GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2017
H 2
HOUSE BILL 619
Committee Substitute Favorable 4/19/17
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Short Title: Clarify Motor Vehicle Dealer Laws. |
(Public) |
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Sponsors: |
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Referred to: |
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April 10, 2017
A BILL TO BE ENTITLED
AN ACT to clarify motor vehicle dealers and manufacturers licensing laws.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 20‑288(a1)(2) reads as rewritten:
"(2) Proof that the
applicant, within the last 12 months, has completed a 12‑hour licensing
course approved by the Division if the applicant is seeking an initial license
and a six‑hour course approved by the Division if the applicant is
seeking a renewal license. The requirements of this subdivision do not apply to
a used motor vehicle dealer the primary business of which is the sale of
salvage vehicles on behalf of insurers or to a manufactured home dealer
licensed under G.S. 143‑143.11 who complies with the continuing
education requirements of G.S. 143‑143.11B. The requirement of this
subdivision does not apply to persons age 62 or older as of July 1, 2002, who
are seeking a renewal license. This subdivision also does not apply to an
applicant who holds a license as a new motor vehicle dealer as defined in G.S. 20‑286(13)
and operates from an established showroom 20 miles or less fromlocated
in an area within a radius of 30 miles around the location of the
established showroom for which the applicant seeks a used motor vehicle dealer
license. An applicant who also holds a license as a new motor vehicle dealer
may designate a representative to complete the licensing course required by
this subdivision."
SECTION 2. G.S. 20‑305 is amended by adding a new subdivision to read:
"(50) To require, coerce, or attempt to coerce any new motor vehicle dealer located in this State to change location of its dealership, or to make any substantial alterations to its dealership premises or facilities, if the dealer (i) has changed the location of its dealership or made substantial alterations to its dealership premises or facilities within the preceding 10 years at a cost of more than one hundred thousand dollars ($100,000) over this 10‑year period and (ii) the change in location or alteration was made at the request of, or with the knowledge, acquiescence, or approval of, the manufacturer, factory branch, distributor, or distributor branch. For any dealer that did not change the location of its dealership or make substantial alterations to its dealership premises or facilities within the preceding 10 years at a cost of more than one hundred thousand dollars ($100,000), the dealer's obligation to change location of its dealership, or to make any substantial alteration to its dealership premises or facilities, at the request of a manufacturer, factory branch, distributor, or distributor branch, or to satisfy a requirement or condition of an incentive program sponsored by a manufacturer, factory branch, distributor, or distributor branch, shall be governed by the applicable provisions of subdivisions (4), (11), (12), (25), (30), (32), and (42) of this section."
SECTION 3. G.S. 20‑305.1 reads as rewritten:
"§ 20‑305.1. Automobile dealer warranty and recall obligations.
(a) Each motor vehicle
manufacturer, factory branch, distributor or distributor branch, shall specify
in writing to each of its motor vehicle dealers licensed in this State the
dealer's obligations for preparation, delivery and warrantydelivery,
warranty, and recall service on its products, including any service
performed under a maintenance plan, extended warranty, certified pre‑owned
warranty, or service contract issued by or through the manufacturer, factory
branch, distributor, distributor branch, or any person or entity contracted or
otherwise affiliated with the manufacturer, factory branch, distributor, or
distributor branch. The disclosure required under this subsection shall include
the schedule of compensation to be paid suchthe dealers for
parts, work, and service in connection with warrantypreparation,
delivery, warranty, and recall service, and any services performed by
the dealers under any warranty, maintenance plan, extended warranty, certified
pre‑owned warranty, or service contract issued by or through the
manufacturer, factory branch, distributor, distributor branch, or any person or
entity contracted or otherwise affiliated with the manufacturer, factory
branch, distributor, or distributor branch, and the time allowances for the
performance of suchthe work and service. In no event shall suchthe
schedule of compensation fail to include reasonable compensation for diagnostic
work and associated administrative requirements as well as repair service and
labor. Time allowances for the performance of warrantypreparation,
delivery, warranty, and recall work and serviceservice, and any
services performed by the dealers under any warranty, maintenance plan,
extended warranty, certified pre‑owned warranty, or service contract
issued by or through the manufacturer, factory branch, distributor, distributor
branch, or any person or entity contracted or otherwise affiliated with the
manufacturer, factory branch, distributor, or distributor branch, shall be
reasonable and adequate for the work to be performed. The compensation which
must be paid under this section mustshall be reasonable,
provided, however, that under no circumstances mayshall the
reasonable compensation under this section be in an amount less than the
dealer's current retail labor rate and the amount charged to retail customers
for the manufacturer's or distributor's original parts for nonwarranty work of
like kind, provided suchthe amount is competitive with the retail
rates charged for parts and labor by other franchised dealers within the
dealer's market.
…
(a3) If a manufacturer or distributor furnishes a part or component to a dealer, at reduced or no cost, to use in performing repairs under a recall, campaign service action, or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer on the basis of the dealer's average markup on the cost for the part or component as listed in the manufacturer's or distributor's price schedule less the cost for the part or component.
…
(b) Notwithstanding the
terms of any franchise agreement, it is unlawful for any motor vehicle
manufacturer, factory branch, distributor, or distributor branch to fail to
perform any of its warranty or recall obligations with respect to a
motor vehicle, to fail to fully compensate its motor vehicle dealers licensed
in this State for warranty and recall parts other than parts used to
repair the living facilities of recreational vehicles, at the prevailing
retail rate according to the factors in subsection (a) of this section, or, in
service in accordance with the schedule of compensation provided the dealer
pursuant to subsection (a) above,of this section, or to otherwise
recover all or any portion of its costs for compensating its motor vehicle
dealers licensed in this State for warranty or recall parts and service
either by reduction in the amount due to the dealer, or by separate charge,
surcharge, or other imposition, and to fail to indemnify and hold harmless its
franchised dealers licensed in this State against any judgment for damages or
settlements agreed to by the manufacturer, including, but not limited to, court
costs and reasonable attorneys' fees of the motor vehicle dealer, arising out
of complaints, claims or lawsuits including, but not limited to, strict
liability, negligence, misrepresentation, express or implied warranty, or
recision or revocation of acceptance of the sale of a motor vehicle as defined
in G.S. 25‑2‑608, to the extent that the judgment or
settlement relates to the alleged defective negligent manufacture, assembly or
design of new motor vehicles, parts or accessories or other functions by the
manufacturer, factory branch, distributor or distributor branch, beyond the
control of the dealer. It is unlawful for any manufacturer, factory branch,
distributor, or distributor branch that manufactures or distributes
recreational vehicles to fail to fully compensate its dealers located in this
State in accordance with this section for warranty work performed by the
dealers related to all parts of the vehicle, including labor and parts used to
repair the living facilities of the vehicle and any equipment, appliances, and
other options included by the manufacturer, factory branch, distributor, or
distributor branch in the purchase price paid by the dealer. Any audit for
warranty or recall parts or service compensationcompensation,
including compensation for any service performed under any warranty,
maintenance plan, extended warranty, certified pre‑owned warranty, or
service contract issued by or through the manufacturer, factory branch,
distributor, distributor branch, or any person or entity contracted or otherwise
affiliated with the manufacturer, factory branch, distributor, or distributor
branch, shall only be for the 12‑month period immediately following
the date of the payment of the claim by the manufacturer, factory branch,
distributor, or distributor branch. Any audit for sales incentives, service
incentives, rebates, or other forms of incentive compensation shall only be for
the 12‑month period immediately following the date of the payment of the
claim by the manufacturer, factory branch, distributor, or distributor branch
pursuant to a sales incentives program, service incentives program, rebate
program, or other form of incentive compensation program. Provided, however,
these limitations shall not be effective in the case of fraudulent claims.
…
(c) In the event there is a
dispute between the manufacturer, factory branch, distributor, or distributor
branch, and the dealer with respect to any matter referred to in subsection
(a), (b), (b1), (b2), (b3), or (d) of this section, either party may petition the
Commissioner in writing, within 30 days after either party has given written
notice of the dispute to the other, for a hearing on the subject and the
decision of the Commissioner shall be binding on the parties, subject to rights
of judicial review and appeal as provided in Chapter 150B of the General
Statutes; provided, however, that nothing contained herein shall give the
Commissioner any authority as to the content of any manufacturer's or
distributor's warranty. Upon the filing of a petition before the Commissioner
under this subsection, any chargeback to or any payment required of a dealer by
a manufacturer relating to warranty or recall parts or service
compensation, including compensation paid to a dealer for any services
performed under any warranty, maintenance plan, extended warranty, certified
pre‑owned warranty, or service contract issued by or through the
manufacturer, factory branch, distributor, distributor branch, or any person or
entity contracted or otherwise affiliated with the manufacturer, factory
branch, distributor, or distributor branch, or to sales incentives, service
incentives, rebates, other forms of incentive compensation, or the withholding
or chargeback of other compensation or support that a dealer would otherwise be
eligible to receivereceive, shall be stayed during the pendency
of the determination by the Commissioner.
…
(h) Right to Return
Unnecessary Parts or Accessories. – Notwithstanding the terms of any
franchise agreement, it is unlawful for any motor vehicle manufacturer, factory
branch, distributor, or distributor branch to deny a franchised new motor
vehicle dealer the right to return any part or accessory that the dealer has
not sold after 15 months where the part or accessory was not obtained through a
specific order initiated by the franchised new motor vehicle dealerdealer,
but instead was specified for, sold to, and shipped to the dealer pursuant to
an automated ordering system, provided that suchthe part or
accessory is in the condition required for return to the manufacturer, factory
branch, distributor, or distributor branch and the dealer returns the part
within 60 days of it becoming eligible under this subsection. For purposes of
this subsection, an "automated ordering system" shall be a
computerized system required by the manufacturer that automatically specifies
parts and accessories for sale and shipment to the dealer without specific
order thereof initiated by the dealer. The manufacturer, factory branch,
distributor, or distributor branch shall not charge a restocking or handling
fee for any part or accessory being returned under this subsection."
SECTION 4. G.S. 20‑305.5 reads as rewritten:
"§ 20‑305.5. Sections 20‑305, subdivisions (4)
through (28), and 20‑305.120‑305.2 to 20‑305.4
not applicable to certain manufacturers and dealers.
The provisions of G.S. 20‑305(4)
through G.S. 20‑305(28) and 20‑305.120‑305.2
to 20‑305.4 shall not apply to manufacturers of, or dealers in, mobile or
manufactured type housing or recreational trailers."
SECTION 5. G.S. 20‑305.2 reads as rewritten:
"§ 20‑305.2. Unfair methods of competition.
…
(b) Subsection (a) of this section does not apply to manufacturers or distributors of trailers or semitrailers that are not recreational vehicles as defined in G.S. 20‑4.01.
(b1) It is unlawful for any motor vehicle manufacturer, factory branch, distributor, or distributor branch that has any franchised motor vehicles dealers in this State to, directly or indirectly, or through any parent, subsidiary, affiliate, or other related entity, own any ownership interest in, operate, or control any entity in this State that leases or rents motor vehicles to the general public in competition with any of its franchised dealers located in this State.
…."
SECTION 6. G.S. 20‑305.7(b) reads as rewritten:
"(b) No manufacturer,
factory branch, distributor, distributor branch, dealer management computer
system vendor, or any third party acting on behalf of any manufacturer, factory
branch, distributor, distributor branch, or dealer management computer system
vendor may access or utilize customer or prospect information maintained in a
dealer management computer system utilized by a motor vehicle dealer located in
this State for purposes of soliciting any such customer or prospect on behalf
of, or directing such customer or prospect to, any other dealer. The
limitations in this subsection do not apply to:to any of the
following:
(1) A customer that requests
a reference to another dealership;dealership.
(2) A customer that moves
more than 60 miles away from the dealer whose data was accessed;accessed.
(3) Customer or prospect
information that was provided to the dealer by the manufacturer, factory
branch, distributor, or distributor branch; orbranch.
…
No manufacturer, factory branch,
distributor, distributor branch, dealer management computer system vendor, or
any third party acting on behalf of any manufacturer, factory branch,
distributor, distributor branch, or dealer management computer system vendor,
may provide access to customer or dealership information maintained in a dealer
management computer system utilized by a motor vehicle dealer located in this
State, without first obtaining the dealer's prior express written consent,
revocable by the dealer upon five business days written notice, to provide such
access. Prior to obtaining said consent and prior to entering into an initial
contract or renewal of a contract with a dealer located in this State, the
manufacturer, factory branch, distributor, distributor branch, dealer
management computer system vendor, or any third party acting on behalf of, or
through any manufacturer, factory branch, distributor, distributor branch, or
dealer management computer system vendor shall provide to the dealer a written
list of all specific third parties to whom any data obtained from the dealer
has actually been provided within the 12‑month period ending November 1
of the prior year. The list shall further describe the scope and specific
fields of the data provided. In addition to the initial list, a dealer
management computer system vendor or any third party acting on behalf of, or
through a dealer management computer system vendor shall provide to the dealer
an annual list of each and every third partiesparty to
whom said data is actually being provided on November 1 of each year and each
and every third party to whom said data haswas actually been
provided in the preceding 12 months and describeand, for each and
every third party identified, the list shall detail the scope and specific
fields of the data provided.provided to the third party during the 12‑month
period. Such list shall be provided to the dealer by January 1 of each
year. The lists required under this subsection of the third parties to whom
any data obtained from the dealer has actually been provided shall be specific
to each affected dealer, and it shall be insufficient and unlawful for the
provider of this information to furnish any dealer a list of third parties who
could or may have received any of the affected dealer's data, as the
information required to be provided under this subsection requires the provider
of this information to state the identity and other specified information of
each and every third party to whom the data was actually provided during the
relevant period of time. It shall be unlawful for any third party to whom any
of the dealer's data has been provided to pass on or charge the dealer any fee,
cost, or surcharge, any part of which is intended to reimburse the third party
for charges or fees paid by the third party to access the dealer's data. Any
dealer management computer system vendor's contract that directly relates to
the transfer or accessing of dealer or dealer customer information must
conspicuously state, "NOTICE TO DEALER: THIS AGREEMENT RELATES TO THE
TRANSFER AND ACCESSING OF CONFIDENTIAL INFORMATION AND CONSUMER RELATED
DATA". Such consent does not change any such person's obligations to
comply with the terms of this section and any additional State or federal laws
(and any rules or regulations promulgated thereunder) applicable to them with
respect to such access. In addition, no dealer management computer system
vendor may refuse to provide a dealer management computer system to a motor
vehicle dealer located in this State if the dealer refuses to provide any
consent under this subsection. The rights conferred under this subsection on
a motor vehicle dealer are not waivable and may not be modified by any contract
or agreement."
SECTION 7. Article 3 of Chapter 20 of the General Statutes is amended by adding a new section to read:
"§ 20‑101.3. Conspicuous disclosure of dealer shop and other service‑related fees.
(a) Requirement. – A motor vehicle dealer shall not charge shop fees in conjunction with service work performed by the dealer, or other discretionary fees relating to environmental or regulatory compliance, record retention, or other costs incurred by the dealer in conjunction with service work performed by the dealer, whether or not the fees are attributable to or include the dealer's internal overhead or profit, unless the dealer complies with both of the following requirements:
(1) The dealer shall post a conspicuous notice in the service area of the dealership measuring at least 24 inches on each side informing customers that fees regulated by this section may or will be charged and that customers should inquire of dealership personnel if they would like to know the type and amount or basis of the fees charged by the dealer.
(2) The total amount of all fees regulated by this section shall be disclosed on the customer's repair order or repair invoice. Nothing in this subdivision shall be construed as requiring a dealer to list separately each fee charged by the dealer.
(b) Discretion. – Notwithstanding any provision of law to the contrary, a dealer is not required to charge a shop or other service‑related fee regulated under this section and may reduce the amount of any or all fees charged."
SECTION 8. If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.
SECTION 9. Sections 1 through 6 of this act are effective when it becomes law and apply to all current and future franchises and other agreements in existence between any new motor vehicle dealer located in this State and a manufacturer or distributor as of the effective date of this act. Section 7 of this act becomes effective January 1, 2018, and applies to fees charged on or after that date. The remainder of this act is effective when it becomes law.