Bill Text: MO HB1634 | 2014 | Regular Session | Comm Sub
Bill Title: Changes the laws regarding the Motor Vehicle Franchise Practices Act
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2014-04-24 - Rules - Reported Do Pass (H) [HB1634 Detail]
Download: Missouri-2014-HB1634-Comm_Sub.html
SECOND REGULAR SESSION
HOUSE COMMITTEE SUBSTITUTE FOR
97TH GENERAL ASSEMBLY
5701H.02C D. ADAM CRUMBLISS, Chief Clerk
AN ACT
To repeal sections 407.826 and 407.828, RSMo, and to enact in lieu thereof two new sections relating to motor vehicle franchise practices.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Sections 407.826 and 407.828, RSMo, are repealed and two new sections enacted in lieu thereof, to be known as sections 407.826 and 407.828, to read as follows:
407.826. 1. (1) A franchisor shall be prohibited from owning or operating a new motor vehicle dealership in this state. It is not a violation of this section for a franchisor to own or operate a new motor vehicle dealership:
(a) For a temporary period of not more than twenty-four months if the dealership is for sale at a reasonable price and on reasonable terms and conditions to an independent qualified buyer. On showing by a franchisor of good cause, the time limit set forth above may be extended for an additional period of up to twelve months; or
(b) In a bona fide relationship with an independent person (i) who is required to make a significant investment in the new motor vehicle dealership subject to loss and (ii) operates the dealership and can reasonably expect to acquire full ownership of the dealership within a reasonable time and under reasonable terms and conditions.
(2) Nothing in this section shall be deemed to prohibit a franchisor from owning a minority interest in an entity that owns motor vehicle dealerships of the same line-make manufactured and franchised by the factory, provided that all of the following conditions are met at the time of acquisition and continue to be met during the time the entity maintains ownership:
(a) The interest owned by the factory in said entity shall not exceed forty-five percent of the total ownership;
(b) Any dealership in which the entity owns an interest shall be located no less than [nine miles of] the distances set forth in section 407.817 from any unaffiliated new motor vehicle dealership trading in the same line-make of vehicle;
(c) All of the licensed dealerships for the sale of such factory's new motor vehicle in the state trade exclusively in the factory's line-make;
(d) During any period in which the entity has such ownership interest, the factory shall have no more than four franchise agreements governing such line-make with dealers licensed to do business in this state;
(e) All the factory's franchise agreements confer rights on the franchisee of the line-make to develop and operate, within a defined geographic territory or area, as many dealership facilities as the franchisee and factory shall agree are appropriate;
(f) At the time the entity first acquires an ownership interest, not fewer than seventy-five percent of the franchisees of the line-make within this state own and operate two or more dealership facilities in the geographic territory or area covered by the franchise agreement with the factory;
(g) As of January 1, 2001, there were no more than ten dealerships of such line-make licensed as a new motor vehicle dealer in this state; and
(h) Prior to August 28, 2001, the factory has been continuously engaged, at least since July 1, 1998, in the retail sale of motor vehicles of its own line-make through direct or indirect ownership of dealerships in at least five states.
2. A franchisor shall not sell new motor vehicles directly to any retail consumer except through a franchisee for the line-make that includes the new motor vehicle unless such consumer is an employee of the franchisor, or is a not-for-profit organization or an agency of the federal, state or local governments. This subsection shall not preclude a franchisor from providing information to consumers for the purpose of marketing or facilitating the sale of a new motor vehicle or from establishing programs to sell or offer to sell new motor vehicles through participating franchisees.
3. The remedies and relief available pursuant to section 407.835 shall apply to this section.
407.828. 1. Notwithstanding any provision in a franchise to the contrary, each franchisor shall specify in writing to each of its franchisees in this state the franchisee's obligations for preparation, delivery, and warranty service on its products. The franchisor shall fairly and reasonably compensate the franchisee for preparation, delivery, and warranty service required of the franchisee by the franchisor. The franchisor shall provide the franchisee with the schedule of compensation to be paid to the franchisee for parts, labor, and service, and the time allowance for the performance of the labor and service for the franchisee's obligations for preparation, delivery, and warranty service.
2. The schedule of compensation shall include reasonable compensation for diagnostic work, as well as repair service and labor for the franchisee to meet its obligations for preparation, delivery, and warranty service. The schedule shall also include reasonable and adequate time allowances for the diagnosis and performance of preparation, delivery, and warranty service to be performed in a careful and professional manner. In the determination of what constitutes reasonable compensation for labor and service pursuant to this section, the principal factor to be given consideration shall be the prevailing wage rates being charged for similar labor and service by franchisees in the market in which the franchisee is doing business, and in no event shall the compensation of a franchisee for labor and service be less than the rates charged by the franchisee for similar labor and service to retail customers for nonwarranty labor and service, provided that such rates are reasonable. The primary factor in determining a fair and reasonable compensation for parts under this section shall be the prevailing amount charged for similar parts by other same line-make franchisees in the market in which the franchisee is doing business and the fair and reasonable compensation for parts shall not be less than the amount charged by the franchisee for similar parts to retail customers for nonwarranty parts, provided that such rates are reasonable. If another same line-make franchisee is not available within the market, then the prevailing amount charged for similar parts by other franchisees in the market shall be used as the primary factor. For trucks with a licensed gross weight of eighteen thousand pounds or more, reasonable compensation for parts shall be equal to the dealer's cost for the parts multiplied by the dealer's average percentage markup over dealer cost for parts. For this determination, a "dealer's average percentage markup over dealer cost for parts" is calculated by dividing total charges for parts in the dealer's qualifying nonwarranty repair orders by the total dealer cost for the parts. A dealer's "qualifying nonwarranty repair orders" means an order relating to a nonwarranty repair that would be warranty work if the vehicle repaired was covered by the franchisor's warranty. A "qualifying nonwarranty repair order" does not include routine maintenance such as oil changes or replacement of fluids, belts, nuts, bolts, fasteners, bulbs, batteries, or tires.
3. A franchisor shall perform all warranty obligations, including recall notices; include in written notices of franchisor recalls to new motor vehicle owners and franchisees the expected date by which necessary parts and equipment will be available to franchisees for the correction of the defects; and reasonably compensate any of the franchisees in this state for repairs required by the recall. Reasonable compensation for parts, labor, and service shall be determined under subsection 2 of this section.
4. No franchisor shall require a franchisee to submit a claim authorized under this section sooner than thirty days after the franchisee completes the preparation, delivery, or warranty service authorizing the claim for preparation, delivery, or warranty service. All claims made by a franchisee under this section shall be paid within thirty days after their approval. All claims shall be either approved or disapproved by the franchisor within thirty days after their receipt on a proper form generally used by the franchisor and containing the usually required information therein. Any claims not specifically disapproved in writing within thirty days after the receipt of the form shall be considered to be approved and payment shall be made within fifteen days thereafter. A franchisee shall not be required to maintain defective parts for more than thirty days after submission of a claim.
5. A franchisor shall compensate the franchisee for franchisor-sponsored sales or service promotion events, including but not limited to, rebates, programs, or activities in accordance with established written guidelines for such events, programs, or activities, which guidelines shall be provided to each franchisee.
6. No franchisor shall require a franchisee to submit a claim authorized under subsection 5 of this section sooner than thirty days after the franchisee becomes eligible to submit the claim. All claims made by a franchisee pursuant to subsection 5 of this section for promotion events, including but not limited to rebates, programs, or activities shall be paid within ten days after their approval. All claims shall be either approved or disapproved by the franchisor within thirty days after their receipt on a proper form generally used by the franchisor and containing the usually required information therein. Any claim not specifically disapproved in writing within thirty days after the receipt of this form shall be considered to be approved and payment shall be made within ten days.
7. In calculating the retail rate customarily charged by the franchisee for parts, service, and labor, the following work shall not be included in the calculation:
(1) Repairs for franchisor, manufacturer, or distributor special events, specials, or promotional discounts for retail customer repairs;
(2) Parts sold at wholesale;
(3) Engine assemblies and transmission assemblies;
(4) Routine maintenance not covered under any retail customer warranty, such as fluids, filters, and belts not provided in the course of repairs;
(5) Nuts, bolts, fasteners, and similar items that do not have an individual part number;
(6) Tires; and
(7) Vehicle reconditioning.
8. If a franchisor, manufacturer, importer, or distributor furnishes a part or component to a franchisee, at no cost, to use in performing repairs under a recall, campaign service action, or warranty repair, the franchisor shall compensate the franchisee for the part or component in the same manner as warranty parts compensation under this section by compensating the franchisee at the average markup on the cost for the part or component as listed in the price schedule of the franchisor, manufacturer, importer, or distributor, less the cost for the part or component. For parts used under a recall, campaign service action, or warranty repair for trucks with a licensed gross weight of eighteen thousand pounds or more, compensation shall be determined as set forth in subsection 2 of this section, less the cost for the part or component.
9. A franchisor shall not require a franchisee to establish the retail rate customarily charged by the franchisee for parts, service, or 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 franchisee shall not request a franchisor to approve a different labor rate or parts rate more than twice in one calendar year.
10. If a franchisee submits any claim under this section to a franchisor that is incomplete, inaccurate, or lacking any information usually required by the franchisor, then the franchisor shall promptly notify the franchisee, and the time limit to submit the claim shall be extended for a reasonable length of time, not less than five business days following notice by the franchisor to the franchisee, for the franchisee to provide the complete, accurate, or lacking information to the franchisor.
11. (1) A franchisor may only audit warranty, sales, or incentive claims and charge-back to the franchisee unsubstantiated claims for a period of twelve months following payment, subject to all of the provisions of this section. Furthermore, if the franchisor has good cause to believe that a franchisee has submitted fraudulent claims, then the franchisor may only audit suspected fraudulent warranty, sales, or incentive claims and charge-back to the franchisee fraudulent claims for a period of two years following payment, subject to all provisions of this section.
(2) A franchisor shall not require documentation for warranty, sales, or incentive claims more than twelve months after the claim was paid.
(3) Prior to requiring any charge-back, reimbursement, or credit against a future transaction arising out of an audit, the franchisor shall submit written notice to the franchisee along with a copy of its audit and the detailed reason for each intended charge-back, reimbursement, or credit. A franchisee may file a complaint with the administrative hearing commission within thirty days after receipt of any such written notice challenging such action. If a complaint is filed within the thirty days, then the charge-back, reimbursement, or credit shall be stayed pending a hearing and determination of the matter under section 407.822. If the administrative hearing commission determines that any portion of the charge-back, reimbursement, or credit is improper, then that portion of the charge-back, reimbursement, or credit shall be void and not allowed.
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