S.B. 51 Enrolled

NEW MOTOR VEHICLE FRANCHISE ACT
AMENDMENTS
2005 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Dan R. Eastman
House Sponsor: Patrick Painter

LONG TITLE
General Description:
This bill modifies the New Automobile Franchise Act.
Highlighted Provisions:
This bill:
. amends provisions relating to the Utah Motor Vehicle Franchise Advisory Board,
including:
. membership of the board;
. requirements for the transaction of business by the board; and
. powers and duties of the board;
. clarifies the powers and duties of the executive director of the Department of
Commerce and the advisory board;
. shifts numerous duties from the board to the executive director including:
. allowing the executive director to issue certain decisions after a
recommendation is received from the board; and
. allowing the executive director to make administrative rules in consultation with
the board;
. adds provisions regarding administrative hearings to Section 13-14-106;
. shifts the responsibility for notifying a franchisor of a protest to the establishment or
relocation of a franchise from the board to the department;
. clarifies that the executive director is to comply with procedures for the issuance of
formal orders mandated by Section 63-46b-10 in both formal and informal

adjudicative proceedings;
. clarifies acceptable methods of communicating certain required notices; and
. makes technical changes.
Monies Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a coordination clause.
Utah Code Sections Affected:
AMENDS:
13-14-102, as last amended by Chapter 123, Laws of Utah 2004
13-14-103, as last amended by Chapter 123, Laws of Utah 2004
13-14-104, as last amended by Chapter 162, Laws of Utah 1997
13-14-105, as last amended by Chapter 162, Laws of Utah 1997
13-14-106, as last amended by Chapter 158, Laws of Utah 2001
13-14-107, as last amended by Chapter 158, Laws of Utah 2001
13-14-201, as last amended by Chapter 68, Laws of Utah 2002
13-14-202, as enacted by Chapter 277, Laws of Utah 1996
13-14-203, as last amended by Chapter 68, Laws of Utah 2002
13-14-301, as enacted by Chapter 277, Laws of Utah 1996
13-14-302, as last amended by Chapters 123 and 187, Laws of Utah 2004
13-14-303, as enacted by Chapter 277, Laws of Utah 1996
13-14-304, as last amended by Chapter 187, Laws of Utah 2004
13-14-305, as enacted by Chapter 277, Laws of Utah 1996
13-14-306, as enacted by Chapter 277, Laws of Utah 1996

Be it enacted by the Legislature of the state of Utah:
Section 1. Section 13-14-102 is amended to read:
13-14-102. Definitions.

As used in this chapter:
[(2) "Board"] (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise
Advisory Board created in Section 13-14-103 .
[(1)] (2) "Affiliate" has the meaning set forth in Section 16-10a-102 .
(3) "Dealership" means a site or location in this state:
(a) at which a franchisee conducts the business of a new motor vehicle dealer; and
(b) that is identified as a new motor vehicle dealer's principal place of business for
licensing purposes under Section 41-3-204 .
(4) "Department" means the Department of Commerce.
(5) "Executive director" means the executive director of the Department of Commerce.
(6) "Franchise" or "franchise agreement" means a written agreement, for a definite or
indefinite period, in which:
(a) a person grants to another person a license to use a trade name, trademark, service
mark, or related characteristic; and
(b) a community of interest exists in the marketing of new motor vehicles, new motor
vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or
retail.
(7) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
produced, represented, or distributed by the franchisor.
(8) "Franchisor" means a person who has, in writing or in practice, agreed with or
permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
produced, represented, or distributed by the franchisor, and includes:
(a) the manufacturer or distributor of the new motor vehicles;
(b) an intermediate distributor; and
(c) an agent, officer, or field or area representative of the franchisor.
(9) "Lead" means the referral by a franchisor to a franchisee of a potential customer
whose contact information was obtained from a franchisor's program, process, or system

designed to generate referrals for the purchase or lease of a new motor vehicle, or for service
work related to the franchisor's vehicles.
(10) "Line-make" means the motor vehicles that are offered for sale, lease, or distribution
under a common name, trademark, service mark, or brand name of the franchisor, or
manufacturer of the motor vehicle.
(11) "Mile" means 5,280 feet.
(12) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
dwelling for travel, recreational, or vacation use.
(13) (a) "Motor vehicle" means:
(i) a travel trailer;
(ii) a motor vehicle as defined in Section 41-3-102 ;
(iii) a semitrailer as defined in Section 41-1a-102 ;
(iv) a trailer as defined in Section 41-1a-102 ; and
(v) a recreational vehicle.
(b) "Motor vehicle" does not include a motorcycle as defined in Section 41-1a-102 .
(14) "New motor vehicle" means a motor vehicle as defined in Subsection (13) that has
never been titled or registered and has been driven less than 7,500 miles, unless the motor vehicle
is a trailer, travel trailer, or semitrailer, in which case the mileage limit does not apply.
(15) "New motor vehicle dealer" is a person who is licensed under Subsection
41-3-202 (1)(a) to sell new motor vehicles.
(16) "Notice" or "notify" includes both traditional written communications and all
reliable forms of electronic communication unless expressly prohibited by statute or rule.
(17) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
primarily designed as a temporary dwelling for travel, recreational, or vacation use, [which] that
is either self-propelled or pulled by another vehicle.
(b) "Recreational vehicle" includes:
(i) a travel trailer[,];
(ii) a camping trailer[,];

(iii) a motor home[,];
(iv) a fifth wheel trailer[,]; and
(v) a van.
(18) (a) "Relevant market area," except with respect to recreational vehicles, means:
(i) the county in which a dealership is to be established or relocated; and
(ii) the area within a ten-mile radius from the site of the new or relocated dealership.
(b) "Relevant market area," with respect to recreational vehicles, means:
(i) the county in which the dealership is to be established or relocated; and
(ii) the area within a 35-mile radius from the site of the new or relocated dealership.
(19) "Sale, transfer, or assignment" means any disposition of a franchise or an interest in
a franchise, with or without consideration, including a bequest, inheritance, gift, exchange, lease,
or license.
(20) "Serve" or "served," unless expressly indicated otherwise by statute or rule, includes
any reliable form of communication.
(21) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable vehicle
without motive power, designed as a temporary dwelling for travel, recreational, or vacation use
that does not require a special highway movement permit when drawn by a self-propelled motor
vehicle.
(22) "Written," "write," "in writing," or other variations of those terms shall include all
reliable forms of electronic communication.
Section 2. Section 13-14-103 is amended to read:
13-14-103. Utah Motor Vehicle Franchise Advisory Board -- Creation --
Appointment of members -- Alternate members -- Chair -- Quorum -- Conflict of interest.
(1) There is created within the department the Utah Motor Vehicle Franchise Advisory
Board that consists of:
(a) the executive director or the executive director's designee;
(b) six members appointed by the executive director, with the concurrence of the
governor as follows:

(i) one recreational motor vehicle franchisee;
(ii) two new motor vehicle franchisees from different congressional districts in the state;
and
(iii) (A) three members representing motor vehicle franchisors registered by the
department pursuant to Section 13-14-105 [, or];
(B) three members of the general public, none of whom shall be related to any
franchisee[,]; or
(C) three members consisting of any combination of these representatives under this
Subsection (1)(b)(iii)[; and].
[(c) (i)] (2) (a) The executive director shall appoint, with the concurrence of the
governor, three alternate members, with one alternate from each of the designations set forth in
Subsections (1)(b)(i), (1)(b)(ii), and (1)(b)(iii), except that the new motor vehicle franchisee
alternate or alternates for the designation under Subsection (1)(b)(ii) may be from any
congressional district[; and].
[(ii) an] (b) An alternate [who] shall take the place of a regular advisory board member
from the same designation at a meeting of the advisory board where that regular advisory board
member is absent or otherwise disqualified from participating in the advisory board meeting.
[(2)] (3) (a) (i) Members of the advisory board appointed under Subsections (1)(b) and
(2) shall be appointed for a term of four years.
(ii) No specific term shall apply to the executive director or the executive director's
designee.
(b) The executive director may adjust the term of members who were appointed to the
advisory board prior to July 1, 2001, by extending the unexpired term of a member for up to two
additional years in order to insure that approximately half of the members are appointed every
two years.
(c) In the event of a vacancy on the advisory board of a member appointed under
Subsection (1)(b) or (2), the executive director with the concurrence of the governor, shall
appoint an individual to complete the unexpired term of the member whose office is vacant.

(d) A member may not be appointed to more than two consecutive terms.
[(3)] (4) (a) The executive director or the executive director's designee shall be the chair
of the advisory board.
(b) The department shall keep a record of all hearings, proceedings, transactions,
communications, and recommendations of the advisory board.
[(4)] (5) (a) Four or more members of the advisory board constitute a quorum for the
transaction of business.
(b) The action of a majority of [the members of the advisory board] a quorum present is
considered the action of the advisory board.
[(5)] (6) (a) A member of the advisory board may not participate as a board member in a
proceeding or hearing:
(i) involving the member's licensed business or employer; or
(ii) when a member, a member's business or family, or employer has a pecuniary interest
in the outcome or other conflict of interest concerning an issue before the advisory board.
(b) If a member of the advisory board is disqualified under Subsection [(5)] (6)(a), the
executive director shall select the appropriate alternate member to act on the issue before the
advisory board as provided in Subsection [(1)(c)] (2).
[(6)] (7) Except for the executive director or the executive director's designee, an
individual may not be appointed or serve on the advisory board while holding any other elective
or appointive state or federal office.
[(7)] (8) (a) (i) A member of the advisory board who is not a government employee shall
receive no compensation or benefits for the member's services, but may receive per diem and
expenses incurred in the performance of the member's official duties at the rates established by
the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
(ii) A member may decline to receive per diem and expenses for the member's services.
(b) (i) A state government officer and employee member who does not receive salary, per
diem, or expenses from the member's agency for the member's service may receive per diem and
expenses incurred in the performance of the member's official duties at the rates established by

the Division of Finance under Sections 63A-3-106 and 63A-3-107 .
(ii) A state government officer and employee member may decline to receive per diem
and expenses for the member's service.
[(8)] (9) The department shall provide necessary staff support to the advisory board.
Section 3. Section 13-14-104 is amended to read:
13-14-104. Powers and duties of the advisory board and the executive director.
[The advisory board has the jurisdiction to]
(1) (a) Except as provided in Subsection 13-14-106 (3), the advisory board shall make
recommendations to the executive director on the administration and enforcement of this chapter
[and shall: (1) conduct rulemaking proceedings], including adjudicative and rulemaking
proceedings.
(b) The executive director shall:
(i) consider the advisory board's recommendations; and
(ii) issue any final decision by the department.
(2) The executive director, in consultation with the advisory board, shall make rules for
the administration of this chapter in accordance with Title 63, Chapter 46a, Utah Administrative
Rulemaking Act[, concerning administrative proceedings before the advisory board; and (2)
conduct adjudicative proceedings required by].
(3) (a) An adjudicative proceeding under this chapter shall be conducted in accordance
with Title 63, Chapter 46b, Administrative Procedures Act[, for the purpose of making
recommendations to the executive director].
(b) In an adjudicative proceeding under this chapter, any order issued by the executive
director:
(i) shall comply with Section 63-46b-10 , whether the proceeding is a formal or an
informal adjudicative proceeding under Title 63, Chapter 46b, Administrative Procedures Act;
and
(ii) if the order modifies or rejects a finding of fact in a recommendation from the
advisory board, shall be made on the basis of information learned from the executive director's:

(A) personal attendance at the hearing; or
(B) review of the record developed at the hearing.
Section 4. Section 13-14-105 is amended to read:
13-14-105. Registration -- Fees.
(1) A franchisee or franchisor doing business in this state shall:
(a) annually register or renew its registration with the department in a manner established
by the department [in collaboration with the advisory board]; and
(b) pay an annual registration fee in an amount determined by the department in
accordance with Sections 13-1-2 and 63-38-3.2 .
(2) The department[, in collaboration with the advisory board,] shall register or renew the
registration of a franchisee or franchisor if the franchisee or franchisor complies with this chapter
and rules made by the department under this chapter.
(3) A franchisee or franchisor registered under this section shall comply with this chapter
and any rules made by the department under this chapter including any amendments to this
chapter or the rules made after a franchisee or franchisor enter into a franchise agreement.
(4) The fee imposed under Subsection (1)(b) shall be collected by the department and
deposited into the Commerce Service Fund.
(5) Notwithstanding Subsection (1), an agent, officer, or field or area representative of a
franchisor does not need to be registered under this section if the franchisor is registered under
this section.
Section 5. Section 13-14-106 is amended to read:
13-14-106. Administrative proceedings commenced by the agency.
(1) Except as provided in Subsection [(5)] (3), after a hearing and after receipt of the
advisory board's recommendation, if the executive director finds that a person has violated this
chapter or any rule made under this chapter, the executive director may:
(a) issue a cease and desist order; and
(b) assess an administrative fine.
[(2) Except as provided in Subsection (5), the executive director shall comply with Title

63, Chapter 46b, Administrative Procedures Act, and shall consult with the advisory board prior
to any order or assessment of fine.]
[(3)] (2) (a) In determining the amount and appropriateness of an administrative fine
under Subsection (1), the executive director shall consider:
(i) the gravity of the violation;
(ii) any history of previous violations; and
(iii) any attempt made by the person to retaliate against another person for seeking relief
under this chapter or other federal or state law relating to the motor vehicle industry.
(b) In addition to any other action permitted under Subsection (1), the department may
file an action with a court seeking to enforce the executive director's order and pursue the
executive director's assessment of a fine in an amount not to exceed $5,000 for each day a person
violates an order of the executive director.
[(4) Any person aggrieved by an adverse determination by the executive director may
either seek reconsideration of the order pursuant to Section 63-46b-13 of the Administrative
Procedures Act or seek judicial review of the order.]
[(5)] (3) (a) In addition to the grounds for issuing an order on an emergency basis listed
in Subsection 63-46b-20 (1), the executive director may issue an order on an emergency basis if
the executive director determines that irreparable damage is likely to occur if immediate action is
not taken.
(b) In issuing an emergency order under Subsection [(5)] (3)(a) the executive director
shall comply with the requirements of Subsections 63-46b-20 (2) and (3).
Section 6. Section 13-14-107 is amended to read:
13-14-107. Administrative proceedings -- Request for agency action.
(1) (a) A person may commence an adjudicative proceeding in accordance with this
chapter and with Title 63, Chapter 46b, Administrative Procedures Act to:
(i) remedy a violation of this chapter; [or]
(ii) obtain approval of an act regulated by this chapter[.]; or
(iii) obtain any determination that this chapter specifically authorizes that person to

request.
(b) A person shall commence an adjudicative proceeding by filing a request for agency
action in accordance with Section 63-46b-3 .
[(2) (a) The advisory board shall conduct all adjudicative proceedings in accordance with
Title 63, Chapter 46b, Administrative Procedures Act, with a quorum of the advisory board
members in attendance.]
[(b) An order or decision issued by the executive director shall comply with Section
63-46b-10 .]
[(c) Any hearing under this chapter shall be conducted as an informal proceeding unless
otherwise designated as a formal proceeding pursuant to the provisions of Title 63, Chapter 46b,
Administrative Procedures Act.]
[(3) The advisory board]
(2) After receipt of the advisory board's recommendation, the executive director shall
apportion in a fair and equitable manner between the parties any costs of the adjudicative
proceeding, including reasonable attorney's fees [subject to final approval by a court].
Section 7. Section 13-14-201 is amended to read:
13-14-201. Prohibited acts by franchisors -- Affiliates -- Disclosures.
(1) A franchisor may not in this state:
(a) except as provided in Subsection (3), require a franchisee to order or accept delivery
of any new motor vehicle, part, accessory, equipment, or other item not otherwise required by
law that is not voluntarily ordered by the franchisee;
(b) require a franchisee to:
(i) participate monetarily in any advertising campaign; or
(ii) contest, or purchase any promotional materials, display devices, or display
decorations or materials;
(c) require a franchisee to change the capital structure of the franchisee's dealership or
the means by or through which the franchisee finances the operation of the franchisee's
dealership, if the dealership at all times meets reasonable capital standards determined by and

applied in a nondiscriminatory manner by the franchisor;
(d) require a franchisee to refrain from participating in the management of, investment
in, or acquisition of any other line of new motor vehicles or related products, if the franchisee:
(i) [the franchisee] maintains a reasonable line of credit for each make or line of vehicles;
and
(ii) complies with reasonable capital and facilities requirements of the franchisor;
(e) require a franchisee to prospectively agree to a release, assignment, novation, waiver,
or estoppel that would:
(i) relieve a franchisor from any liability, including notice and hearing rights imposed on
the franchisor by this chapter; or
(ii) require any controversy between the franchisee and a franchisor to be referred to a
third party if the decision by the third party would be binding;
(f) require a franchisee to change the location of the principal place of business of the
franchisee's dealership or make any substantial alterations to the dealership premises, if the
change or alterations would be unreasonable;
(g) coerce or attempt to coerce a franchisee to join, contribute to, or affiliate with an
advertising association;
(h) require, coerce, or attempt to coerce a franchisee to enter into an agreement with the
franchisor or do any other act that is unfair or prejudicial to the franchisee, by threatening to
cancel a franchise agreement or other contractual agreement or understanding existing between
the franchisor and franchisee;
(i) adopt, change, establish, modify, or implement a plan or system for the allocation,
scheduling, or delivery of new motor vehicles, parts, or accessories to its franchisees so that the
plan or system is not fair, reasonable, and equitable;
(j) increase the price of any new motor vehicle that the franchisee has ordered from the
franchisor and for which there exists at the time of the order a bona fide sale to a retail purchaser
if the order was made prior to the franchisee's receipt of an official written price increase
notification;

(k) fail to indemnify and hold harmless its franchisee against any judgment for damages
or settlement approved in writing by the franchisor:
(i) including court costs and attorneys' fees arising out of actions, claims, or proceedings
including those based on:
(A) strict liability;
(B) negligence;
(C) misrepresentation;
(D) express or implied warranty;
(E) revocation as described in Section 70A-2-608 ; or
(F) rejection as described in Section 70A-2-602 ; and
(ii) to the extent the judgment or settlement relates to alleged defective or negligent
actions by the franchisor;
(l) threaten or coerce a franchisee to waive or forbear its right to protest the
establishment or relocation of a same line-make franchisee in the relevant market area of the
affected franchisee;
(m) fail to ship monthly to a franchisee, if ordered by the franchisee, the number of new
motor vehicles of each make, series, and model needed by the franchisee to achieve a percentage
of total new vehicle sales of each make, series, and model equitably related to the total new
vehicle production or importation being achieved nationally at the time of the order by each
make, series, and model covered under the franchise agreement;
(n) require or otherwise coerce a franchisee to under-utilize the franchisee's existing
facilities;
(o) fail to include in any franchise agreement the following language or language to the
effect that: "If any provision in this agreement contravenes the laws or regulations of any state or
other jurisdiction where this agreement is to be performed, or provided for by such laws or
regulations, the provision is considered to be modified to conform to such laws or regulations,
and all other terms and provisions shall remain in full force.";
(p) engage in the distribution, sale, offer for sale, or lease of a new motor vehicle to

purchasers who acquire the vehicle in this state except through a franchisee with whom the
franchisor has established a written franchise agreement, if the franchisor's trade name,
trademark, service mark, or related characteristic is an integral element in the distribution, sale,
offer for sale, or lease;
(q) engage in the distribution or sale of a recreational vehicle [which] that is
manufactured, rented, sold, or offered for sale in this state without being constructed in
accordance with the standards set by the American National Standards Institute for recreational
vehicles and evidenced by a seal or plate attached to the vehicle;
(r) except as provided in Subsection (2), authorize or permit a person to perform
warranty service repairs on motor vehicles, except warranty service repairs:
(i) by a franchisee with whom the franchisor has entered into a franchise agreement for
the sale and service of the franchisor's motor vehicles; or
(ii) on owned motor vehicles by a person or government entity who has purchased new
motor vehicles pursuant to a franchisor's or manufacturer's fleet discount program;
(s) fail to provide a franchisee with a written franchise agreement;
(t) notwithstanding any other provisions of this chapter, unreasonably fail or refuse to
offer to its same line-make franchised dealers all models manufactured for that line-make, or
unreasonably require a dealer to pay any extra fee, remodel, renovate, recondition the dealer's
existing facilities, or purchase unreasonable advertising displays or other materials as a
prerequisite to receiving a model or series of vehicles, except that a recreational vehicle
manufacturer may split a line-make between motor home and travel trailer products;
(u) except as provided in Subsection (6), directly or indirectly:
(i) own an interest in a new motor vehicle dealer or dealership;
(ii) operate or control a new motor vehicle dealer or dealership;
(iii) act in the capacity of a new motor vehicle dealer, as defined in Section 13-14-102 ; or
(iv) operate a motor vehicle service facility;
(v) fail to timely pay for all reimbursements to a franchisee for incentives and other
payments made by the franchisor;

(w) directly or indirectly influence or direct potential customers to franchisees in an
inequitable manner, including:
(i) charging a franchisee a fee for a referral regarding a potential sale or lease of any of
the franchisee's products or services in an amount exceeding the actual cost of the referral;
(ii) giving a customer referral to a franchisee on the condition that the franchisee agree to
sell the vehicle at a price fixed by the franchisor; or
(iii) advising a potential customer as to the amount that the potential customer should
pay for a particular product;
(x) fail to provide comparable delivery terms to each franchisee for a product of the
franchisor, including the time of delivery after the placement of an order by the franchisee;
(y) if personnel training is provided by the franchisor to its franchisees, unreasonably fail
to make that training available to each franchisee on proportionally equal terms;
(z) condition a franchisee's eligibility to participate in a sales incentive program on the
requirement that a franchisee use the financing services of the franchisor or a subsidiary or
affiliate of the franchisor for inventory financing;
(aa) make available for public disclosure, except with the franchisee's permission or
under subpoena or in any administrative or judicial proceeding in which the franchisee or the
franchisor is a party, any confidential financial information regarding a franchisee, including:
(i) monthly financial statements provided by the franchisee;
(ii) the profitability of a franchisee; or
(iii) the status of a franchisee's inventory of products;
(bb) use any performance standard, incentive program, or similar method to measure the
performance of franchisees unless the standard or program:
(i) is designed and administered in a fair, reasonable, and equitable manner;
(ii) if based upon a survey, utilizes an actuarially generally acceptable, valid sample; and
(iii) is, upon request by a franchisee, disclosed and explained in writing to the franchisee,
including:
(A) how the standard or program is designed[,];

(B) how [it] the standard or program will be administered[,]; and
(C) the types of data that will be collected and used in [its] the application of the standard
or program;
(cc) other than sales to the federal government, directly or indirectly, sell, lease, offer to
sell, or offer to lease, a new motor vehicle or any motor vehicle owned by the franchisor, except
through a franchised new motor vehicle dealer;
(dd) compel a franchisee, through a finance subsidiary, to agree to unreasonable
operating requirements, except that this Subsection (1)(dd) [shall] may not be construed to limit
the right of a financing subsidiary to engage in business practices in accordance with the usage of
trade in retail and wholesale motor vehicle financing;
(ee) condition the franchisor's participation in co-op advertising for a product category on
the franchisee's participation in any program related to another product category or on the
franchisee's achievement of any level of sales in a product category other than that which is the
subject of the co-op advertising;
(ff) except as provided in Subsections (7) through (9), discriminate against a franchisee
in the state in favor of another franchisee of the same line-make in the state by:
(i) selling or offering to sell a new motor vehicle to one franchisee at a higher actual
price, including the price for vehicle transportation, than the actual price at which the same
model similarly equipped is offered to or is made available by the franchisor to another
franchisee in the state during a similar time period;
(ii) except as provided in Subsection (8), using a promotional program or device or an
incentive, payment, or other benefit, whether paid at the time of the sale of the new motor vehicle
to the franchisee or later, that results in the sale of or offer to sell a new motor vehicle to one
franchisee in the state at a higher price, including the price for vehicle transportation, than the
price at which the same model similarly equipped is offered or is made available by the
franchisor to another franchisee in the state during a similar time period; or
(iii) except as provided in Subsection (9), failing to provide or direct a lead in a fair,
equitable, and timely manner; or

(gg) through an affiliate, take any action that would otherwise be prohibited under this
chapter.
(2) Notwithstanding Subsection (1)(r), a franchisor may authorize or permit a person to
perform warranty service repairs on motor vehicles if the warranty services is for a franchisor of
recreational vehicles.
(3) Subsection (1)(a) does not prevent the franchisor from requiring that a franchisee
carry a reasonable inventory of:
(a) new motor vehicle models offered for sale by the franchisor; and
(b) parts to service the repair of the new motor vehicles.
(4) Subsection (1)(d) does not prevent a franchisor from:
(a) requiring that a franchisee maintain separate sales personnel or display space; or
(b) refusing to permit a combination of new motor vehicle lines, if justified by
reasonable business considerations.
(5) Upon the written request of any franchisee, a franchisor shall disclose in writing to
the franchisee the basis on which new motor vehicles, parts, and accessories are allocated,
scheduled, and delivered among the franchisor's dealers of the same line-make.
(6) (a) A franchisor may engage in any of the activities listed in Subsection (1)(u), for a
period not to exceed 12 months if:
(i) (A) the person from whom the franchisor acquired the interest in or control of the new
motor vehicle dealership was a franchised new motor vehicle dealer; and
(B) the franchisor's interest in the new motor vehicle dealership is for sale at a reasonable
price and on reasonable terms and conditions; or
(ii) the franchisor is engaging in the activity listed in Subsection (1)(u) for the purpose of
broadening the diversity of its dealer body and facilitating the ownership of a new motor vehicle
dealership by a person who:
(A) is part of a group that has been historically underrepresented in the franchisor's
dealer body;
(B) would not otherwise be able to purchase a new motor vehicle dealership;

(C) has made a significant investment in the new motor vehicle dealership [which] that is
subject to loss;
(D) has an ownership interest in the new motor vehicle dealership; and
(E) operates the new motor vehicle dealership under a plan to acquire full ownership of
the dealership within a reasonable period of time and under reasonable terms and conditions.
(b) [The board] After receipt of the advisory board's recommendation, the executive
director may, for good cause shown, extend the time limit set forth in Subsection (6)(a) for an
additional period not to exceed 12 months.
(c) A franchisor who was engaged in any of the activities listed in Subsection (1)(u) in
this state prior to May 1, 2000, may continue to engage in that activity, but [shall] may not
expand that activity to acquire an interest in any other new motor vehicle dealerships or motor
vehicle service facilities after May 1, 2000.
(d) Notwithstanding [the provisions of] Subsection (1)(u), a franchisor may own, operate,
or control a new motor vehicle dealership trading in a line-make of motor vehicle if:
(i) as to that line-make of motor vehicle, there are no more than four franchised new
motor vehicle dealerships licensed and in operation within the state as of January 1, 2000;
(ii) the franchisor does not own directly or indirectly, more than a 45% interest in the
dealership;
(iii) at the time the franchisor first acquires ownership or assumes operation or control of
the dealership, the distance between the dealership thus owned, operated, or controlled and the
nearest unaffiliated new motor vehicle dealership trading in the same line-make is not less than
150 miles;
(iv) all the franchisor's franchise agreements confer rights on the franchisee to develop
and operate as many dealership facilities as the franchisee and franchisor shall agree are
appropriate within a defined geographic territory or area; and
(v) as of January 1, 2000, no fewer than half of the franchisees of the line-make within
the state own and operate two or more dealership facilities in the geographic area covered by the
franchise agreement.

(7) Subsection (1)(ff) does not apply to recreational vehicles.
(8) Subsection (1)(ff)(ii) does not prohibit a promotional or incentive program that is
functionally available to all competing franchisees of the same line-make in the state on
substantially comparable terms.
(9) Subsection (1)(ff)(iii) may not be construed to:
(a) permit provision of or access to customer information that is otherwise protected from
disclosure by law or by contract between a franchisor and a franchisee; or
(b) require a franchisor to disregard the preference volunteered by a potential customer in
providing or directing a lead.
(10) Subsection (1)(gg) does not limit the right of an affiliate to engage in business
practices in accordance with the usage of trade in which the affiliate is engaged.
Section 8. Section 13-14-202 is amended to read:
13-14-202. Sale or transfer of ownership.
(1) (a) The franchisor shall give effect to the change in a franchise agreement as a result
of an event listed in Subsection (1)(b):
(i) subject to Subsection 13-14-305 (2)(b); and
(ii) unless exempted under Subsection (2).
(b) The franchisor shall give effect to the change in a franchise agreement pursuant to
Subsection (1)(a) for the:
(i) sale of a dealership;
(ii) contract for sale of a dealership;
(iii) transfer of ownership of a franchisee's dealership by:
(A) sale[,];
(B) transfer of the business[,]; or [by]
(C) stock transfer; or
(iv) change in the executive management of the franchisee's dealership.
(2) A franchisor is exempted from the requirements of Subsection (1) if:
(a) the transferee is denied, or would be denied, a new motor vehicle franchisee's license

pursuant to Title 41, Chapter 3, Motor Vehicle Business Regulation Act; or
(b) the proposed sale or transfer of the business or change of executive management will
be substantially detrimental to the distribution of franchisor's new motor vehicles or to
competition in the relevant market area, provided that the franchisor has given written notice to
the franchisee within 60 days following receipt by the franchisor of the following:
(i) a copy of the proposed contract of sale or transfer executed by the franchisee and the
proposed transferee;
(ii) a completed copy of the franchisor's written application for approval of the change in
ownership or executive management, if any, including the information customarily required by
the franchisor; and
(iii) (A) a written description of the business experience of the executive management of
the transferee in the case of a proposed sale or transfer of the franchisee's business; or
(B) a written description of the business experience of the person involved in the
proposed change of the franchisee's executive management in the case of a proposed change of
executive management.
(3) For purposes of this section, the refusal by the franchisor to accept a proposed
transferee [who] is presumed to be unreasonable and undertaken without good cause if the
proposed franchisee:
(a) is of good moral character; and [who]
(b) otherwise meets the written, reasonable, and uniformly applied standards or
qualifications, if any, of the franchisor relating to the business experience of executive
management and financial capacity to operate and maintain the dealership required by the
franchisor of its franchisees [is presumed to be unreasonable and undertaken without good
cause].
(4) (a) If after receipt of the written notice from the franchisor described in Subsection
(1) the franchisee objects to the franchisor's refusal to accept the proposed sale or transfer of the
business or change of executive management, the franchisee may file an application for a hearing
before the advisory board up to 60 days from the date of receipt of the notice.

(b) After a hearing[, the board] and the executive director's receipt of the advisory board's
recommendation, the executive director shall determine, and enter an order providing that:
(i) the proposed transferee or change in executive management:
(A) shall be approved; or
(B) may not be approved for specified reasons; or
(ii) a proposed transferee or change in executive management is approved if specific
conditions are timely satisfied.
(c) (i) The franchisee shall have the burden of proof with respect to all issues raised by
the franchisee's application for a hearing as provided in this section.
(ii) During the pendency of the hearing, the franchise agreement shall continue in effect
in accordance with its terms.
(d) The advisory board and the executive director shall expedite, upon written request,
any determination sought under this section.
Section 9. Section 13-14-203 is amended to read:
13-14-203. Succession to franchise.
(1) (a) A successor, including a family member of a deceased or incapacitated franchisee,
who is designated by the franchisee may succeed the franchisee in the ownership and operation
of the dealership under the existing franchise agreement if:
(i) the designated successor gives the franchisor written notice of an intent to succeed to
the rights of the deceased or incapacitated franchisee in the franchise agreement within 180 days
after the franchisee's death or incapacity;
(ii) the designated successor agrees to be bound by all of the terms and conditions of the
franchise agreement; and
(iii) the designated successor meets the criteria generally applied by the franchisor in
qualifying franchisees.
(b) A franchisor may refuse to honor the existing franchise agreement with the
designated successor only for good cause.
(2) The franchisor may request in writing from a designated successor the personal and

financial data that is reasonably necessary to determine whether the existing franchise agreement
should be honored. The designated successor shall supply the personal and financial data
promptly upon the request.
(3) (a) If a franchisor believes that good cause exists for refusing to honor the requested
succession, the franchisor shall serve upon the designated successor notice of its refusal to
approve the succession, within 60 days after the later of:
(i) receipt of the notice of the designated successor's intent to succeed the franchisee in
the ownership and operation of the dealership; or
(ii) [the] receipt of the requested personal and financial data.
(b) Failure to serve the notice pursuant to Subsection (3)(a) is considered approval of the
designated successor and the franchise agreement is considered amended to reflect the approval
of the succession the day following the last day the franchisor can serve notice under Subsection
(3)(a).
(4) The notice of the franchisor provided in Subsection (3) shall:
(a) state the specific grounds for the refusal to approve the succession; and
(b) that discontinuance of the franchise agreement shall take effect not less than 180 days
after the date the notice of refusal is served unless the proposed successor files an application for
hearing under Subsection (6).
(5) (a) This section does not prevent a franchisee from designating a person as the
successor by written instrument filed with the franchisor.
(b) If a franchisee files an instrument under Subsection (5)(a), the instrument governs
the succession rights to the management and operation of the dealership subject to the designated
successor satisfying the franchisor's qualification requirements as described in this section.
(6) (a) If a franchisor serves a notice of refusal to a designated successor pursuant to
Subsection (3), the designated successor may, within the 180-day period provided in Subsection
(4), file with the advisory board an application for a hearing [to determine] and a determination
by the executive director regarding whether [or not] good cause exists for the refusal.
(b) If application for a hearing is timely filed, the franchisor shall continue to honor the

franchise agreement until after:
(i) the requested hearing has been concluded;
(ii) a decision is rendered by the [board] executive director; and
(iii) the applicable appeal period has expired following a decision by the [board]
executive director.
Section 10. Section 13-14-301 is amended to read:
13-14-301. Termination or noncontinuance of franchise.
(1) Except as provided in Subsection (2), a franchisor may not terminate or refuse to
continue a franchise agreement unless:
(a) the franchisee has received written notice from the franchisor 60 days before the
effective date of termination or noncontinuance setting forth the specific grounds for termination
or noncontinuance that are relied on by the franchisor as establishing good cause for the
termination or noncontinuance;
(b) the franchisor has good cause for termination or noncontinuance; and
(c) the franchisor is willing and able to comply with Section 13-14-307 .
(2) A franchisor may terminate a franchise, without complying with Subsection (1) [if]:
(a) if for a particular line-make the franchisor or manufacturer discontinues that
line-make;
(b) if the franchisee's license as a new motor vehicle dealer is revoked under Title 41,
Chapter 3, Motor Vehicle Business Regulation Act; or
(c) upon a mutual written agreement of the franchisor and franchisee.
(3) (a) At any time before the effective date of termination or noncontinuance of the
franchise, the franchisee may apply to the advisory board for a hearing on the merits, and
following notice to all parties concerned, the hearing shall be promptly held as provided in
Section 13-14-304 .
(b) A termination or noncontinuance subject to a hearing under Subsection (3)(a) may
not become effective until:
(i) final determination of the issue by the [board] executive director; and

(ii) the applicable appeal period has lapsed.
Section 11. Section 13-14-302 is amended to read:
13-14-302. Issuance of additional franchises -- Relocation of existing franchisees.
(1) Except as provided in Subsection (6), a franchisor shall provide the notice and
documentation required under Subsection (2) if the franchisor seeks to:
(a) enter into a franchise agreement establishing a motor vehicle dealership within a
relevant market area where the same line-make is represented by another franchisee; or
(b) relocate an existing motor vehicle franchisee.
(2) (a) If a franchisor seeks to take an action listed Subsection (1), prior to taking the
action, the franchisor shall, in writing, notify the advisory board and each franchisee in that
line-make in the relevant market area.
(b) The notice required by Subsection (2)(a) shall:
(i) specify the intended action described under Subsection (1);
(ii) specify the good cause on which it intends to rely for the action; and
(iii) be delivered by registered or certified mail or by any form of reliable [electronic
communication] delivery through which receipt is verifiable.
(3) (a) Except as provided in Subsection (3)(c), the franchisor shall provide to the
advisory board and each franchisee in that line-make in the relevant market area the following
documents relating to the notice described under Subsection (2):
(i) (A) any aggregate economic data and all existing reports, analyses, or opinions based
on the aggregate economic data that were relied on by the franchisor in reaching the decision to
proceed with the action described in the notice; and
(B) the aggregate economic data under Subsection (3)(a)(i)(A) includes:
(I) motor vehicle registration data;
(II) market penetration data; and
(III) demographic data;
(ii) written documentation that the franchisor has in its possession that it intends to rely
on in establishing good cause under Section 13-14-306 relating to the notice;

(iii) a statement that describes in reasonable detail how the establishment of a new
franchisee or the relocation of an existing franchisee will affect the amount of business transacted
by other franchisees of the same line-make in the relevant market area, as compared to business
available to the franchisees; and
(iv) a statement that describes in reasonable detail how the establishment of a new
franchisee or the relocation of an existing franchisee will be beneficial or injurious to the public
welfare or public interest.
(b) The franchisor shall provide the documents described under Subsection (3)(a) with
the notice required under Subsection (2).
(c) The franchisor is not required to disclose any documents under Subsection (3)(a) if:
(i) the documents would be privileged under the Utah Rules of Evidence;
(ii) the documents contain confidential proprietary information;
(iii) the documents are subject to federal or state privacy laws;
(iv) the documents are correspondence between the franchisor and existing franchisees in
that line-make in the relevant market area; or
(v) the franchisor reasonably believes that disclosure of the documents would violate:
(A) the privacy of another franchisee; or
(B) Section 13-14-201 .
(4) (a) Within 45 days of receiving notice required by Subsection (2), any franchisee that
is required to receive notice under Subsection (2) may protest to the advisory board the
establishment or relocation of the dealership.
(b) When a protest is filed, the [board] department shall inform the franchisor that:
[(a)] (i) a timely protest has been filed;
[(b)] (ii) a hearing is required;
[(c)] (iii) the franchisor may not establish or relocate the proposed dealership until the
advisory board has held a hearing; and
[(d)] (iv) the franchisor may not establish or relocate a proposed dealership if the [board ]
executive director determines that there is not good cause for permitting the establishment or

relocation of the dealership.
(5) If multiple protests are filed under Subsection (4), hearings may be consolidated to
expedite the disposition of the issue.
(6) Subsections (1) through (5) do not apply to a relocation that is:
(a) less than one aeronautical mile from the existing location of the franchisee's
dealership; and
(b) within the same county.
(7) For purposes of this section:
(a) relocation of an existing franchisee's dealership in excess of one mile from its
existing location is considered the establishment of an additional franchise in the line-make of
the relocating franchise;
(b) the reopening in a relevant market area of a dealership that has not been in operation
for one year or more is considered the establishment of an additional motor vehicle dealership;
and
(c) (i) except as provided in Subsection (7)(c)(ii), the establishment of a temporary
additional place of business by a recreational vehicle franchisee is considered the establishment
of an additional motor vehicle dealership; and
(ii) the establishment of a temporary additional place of business by a recreational
vehicle franchisee is not considered the establishment of an additional motor vehicle dealership if
the recreational vehicle franchisee is participating in a trade show where three or more
recreational vehicle dealers are participating.
Section 12. Section 13-14-303 is amended to read:
13-14-303. Effect of terminating a franchise.
If under Section 13-14-301 the [board] executive director permits a franchisor to
terminate or not continue a franchise and prohibits the franchisor from entering into a franchise
for the sale of new motor vehicles of a line-make in a relevant market area, the franchisor may
not enter into a franchise for the sale of new motor vehicles of that line-make in the specified
relevant market area unless the [franchisor first establishes in a hearing before the board]

executive director determines, after a recommendation by the advisory board, that there has been
a change of circumstances so that the relevant market area at the time of the establishment of the
new franchise agreement can reasonably be expected to support the new franchisee.
Section 13. Section 13-14-304 is amended to read:
13-14-304. Hearing regarding termination, relocation, or establishment of
franchises.
(1) (a) Within ten days of receiving an application from a franchisee under Subsection
13-14-301 (3) challenging its franchisor's right to terminate or not continue a franchise, or an
application under Section 13-14-302 challenging the establishment or relocation of a franchise,
the [board] executive director shall:
(i) enter an order designating the time and place for the hearing; and
(ii) send a copy of the order by certified or registered mail, with return receipt requested,
or by any form of reliable [electronic communication] delivery through which receipt is
verifiable to:
(A) the applicant;
(B) the franchisor; and
(C) if the application involves the establishment of a new franchise or the relocation of
an existing dealership, to all franchisees in the relevant market area engaged in the business of
offering to sell or lease the same line-make.
(b) A copy of an order mailed under Subsection (1)(a) shall be addressed to the
franchisee at the place where the franchisee's business is conducted.
(2) Any person who can establish [to the board] an interest in the application may
intervene as a party to the hearing, whether or not that person receives notice.
(3) Any person may appear and testify on the question of the public interest in the
termination or noncontinuation of a franchise or in the establishment of an additional franchise.
(4) (a) (i) Any hearing ordered under Subsection (1) shall be conducted no later than 120
days after the application for hearing is filed.
(ii) A final decision on the challenge shall be made by the [board] executive director no

later than 30 days after the hearing.
(b) Failure to comply with the time requirements of Subsection (4)(a) is considered a
determination that the franchisor acted with good cause or, in the case of a protest of a proposed
establishment or relocation of a dealer, that good cause exists for permitting the proposed
additional or relocated new motor vehicle dealer, unless:
(i) the delay is caused by acts of the franchisor or the additional or relocating franchisee;
or
(ii) the delay is waived by the parties.
(5) The franchisor has the burden of proof to establish that under the provisions of this
chapter it should be granted permission to:
(a) terminate or not continue the franchise;
(b) enter into a franchise agreement establishing an additional franchise; or
(c) relocate the dealership of an existing franchisee.
Section 14. Section 13-14-305 is amended to read:
13-14-305. Evidence to be considered in determining cause to terminate or
discontinue.
(1) In determining whether a franchisor has established good cause for terminating or not
continuing a franchise agreement, the advisory board and the executive director shall consider:
(a) the amount of business transacted by the franchisee, as compared to business
available to the franchisee;
(b) the investment necessarily made and obligations incurred by the franchisee in the
performance of the franchisee's part of the franchise agreement;
(c) the permanency of the investment;
(d) whether it is injurious or beneficial to the public welfare or public interest for the
business of the franchisee to be disrupted;
(e) whether the franchisee has adequate motor vehicle sales and service facilities,
equipment, vehicle parts, and qualified service personnel to reasonably provide for the needs of
the consumer for the new motor vehicles handled by the franchisee and has been and is rendering

adequate services to the public;
(f) whether the franchisee refuses to honor warranties of the franchisor under which the
warranty service work is to be performed pursuant to the franchise agreement, if the franchisor
reimburses the franchisee for the warranty service work;
(g) failure by the franchisee to substantially comply with those requirements of the
franchise agreement that are determined by the advisory board or the executive director to be:
(i) reasonable [and];
(ii) material; and
(iii) not in violation of this chapter;
(h) evidence of bad faith by the franchisee in complying with those terms of the franchise
agreement that are determined by the advisory board or the executive director to be:
(i) reasonable [and];
(ii) material; and
(iii) not in violation of this chapter;
(i) prior misrepresentation by the franchisee in applying for the franchise;
(j) transfer of any ownership or interest in the franchise without first obtaining approval
from the franchisor or the [board] executive director after receipt of the advisory board's
recommendation; and
(k) any other factor the advisory board [considers] or the executive director consider
relevant.
(2) Notwithstanding any franchise agreement, the following do not constitute good cause,
as used in this chapter for the termination or noncontinuation of a franchise:
(a) the sole fact that the franchisor desires greater market penetration or more sales or
leases of new motor vehicles;
(b) the change of ownership of the franchisee's dealership or the change of executive
management of the franchisee's dealership unless the franchisor proves that the change of
ownership or executive management will be substantially detrimental to the distribution of the
franchisor's motor vehicles; or

(c) the fact that the franchisee has justifiably refused or declined to participate in any
conduct covered by Section 13-14-201 .
(3) For purposes of Subsection (2), "substantially detrimental" includes the failure of any
proposed transferee to meet the objective criteria applied by the franchisor in qualifying
franchisees at the time of application.
Section 15. Section 13-14-306 is amended to read:
13-14-306. Evidence to be considered in determining cause to relocate or establish a
new franchised dealership.
In determining whether a franchisor has established good cause for relocating an existing
franchisee or establishing a new franchised dealership for the same line-make in a given relevant
market area, the advisory board and the executive director shall consider:
(1) the amount of business transacted by other franchisees of the same line-make in that
relevant market area, as compared to business available to the franchisees;
(2) the investment necessarily made and obligations incurred by other franchisees of the
same line-make in that relevant market area in the performance of their part of their franchisee
agreements;
(3) the permanency of the existing and proposed investment;
(4) whether it is injurious or beneficial to the public welfare or public interest for an
additional franchise to be established; and
(5) whether the franchisees of the same line-make in that relevant market area are
providing adequate service to consumers for the motor vehicles of the line-make, which shall
include the adequacy of:
(a) the motor vehicle sale and service facilities[,];
(b) equipment[,];
(c) supply of vehicle parts[,]; and
(d) qualified service personnel.
Section 16. Coordinating S.B. 51 with H.B. 47.
If this S.B. 51 and H.B. 47, New Automobile Franchise Act Amendments, both pass, it is

the intent of the Legislature that the Office of Legislative Research and General Counsel shall
prepare Subsection 13-14-201(1)(e)(i) in the Utah Code database to read, "(i) relieve a franchisor
from any liability, including notice and hearing rights imposed on the franchisor by this chapter;
or".