposed new vehicle dealer or the intended

 

place of business of a new vehicle dealer that plans to relocate

 

its place of business. For purposes of this section, the 9-mile

 

distance is determined by measuring the distance between the

 

nearest surveyed boundary of an existing new motor vehicle dealer's

 

principal place of business and the nearest surveyed boundary line

 

of the proposed or relocated new motor vehicle dealer's principal

 

place of business.

 

     (b) In a county that has a population of 150,000 or fewer, the

 

area within a radius of 15 miles of the site of the intended place

 

of business of a proposed new vehicle dealer or the intended place

 

of business of a new vehicle dealer that plans to relocate its


place of business. For purposes of this section, the 15-mile

 

distance is determined by measuring the distance between the

 

nearest surveyed boundary line of an existing new motor vehicle

 

dealer's principal place of business and the nearest surveyed

 

boundary line of the proposed or relocated new motor vehicle

 

dealer's principal place of business.

 

     (2) "Stop-sale order" means a notification issued by a

 

manufacturer to its franchised new motor vehicle dealers stating

 

that certain used vehicles in inventory shall not be driven, sold,

 

or leased, at either retail or wholesale, due to a federal safety

 

recall or manufacturer issued recall for a defect or a

 

noncompliance, or a federal emissions recall.

 

     (3) (2) "Successor manufacturer" means a manufacturer that

 

acquires, succeeds to, or assumes any part of the business of

 

another manufacturer as the result of any of the following:

 

     (a) A change in ownership, operation, or control of a

 

predecessor manufacturer by sale or transfer of assets, corporate

 

stock, or other equity interest, assignment, merger, consolidation,

 

combination, joint venture, redemption, court-approved sale,

 

operation of law, or any other means.

 

     (b) Termination, suspension, or cessation of a part or all of

 

the business operations of a predecessor manufacturer.

 

     (c) Discontinuance of the sale of a product line.

 

     (d) A change in distribution system by a predecessor

 

manufacturer, whether through a change in distributor or the

 

predecessor manufacturer's decision to cease conducting any

 

business through a particular distributor.


     (4) (3) "Used motor vehicle" means a motor vehicle that is not

 

a new motor vehicle.

 

     (5) (4) "Used motor vehicle dealer" means a person that is

 

engaged in the business of purchasing, selling, exchanging, or

 

dealing in used motor vehicles and that has an established place of

 

business in this state at which it conducts that business. The term

 

does not include a new motor vehicle dealer purchasing, selling,

 

exchanging, or dealing in used motor vehicles as part of its

 

business of purchasing, selling, exchanging, or dealing in new

 

motor vehicles.

 

     Sec. 7. (1) Notwithstanding any agreement, a manufacturer or

 

distributor shall not cancel, terminate, fail to renew, or refuse

 

to continue any dealer agreement with a new motor vehicle dealer

 

unless the manufacturer or distributor has complied with meets all

 

of the following:

 

     (a) Satisfied Has satisfied the notice requirement of section

 

10.

 

     (b) Acted Has acted in good faith.

 

     (c) Has good cause for the cancellation, termination,

 

nonrenewal, or discontinuance.

 

     (2) Notwithstanding any agreement, good cause shall exist

 

exists for the purposes of a termination, cancellation, nonrenewal,

 

or discontinuance under subsection (1)(c) when both of the

 

following occur:

 

     (a) there There is a failure by the new motor vehicle dealer

 

to comply with a provision of the dealer agreement and the

 

provision is both reasonable and of material significance to the


relationship between the manufacturer or distributor and the new

 

motor vehicle dealer. and

 

     (b) the manufacturer or distributor first acquired actual or

 

constructive knowledge of the failure not more than 2 years prior

 

to the date on which notification was given pursuant to section

 

10.Unless otherwise agreed or if the dealer is participating in a

 

performance improvement plan or program, the manufacturer or

 

distributor provided the required notification under section 10 not

 

more than 2 years after the date on which the manufacturer first

 

acquired actual or constructive knowledge of the failure.

 

     (3) If the failure by the of a new motor vehicle dealer to

 

comply with a provision of the dealer agreement relates to the

 

performance of the new motor vehicle dealer in sales or service,

 

good cause shall exist exists for the purposes of a termination,

 

cancellation, nonrenewal, or discontinuance under subsection (1)

 

when the new motor vehicle dealer fails to effectively carry out

 

the performance provisions of the dealer agreement if all of the

 

following have occurred:

 

     (a) The new motor vehicle dealer was given written notice by

 

the manufacturer or distributor of the failure.

 

     (b) The notification stated that the notice of failure of

 

performance was provided pursuant to under this act and, if

 

requested in writing by the dealer, the manufacturer provided

 

written information indicating the methodology and data the

 

manufacturer or distributor used to measure the new motor vehicle

 

dealer's performance. However, this subdivision does not require

 

the manufacturer to disclose any proprietary or confidential


information or other information if disclosure is prohibited by

 

law.

 

     (c) The new motor vehicle dealer was afforded a reasonable

 

opportunity to exert good faith efforts to carry out the dealer

 

agreement.

 

     (d) The failure continued for more than 180 days after the

 

date notification was given pursuant to under subdivision (a).

 

     (e) The new motor vehicle dealer was afforded a reasonable

 

opportunity to present evidence to the manufacturer or distributor

 

demonstrating the effect of local market conditions that materially

 

and adversely affected the dealer's performance.

 

     (f) If the manufacturer used a survey or index to measure the

 

performance of a new motor vehicle dealer, the survey or index was

 

based on a reasonable sampling of the measured performance

 

criteria.

 

     (4) Before a final determination by a manufacturer or

 

distributor that a new motor vehicle dealer has failed to achieve

 

any performance criteria that are the basis to cancel, terminate,

 

fail to renew, or refuse to continue any dealer agreement under

 

this section, the manufacturer or distributor must provide the new

 

motor vehicle dealer an opportunity to present, in writing,

 

evidence that demonstrates the effect of local market conditions

 

that materially and adversely affected the dealer's performance.

 

     (5) If a manufacturer makes a final decision to terminate,

 

cancel, nonrenew, or discontinue a dealer agreement without

 

complying with subsection (3)(b) or (e), or does not in good faith

 

evaluate the effect of the local market conditions presented by the


dealer in writing, good cause does not exist for purposes of

 

terminating, canceling, nonrenewing, or discontinuing a dealer

 

agreement.

 

     Sec. 8. Notwithstanding any agreement, the following alone

 

shall not constitute good cause for the termination, cancellation,

 

nonrenewal, or discontinuance of a dealer agreement under section

 

7(1)(c):

 

     (a) A change in ownership of the new motor vehicle dealer's

 

dealership. This subdivision does not authorize any change in

 

ownership which that would have the effect of a sale or an

 

assignment of the dealer agreement or a change in the principal

 

management of the dealership without the manufacturer's or

 

distributor's prior written consent.

 

     (b) The refusal of the new motor vehicle dealer to purchase or

 

accept delivery of any new motor vehicle parts, accessories, or any

 

other commodity or services not ordered by the new motor vehicle

 

dealer.

 

     (c) The fact that the new motor vehicle dealer owns, has an

 

investment in, participates in the management of, or holds a dealer

 

agreement for the sale of another make or line of new motor

 

vehicles, or that the new motor vehicle dealer has established

 

another make or line of new motor vehicles in the same dealership

 

facilities as those of the manufacturer or distributor, provided

 

that the new motor vehicle dealer maintains a reasonable line of

 

credit for each make or line of new motor vehicles, and that the

 

new motor vehicle dealer remains in substantial compliance with the

 

terms and conditions of the dealer agreement and with the


reasonable facilities' requirements of the manufacturer or

 

distributor.

 

     (d) The fact that the new motor vehicle dealer sells or

 

transfers ownership of the dealership or sells or transfers capital

 

stock in the dealership to the new motor vehicle dealer's spouse,

 

son, or daughter. , provided that the However, a sale or transfer

 

shall described in this subdivision does not have the effect of a

 

sale or an assignment of the dealer agreement or a change in the

 

principal management of the dealership without the manufacturer's

 

or distributor's prior written consent.

 

     (e) For purposes of this section, the failure of the new motor

 

vehicle dealer to achieve any performance standard or criteria that

 

are unreasonable, inequitable, or discriminatory.

 

     Sec. 13. (1) A manufacturer shall not require any new motor

 

vehicle dealer in this state to do any of the following:

 

     (a) Order or accept delivery of any new motor vehicle, a part

 

or accessory of a new motor vehicle, equipment, or any other

 

commodity not required by law that is not voluntarily ordered by

 

the new motor vehicle dealer. This section does not prevent the

 

manufacturer from requiring that new motor vehicle dealers carry a

 

reasonable inventory of models offered for sale by the

 

manufacturer.

 

     (b) Order or accept delivery of any new motor vehicle with

 

special features, accessories, or equipment not included in the

 

list price of the new motor vehicle as publicly advertised by the

 

manufacturer.

 

     (c) Participate monetarily in any advertising campaign or


contest, purchase any promotional materials, display devices, or

 

display decorations or materials, or pay or assume directly in

 

connection with the sale of a new motor vehicle any part of the

 

cost of a refund, rebate, or discount made by or lawfully imposed

 

by the manufacturer to or in favor of a consumer, unless

 

voluntarily agreed to by the dealer.

 

     (d) Enter into any agreement with the manufacturer or do any

 

other act prejudicial to the new motor vehicle dealer by

 

threatening to terminate a dealer agreement or any contractual

 

agreement or understanding existing between the dealer and the

 

manufacturer. Notice in good faith to any dealer of the dealer's

 

violation of any terms or provisions of the dealer agreement does

 

not constitute a violation of this act.

 

     (e) Change the capital structure of the new motor vehicle

 

dealership or the means by or through which the dealer finances the

 

operation of the dealership, if the dealership at all times meets

 

any reasonable capital standards determined by the manufacturer in

 

accordance with uniformly applied criteria.

 

     (f) Refrain from participation in the management of,

 

investment in, or the acquisition of, any other line of new motor

 

vehicles or related products at or in any of the following:

 

     (i) At a location different from the location used by the

 

dealer for the sale or service of new motor vehicles or related

 

products of the manufacturer, if the dealer maintains a reasonable

 

line of credit for each make or line of vehicle, remains in

 

compliance with reasonable facilities requirements, remains in

 

substantial compliance with capital requirements, and makes no


change in the principal management of the dealer.

 

     (ii) In facilities at the same location as, but separated

 

from, the facilities used by the dealer for the sale or service of

 

new motor vehicles or related products of the manufacturer, if the

 

dealer maintains a reasonable line of credit for each make or line

 

of vehicle, remains in compliance with minimum space requirements

 

and reasonable facilities requirements, remains in substantial

 

compliance with capital requirements, and does not make a change in

 

the principal management of the dealer.

 

     (iii) Unless the manufacturer otherwise objects based on other

 

reasonable business considerations, in the same facilities used by

 

the dealer for the sale or service of new motor vehicles or related

 

products of the manufacturer, if the dealer maintains a reasonable

 

line of credit for each make or line of vehicle, remains in

 

compliance with reasonable facilities requirements, remains in

 

substantial compliance with capital requirements, and does not make

 

a change in the principal management of the dealer. The

 

manufacturer has the burden of proving reasonable business

 

considerations for purposes of this subparagraph.

 

     (g) Change the location of the new motor vehicle dealership or

 

make any substantial alterations to the dealership premises, if

 

changing the location or making the alterations is unreasonable.

 

     (h) Prospectively assent to a release, assignment, novation,

 

waiver, or estoppel that would relieve any person from liability

 

imposed by this act; require that any dealer agreement be governed

 

by the laws of a state other than this state; or require referral

 

of any controversy between a new motor vehicle dealer and a


manufacturer to a person other than the duly constituted courts of

 

this state, or of the United States located in this state, if the

 

referral would be binding on the new motor vehicle dealer. This

 

subdivision does not apply to an agreement between the parties,

 

made at the time of a controversy, to refer the controversy to a

 

court of the United States located outside this state or agree at

 

the time of an arbitration to conduct the arbitration either in or

 

outside of this state. A provision in a dealer agreement that

 

violates this subdivision is void and unenforceable.

 

     (i) Construct or substantially alter a facility or premises if

 

the same item or design component, consisting of interior or

 

exterior elements of the sales, service, administrative, or parts

 

components, was constructed or substantially altered within the

 

previous 10 years and that construction or alteration was required

 

and approved by the manufacturer or distributor.

 

     (j) Subject to subsection (3), require a new motor vehicle

 

dealer to purchase goods or services to make improvements to the

 

dealer's facilities from a vendor that is selected, identified, or

 

designated by the manufacturer or an affiliate of the manufacturer,

 

unless the dealer is allowed to obtain the goods or services from a

 

vendor chosen by the dealer if all of the following are met:

 

     (i) The goods or services offered by the vendor chosen by the

 

dealer are of the same material, quality, and overall design.

 

     (ii) The vendor chosen by the dealer is approved by the

 

manufacturer. A manufacturer shall not unreasonably withhold its

 

consent for purposes of this subparagraph.

 

     (iii) The manufacturer is not providing substantial


House Bill No. 6498 as amended December 13, 2018

reimbursement or compensation to the dealer for the goods or

 

services.

 

     (k) Subject to subsection (3), require a new motor vehicle

 

dealer to lease signs, except for signs that contain the

 

manufacturer's intellectual property or free-standing signs that

 

are not directly attached to a building, or other manufacturer

 

image or design elements or trade dress, from a vendor selected,

 

identified, or designated by the manufacturer, unless the dealer is

 

allowed to purchase the signs or other image or design elements or

 

trade dress from a vendor chosen by the dealer if all of the

 

following are met:

 

     (i) The signs offered by the vendor chosen by the dealer are

 

of the same material, quality, and overall design.

 

     (ii) The signs are approved by the manufacturer. A

 

manufacturer shall not unreasonably withhold its consent for

 

purposes of this subparagraph.

 

     (l) Except as required by the manufacturer for warranty

 

repairs, recall repairs, or other services or programs paid for by

 

the manufacturer, or unless otherwise agreed, require a new motor

 

vehicle dealer to purchase fluids or lubricants from a particular

 

vendor, if fluids or lubricants of the same material and quality

 

are available from another vendor.

 

     (2) If, during the 10-year period described in subsection

 

(1)(i), [  ] a manufacturer establishes a new program, standard,

 

policy, bonus, incentive, rebate, or other benefit, a new motor

 

vehicle dealer is eligible for the new program, standard, policy,

 

bonus, incentive, rebate, or other benefit if the dealer fully


House Bill No. 6498 as amended December 13, 2018

complies with the new standards set by the manufacturer in the new

 

program, standard, policy, bonus, incentive, or other benefit.

 

     (3) Subsection (1)(j) and subsection (1)(k) do not allow a new

 

motor vehicle dealer or a vendor chosen by the dealer to impair,

 

infringe upon, or eliminate, directly or indirectly, the

 

intellectual property rights of the manufacturer, including, but

 

not limited to, the manufacturer's intellectual property rights in

 

any trademarks or trade dress, or other intellectual property

 

interests owned or controlled by the manufacturer, or to permit a

 

new motor vehicle dealer to erect or maintain signs that do not

 

conform to the manufacturer's intellectual property rights or

 

trademark or trade dress usage guidelines.

 

     (4) As used in this section:

[(A) "Construction" means the construction of new sales or service facilities by a new motor vehicle dealer, or the substantial remodeling, improvement, renovation, expansion, replacement, or alteration of a dealer's existing sales or service facilities. the term does not include installation of signs or other image elements that are subject to the intellectual property rights of the manufacturer, including logos, trademarks, trade dress, patents, or other intellectual propertY.]

     (B) "Goods" does not include movable displays, brochures, and

 

promotional materials containing material that is subject to the

 

intellectual property rights of a manufacturer.

 

     (C) "Substantial reimbursement" means an amount equal to or

 

greater than the cost savings that would result if a new motor

 

vehicle dealer utilized a vendor of the dealer's own selection

 

instead of using the vendor selected, identified, or designated by

 

the manufacturer or an affiliate of the manufacturer.

 

     (D) "Substantial alteration" means an alteration that has a

 

major impact on the architectural features, characteristics,

 

appearance, or integrity of a structure or lot. The term does not

 

include routine maintenance that is reasonably necessary to

 

maintain a dealership facility in attractive condition and does not

 

include any changes to items protected by federal intellectual


property rights.

 

     Sec. 14. (1) A manufacturer shall not do any of the following:

 

     (a) Adopt, change, establish, or implement a plan or system

 

for the allocation and distribution of new motor vehicles to new

 

motor vehicle dealers that is arbitrary or capricious or based on

 

unreasonable sales and service standards, or modify an existing

 

plan or system that causes the plan or system to be arbitrary or

 

capricious or based on unreasonable sales and service standards.

 

     (b) If requested in writing by a new motor vehicle dealer,

 

fail or refuse to advise or disclose to the dealer the basis on

 

which new motor vehicles of the same line make line-make are

 

allocated or distributed to new motor vehicle dealers in this state

 

and the basis on which the current allocation or distribution is

 

being made or will be made to that new motor vehicle dealer.

 

     (c) Refuse to deliver to a new motor vehicle dealer in

 

reasonable quantities and within a reasonable time after receipt of

 

the dealer's order, any new motor vehicles that are covered by the

 

dealer agreement and specifically publicly advertised in this state

 

by the manufacturer as available for immediate delivery. However,

 

the failure to deliver any motor vehicle is not considered a

 

violation of this act if the failure is due to an act of God, a

 

work stoppage or delay due to a strike or labor difficulty, a

 

shortage of materials, a lack of manufacturing capacity, a freight

 

embargo, or other cause over which the manufacturer has no control.

 

If a manufacturer requires a new motor vehicle dealer to purchase

 

essential service tools with a purchase price in the aggregate of

 

more than $7,500.00 in order to receive a specific model of


vehicle, the manufacturer shall on written request provide the

 

dealer with a good faith estimate in writing of the number of

 

vehicles of that specific model the dealer will be allocated in the

 

model year in which the dealer is required to purchase the tool.

 

     (d) Increase the price of a new motor vehicle that the new

 

motor vehicle dealer had ordered, and then eventually delivered to,

 

the same retail consumer for whom the vehicle was ordered, if the

 

order was made before the dealer's receipt of a written official

 

price increase notification. A sales contract signed by a private

 

retail consumer and binding on the dealer constitutes evidence of a

 

vehicle order. In the event of manufacturer price reductions or

 

cash rebates, the dealer shall pass on the amount of any reduction

 

or rebate received by the dealer to the private retail consumer.

 

Any price reduction in excess of $5.00 shall apply to all vehicles

 

in the dealer's inventory that were subject to the price reduction.

 

A price difference applicable to new model or series motor vehicles

 

at the time of the introduction of the new models or the series is

 

not considered a price increase or price decrease. This subdivision

 

does not apply to price changes caused by any of the following:

 

     (i) The addition to a motor vehicle of required or optional

 

equipment under state or federal law.

 

     (ii) In the case of foreign made vehicles or components,

 

revaluation of the United States dollar.

 

     (iii) Any increase in transportation charges due to an

 

increase in rates charged by a common carrier or transporter.

 

     (e) Offer any of the following to any new motor vehicle dealer

 

of a specific line make line-make without making the same offer


available to all other new motor vehicle dealers of the same line

 

make:line-make:

 

     (i) Any specific model or series of new motor vehicles

 

manufactured for that line make.line-make.

 

     (ii) Any incentives, rebates, bonuses, promotional items, or

 

other similar benefits payable to the new motor vehicle dealer for

 

selling new motor vehicles or purchasing new motor vehicles from

 

the manufacturer.

 

     (iii) Any consumer rebates, vehicle price reductions, or

 

interest rate reductions or other changes to finance terms that

 

benefit the consumer.

 

     (iv) Any program that provides marketing and sales assistance

 

to new motor vehicle dealers, including, but not limited to,

 

internet listings, sales leads, marketing programs, and dealer

 

recognition programs.

 

     (f) Release to an outside party, except under subpoena or in

 

an administrative or judicial proceeding to which the new motor

 

vehicle dealer or the manufacturer are parties, any business,

 

financial, or personal information that has been provided by the

 

dealer to the manufacturer, unless the new motor vehicle dealer

 

gives written consent.

 

     (g) Deny a new motor vehicle dealer the right to associate

 

with another new motor vehicle dealer for any lawful purpose.

 

     (h) Directly or indirectly own, operate, or control a new

 

motor vehicle dealer, including, but not limited to, a new motor

 

vehicle dealer engaged primarily in performing warranty repair

 

services on motor vehicles under the manufacturer's warranty, or a


used motor vehicle dealer. This subdivision does not apply to any

 

of the following:

 

     (i) The ownership, operation, or control by a manufacturer of

 

a new motor vehicle dealer for a period of not more than 24 months

 

during the transition from 1 owner or operator to another. The

 

circuit court may extend the 24-month time period for an additional

 

12 months upon receipt of an application from a manufacturer and a

 

showing of good cause.

 

     (ii) The ownership, operation, or control of a new motor

 

vehicle dealer or a used motor vehicle dealer by a manufacturer

 

while it is being sold under a bona fide contract or purchase

 

option to the operator of the new motor vehicle dealer or the used

 

motor vehicle dealer.

 

     (iii) The direct or indirect ownership by a manufacturer of an

 

entity that owns, operates, or controls a new motor vehicle dealer

 

of the same line make line-make franchised by the manufacturer, if

 

all of the following conditions are met:

 

     (A) As of May 1, 2000, the manufacturer for a period of not

 

less than 12 months has continuously owned, directly or indirectly,

 

1 or more new motor vehicle dealers in this state.

 

     (B) All of the new motor vehicle dealers selling the

 

manufacturer's motor vehicles in this state trade exclusively in

 

the manufacturer's line make.line-make.

 

     (C) As of January 1, 2000, not fewer than 1/2 of the new motor

 

vehicle dealers of the line make line-make within this state own

 

and operate 2 or more new motor vehicle dealer facilities in the

 

geographic territory or area covered by the franchise agreement


with the manufacturer.

 

     (D) For a manufacturer or any entity in which the manufacturer

 

has more than a 45% ownership interest, the manufacturer or entity

 

has not acquired, operated, or controlled a new motor vehicle

 

dealer that the manufacturer did not directly or indirectly own as

 

of May 1, 2000.

 

     (iv) The acquisition by a manufacturer of a used motor vehicle

 

dealer's license for the purpose of selling motor vehicles to

 

nonretail buyers.

 

     (i) Sell any new motor vehicle directly to a retail customer

 

other than through franchised dealers, unless the retail customer

 

is a nonprofit organization or a federal, state, or local

 

government or agency. This subdivision does not prohibit a

 

manufacturer from providing information to a consumer for the

 

purpose of marketing or facilitating the sale of new motor vehicles

 

or from establishing a program to sell or offer to sell new motor

 

vehicles through franchised new motor vehicle dealers that sell and

 

service new motor vehicles produced by the manufacturer.

 

     (j) Prevent or attempt to prevent by contract or otherwise any

 

new motor vehicle dealer from changing the executive management of

 

a new motor vehicle dealer unless the manufacturer, having the

 

burden of proof, can show that the change of executive management

 

will result in executive management by a person or persons who are

 

not of good moral character or who do not meet reasonable,

 

preexisting, and equitably applied standards of the manufacturer.

 

If a manufacturer rejects a proposed change in the executive

 

management, the manufacturer shall give written notice of its


reasons to the dealer within 60 75 days after receiving written

 

notice from the dealer of the proposed change and all related

 

information reasonably requested by the manufacturer, or the change

 

in executive management is considered approved.

 

     (k) Unreasonably withhold consent to the sale, transfer, or

 

exchange of a new motor vehicle dealership to a qualified buyer

 

that meets the manufacturer's uniformly applied requirements and

 

criteria to be a new motor vehicle dealer and that is capable of

 

being licensed as a new motor vehicle dealer in this state.

 

     (l) Fail to respond in writing to a request for consent to a

 

sale, transfer, or exchange of a new motor vehicle dealership

 

within 60 days after receiving a written application from the new

 

motor vehicle dealer on the forms generally utilized by the

 

manufacturer for that purpose and containing the information

 

required in that application. Failure to respond to a request for

 

consent within the 60-day period is considered consent to the sale,

 

transfer, or exchange.to a written request from a new motor vehicle

 

dealer that has submitted an agreement for the sale, transfer, or

 

exchange of a new motor vehicle dealership. The manufacturer shall

 

provide the dealer with all forms generally utilized and requested

 

by the manufacturer for the approval of a sale, transfer, or

 

exchange of a new motor vehicle dealership not later than 30 days

 

after receiving a written request from the dealer for the forms. A

 

manufacturer shall have 75 days after the date the manufacturer

 

receives all the properly completed forms and information generally

 

utilized and requested by the manufacturer to approve or disapprove

 

the sale, transfer, or exchange of the new motor vehicle


dealership. The failure of the manufacturer to approve or

 

disapprove the sale, transfer, or exchange within the 75-day time

 

period is considered approval.

 

     (m) Unfairly prevent a new motor vehicle dealer that sells,

 

transfers, or exchanges a new motor vehicle dealership from

 

receiving reasonable compensation for the value of the new motor

 

vehicle dealership.

 

     (n) Unless Subject to section 13(1)(i) and (2), unless the

 

manufacturer enters into a written agreement with the new motor

 

vehicle dealer that clearly states the amount of the incentive

 

payments and the period of time during which the incentive payments

 

are paid, offer incentive payments to a new motor vehicle dealer in

 

consideration for a new motor vehicle dealer's promise to do any of

 

the following:

 

     (i) Make material alterations to any facilities at the

 

dealer's place of business.

 

     (ii) Construct new facilities for the conduct of the business

 

of the dealership.

 

     (o) Require unreasonable improvements to a facility as a

 

condition to entering into or renewing a dealer agreement.

 

     (p) Authorize a motor vehicle service and repair facility to

 

perform motor vehicle warranty repairs and recall work, unless the

 

work meets any of the following:

 

     (i) Is required for emergency service of a vehicle.

 

     (ii) Is work performed at a service center owned or operated

 

by a manufacturer on a manufacturer-owned vehicle.

 

     (iii) Is work performed by employees of a fleet operator on


its own vehicles.

 

     (q) Own a motor vehicle service and repair facility, except

 

that a manufacturer may own a service and repair facility for the

 

repair of manufacturer-owned vehicles.

 

     (r) Engage in conduct that meets all of the following:

 

     (i) Materially affects a new motor vehicle dealer.

 

     (ii) Is capricious, is not in good faith, or is

 

unconscionable.

 

     (iii) Causes material damage to a new motor vehicle dealer.

 

     (s) Impose unreasonable standards of performance on a new

 

motor vehicle dealer or require, Require, attempt to require,

 

coerce, or attempt to coerce a new motor vehicle dealer to adhere

 

to unreasonable performance standards that are not applied

 

uniformly to other similarly situated new motor vehicle dealers.

 

     (t) Use or consider the performance of a new motor vehicle

 

dealer in selling the manufacturer's vehicles or the new motor

 

vehicle dealer's ability to satisfy any minimum sales or market

 

share quota or responsibility relating to the sale of the new motor

 

vehicles in determining any of the following:

 

     (i) The new motor vehicle dealer's eligibility to purchase

 

program, certified, or other used motor vehicles from the

 

manufacturer.

 

     (ii) The volume, type, or model of program, certified, or

 

other used motor vehicles that a new motor vehicle dealer is

 

eligible to purchase from the manufacturer.

 

     (iii) The price of any program, certified, or other used motor

 

vehicle that the new motor vehicle dealer purchases from the


manufacturer.

 

     (iv) The availability or amount of any discount, credit,

 

rebate, or sales incentive that the new motor vehicle dealer is

 

eligible to receive from the manufacturer in connection with any

 

program, certified, or other used motor vehicle offered for sale by

 

the manufacturer.

 

     (u) Require that a new motor vehicle dealer provide its

 

customer lists or service files to the manufacturer, unless

 

necessary for the sale and delivery of a new motor vehicle to a

 

consumer, to validate and pay consumer or dealer incentives, or in

 

connection with the submission of a claim to the manufacturer for

 

services supplied by the new motor vehicle dealer for any claim for

 

warranty repairs. This section does not limit a manufacturer's

 

authority to require or use customer information to satisfy any

 

safety or recall obligation.

 

     (v) Establish a performance standard or program for measuring

 

new motor vehicle dealer performance that may have a material and

 

adverse impact on a new motor vehicle dealer that is not fair,

 

reasonable, and equitable. For purposes of this subdivision, all of

 

the following apply if a manufacturer does not provide a complete

 

program description explaining the performance standard or program

 

details to a new motor vehicle dealer on or before the beginning of

 

the program:

 

     (i) Within 10 days after receiving a request from the new

 

motor vehicle dealer, the manufacturer shall provide the new motor

 

vehicle dealer with a written description of how a performance

 

standard or program is designed.


     (ii) Within 30 days after receiving a written request from the

 

new motor vehicle dealer, the manufacturer shall provide

 

information relating to how the performance standard or program

 

applies to the new motor vehicle dealer.all of the following to the

 

dealer:

 

     (A) The specific information relied on by the manufacturer

 

relating to how the performance standard or program was applied to

 

the new motor vehicle dealer. The manufacturer is not required to

 

disclose any proprietary or confidential information for purposes

 

of this sub-subparagraph. However, the result of the application of

 

a performance standard or program to a particular new motor vehicle

 

dealer is not considered proprietary or confidential as between the

 

manufacturer and that particular new motor vehicle dealer.

 

     (B) An explanation as to how the manufacturer applies a

 

performance standard or program to a new motor vehicle dealer's

 

performance.

 

     (iii) On written request, a manufacturer or a new motor

 

vehicle dealer shall meet with the other party, in person or

 

telephonically, under reasonable circumstances and as agreed to by

 

both parties, to present, explain, or discuss information the

 

manufacturer is required to provide under subparagraph (ii)(A) and

 

(B).

 

     (w) If a new motor vehicle dealer sold or leased a new motor

 

vehicle to a customer that exported the motor vehicle to a foreign

 

country or resold the motor vehicle, and at the time of delivery to

 

the customer the vehicle was titled and registered in this state or

 

another state of the United States by the dealer, refuse to


allocate, sell, or deliver new motor vehicles to the dealer; charge

 

back or withhold payments or other things of value for which the

 

dealer is otherwise eligible under a sales promotion, program, or

 

contest; prevent a new motor vehicle dealer from participating in

 

any sales promotion, program, or contest; or take or threaten to

 

take any other adverse action against a new motor vehicle dealer,

 

including, but not limited to, reducing vehicle allocations or

 

terminating or threatening to terminate a dealer agreement, unless

 

the manufacturer proves that the new motor vehicle dealer knew or

 

reasonably should have known that the customer intended to export

 

or resell the motor vehicle. In an action by a new motor vehicle

 

dealer for a violation of this subdivision, there is a rebuttable

 

presumption that a new motor vehicle dealer did not know or should

 

not reasonably have known of its customer's intent to export or

 

resell a motor vehicle if the vehicle was titled and registered in

 

the United States, and the manufacturer bears the burden of

 

rebutting that presumption.

 

     (x) If a new motor vehicle dealer is a party to a dealer

 

agreement on August 4, 2010, and the dealer agreement provides for

 

sale of a competing line make line-make of new motor vehicles at

 

the same place of business where the manufacturer's line make line-

 

make is sold, require or otherwise coerce the new motor vehicle

 

dealer to remove the sale or servicing of new motor vehicles of

 

that competing line make line-make from that place of business.

 

     (y) Prevent, attempt to prevent, prohibit, coerce, or attempt

 

to coerce a new motor vehicle dealer from charging a consumer any

 

documentary preparation fee allowed to be charged by the dealer


under the laws of this state or require the disclosure of the

 

documentary preparation fee in a written format that is not

 

otherwise required by law.

 

     (z) Prohibit, prevent, or attempt to prevent a new motor

 

vehicle dealer from transferring a dealership to or naming a

 

spouse, child, or executive manager as dealership successor to own

 

and operate the dealership unless the manufacturer, having the

 

burden of proof, can show that at the time the successor is named

 

or the dealership is transferred, the successor spouse, child, or

 

executive manager of the dealer is not of good moral character, has

 

a felony conviction, does not meet the manufacturer's uniformly

 

applied requirements and criteria to be a dealer, or is otherwise

 

disqualified from holding a license as a new motor vehicle dealer

 

under any applicable statute of this state. All of the following

 

apply for purposes of this subdivision:

 

     (i) The manufacturer is required to provide the new motor

 

vehicle dealer, in writing, with its current uniformly applied

 

requirements and criteria to be a dealer within 30 days of

 

receiving the new motor vehicle dealer's written request for the

 

uniformly applied requirements and criteria to be a dealer.

 

     (ii) Within 75 days after receiving the manufacturer's current

 

uniformly applied written requirements and criteria to be a dealer

 

from the manufacturer, the new motor vehicle dealer may submit a

 

written request to the manufacturer for a meeting, in person or

 

telephonically, with the manufacturer, under reasonable

 

circumstances as agreed to by both parties, to address the

 

requirements and criteria. The parties shall meet, in person or


telephonically, within 45 days after the new motor vehicle dealer's

 

request for a meeting, unless otherwise agreed. During the meeting,

 

the manufacturer shall provide the dealer an opportunity to

 

present, in writing, facts, data, and evidence that establish that

 

there are factors beyond the reasonable control or influence of the

 

new motor vehicle dealer that materially and adversely impact the

 

proposed transferee's ability to meet the manufacturer's current

 

uniformly applied written requirements to be a dealer. If the

 

manufacturer does not provide the new motor vehicle dealer an

 

opportunity to present, in writing, facts, data, and evidence, or

 

does not in good faith evaluate the effect of the facts, data, and

 

evidence presented by the dealer, then the manufacturer may not

 

prohibit or prevent the new motor vehicle dealer from transferring

 

the dealership to a spouse, child, or executive manager, or naming

 

a spouse, child, or executive manager as the dealership successor

 

to own and operate the dealership.

 

     (iii) The manufacturer must make any decision to decline the

 

new motor vehicle dealer's request to transfer a new motor vehicle

 

dealership to a spouse, child, or executive manager, or name a

 

spouse, child, or executive manager as dealership successor, in

 

good faith, including the opportunity for a meeting, in person or

 

telephonically as provided in subparagraph (ii). If requested by

 

the new motor vehicle dealer in writing, the manufacturer must

 

provide the new motor vehicle dealer with the information that it

 

relied on when concluding that the spouse, child, or executive

 

manager did not satisfy the uniformly required requirements and

 

criteria to be a new motor vehicle dealer. However, the


manufacturer is not required to disclose proprietary or

 

confidential information and is not required to disclose any

 

information if disclosure is prohibited by law.

 

     (aa) Make any material change in a dealer agreement without

 

giving the new motor vehicle dealer written notice of the change at

 

least 30 days before the effective date of the change. In any

 

dispute under this subdivision, the new motor vehicle dealer has

 

the burden of proving the modification is sufficiently significant

 

and material to require notice under this subdivision.

 

     (bb) Unless otherwise agreed, require a new motor vehicle

 

dealer to sell or offer to sell an extended service contract or

 

extended maintenance plan offered, sold, backed by, or sponsored by

 

the manufacturer.

 

     (2) A manufacturer, either directly or through any subsidiary,

 

shall not terminate, cancel, fail to renew, or discontinue any

 

lease of a new motor vehicle dealer's established place of business

 

except for a material breach of the lease.

 

     (3) Within 30 days after receiving a written request from the

 

dealer, a manufacturer shall provide a new motor vehicle dealer

 

that is seeking to sell, transfer, or exchange a new motor vehicle

 

dealership with all forms generally utilized and requested by the

 

manufacturer in connection with the sale, transfer, or exchange of

 

a new motor vehicle dealership.

 

     (4) A failure by a manufacturer or distributor to approve or

 

disapprove a dealer's request to sell, transfer, or exchange its

 

new motor vehicle dealership within the 75-day period after it

 

receives a completed application, including all required


House Bill No. 6498 as amended December 13, 2018

documentation and information requested by the manufacturer or

 

distributor, is considered approval by the manufacturer [of] the

 

sale, transfer, or exchange of the dealership.

 

     (5) (3) This section applies to a manufacturer that sells,

 

services, displays, or advertises its new motor vehicles in this

 

state.

 

     Sec. 14b. (1) A manufacturer shall not exercise a right of

 

first refusal or other right to acquire a new motor vehicle

 

dealership from a new motor vehicle dealer, unless the manufacturer

 

does all of the following:

 

     (a) Within 75 days after the manufacturer receives a complete

 

written application, including all required documentation and

 

information requested by the manufacturer or distributor from a new

 

motor vehicle dealer for a proposed sale, transfer, or exchange of

 

a new motor vehicle dealership by the new motor vehicle dealer,

 

submitted on the forms generally utilized by the manufacturer for

 

that purpose and containing all of the information required by the

 

manufacturer, notifies the dealer in writing that it intends to

 

exercise the right to acquire the dealership.

 

     (b) Pays to the dealer the same or greater consideration as

 

the dealer has contracted to receive in connection with the

 

proposed transfer or sale of all or substantially all of the

 

dealership assets, stock, or other ownership interest, including,

 

but not limited to, the purchase of, lease of, or assignment or

 

transfer of any leased interest in, real property or improvements

 

related to the transfer or sale of the dealership.

 

     (c) Assumes all of the duties, obligations, and liabilities


concerning the manufacturer's line-makes that the proposed

 

transferee was to assume in the agreements between the proposed

 

transferee and the dealer and with respect to which the

 

manufacturer exercised the right of first refusal or other right to

 

acquire the new motor vehicle dealership.

 

     (d) Reimburses the proposed transferee for all reasonable

 

expenses incurred in evaluating, investigating, and negotiating the

 

transfer of the dealership before the manufacturer's exercise of

 

its right of first refusal to acquire the dealership. All of the

 

following apply for purposes of this subdivision:

 

     (i) The proposed transferee shall submit an itemized list of

 

its expenses to the manufacturer not later than 60 days after the

 

manufacturer exercises its right of first refusal to acquire the

 

motor vehicle franchise. However, if requested by the manufacturer,

 

the proposed transferee must provide the list before the

 

manufacturer exercises its right of first refusal.

 

     (ii) The manufacturer must reimburse the proposed transferee

 

for its reasonable expenses not later than 60 days after it

 

receives the itemized list described in subparagraph (i).

 

     (2) Except as provided in this section, a manufacturer that

 

exercises its right of first refusal under this section and the new

 

motor vehicle dealer are not liable to any person as a result of a

 

manufacturer exercising its right of first refusal.

 

     (3) A manufacturer that exercises a right of first refusal

 

under this section may assign the lease or convey the real property

 

of the new motor vehicle dealership.

 

     (4) As used in this section:


     (a) "Proposed transferee" means the person to which a new

 

motor vehicle dealership would have been transferred, or was

 

proposed to be transferred, if the manufacturer did not exercise a

 

right of first refusal to acquire the dealership from a new motor

 

vehicle dealer.

 

     (b) "Reasonable expenses" includes the usual and customary

 

legal and accounting fees charged for similar work, as well as

 

expenses associated with the evaluation and investigation of any

 

real property on which a new motor vehicle dealership is operated.

 

     Sec. 15. (1) Any designated family member of a deceased or

 

incapacitated new motor vehicle dealer or an If a new motor vehicle

 

dealer dies or becomes incapacitated, any designated family member

 

of the dealer or executive manager of the dealership may succeed

 

the dealer in the ownership or operation of the dealership under

 

the existing dealer agreement if the designated family member or

 

executive manager gives the manufacturer written notice of his or

 

her intention to succeed to the dealership within 120 days after

 

the dealer's death or incapacity, agrees to be bound by all of the

 

terms and conditions of the existing dealer agreement, and meets

 

the current criteria generally applied by the manufacturer in

 

qualifying new motor vehicle dealers. is designated a successor in

 

a written instrument filed with the manufacturer, and meets the

 

manufacturer's uniformly applied requirements and criteria to be a

 

dealer. A manufacturer may refuse to continue the existing dealer

 

agreement with the designated family member or executive manager

 

only for good cause.

 

     (2) A manufacturer may request from a designated family member


or executive manager described in subsection (1) a completed

 

application form and any personal and financial information that is

 

reasonably necessary to determine whether the existing dealer

 

agreement should continue. The designated family member or

 

executive manager shall supply the completed application form and

 

personal and financial information promptly on request. As used in

 

this subsection and subsection (3), "application form" means the

 

application form generally used by the manufacturer in connection

 

with a proposal to continue a dealer agreement under this section.

 

     (3) If a manufacturer believes that good cause exists for

 

refusing to continue a dealer agreement under this section with a

 

designated family member or executive manager described in

 

subsection (1), the manufacturer may, within 60 75 days after

 

receiving notice of the designated family member's or executive

 

manager's intent to succeed the dealer in the ownership and

 

operation of the dealership, or within 60 75 days after receiving

 

the requested personal and financial information and completed

 

application form, whichever is later if both occur, serve on the

 

designated family member or executive manager notice of its refusal

 

to approve the succession.

 

     (4) A notice of refusal served by a manufacturer under

 

subsection (3) shall state the specific grounds for the refusal to

 

approve the succession and that discontinuance of the agreement

 

shall take effect not fewer than on a date specified in the notice

 

that is at least 90 days after the date the notice is served.

 

     (5) If a notice of refusal described in subsection (3) is not

 

served within the 60-day 75-day period described in subsection (3),


the dealer agreement shall continue in effect and is subject to

 

termination only as otherwise permitted under this act.

 

     (6) This Subject to section 14(z), this section does not

 

preclude a new motor vehicle dealer from designating any person as

 

his or her the dealer's successor by written instrument filed with

 

the manufacturer. If the dealer files an instrument described in

 

this subsection, it alone shall determine the succession rights to

 

the management and operation of the dealership.filing a written

 

instrument with the manufacturer designating any person as the

 

dealer's successor. A written instrument filed under this

 

subsection shall determine the succession rights to the management,

 

ownership, and operation of the dealership if, at the time of

 

succession, the person designated in the written instrument meets

 

the manufacturer's uniformly applied requirements and criteria to

 

be a dealer. 

 

     Sec. 16. (1) As used in this section, "relocate" and

 

"relocation" shall not include the relocation of a new motor

 

vehicle dealer within 2 miles of its established place of business.

 

     (2) Before a manufacturer or distributor enters into a dealer

 

agreement establishing or relocating a new motor vehicle dealer

 

within in a relevant market area where the same line make line-make

 

is represented, the manufacturer or distributor shall give provide

 

written notice to each new motor vehicle dealer of the same line

 

make in the relevant market area of its intention to establish an

 

additional dealer or to relocate an existing dealer within in that

 

relevant market area to each new motor vehicle dealer that

 

represents that line-make in the relevant market area on the date


the notice is provided.

 

     (3) Within 30 days after receiving the notice provided for in

 

subsection (2), or within 30 days after the end of any appeal

 

procedure provided by the manufacturer or distributor, a new motor

 

vehicle dealer may bring a declaratory judgment action in the

 

circuit court for the county in which the new motor vehicle dealer

 

is located to determine whether good cause exists for the

 

establishing or relocating of a proposed new motor vehicle dealer.

 

Once an action has been is filed, the manufacturer or distributor

 

shall not establish or relocate the proposed new motor vehicle

 

dealer until the circuit court has rendered a decision on the

 

matter. An A court shall give precedence to an action brought

 

pursuant to under this section shall be given precedence over all

 

other civil matters on the court's docket.

 

     (4) This section shall does not apply to the reopening or

 

replacement in a relevant market area of a closed dealership that

 

has been closed within the preceding year, if the established place

 

of business of the reopened or replacement dealer is within 2 miles

 

of the established place of business of the closed dealership.

 

     (5) In determining whether good cause exists for establishing

 

or relocating an additional new motor vehicle dealer for the same

 

line make, line-make, the court shall take into consideration the

 

existing circumstances, including, but not limited to, the

 

following:

 

     (a) Permanency of the investment.

 

     (b) Effect on the retail new motor vehicle business and the

 

consuming public in the relevant market area.


     (c) Whether it is injurious or beneficial to the public

 

welfare.

 

     (d) Whether the new motor vehicle dealers of the same line

 

make line-make in that relevant market area are providing adequate

 

competition and convenient consumer care for the motor vehicles of

 

that line make line-make in the market area, including the adequacy

 

of motor vehicle sales and qualified service personnel.

 

     (e) Whether the establishment or relocation of the new motor

 

vehicle dealer would promote competition.

 

     (f) Growth or decline of the population and the number of new

 

motor vehicle registrations in the relevant market area.

 

     (g) The effect on the relocating dealer of a denial of its

 

relocation into the relevant market area.

 

     Sec. 17. (1) Each new motor vehicle A manufacturer shall

 

specify in writing to each of its new motor vehicle dealers

 

licensed in this state the dealer's obligations for preparation,

 

delivery, recall service, and warranty service on its products. A

 

manufacturer shall compensate a new motor vehicle dealer for recall

 

or warranty service required of the dealer by the manufacturer. A

 

manufacturer shall provide a new motor vehicle dealer with the

 

schedule of compensation to be paid to the dealer for parts, work,

 

and service, and the time allowance for the performance of the work

 

and service. A manufacturer shall also include in the schedule of

 

compensation a reasonable time allowance for labor for diagnostic

 

work and repair work, included in the manufacturer's labor time

 

allowance or listed as a separate compensable item. A dealer may

 

submit a request for an additional time allowance for either


diagnostic or repair time, that includes any information and

 

documentation reasonably required by the manufacturer, and a

 

manufacturer shall not unreasonably deny that request. The schedule

 

of compensation shall include reasonable compensation for parts

 

reimbursement and labor rates as determined under section 17a(1).

 

     (2) A schedule of compensation described in subsection (1)

 

shall include reasonable compensation for diagnostic work and

 

repair service and labor. Time allowances for the diagnosis and

 

performance of warranty work and service shall be reasonable and

 

adequate for the work to be performed. In determining what

 

constitutes reasonable compensation under this section, the

 

principal factor to be given consideration is the prevailing wage

 

rates being paid by dealers in the community in which the dealer is

 

doing business, and the compensation of a dealer for warranty labor

 

shall not be less than the rates charged by the dealer for like

 

service to retail customers for nonwarranty service and repairs, if

 

those rates are reasonable.

 

     (2) (3) A manufacturer shall not do any of the following:

 

     (a) Fail to perform any recall or warranty obligation.

 

     (b) Fail to include in written notices of factory recalls to

 

new motor vehicle owners and dealers the expected date by which

 

necessary parts and equipment will be available to dealers for the

 

correction of the defects.

 

     (c) Fail to compensate a new motor vehicle dealer licensed in

 

this state for repairs made in connection with the recall.

 

     (3) (4) A manufacturer shall pay a claim made by a new motor

 

vehicle dealer under this section for labor and parts within 30


days after its approval. A manufacturer shall either approve or

 

disapprove a claim within 30 days after receiving the claim,

 

submitted on the form generally used by the manufacturer and

 

containing the information usually required in the form. Any claim

 

not specifically disapproved in writing within 30 days after the

 

manufacturer receives the claim form is considered approved, and

 

the manufacturer shall pay the claim within 30 days.

 

     (4) (5) Subject to subsection (10), subsections (5) and (10),

 

if a manufacturer has approved and paid a new motor vehicle dealer

 

for a claim, the manufacturer may only charge the claim back to the

 

dealer if 1 of the following is met:

 

     (a) The manufacturer shows that the claim is fraudulent. or

 

false. However, the manufacturer may not charge back the amount

 

paid if the claim is found to be false or fraudulent more than 2 6

 

years after payment.

 

     (b) The manufacturer shows that the claim is false,

 

unsubstantiated, lacks proper documentation, or shows an improper

 

diagnosis process or improper repair procedures. However, the

 

manufacturer may not charge back the amount paid if the claim is

 

found to be false, unsubstantiated, to lack proper documentation,

 

or show an improper diagnosis process or repair procedures more

 

than 12 months after payment.

 

     (5) If a manufacturer seeks to charge back a claim under

 

subsection (4) on the basis that the claim is false,

 

unsubstantiated, or lacks proper documentation, or shows an

 

improper diagnosis process or improper repair procedures, a new

 

motor vehicle dealer has 14 days after the date the new motor


vehicle dealer receives notice of the chargeback to supply

 

documentation that meets the manufacturer's requirements to support

 

the validity of the claim, and if the claim is valid, the

 

manufacturer shall not charge back the claim to the new motor

 

vehicle dealer.

 

     (6) A manufacturer may not deny a claim made under this

 

section because of a new motor vehicle dealer's incidental failure

 

to comply with a specific claim processing requirement, such as a

 

clerical error, that does not call into question the legitimacy of

 

the claim.

 

     (7) A new motor vehicle dealer shall maintain all records of

 

warranty repairs, including the related time records of its

 

employees, for at least 2 years following payment of any warranty

 

claim.

 

     (8) A manufacturer shall compensate a new motor vehicle dealer

 

for any sales or service promotion events, incentives, programs, or

 

activities sponsored by the manufacturer, in accordance with

 

established guidelines for those events, incentives, programs, or

 

activities.

 

     (9) A manufacturer shall pay a claim for compensation owed to

 

a new motor vehicle dealer under subsection (8) for a promotion

 

event, incentive, program, or activity within 10 15 days after its

 

approval. A manufacturer shall either approve or disapprove a claim

 

for compensation described in this subsection within 30 days after

 

receiving the claim, submitted on the form generally used by the

 

manufacturer and containing the information usually required in the

 

form. Any claim for compensation the manufacturer does not


specifically disapprove in writing within 30 days after receiving

 

the claim form is considered approved, and the manufacturer shall

 

pay the amount of the claim within 30 days. A manufacturer may only

 

charge back a claim for compensation within 12 months after the

 

date of payment, or within 12 months after the end of a program if

 

the duration of the program is 1 year or less.described in this

 

subsection under subsection (4).

 

     (10) A manufacturer may not charge a claim back to a new motor

 

vehicle dealer after the claim is paid unless a representative of

 

the manufacturer first meets in person or by video teleconference

 

or telephone with an officer or employee of the dealer designated

 

by the new motor vehicle dealer, or responds in writing to any

 

dealer written request for information. All of the following apply

 

if a meeting is held under this subsection:

 

     (a) At the meeting, the manufacturer shall provide a detailed

 

explanation, with supporting documentation, of the basis for each

 

proposed chargeback of a claim to the dealer and a written

 

statement containing the basis on which the claim or claims of the

 

dealer were selected for audit or review by the manufacturer.

 

However, the manufacturer is not required to disclose proprietary

 

or confidential information about a customer or other dealer under

 

this subdivision, and is not required to disclose any information

 

if disclosure is prohibited by law.

 

     (b) After the meeting, the manufacturer shall provide the

 

motor vehicle dealer's representative a reasonable period of time

 

of at least 45 days to respond to the proposed chargebacks. The

 

manufacturer shall provide a longer period of time for the dealer


to respond if warranted by the volume of proposed chargebacks.

 

     (c) An unexcused failure or refusal of the dealer or

 

designated officer or employee of the dealer to schedule, attend,

 

or participate in the meeting with the manufacturer relieves the

 

manufacturer from any further obligation under this subsection.

 

     (11) A manufacturer may conduct an audit of the records of a

 

new motor vehicle dealer relating to a warranty or promotion claim

 

submitted by a new motor vehicle dealer under this section, but the

 

manufacturer may only conduct that audit in the time periods

 

allowed for warranty or promotional claim chargebacks under this

 

section.

 

     Sec. 17a. (1) The principal factors in determining what

 

constitutes reasonable compensation for parts reimbursement and

 

labor rates for purposes of section 17(1) are as follows:

 

     (a) The retail price charged for parts by other similarly

 

situated new motor vehicle dealers in a comparable geographic area

 

in this state that offer the same line-make of vehicles.

 

     (b) The retail labor rates of other similarly situated

 

new motor vehicle dealers in a comparable geographic area in this

 

state that offer the same line-make of vehicles.

 

     (2) All of the following apply for purposes of subsection (1):

 

     (a) A new motor vehicle dealer that is demanding warranty

 

compensation from a manufacturer at a rate that exceeds the agreed-

 

upon rates shall establish the retail rate it customarily charges

 

for parts by submitting to the manufacturer 100 consecutive and

 

sequential nonwarranty customer-paid service repair orders that

 

contain repairs for like services or all nonwarranty customer-paid


service repair orders covering a period of 90 consecutive days,

 

whichever is less. A dealer shall not submit a service repair order

 

under this subsection that covers repairs made more than 180 days

 

before the date of the submission.

 

     (b) If a manufacturer determines from any set of repair orders

 

submitted under subdivision (a) that the calculated retail markup

 

rate for parts or the retail labor rate is substantially higher or

 

lower than the rate currently on record with the manufacturer, the

 

manufacturer may request additional documentation for a period of

 

either 60 days before or 60 days after the time period for which

 

the repair orders were submitted for purposes of an adjustment.

 

     (c) A new motor vehicle dealer's retail rate percentage for

 

parts is calculated by determining the dealer's total parts sales

 

in the submitted repair orders and dividing that amount by the

 

dealer's total cost for the purchase of those parts, subtracting 1

 

from that amount, and then multiplying by 100. The manufacturer

 

must approve or disapprove the declared retail rate within 45 days

 

after the date of submission by the dealer. The declared retail

 

rate is effective beginning 30 days after approval by the

 

manufacturer, unless the manufacturer disapproves and timely

 

contests the dealer's declared rate. If a manufacturer fails to

 

disapprove within 45 days following submission by the dealer, the

 

declared retail rate is considered approved. A new motor vehicle

 

dealer's retail rate for labor is calculated by determining the

 

dealer's total labor sales from the submitted repair orders and

 

dividing that amount by the total number of hours that generated

 

those sales. The manufacturer must approve or disapprove the


declared retail rate within 45 days after the date the dealer

 

submits the repair orders. The declared retail labor rate is

 

effective beginning 30 days after approval by the manufacturer,

 

unless the manufacturer disapproves and timely contests the

 

dealer's declared rate.

 

     (d) A manufacturer may contest a new motor vehicle dealer's

 

declared retail markup rate for parts or retail labor rate not

 

later than 45 days after submission and declaration of the retail

 

markup rate for parts or retail labor rate by the dealer by

 

reasonably substantiating that the rate is inaccurate, incomplete,

 

or unreasonable in light of the factors described in subsection

 

(1). In contesting a new motor vehicle dealer's declared rate, a

 

manufacturer shall provide a written explanation of the reasons for

 

disagreement with the declared rate. If the declared retail markup

 

rate for parts or retail labor rate is contested, then the

 

manufacturer shall propose an adjustment of the rate. If the

 

manufacturer contests the dealer's declared parts or labor rate,

 

the parties shall attempt to resolve the dispute through an

 

internal dispute resolution procedure of the manufacturer, if

 

available, provided that the dispute resolution procedure occurs

 

within a reasonable amount of time that does not exceed 45 days

 

after notification of disagreement with the dealer's declared rate.

 

     (e) If an internal dispute resolution procedure described in

 

subdivision (d) is unsuccessful or does not occur in a timely

 

manner, a new motor vehicle dealer may file a complaint in the

 

circuit court for the county in which the new motor vehicle dealer

 

is located, within 60 days after it receives the adjustment


proposed by the manufacturer or within 30 days after conclusion of

 

the internal dispute resolution procedure, whichever is later. In

 

an action under this subdivision, the manufacturer has the burden

 

of proof to demonstrate that the retail markup rate for parts or

 

retail labor rate declared by the dealer is inaccurate, incomplete,

 

or unreasonable.

 

     (3) The following work shall not be considered in calculating

 

the retail rate customarily charged by a new motor vehicle dealer

 

for parts and labor under this section:

 

     (a) Repairs for manufacturer special events, specials, or

 

promotional discounts for retail customer repairs.

 

     (b) Parts sold at wholesale.

 

     (c) Routine maintenance not covered under any retail customer

 

warranty, such as oil changes, fluids, filters, or belts not

 

provided in the course of repairs.

 

     (d) Nuts, bolts, or fasteners or similar items that do not

 

have an individual part number.

 

     (e) Tires, tire repair, tire rotation, or other tire services.

 

     (f) Vehicle reconditioning.

 

     (g) Installation or repair of accessories.

 

     (h) Repairs of vehicle body damage caused by a collision, a

 

road hazard, the force of the elements, vandalism, or theft.

 

     (i) Vehicle emission or safety inspections required by law.

 

     (j) Manufacturer approved and reimbursed goodwill or policy

 

repairs or replacements.

 

     (k) Repairs for which volume discounts have been negotiated

 

with government agencies.


     (4) If a manufacturer furnishes a part or component to a new

 

motor vehicle dealer to use in performing repairs under a recall,

 

campaign service action, or warranty repair at no cost to the

 

dealer, the manufacturer shall compensate the dealer for the

 

authorized repair part or component in the same manner as warranty

 

parts compensation under section 17 by paying the dealer the retail

 

rate markup on the cost for the part or component as listed in the

 

price schedule of the manufacturer less the cost for the part or

 

component.

 

     (5) A manufacturer shall not require a new motor vehicle

 

dealer to establish the retail rate customarily charged by the

 

dealer for parts and labor by an unduly burdensome or time-

 

consuming method or by requiring information that is unduly

 

burdensome or time consuming to provide, including, but not limited

 

to, part-by-part or transaction-by-transaction calculations. A

 

dealer shall not declare a retail rate for parts or labor or both

 

more than once in a calendar year.

 

     (6) A manufacturer shall not limit access to sales or service

 

promotion events, incentives, programs, or activities sponsored by

 

the manufacturer or limit allocation of vehicles or parts to a new

 

motor vehicle dealer based solely on the new motor vehicle dealer's

 

exercise of its rights under this section. This subsection does not

 

prohibit a manufacturer from increasing the price of a motor

 

vehicle or part in the normal course of business.

 

     Sec. 17b. (1) A manufacturer shall compensate its new motor

 

vehicle dealers a reasonable amount for all labor and parts

 

required by the manufacturer to perform recall repairs.


     (2) If parts or a remedy are not reasonably available to

 

perform a recall service or repair on a used vehicle held for sale

 

by a new motor vehicle dealer authorized to sell and service new

 

vehicles of the same line-make within 30 days of the manufacturer

 

issuing the initial notice of recall, and the manufacturer has

 

issued a stop-sale order on the vehicle, the manufacturer shall

 

compensate the dealer at a prorated rate of at least 1% of the

 

value of the vehicle per month beginning on the date that is 30

 

days after the date on which the stop-sale order was provided to

 

the dealer, until the earlier of either of the following occurs:

 

     (a) The date the recall or remedy parts are made available.

 

     (b) The date the dealer sells, trades, or otherwise disposes

 

of the affected used motor vehicle.

 

     (3) For purposes of subsection (2), the value of a used motor

 

vehicle is the average trade-in value for used vehicles as

 

indicated in an independent third-party guide for the year, make,

 

and model of the recalled vehicle.

 

     (4) This section applies only to the following:

 

     (a) A used motor vehicle that is subject to safety or

 

emissions recalls under, and recalled in accordance with, federal

 

law, if a stop-sale order has been issued and repair parts or

 

remedy remains unavailable for 30 days or longer.

 

     (b) A new motor vehicle dealer that holds an affected used

 

vehicle for sale that meets both of the following:

 

     (i) Is in inventory at the time the stop-sale order was

 

issued, or was taken in the used vehicle inventory of the dealer as

 

a consumer trade-in in connection with the purchase of a new motor


vehicle from the dealer after the stop-sale order was issued.

 

     (ii) Is of the same line-make as a new motor vehicle that the

 

dealer is authorized by a manufacturer to sell or on which the

 

dealer is authorized to perform recall repairs.

 

     (5) A manufacturer shall not reduce the amount of compensation

 

otherwise owed to a new motor vehicle dealer, whether through a

 

chargeback, removal of the dealer from an incentive program, or

 

reduction in amount owed under an incentive program, solely because

 

the new motor vehicle dealer has submitted a claim for

 

reimbursement under this section. This subsection does not apply to

 

an action by a manufacturer that is applied uniformly among all new

 

motor vehicle dealers of the same line-make in this state.

 

     (6) All reimbursement claims made by new motor vehicle dealers

 

under this section for recall remedies or repairs, or for

 

compensation if a part or repair is not reasonably available and

 

the vehicle is subject to a stop-sale order, are subject to the

 

same limitations and requirements as a warranty reimbursement claim

 

made under section 17. In the alternative, a manufacturer may

 

compensate its new motor vehicle dealers under a national recall

 

compensation program if the compensation under the program is equal

 

to or greater than that provided under this section, or the

 

manufacturer and dealer otherwise agree.

 

     (7) A manufacturer may direct the manner and method the dealer

 

must use to demonstrate the inventory status of an affected used

 

motor vehicle to determine eligibility under this section, if that

 

manner and method is not unduly burdensome and does not require

 

information that is unduly burdensome to provide.


     (8) This section does not require a manufacturer to provide

 

total compensation to a new motor vehicle dealer that would exceed

 

the total average trade-in value of the affected used motor vehicle

 

as originally determined under subsection (3).

 

     (9) Any remedy provided to a dealer under this section is

 

exclusive and may not be combined with any other state or federal

 

recall compensation remedy.

 

     Sec. 19. (1) Notwithstanding the terms, provisions, or

 

conditions of any dealer agreement, a manufacturer or distributor

 

shall indemnify and hold harmless its new motor vehicle dealers

 

against any judgment for damages or settlement agreed to in writing

 

by the manufacturer, including, but not limited to, court costs and

 

reasonable attorney's fees of the new motor vehicle dealer arising

 

solely out of the complaints, claims, or actions from defects ,

 

which that relate to the manufacture, assembly, or design of

 

vehicles, parts, or accessories, or other functions by the

 

manufacturer or distributor, that are beyond the control of the

 

dealer, including, without limitation, the selection by the

 

manufacturer or distributor of parts or components for the vehicle,

 

or any damages to merchandise occurring in transit to the dealer if

 

the carrier is designated by the manufacturer or distributor. If

 

the a complaint, claim, or action contains independent allegations

 

against the new motor vehicle dealer, the manufacturer shall pay

 

only that portion of the costs, fees, and judgment or settlement

 

which that is directly related to the manufacture, assembly, or

 

design of the vehicle, parts, or accessories , or other functions

 

of the manufacturer that are beyond the control of the dealer.


     (2) A manufacturer must respond to a request for

 

indemnification under this section within 30 days after the date

 

the new motor vehicle dealer submits all documents necessary to

 

support its request to the manufacturer.

 

     (3) (2) A dealer shall have no does not have a right to

 

indemnification or attorney's attorney fees as provided in under

 

subsection (1) unless the dealer has given reasonable notice in

 

writing of the complaint, claim, or action to the manufacturer or

 

distributor.

 

     Sec. 22a. (1) The 1998 amendments to this act that added this

 

section apply to agreements in existence on the effective date of

 

this section December 30, 1998 and to agreements entered into or

 

renewed after the effective date of this section.December 30, 1998.

 

     (2) The amendments to this act made by the amendatory act that

 

added this subsection apply to dealer agreements entered into or

 

renewed, or existing dealer agreements that are materially and

 

substantially amended, after the effective date of this subsection.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.