Bill Text: IN HB1386 | 2013 | Regular Session | Amended
Bill Title: Unfair practices concerning motor vehicle sales.
Spectrum: Bipartisan Bill
Status: (Passed) 2013-05-13 - Public Law 152 [HB1386 Detail]
Download: Indiana-2013-HB1386-Amended.html
Citations Affected: IC 9-23.
Synopsis: Unfair practices concerning motor vehicles sales. Amends
existing provisions and establishes new provisions concerning unfair
practices with respect to motor vehicle dealers, manufacturers,
distributors, franchises, and franchisees.
Effective: July 1, 2013.
January 22, 2013, read first time and referred to Committee on Roads and Transportation.
February 18, 2013, amended, reported _ Do Pass.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
Additions: Whenever a new statutory provision is being enacted (or a new constitutional provision adopted), the text of the new provision will appear in this style type. Also, the word NEW will appear in that style type in the introductory clause of each SECTION that adds a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or
A BILL FOR AN ACT to amend the Indiana Code concerning
motor vehicles.
(b) This subsection applies if a dealer sells or leases a motor vehicle to a customer that resells the motor vehicle or exports the motor vehicle to a foreign country. A manufacturer or distributor may not take or threaten to take adverse action or otherwise discriminate against the dealer unless the dealer knew or reasonably should have known before the dealer sold or leased the motor vehicle to the customer that the customer intended to resell or export the motor vehicle. Titling and registering a motor vehicle in any state in the name of the customer to whom the dealer sold or leased the motor vehicle establishes a rebuttable presumption that the dealer did not know or should not reasonably have known that the customer intended to resell or export the motor vehicle.
(c) For purposes of subsection (b), adverse actions by a
manufacturer or distributor include the following conduct by a
manufacturer or distributor, whether actual or threatened:
(1) Failing or refusing to allocate, sell, or deliver a motor
vehicle to the dealer.
(2) Discriminating against the dealer in the allocation of
motor vehicles.
(3) Charging back or withholding payments or other
consideration for which a dealer is eligible under a warranty
reimbursement, sales promotion, incentive program, or
contest.
(4) Disqualifying a dealer from participating in a sales
promotion, incentive program, or contest.
(5) Terminating a franchise.
(1) Cancel or terminate a franchise or selling agreement of a franchisee, or fail or refuse to extend or renew a franchise or selling agreement upon the franchise's or selling agreement's expiration, without good cause or notice to the franchisee by certified mail, return receipt requested:
(A) at least ninety (90) days before the cancellation or termination; or
(B) at least ten (10) days before the cancellation or termination if any of the following apply:
(i) The franchisee has abandoned business operations or otherwise failed to conduct sales and service operations during regular business hours for at least seven (7) consecutive business days, unless the abandonment or closure is due to an act of God or another act over which the franchisee has no control.
(ii) The franchisee or another operator of the franchise has been convicted of or pled guilty to an offense punishable by at least one (1) year of imprisonment.
(iii) The dealer files for bankruptcy or enters into receivership.
(iv) The license of the dealer is revoked under IC 9-23-2 or IC 9-23-6.
(v) The dealer commits fraud.
(2) Offer a renewal, replacement, or succeeding franchise or selling agreement that substantially changes or modifies the
sales and service obligations, facilities standards, capital
requirements, or other terms of the original franchise or
agreement of a franchisee without notice to the franchisee by
certified mail, return receipt requested, at least ninety (90)
days before the expiration or termination of the original
franchise or agreement.
Notice provided under this subsection must include a detailed
statement setting forth the specific grounds for the proposed
action.
(b) For purposes of subsection (a)(1), the following do not
constitute good cause, provided that no unfair practice is
committed under IC 9-23-3-11 and no transfer, sale, or assignment
is made in violation of IC 9-23-3-22:
(1) A change of ownership or executive management of a
dealership.
(2) Requiring the appointment of an individual to an executive
management position in a dealership.
(3) Ownership of, investment in, participation in the
management of, or holding a license for the sale of any line
make of new motor vehicles by a franchisee or an owner of an
interest in a franchise.
(c) Good cause exists under subsection (a)(1) with respect to all
franchisees of a line make if the manufacturer of the line make
permanently discontinues the manufacture or assembly of the line
make.
(d) Not more than thirty (30) days after a franchisee receives
notice under subsection (a), the franchisee may protest the
proposed action.
(1) the termination, cancellation, or nonrenewal by the manufacturer or distributor of a franchise between the dealer and the manufacturer or distributor; or
(2) the discontinuance of a line make by the manufacturer or distributor.
(b) Not more than ninety (90) days after a manufacturer or distributor receives a request for payment from a dealer described in subsection (a), the manufacturer or distributor shall pay to the dealer the following amounts for items that are in the dealer's inventory or possession at the time of termination, cancellation,
nonrenewal, or discontinuance, that the dealer delivers to the
manufacturer or distributor, and as to which the dealer conveys
clear title to the manufacturer or distributor under subsection (c):
(1) For:
(A) current model year motor vehicles; or
(B) immediately preceding model year motor vehicles with
less than three hundred (300) miles;
acquired from the manufacturer or distributor in the usual
course of business, the cost at acquisition less any discounts or
allowances received from the manufacturer or distributor.
(2) For all new, unused, and undamaged parts in original
packaging that were purchased from the manufacturer or
distributor:
(A) the cost listed in the manufacturer's or distributor's
parts catalog in effect at the time of termination,
cancellation, nonrenewal, or discontinuance; minus
(B) any allowances authorized by the manufacturer or
distributor.
(3) For required special tools, equipment, or computer
equipment that was used for reporting financial data to the
manufacturer or distributor, used solely for the franchise
being terminated, and purchased by the dealer during the two
(2) years immediately preceding the termination, cancellation,
nonrenewal, or discontinuance, fair market value.
(4) For signs that bear a trademark or trade name, that the
dealer was required by the manufacturer or distributor to
purchase, and that the dealer purchased within three (3) years
of the termination, cancellation, nonrenewal, or
discontinuance, fair market value.
For purposes of this subsection, fair market value is determined on
the date of termination, cancellation, nonrenewal, or
discontinuance.
(c) Title to items described in subsection (b) transfers from a
dealer to a manufacturer or distributor on the date of termination,
cancellation, nonrenewal, or discontinuance. The dealer has an
enforceable security interest in the transferred items.
(d) It is an unfair practice for a manufacturer or distributor to
violate this section.
between the manufacturer or distributor and a dealer, unless the
termination, cancellation, or failure to renew is due to any of the
following:
(1) The dealer files for bankruptcy or enters into receivership.
(2) The dealer's license is revoked under IC 9-23-2 or
IC 9-23-6.
(3) The dealer has been convicted of or pled guilty to a felony.
(4) The dealer commits fraud.
(5) The dealer has abandoned business operations or
otherwise failed to conduct sales and service operations
during regular business hours for at least seven (7)
consecutive days, unless the abandonment or closure is due to
an act of God or another act over which the franchise has no
control.
(b) Except as provided in subsection (c), upon termination,
cancellation, or nonrenewal, a manufacturer or distributor shall
pay to a dealer the following amounts:
(1) If the dealer is leasing the dealership facilities from a
person other than the manufacturer or distributor, the lesser
of:
(A) the total lease payments remaining unpaid on the date
of termination, cancellation, or nonrenewal; or
(B) the total annual lease payments for one (1) year;
subject to damages mitigated by the dealer under the terms of
the lease.
(2) If the dealer owns the dealership facilities, an amount
equal to the reasonable rental value of the facilities for the one
(1) year period beginning on the date of termination,
cancellation, or nonrenewal, subject to damages mitigated by
the dealer.
(c) A manufacturer or distributor may discharge the
manufacturer's or distributor's obligations under a lease with a
dealer by negotiating with the dealer a lease termination payment,
a sublease, or a new lease.
(d) The manufacturer or distributor is entitled to possession of
the dealership facilities during the time period for which the
manufacturer or distributor makes any lease payments.
(e) It is an unfair practice for a manufacturer or a distributor
to violate this section.
distributor, officer, or agent to do any of the following:
(1) Require, coerce, or attempt to coerce any new motor vehicle
dealer in Indiana to:
(A) change location of the dealership;
(B) make any substantial alterations to the use of franchises;
or
(C) make any substantial alterations to the dealership premises
or facilities;
if to do so would be unreasonable or would not be justified by
current economic conditions or reasonable business
considerations. This subdivision does not prevent a manufacturer
or distributor from establishing and enforcing reasonable facility
requirements,
provided, however, that a motor vehicle dealer
may elect to use for the facility alteration locally-sourced
materials or supplies that are substantially similar to those
required by the manufacturer or distributor, subject to the
approval of the manufacturer or distributor.
(2) Require, coerce, or attempt to coerce any new motor vehicle
dealer in Indiana to divest its ownership of or management in
another line or make of motor vehicles that the dealer has
established in its dealership facilities with the prior written
approval of the manufacturer or distributor.
(3) Establish or acquire wholly or partially a franchisor owned
outlet engaged wholly or partially in a substantially identical
business to that of the franchisee within the exclusive territory
granted the franchisee by the franchise agreement or, if no
exclusive territory is designated, competing unfairly with the
franchisee within a reasonable market area. A franchisor is not
considered to be competing unfairly if operating:
(A) a business for less than two (2) years;
(B) in a bona fide retail operation that is for sale to any
qualified independent person at a fair and reasonable price; or
(C) in a bona fide relationship in which an independent person
or persons have made a significant investment subject to loss
in the business operation and can reasonably expect to acquire
majority ownership or managerial control of the business on
reasonable terms and conditions.
(4) Require a dealer, as a condition of granting or continuing
a franchise, approving the transfer of ownership or assets of
a new motor vehicle dealer, or approving a successor to a new
motor vehicle dealer to:
(A) construct a new dealership facility;
(B) modify or change the location of an existing dealership;
or
(C) grant the manufacturer or distributor control rights
over any real property owned, leased, controlled, or
occupied by the dealer.
(5) Prohibit a dealer from representing more than one (1) line
make of motor vehicles from the same or a modified facility
if:
(A) reasonable facilities exist for the combined operations;
(B) the dealer meets reasonable capitalization
requirements for the original line make and complies with
the reasonable facilities requirements of the manufacturer
or distributor; and
(C) the prohibition is not justified by the reasonable
business considerations of the manufacturer or distributor.
This subdivision shall Subdivisions (3) through (5) do not apply to
recreational vehicle manufacturer franchisors.
(b) Nothing in this section prohibits the enforcement of a
voluntary agreement between the manufacturer or distributor and
the franchisee where separate and valuable consideration has been
offered and accepted.
(1) make an improvement to the dealer's facilities; or
(2) install signs or other franchisor image elements;
that would result in replacing or substantially altering improvements or image elements that the dealer made or installed during the immediately preceding seven (7) years as required by the manufacturer or distributor, unless the improvement or installation of signs or visual elements is necessary to comply with the health or safety laws of the state or to sell, service, or display a new motor vehicle due to the unique technology of the new motor vehicle.
(b) It is an unfair practice for a manufacturer or distributor to violate this section.
(c) This section does not apply to a recreational vehicle manufacturer franchisor.
players, voice command devices, hands free technology, and
bumpers when replaced by identical manufacturer's original equipment.
(b) Any uncorrected damage or any corrected damage exceeding
four percent (4%) of the manufacturer's suggested retail price (as
defined in 26 U.S.C. 4216), as measured by retail repair costs, must be
disclosed by the dealer in writing before delivery to an the ultimate
purchaser.
