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H.B. 347

             1     

MOTOR VEHICLE BUSINESS REGULATION

             2     
AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Sylvia S. Andersen

             6     
Senate Sponsor: Dan R. Eastman

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the New Automobile Franchise Act and the Motor Vehicles Code by
             11      amending motor vehicle business regulations.
             12      Highlighted Provisions:
             13          This bill:
             14          .    amends definitions;
             15          .    provides that the requirements for motor vehicle dealers apply to a person who sells
             16      off-highway motor vehicles;
             17          .    requires a provider of a motor vehicle dealer orientation class to submit the class
             18      curriculum to the Motor Vehicle Division for approval prior to teaching the class;
             19          .    requires a distributor who is either located in the state or has a branch office within
             20      the state to maintain a principal place of business;
             21          .    provides that a used motor vehicle dealer whose license has been suspended shall
             22      liquidate any existing inventory by selling the remaining used motor vehicles to
             23      certain persons and provides that the fine for violating the liquidation provisions is a
             24      class A misdemeanor; and
             25          .    makes technical changes.
             26      Monies Appropriated in this Bill:
             27          None


             28      Other Special Clauses:
             29          This bill takes effect on July 1, 2008.
             30      Utah Code Sections Affected:
             31      AMENDS:
             32          13-14-102, as last amended by Laws of Utah 2005, Chapters 167 and 249
             33          41-3-102, as last amended by Laws of Utah 2003, Chapter 157
             34          41-3-201, as last amended by Laws of Utah 2000, Chapter 311
             35          41-3-204, as last amended by Laws of Utah 1998, Chapter 165
             36          41-3-206, as last amended by Laws of Utah 1999, Chapter 239
             37          41-3-701, as last amended by Laws of Utah 2007, Chapters 105 and 322
             38      ENACTS:
             39          41-3-207.5, Utah Code Annotated 1953
             40     
             41      Be it enacted by the Legislature of the state of Utah:
             42          Section 1. Section 13-14-102 is amended to read:
             43           13-14-102. Definitions.
             44          As used in this chapter:
             45          (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
             46      Board created in Section 13-14-103 .
             47          (2) "Affiliate" has the meaning set forth in Section 16-10a-102 .
             48          (3) "Aftermarket product" means any product or service not included in the
             49      manufacturer's suggested retail price of the new motor vehicle, as that price appears on the
             50      label required by 15 U.S.C. Sec. 1232(f).
             51          (4) "Dealership" means a site or location in this state:
             52          (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
             53          (b) that is identified as a new motor vehicle dealer's principal place of business for
             54      licensing purposes under Section 41-3-204 .
             55          (5) "Department" means the Department of Commerce.
             56          (6) "Executive director" means the executive director of the Department of Commerce.
             57          (7) "Franchise" or "franchise agreement" means a written agreement, for a definite or
             58      indefinite period, in which:


             59          (a) a person grants to another person a license to use a trade name, trademark, service
             60      mark, or related characteristic; and
             61          (b) a community of interest exists in the marketing of new motor vehicles, new motor
             62      vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or
             63      retail.
             64          (8) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
             65      writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
             66      produced, represented, or distributed by the franchisor.
             67          (9) "Franchisor" means a person who has, in writing or in practice, agreed with or
             68      permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
             69      produced, represented, or distributed by the franchisor, and includes:
             70          (a) the manufacturer or distributor of the new motor vehicles;
             71          (b) an intermediate distributor; and
             72          (c) an agent, officer, or field or area representative of the franchisor.
             73          (10) "Lead" means the referral by a franchisor to a franchisee of a potential customer
             74      whose contact information was obtained from a franchisor's program, process, or system
             75      designed to generate referrals for the purchase or lease of a new motor vehicle, or for service
             76      work related to the franchisor's vehicles.
             77          (11) "Line-make" means the motor vehicles that are offered for sale, lease, or
             78      distribution under a common name, trademark, service mark, or brand name of the franchisor,
             79      or manufacturer of the motor vehicle.
             80          (12) "Mile" means 5,280 feet.
             81          (13) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
             82      dwelling for travel, recreational, or vacation use.
             83          (14) (a) "Motor vehicle" means:
             84          (i) a travel trailer;
             85          (ii) except as provided in Subsection (14)(b), a motor vehicle as defined in Section
             86      41-3-102 ;
             87          (iii) a semitrailer as defined in Section 41-1a-102 ;
             88          (iv) a trailer as defined in Section 41-1a-102 ; and
             89          (v) a recreational vehicle.


             90          (b) "Motor vehicle" does not include:
             91          (i) a motorcycle as defined in Section 41-1a-102 [.];
             92          (ii) an off-highway vehicle as defined in Section 41-3-102 ; and
             93          (iii) a small trailer as defined in Section 41-3-102 .
             94          (15) "New motor vehicle" means a motor vehicle as defined in Subsection (14) that has
             95      never been titled or registered and has been driven less than 7,500 miles, unless the motor
             96      vehicle is a trailer, travel trailer, or semitrailer, in which case the mileage limit does not apply.
             97          (16) "New motor vehicle dealer" is a person who is licensed under Subsection
             98      41-3-202 (1)(a) to sell new motor vehicles.
             99          (17) "Notice" or "notify" includes both traditional written communications and all
             100      reliable forms of electronic communication unless expressly prohibited by statute or rule.
             101          (18) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
             102      primarily designed as a temporary dwelling for travel, recreational, or vacation use, that is
             103      either self-propelled or pulled by another vehicle.
             104          (b) "Recreational vehicle" includes:
             105          (i) a travel trailer;
             106          (ii) a camping trailer;
             107          (iii) a motor home;
             108          (iv) a fifth wheel trailer; and
             109          (v) a van.
             110          (19) (a) "Relevant market area," except with respect to recreational vehicles, means:
             111          (i) the county in which a dealership is to be established or relocated; and
             112          (ii) the area within a ten-mile radius from the site of the new or relocated dealership.
             113          (b) "Relevant market area," with respect to recreational vehicles, means:
             114          (i) the county in which the dealership is to be established or relocated; and
             115          (ii) the area within a 35-mile radius from the site of the new or relocated dealership.
             116          (20) "Sale, transfer, or assignment" means any disposition of a franchise or an interest
             117      in a franchise, with or without consideration, including a bequest, inheritance, gift, exchange,
             118      lease, or license.
             119          (21) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
             120      includes any reliable form of communication.


             121          (22) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable vehicle
             122      without motive power, designed as a temporary dwelling for travel, recreational, or vacation
             123      use that does not require a special highway movement permit when drawn by a self-propelled
             124      motor vehicle.
             125          (23) "Written," "write," "in writing," or other variations of those terms shall include all
             126      reliable forms of electronic communication.
             127          Section 2. Section 41-3-102 is amended to read:
             128           41-3-102. Definitions.
             129          As used in this chapter:
             130          (1) "Administrator" means the motor vehicle enforcement administrator.
             131          (2) "Agent" means a person other than a holder of any dealer's or salesperson's license
             132      issued under this chapter, who for salary, commission, or compensation of any kind, negotiates
             133      in any way for the sale, purchase, order, or exchange of three or more motor vehicles for any
             134      other person in any 12-month period.
             135          (3) "Auction" means a dealer engaged in the business of auctioning motor vehicles,
             136      either owned or consigned, to the general public.
             137          (4) "Board" means the advisory board created in Section 41-3-106 .
             138          (5) "Body shop" means a business engaged in rebuilding, restoring, repairing, or
             139      painting primarily the body of motor vehicles damaged by collision or natural disaster.
             140          (6) "Commission" means the State Tax Commission.
             141          (7) "Crusher" means a person who crushes or shreds motor vehicles subject to
             142      registration under Title 41, Chapter 1a, Motor Vehicle Act, to reduce the useable materials and
             143      metals to a more compact size for recycling.
             144          (8) (a) "Dealer" means a person:
             145          (i) whose business in whole or in part involves selling new, used, or new and used
             146      motor vehicles or off-highway vehicles; and
             147          (ii) who sells, displays for sale, or offers for sale or exchange three or more new or
             148      used motor vehicles or off-highway vehicles in any 12-month period.
             149          (b) "Dealer" includes a representative or consignee of any dealer.
             150          (9) (a) "Dismantler" means a person engaged in the business of dismantling motor
             151      vehicles subject to registration under Title 41, Chapter 1a, Motor Vehicle Act, for the resale of


             152      parts or for salvage.
             153          (b) "Dismantler" includes a person who dismantles three or more motor vehicles in any
             154      12-month period.
             155          (10) "Distributor" means a person who has a franchise from a manufacturer of motor
             156      vehicles to distribute motor vehicles within this state and who in whole or in part sells or
             157      distributes new motor vehicles to dealers or who maintains distributor representatives.
             158          (11) "Distributor branch" means a branch office similarly maintained by a distributor
             159      for the same purposes a factory branch is maintained.
             160          (12) "Distributor representative" means a person and each officer and employee of the
             161      person engaged as a representative of a distributor or distributor branch of motor vehicles to
             162      make or promote the sale of the distributor or the distributor branch's motor vehicles, or for
             163      supervising or contacting dealers or prospective dealers of the distributor or the distributor
             164      branch.
             165          (13) "Division" means the Motor Vehicle Enforcement Division created in Section
             166      41-3-104 .
             167          (14) "Factory branch" means a branch office maintained by a person who manufactures
             168      or assembles motor vehicles for sale to distributors, motor vehicle dealers, or who directs or
             169      supervises the factory branch's representatives.
             170          (15) "Factory representative" means a person and each officer and employee of the
             171      person engaged as a representative of a manufacturer of motor vehicles or by a factory branch
             172      to make or promote the sale of the manufacturer's or factory branch's motor vehicles, or for
             173      supervising or contacting the dealers or prospective dealers of the manufacturer or the factory
             174      branch.
             175          (16) "Franchise" means a contract or agreement between a dealer and a manufacturer of
             176      new motor vehicles or its distributor or factory branch by which the dealer is authorized to sell
             177      any specified make or makes of new motor vehicles.
             178          (17) "Manufacturer" means a person engaged in the business of constructing or
             179      assembling new motor vehicles, ownership of which is customarily transferred by a
             180      manufacturer's statement or certificate of origin, or a person who constructs three or more new
             181      motor vehicles in any 12-month period.
             182          (18) "Motorcycle" has the same meaning as defined in Section 41-1a-102 .


             183          (19) (a) "Motor vehicle" means a vehicle [intended primarily for use and operation on
             184      the highway] that is:
             185          (i) self-propelled; [or]
             186          (ii) a trailer, travel trailer, or semitrailer[.]; or
             187          (iii) an off-highway vehicle or small trailer.
             188          (b) "Motor vehicle" does not include:
             189          (i) mobile homes as defined in Section 41-1a-102 ;
             190          (ii) trailers of 750 pounds or less unladen weight; and
             191          (iii) farm tractors and other machines and tools used in the production, harvesting, and
             192      care of farm products.
             193          (20) "New motor vehicle" means a motor vehicle that has never been titled or
             194      registered and has been driven less than 7,500 miles, unless the motor vehicle is [a] an
             195      off-highway vehicle, small trailer, trailer, travel trailer, or semitrailer, in which case the
             196      mileage limit does not apply.
             197          (21) "Off-highway vehicle" has the same meaning as provided in Section 41-22-2 .
             198          (22) "Pawnbroker" means a person whose business is to lend money on security of
             199      personal property deposited with him.
             200          (23) "Principal place of business" means a site or location in this state:
             201          (a) devoted exclusively to the business for which the dealer, manufacturer,
             202      remanufacturer, transporter, dismantler, crusher, or body shop is licensed, and businesses
             203      incidental to them;
             204          (b) sufficiently bounded by fence, chain, posts, or otherwise marked to definitely
             205      indicate the boundary and to admit a definite description with space adequate to permit the
             206      display of three or more new, or new and used, or used motor vehicles; and
             207          (c) that includes a permanent enclosed building or structure large enough to
             208      accommodate the office of the establishment and to provide a safe place to keep the books and
             209      other records of the business, at which the principal portion of the business is conducted and
             210      the books and records kept and maintained.
             211          (24) "Remanufacturer" means a person who reconstructs used motor vehicles subject to
             212      registration under Title 41, Chapter 1a, Motor Vehicle Act, to change the body style and
             213      appearance of the motor vehicle or who constructs or assembles motor vehicles from used or


             214      new and used motor vehicle parts, or who reconstructs, constructs, or assembles three or more
             215      motor vehicles in any 12-month period.
             216          (25) "Salesperson" means an individual who for a salary, commission, or compensation
             217      of any kind, is employed either directly, indirectly, regularly, or occasionally by any new motor
             218      vehicle dealer or used motor vehicle dealer to sell, purchase, or exchange or to negotiate for the
             219      sale, purchase, or exchange of motor vehicles.
             220          (26) "Semitrailer" has the same meaning as defined in Section 41-1a-102 .
             221          (27) "Small trailer" means a trailer that has an unladen weight of more than 750
             222      pounds, but less than 2,000 pounds.
             223          (28) "Special equipment" includes a truck mounted crane, cherry picker, material lift,
             224      post hole digger, and a utility or service body.
             225          (29) "Special equipment dealer" means a new or new and used motor vehicle dealer
             226      engaged in the business of buying new incomplete motor vehicles with a gross vehicle weight
             227      of 12,000 or more pounds and installing special equipment on the incomplete motor vehicle.
             228          (30) "Trailer" has the same meaning as defined in Section 41-1a-102 .
             229          (31) "Transporter" means a person engaged in the business of transporting motor
             230      vehicles as described in Section 41-3-202 .
             231          (32) "Travel trailer" has the same meaning as provided in Section 41-1a-102 .
             232          (33) "Used motor vehicle" means a vehicle that has been titled and registered to a
             233      purchaser other than a dealer or has been driven 7,500 or more miles, unless the vehicle is a
             234      trailer, or semitrailer, in which case the mileage limit does not apply.
             235          (34) "Wholesale motor vehicle auction" means a dealer primarily engaged in the
             236      business of auctioning consigned motor vehicles to dealers or dismantlers who are licensed by
             237      this or any other jurisdiction.
             238          Section 3. Section 41-3-201 is amended to read:
             239           41-3-201. Licenses required -- Restitution -- Education.
             240          (1) As used in this section, "new applicant" means a person who is applying for a
             241      license that the person has not been issued during the previous licensing year.
             242          (2) A person may not act as any of the following without having procured a license
             243      issued by the administrator:
             244          (a) a dealer[,];


             245          (b) salvage vehicle buyer[,];
             246          (c) salesperson[,];
             247          (d) manufacturer[,];
             248          (e) transporter[,];
             249          (f) dismantler[,];
             250          (g) distributor[,];
             251          (h) factory branch and representative[,];
             252          (i) distributor branch and representative[,];
             253          (j) crusher[,];
             254          (k) remanufacturer[, and]; or
             255          (l) body shop.
             256          (3) (a) A person may not bid on or purchase a vehicle with a salvage certificate as
             257      defined in Section 41-1a-1001 at or through [any] a motor vehicle auction unless the person is
             258      a licensed salvage vehicle buyer.
             259          (b) A person may not offer for sale, sell, or exchange a vehicle with a salvage
             260      certificate as defined in Section 41-1a-1001 at or through [any] a motor vehicle auction except
             261      to a licensed salvage vehicle buyer.
             262          (4) A supplemental license shall be secured by a dealer, manufacturer, remanufacturer,
             263      transporter, dismantler, crusher, or body shop for each additional place of business maintained
             264      by [him] the licensee.
             265          (5) A person who has been convicted of any law relating to motor vehicle commerce or
             266      motor vehicle fraud may not be issued a license unless full restitution regarding those
             267      convictions has been made.
             268          (6) (a) The division may not issue a license to a new applicant for a new or used motor
             269      vehicle dealer license, a new or used motorcycle dealer license, or a small trailer dealer license
             270      unless the new applicant completes an eight-hour orientation class approved by the division
             271      that includes education on motor vehicle laws and rules.
             272          (b) The approved costs of the orientation class shall be paid by the new applicant.
             273          (c) The class shall be completed by the new applicant and the applicant's partners,
             274      corporate officers, bond indemnitors, and managers.
             275          (d) (i) The division shall approve:


             276          [(i)] (A) providers of the orientation class; and
             277          [(ii)] (B) costs of the orientation class.
             278          (ii) A provider of an orientation class shall submit the orientation class curriculum to
             279      the division for approval prior to teaching the orientation class.
             280          Section 4. Section 41-3-204 is amended to read:
             281           41-3-204. Licenses -- Principal place of business as prerequisite -- Change of
             282      location -- Relinquishment on loss of principal place of business.
             283          (1) (a) The following licensees must maintain a principal place of business:
             284          (i) dealers[,];
             285          (ii) special equipment dealers[,];
             286          (iii) manufacturers[,];
             287          (iv) transporters[,];
             288          (v) remanufacturers[,];
             289          (vi) dismantlers[,];
             290          (vii) crushers[, and];
             291          (viii) body shops[.]; and
             292          (ix) distributors who:
             293          (A) are located within the state; or
             294          (B) have a branch office within the state.
             295          (b) The administrator may not issue a license under Subsection (1)(a) to an applicant
             296      who does not have a principal place of business.
             297          (c) If a licensee changes the location of his principal place of business, he shall
             298      immediately notify the administrator and a new license shall be granted for the unexpired
             299      portion of the term of the original license at no additional fee.
             300          (2) (a) If a licensee loses possession of a principal place of business, the license is
             301      automatically suspended and he shall immediately notify the administrator and upon demand
             302      by the administrator deliver the license, pocket cards, special plates, and temporary permits to
             303      the administrator.
             304          (b) The administrator shall hold the licenses, cards, plates, and permits until the
             305      licensee obtains a principal place of business.
             306          Section 5. Section 41-3-206 is amended to read:


             307           41-3-206. Duration of licenses -- Expiration date -- Renewal.
             308          (1) Except as provided in Subsection (2), each license issued under this chapter expires
             309      on June 30 of each year and may be renewed upon application and payment of a fee required
             310      under Section 41-3-601 , if the license has not been suspended or revoked.
             311          (2) A motor vehicle salesperson's license expires as provided under Subsection (1) or
             312      when the salesperson terminates employment with the dealer with whom he is licensed,
             313      whichever comes first.
             314          (3) (a) Beginning July 1, 1999, the division may not renew a license for a new or used
             315      motor vehicle dealer's license, a new or used motorcycle dealer's license, or a small trailer
             316      dealer's license unless the renewal applicant completes a three-hour class approved by the
             317      division that includes education on new motor vehicle laws and rules.
             318          (b) The approved costs of the class shall be paid by the renewal applicant.
             319          (c) The class shall be completed by the renewal applicant or any designated
             320      representative of the renewal applicant dealer.
             321          (d) The division shall approve:
             322          (i) the class providers; and
             323          (ii) costs of the class.
             324          Section 6. Section 41-3-207.5 is enacted to read:
             325          41-3-207.5. Liquidation of inventory for suspended used motor vehicle dealers.
             326          (1) A used motor vehicle dealer whose used motor vehicle dealer's license has been
             327      suspended shall liquidate any remaining inventory by selling the remaining used motor vehicles
             328      to:
             329          (a) a licensed auto auction;
             330          (b) another licensed motor vehicle dealer; or
             331          (c) to any person, but only after the used motor vehicle has been titled in the name of
             332      the owner, partner, or corporate officer of the used motor vehicle dealer for at least 12 months.
             333          (2) A dealer may sell inventory under Subsections (1)(a) and (b) for up to 90 days from
             334      the date the dealer's used motor vehicle dealer's license was suspended.
             335          Section 7. Section 41-3-701 is amended to read:
             336           41-3-701. Violations as misdemeanors.
             337          (1) Except as otherwise provided in this chapter, any person who violates this chapter


             338      is guilty of a class B misdemeanor.
             339          (2) (a) A person who violates Section 41-3-201 is guilty of a class A misdemeanor.
             340          (b) Once a person has met the criteria for the offense of acting as a dealer without a
             341      license, each additional motor vehicle the person sells, displays for sale, offers for sale or
             342      exchange, or leases in that 12-month period without becoming licensed under Section 41-3-202
             343      is a separate violation.
             344          (3) A person who violates Section 41-3-301 is guilty of a class A misdemeanor unless
             345      the selling dealer complies with the requirements of Section 41-3-403 .
             346          (4) A person who violates Section 41-3-207.5 is guilty of a class A misdemeanor.
             347          Section 8. Effective date.
             348          This bill takes effect on July 1, 2008.




Legislative Review Note
    as of 1-28-08 10:41 AM


Office of Legislative Research and General Counsel


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