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First Substitute S.B. 42

Senator Dan R. Eastman proposes the following substitute bill:





Sponsor: Dan R. Eastman

             6      This act amends the New Automobile Franchise Act. The act prohibits a franchisor from
             7      discriminating against a franchisee by direct and indirect pricing differences, conditioning
             8      franchisee benefits on loan acceptance from the franchisor, or providing lead information
             9      to one franchisee of a prospective customer located in the market area of another franchisee.
             10      The act adds and amends definitions. The act clarifies the compensation structure for
             11      advisory board members. This act makes technical changes.
             12      This act affects sections of Utah Code Annotated 1953 as follows:
             13      AMENDS:
             14          13-14-102, as last amended by Chapter 86, Laws of Utah 2000
             15          13-14-103, as last amended by Chapter 158, Laws of Utah 2001
             16          13-14-201, as last amended by Chapter 330, Laws of Utah 2000
             17          13-14-203, as enacted by Chapter 277, Laws of Utah 1996
             18      Be it enacted by the Legislature of the state of Utah:
             19          Section 1. Section 13-14-102 is amended to read:
             20           13-14-102. Definitions.
             21          As used in this chapter:
             22          (1) "Affiliate" has the meaning set forth in Section 16-10a-102 .
             23          [(1)] (2) "Board" means the Utah Motor Vehicle Franchise Advisory Board created in
             24      Section 13-14-103 .
             25          [(2)] (3) "Dealership" means a site or location in this state:

             26          (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
             27          (b) that is identified as a new motor vehicle dealer's principal place of business for
             28      licensing purposes under Section 41-3-204 .
             29          [(3)] (4) "Department" means the Department of Commerce.
             30          [(4)] (5) "Executive director" means the executive director of the Department of
             31      Commerce.
             32          [(5)] (6) "Franchise" or "franchise agreement" means a written agreement, for a definite
             33      or indefinite period, in which:
             34          (a) a person grants to another person a license to use a trade name, trademark, service
             35      mark, or related characteristic; and
             36          (b) a community of interest exists in the marketing of new motor vehicles, new motor
             37      vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or retail.
             38          [(6)] (7) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
             39      writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
             40      produced, represented, or distributed by the franchisor.
             41          [(7)] (8) "Franchisor" means a person who has, in writing or in practice, agreed with or
             42      permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
             43      produced, represented, or distributed by the franchisor, and includes:
             44          (a) the manufacturer or distributor of the new motor vehicles;
             45          (b) an intermediate distributor; and
             46          (c) an agent, officer, or field or area representative of the franchisor.
             47          (9) "Lead" means the referral by a franchisor to a franchisee of a potential customer whose
             48      contact information was obtained from a franchisor's program, process, or system designed to
             49      generate referrals for the purchase or lease of a new motor vehicle, or for service work related to
             50      the franchisor's vehicles.
             51          [(8)] (10) "Line-make" means the motor vehicles that are offered for sale, lease, or
             52      distribution under a common name, trademark, service mark, or brand name of the franchisor, or
             53      manufacturer of the motor vehicle.
             54          (11) "Mile" means 5,280 feet.
             55          [(9)] (12) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
             56      dwelling for travel, recreational, or vacation use.

             57          [(10)] (13) "Motor vehicle" means:
             58          (a) a travel trailer;
             59          (b) a motor vehicle as defined in Section 41-3-102 ;
             60          (c) a semitrailer as defined in Section 41-1a-102 ;
             61          (d) a trailer as defined in Section 41-1a-102 ; and
             62          (e) a recreational vehicle.
             63          [(11)] (14) "New motor vehicle" has the same meaning as defined in Section 41-3-102 .
             64          [(12)] (15) "New motor vehicle dealer" is a person who is licensed under Subsection
             65      41-3-202 (1)(a).
             66          [(13)] (16) "Notice" or "notify" includes both traditional written communications and all
             67      reliable forms of electronic communication unless expressly prohibited by statute or rule.
             68          [(14)] (17) "Recreational vehicle" means a vehicular unit other than a mobile home,
             69      primarily designed as a temporary dwelling for travel, recreational, or vacation use, which is either
             70      self-propelled or pulled by another vehicle. "Recreational vehicle" includes a travel trailer, a
             71      camping trailer, a motor home, a fifth wheel trailer, and a van.
             72          [(15)] (18) (a) "Relevant market area," except with respect to recreational vehicles, means:
             73          (i) the county in which a dealership is to be established or relocated; and
             74          (ii) the area within a [ten aeronautical miles] ten-mile radius from the site of the new or
             75      relocated dealership.
             76          (b) "Relevant market area," with respect to recreational vehicles, means:
             77          (i) the county in which the dealership is to be established or relocated; and
             78          (ii) the area within a [35 aeronautical miles] 35-mile radius from the site of the new or
             79      relocated dealership.
             80          [(16)] (19) "Sale, transfer, or assignment" means any disposition of a franchise or an
             81      interest in a franchise, with or without consideration, including a bequest, inheritance, gift,
             82      exchange, lease, or license.
             83          [(17)] (20) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
             84      includes any reliable form of communication.
             85          [(18)] (21) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable
             86      vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
             87      vacation use that does not require a special highway movement permit when drawn by a

             88      self-propelled motor vehicle.
             89          [(19)] (22) "Written," "write," "in writing," or other variations of those terms shall include
             90      all reliable forms of electronic communication.
             91          Section 2. Section 13-14-103 is amended to read:
             92           13-14-103. Utah Motor Vehicle Franchise Advisory Board -- Creation --
             93      Appointment of members -- Alternate members -- Chair -- Quorum -- Conflict of interest.
             94          (1) There is created within the department the Utah Motor Vehicle Franchise Advisory
             95      Board that consists of:
             96          (a) the executive director or the executive director's designee;
             97          (b) six members appointed by the executive director, with the concurrence of the governor
             98      as follows:
             99          (i) one motorcycle or recreational motor vehicle franchisee;
             100          (ii) two new motor vehicle franchisees from among the three congressional districts of the
             101      state as the districts were constituted on January 1, 1996, no more than one of which shall be
             102      located in the same congressional district;
             103          (iii) three members representing motor vehicle franchisors registered by the department
             104      pursuant to Section 13-14-105 , or three members of the general public, none of whom shall be
             105      related to any franchisee, or any combination of these representatives under this Subsection
             106      (1)(b)(iii); and
             107          (iv) three alternate members, with one alternate from each of the designations set forth in
             108      Subsections (1)(b)(i), (1)(b)(ii), and (1)(b)(iii), who shall take the place of a regular advisory board
             109      member from the same designation at a meeting of the advisory board where that regular advisory
             110      board member is absent or otherwise disqualified from participating in the advisory board meeting.
             111          (2) (a) Members of the advisory board shall be appointed for a term of four years.
             112          (b) The executive director may adjust the term of members who were appointed to the
             113      advisory board prior to July 1, 2001, by extending the unexpired term of a member for up to two
             114      additional years in order to insure that approximately half of the members are appointed every two
             115      years.
             116          (c) In the event of a vacancy on the advisory board, the executive director with the
             117      concurrence of the governor, shall appoint an individual to complete the unexpired term of the
             118      member whose office is vacant.

             119          (d) A member may not be appointed to more than two consecutive terms.
             120          (3) (a) The executive director or the executive director's designee shall be the chair of the
             121      advisory board.
             122          (b) The department shall keep a record of all hearings, proceedings, transactions,
             123      communications, and recommendations of the advisory board.
             124          (4) Four or more members of the advisory board constitute a quorum for the transaction
             125      of business. The action of a majority of the members of the advisory board is considered the action
             126      of the advisory board.
             127          (5) (a) A member of the advisory board may not participate as a board member in a
             128      proceeding or hearing:
             129          (i) involving the member's licensed business or employer; or
             130          (ii) when a member, a member's business or family, or employer has a pecuniary interest
             131      in the outcome or other conflict of interest concerning an issue before the advisory board.
             132          (b) If a member of the advisory board is disqualified under Subsection (5)(a), the executive
             133      director shall select the appropriate alternate member to act on the issue before the advisory board
             134      as provided in Subsection (1)(b)(iv).
             135          (6) Except for the executive director or the executive director's designee, an individual may
             136      not be appointed or serve on the advisory board while holding any other elective or appointive state
             137      or federal office.
             138          [(7) The members of the advisory board shall serve without compensation.]
             139          (7) (a) (i) A member of the advisory board who is not a government employee shall receive
             140      no compensation or benefits for the member's services, but may receive per diem and expenses
             141      incurred in the performance of the member's official duties at the rates established by the Division
             142      of Finance under Sections 63A-3-106 and 63A-3-107 .
             143          (ii) A member may decline to receive per diem and expenses for the member's services.
             144          (b) (i) A state government officer and employee member who does not receive salary, per
             145      diem, or expense from the member's agency for the member's service may receive per diem and
             146      expenses incurred in the performance of the member's official duties at the rates established by the
             147      Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             148          (ii) A state government officer and employee member may decline to receive per diem and
             149      expenses for the member's service.

             150          (8) The department shall provide necessary staff support to the advisory board.
             151          Section 3. Section 13-14-201 is amended to read:
             152           13-14-201. Prohibited acts by franchisors -- Disclosures.
             153          (1) A franchisor may not in this state:
             154          (a) except as provided in Subsection (3), require a franchisee to order or accept delivery
             155      of any new motor vehicle, part, accessory, equipment, or other item not otherwise required by law
             156      that is not voluntarily ordered by the franchisee;
             157          (b) require a franchisee to participate monetarily in any advertising campaign or contest,
             158      or purchase any promotional materials, display devices, or display decorations or materials;
             159          (c) require a franchisee to change the capital structure of the franchisee's dealership or the
             160      means by or through which the franchisee finances the operation of the franchisee's dealership, if
             161      the dealership at all times meets reasonable capital standards determined by and applied in a
             162      nondiscriminatory manner by the franchisor;
             163          (d) require a franchisee to refrain from participating in the management of, investment in,
             164      or acquisition of any other line of new motor vehicles or related products, if:
             165          (i) the franchisee maintains a reasonable line of credit for each make or line of vehicles;
             166      and
             167          (ii) complies with reasonable capital and facilities requirements of the franchisor;
             168          (e) require a franchisee to prospectively agree to a release, assignment, novation, waiver,
             169      or estoppel that would:
             170          (i) relieve a franchisor from any liability imposed by this chapter; or
             171          (ii) require any controversy between the franchisee and a franchisor to be referred to a third
             172      party if the decision by the third party would be binding;
             173          (f) require a franchisee to change the location of the principal place of business of the
             174      franchisee's dealership or make any substantial alterations to the dealership premises, if the change
             175      or alterations would be unreasonable;
             176          (g) coerce or attempt to coerce a franchisee to join, contribute to, or affiliate with an
             177      advertising association;
             178          (h) require, coerce, or attempt to coerce a franchisee to enter into an agreement with the
             179      franchisor or do any other act that is unfair or prejudicial to the franchisee, by threatening to cancel
             180      a franchise agreement or other contractual agreement or understanding existing between the

             181      franchisor and franchisee;
             182          (i) adopt, change, establish, modify, or implement a plan or system for the allocation,
             183      scheduling, or delivery of new motor vehicles, parts, or accessories to its franchisees so that the
             184      plan or system is not fair, reasonable, and equitable;
             185          (j) increase the price of any new motor vehicle that the franchisee has ordered from the
             186      franchisor and for which there exists at the time of the order a bona fide sale to a retail purchaser
             187      if the order was made prior to the franchisee's receipt of an official written price increase
             188      notification;
             189          (k) fail to indemnify and hold harmless its franchisee against any judgment for damages
             190      or settlement approved in writing by the franchisor:
             191          (i) including court costs and attorneys' fees arising out of actions, claims, or proceedings
             192      including those based on:
             193          (A) strict liability;
             194          (B) negligence;
             195          (C) misrepresentation;
             196          (D) express or implied warranty;
             197          (E) revocation as described in Section 70A-2-608 ; or
             198          (F) rejection as described in Section 70A-2-602 ; and
             199          (ii) to the extent the judgment or settlement relates to alleged defective or negligent actions
             200      by the franchisor;
             201          (l) threaten or coerce a franchisee to waive or forbear its right to protest the establishment
             202      or relocation of a same line-make franchisee in the relevant market area of the affected franchisee;
             203          (m) fail to ship monthly to a franchisee, if ordered by the franchisee, the number of new
             204      motor vehicles of each make, series, and model needed by the franchisee to achieve a percentage
             205      of total new vehicle sales of each make, series, and model equitably related to the total new vehicle
             206      production or importation being achieved nationally at the time of the order by each make, series,
             207      and model covered under the franchise agreement;
             208          (n) require or otherwise coerce a franchisee to under-utilize the franchisee's existing
             209      facilities;
             210          (o) fail to include in any franchise agreement the following language or language to the
             211      effect that: "If any provision in this agreement contravenes the laws or regulations of any state or

             212      other jurisdiction where this agreement is to be performed, or provided for by such laws or
             213      regulations, the provision is considered to be modified to conform to such laws or regulations, and
             214      all other terms and provisions shall remain in full force.";
             215          (p) engage in the distribution, sale, offer for sale, or lease of a new motor vehicle to
             216      purchasers who acquire the vehicle in this state except through a franchisee with whom the
             217      franchisor has established a written franchise agreement, if the franchisor's trade name, trademark,
             218      service mark, or related characteristic is an integral element in the distribution, sale, offer for sale,
             219      or lease;
             220          (q) engage in the distribution or sale of a recreational vehicle which is manufactured,
             221      rented, sold, or offered for sale in this state without being constructed in accordance with the
             222      standards set by the American National Standards Institute for recreational vehicles and evidenced
             223      by a seal or plate attached to the vehicle;
             224          (r) except as provided in Subsection (2), authorize or permit a person to perform warranty
             225      service repairs on motor vehicles, except warranty service repairs:
             226          (i) by a franchisee with whom the franchisor has entered into a franchise agreement for the
             227      sale and service of the franchisor's motor vehicles; or
             228          (ii) on owned motor vehicles by a person or government entity who has purchased new
             229      motor vehicles pursuant to a franchisor's or manufacturer's fleet discount program;
             230          (s) fail to provide a franchisee with a written franchise agreement;
             231          (t) notwithstanding any other provisions of this chapter, unreasonably fail or refuse to offer
             232      to its same line-make franchised dealers all models manufactured for that line-make, or
             233      unreasonably require a dealer to pay any extra fee, remodel, renovate, recondition the dealer's
             234      existing facilities, or purchase unreasonable advertising displays or other materials as a prerequisite
             235      to receiving a model or series of vehicles, except that a recreational vehicle manufacturer may split
             236      a line-make between motor home and travel trailer products;
             237          (u) except as provided in Subsection (6), directly or indirectly:
             238          (i) own an interest in a new motor vehicle dealer or dealership;
             239          (ii) operate or control a new motor vehicle dealer or dealership;
             240          (iii) act in the capacity of a new motor vehicle dealer, as defined in Section 13-14-102 ; or
             241          (iv) operate a motor vehicle service facility;
             242          (v) fail to timely pay for all reimbursements to a franchisee for incentives and other

             243      payments made by the franchisor;
             244          (w) directly or indirectly influence or direct potential customers to franchisees in an
             245      inequitable manner, including:
             246          (i) charging a franchisee a fee for a referral regarding a potential sale or lease of any of the
             247      franchisee's products or services in an amount exceeding the actual cost of the referral;
             248          (ii) giving a customer referral to a franchisee on the condition that the franchisee agree to
             249      sell the vehicle at a price fixed by the franchisor; or
             250          (iii) advising a potential customer as to the amount that the potential customer should pay
             251      for a particular product;
             252          (x) fail to provide comparable delivery terms to each franchisee for a product of the
             253      franchisor, including the time of delivery after the placement of an order by the franchisee;
             254          (y) if personnel training is provided by the franchisor to its franchisees, unreasonably fail
             255      to make that training available to each franchisee on proportionally equal terms;
             256          (z) condition a franchisee's eligibility to participate in a sales incentive program on the
             257      requirement that a franchisee use the financing services of the franchisor or a subsidiary or affiliate
             258      of the franchisor for inventory financing;
             259          (aa) make available for public disclosure, except with the franchisee's permission or under
             260      subpoena or in any administrative or judicial proceeding in which the franchisee or the franchisor
             261      is a party, any confidential financial information regarding a franchisee, including:
             262          (i) monthly financial statements provided by the franchisee;
             263          (ii) the profitability of a franchisee; or
             264          (iii) the status of a franchisee's inventory of products;
             265          (bb) use any performance standard, incentive program, or similar method to measure the
             266      performance of franchisees unless the standard or program:
             267          (i) is designed and administered in a fair, reasonable, and equitable manner;
             268          (ii) if based upon a survey, utilizes an actuarially generally acceptable, valid sample; and
             269          (iii) is, upon request by a franchisee, disclosed and explained in writing to the franchisee,
             270      including how the standard or program is designed, how it will be administered, and the types of
             271      data that will be collected and used in its application;
             272          (cc) other than sales to the federal government, directly or indirectly, sell, lease, offer to
             273      sell, or offer to lease, a new motor vehicle or any motor vehicle owned by the franchisor, except

             274      through a franchised new motor vehicle dealer;
             275          (dd) compel a franchisee, through a finance subsidiary, to agree to unreasonable operating
             276      requirements, except that this Subsection (1)(dd) shall not be construed to limit the right of a
             277      financing subsidiary to engage in business practices in accordance with the usage of trade in retail
             278      and wholesale motor vehicle financing; [or]
             279          (ee) condition the franchisor's participation in co-op advertising for a product category on
             280      the franchisee's participation in any program related to another product category or on the
             281      franchisee's achievement of any level of sales in a product category other than that which is the
             282      subject of the co-op advertising[.];
             283          (ff) discriminate against a franchisee in the state in favor of another franchisee of the same
             284      line-make in the state by:
             285          (i) selling or offering to sell a new motor vehicle to one franchisee at a higher actual price,
             286      including the price for vehicle transportation, than the actual price at which the same model
             287      similarly equipped is offered to or is made available by the franchisor to another franchisee in the
             288      state during a similar time period;
             289          (ii) except as provided in Subsection (8), using a promotional program or device or an
             290      incentive, payment, or other benefit, whether paid at the time of the sale of the new motor vehicle
             291      to the franchisee or later, that results in the sale of or offer to sell a new motor vehicle to one
             292      franchisee in the state at a higher price, including the price for vehicle transportation, than the price
             293      at which the same model similarly equipped is offered or is made available by the franchisor to
             294      another franchisee in the state during a similar time period; or
             295          (iii) except as provided in Subsection (9), failing to provide or direct a lead in a fair,
             296      equitable, and timely manner; or
             297          (gg) through an affiliate, take any action that would otherwise be prohibited under this
             298      chapter.
             299          (2) Notwithstanding Subsection (1)(r), a franchisor may authorize or permit a person to
             300      perform warranty service repairs on motor vehicles if the warranty services is for a franchisor of
             301      recreational vehicles.
             302          (3) Subsection (1)(a) does not prevent the franchisor from requiring that a franchisee carry
             303      a reasonable inventory of:
             304          (a) new motor vehicle models offered for sale by the franchisor; and

             305          (b) parts to service the repair of the new motor vehicles.
             306          (4) Subsection (1)(d) does not prevent a franchisor from:
             307          (a) requiring that a franchisee maintain separate sales personnel or display space; or
             308          (b) refusing to permit a combination of new motor vehicle lines, if justified by reasonable
             309      business considerations.
             310          (5) Upon the written request of any franchisee, a franchisor shall disclose in writing to the
             311      franchisee the basis on which new motor vehicles, parts, and accessories are allocated, scheduled,
             312      and delivered among the franchisor's dealers of the same line-make.
             313          (6) (a) A franchisor may engage in any of the activities listed in Subsection (1)(u), for a
             314      period not to exceed 12 months if:
             315          (i) (A) the person from whom the franchisor acquired the interest in or control of the new
             316      motor vehicle dealership was a franchised new motor vehicle dealer; and
             317          (B) the franchisor's interest in the new motor vehicle dealership is for sale at a reasonable
             318      price and on reasonable terms and conditions; or
             319          (ii) the franchisor is engaging in the activity listed in Subsection (1)(u) for the purpose of
             320      broadening the diversity of its dealer body and facilitating the ownership of a new motor vehicle
             321      dealership by a person who:
             322          (A) is part of a group that has been historically underrepresented in the franchisor's dealer
             323      body;
             324          (B) would not otherwise be able to purchase a new motor vehicle dealership;
             325          (C) has made a significant investment in the new motor vehicle dealership which is subject
             326      to loss;
             327          (D) has an ownership interest in the new motor vehicle dealership; and
             328          (E) operates the new motor vehicle dealership under a plan to acquire full ownership of
             329      the dealership within a reasonable period of time and under reasonable terms and conditions.
             330          (b) The board may, for good cause shown, extend the time limit set forth in Subsection
             331      (6)(a) for an additional period not to exceed 12 months.
             332          (c) A franchisor who was engaged in any of the activities listed in Subsection (1)(u) in this
             333      state prior to May 1, 2000, may continue to engage in that activity, but shall not expand that
             334      activity to acquire an interest in any other new motor vehicle dealerships or motor vehicle service
             335      facilities after May 1, 2000.

             336          (d) Notwithstanding the provisions of Subsection (1)(u), a franchisor may own, operate,
             337      or control a new motor vehicle dealership trading in a line-make of motor vehicle if:
             338          (i) as to that line-make of motor vehicle, there are no more than four franchised new motor
             339      vehicle dealerships licensed and in operation within the state as of January 1, 2000;
             340          (ii) the franchisor does not own directly or indirectly, more than a 45% interest in the
             341      dealership;
             342          (iii) at the time the franchisor first acquires ownership or assumes operation or control of
             343      the dealership, the distance between the dealership thus owned, operated, or controlled and the
             344      nearest unaffiliated new motor vehicle dealership trading in the same line-make is not less than
             345      150 miles;
             346          (iv) all the franchisor's franchise agreements confer rights on the franchisee to develop and
             347      operate as many dealership facilities as the franchisee and franchisor shall agree are appropriate
             348      within a defined geographic territory or area; and
             349          (v) as of January 1, 2000, no fewer than half of the franchisees of the line-make within the
             350      state own and operate two or more dealership facilities in the geographic area covered by the
             351      franchise agreement.
             352          (7) Subsection (1)(ff) does not apply to recreational vehicles.
             353          (8) Subsection (1)(ff)(ii) does not prohibit a promotional or incentive program that is
             354      functionally available to all competing franchisees of the same line-make in the state on
             355      substantially comparable terms.
             356          (9) Subsection (1)(ff)(iii) may not be construed to:
             357          (a) permit provision of or access to customer information that is otherwise protected from
             358      disclosure by law or by contract between a franchisor and a franchisee; or
             359          (b) require a franchisor to disregard the preference volunteered by a potential customer in
             360      providing or directing a lead.
             361          (10) Subsection (1)(gg) does not limit the right of an affiliate to engage in business
             362      practices in accordance with the usage of trade in which the affiliate is engaged.
             363          Section 4. Section 13-14-203 is amended to read:
             364           13-14-203. Succession to franchise.
             365          (1) (a) A successor, including a family member of a deceased or incapacitated franchisee,
             366      who is designated by the franchisee may succeed the franchisee in the ownership and operation of

             367      the dealership under the existing franchise agreement if:
             368          (i) the designated successor gives the franchisor written notice of an intent to succeed to
             369      the rights of the deceased or incapacitated franchisee in the franchise agreement within 180 days
             370      after the franchisee's death or incapacity;
             371          (ii) the designated successor agrees to be bound by all of the terms and conditions of the
             372      franchise agreement; and
             373          (iii) the designated successor meets the criteria generally applied by the franchisor in
             374      qualifying franchisees.
             375          (b) A franchisor may refuse to honor the existing franchise agreement with the designated
             376      successor only for good cause.
             377          (2) The franchisor may request in writing from a designated successor the personal and
             378      financial data that is reasonably necessary to determine whether the existing franchise agreement
             379      should be honored. The designated successor shall supply the personal and financial data promptly
             380      upon the request.
             381          (3) (a) If a franchisor believes that good cause exists for refusing to honor the requested
             382      succession, the franchisor shall serve upon the designated successor notice of its refusal to approve
             383      the succession, within 60 days after the later of:
             384          (i) receipt of the notice of the designated successor's intent to succeed the franchisee in the
             385      ownership and operation of the dealership; or
             386          (ii) the receipt of the requested personal and financial data.
             387          (b) Failure to serve the notice pursuant to Subsection (3)(a) is considered approval of the
             388      designated successor and the franchise agreement is considered amended to reflect the approval
             389      of the succession the day following the last day the franchisor can serve notice under Subsection
             390      (3)(a).
             391          (4) The notice of the franchisor provided in Subsection (3) shall state the specific grounds
             392      for the refusal to approve the succession and that discontinuance of the franchise agreement shall
             393      take effect not less than 180 days after the date the notice of refusal is served unless the proposed
             394      successor files an application for hearing under Subsection (6).
             395          (5) (a) This section does not prevent a franchisee from designating a person as the
             396      successor by written instrument filed with the franchisor.
             397          (b) If a franchisee files an instrument under Subsection (5)[(b)](a), the instrument governs

             398      the succession rights to the management and operation of the dealership subject to the designated
             399      successor satisfying the franchisor's qualification requirements as described in this section.
             400          (6) (a) If a franchisor serves a notice of refusal to a designated successor pursuant to
             401      Subsection (3), the designated successor may, within the 180-day period provided in Subsection
             402      (4), file with the board an application for a hearing to determine whether or not good cause exists
             403      for the refusal.
             404          (b) If application for a hearing is timely filed, the franchisor shall continue to honor the
             405      franchise agreement until after:
             406          (i) the requested hearing has been concluded;
             407          (ii) a decision is rendered by the board; and
             408          (iii) the applicable appeal period has expired following a decision by the board.

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