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Second Substitute S.B. 129

Senator Daniel R. Liljenquist proposes the following substitute bill:


             1     
NEW MOTOR VEHICLE FRANCHISE

             2     
AMENDMENTS

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Daniel R. Liljenquist

             6     
House Sponsor: Douglas C. Aagard

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies and enacts provisions under the New Automobile Franchise Act.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies definitions;
             14          .    enacts a definition of "site-control agreement";
             15          .    modifies provisions relating to prohibited actions by a new motor vehicle
             16      franchisor;
             17          .    prohibits a new motor vehicle franchisor from taking certain actions;
             18          .    modifies the basis for denial of a franchisee's claim for warranty compensation;
             19          .    enacts a provision relating to site-control agreements;
             20          .    modifies a provision relating to the relocation of a franchisee;
             21          .    modifies a provision relating to a franchisor's obligation to pay a franchisee upon
             22      the termination or noncontinuation of a franchise; and
             23          .    enacts a provision governing the termination, cancellation, or nonrenewal of a
             24      recreational vehicle franchise.
             25      Monies Appropriated in this Bill:


             26          None
             27      Other Special Clauses:
             28          None
             29      Utah Code Sections Affected:
             30      AMENDS:
             31          13-14-102, as last amended by Laws of Utah 2009, Chapter 318
             32          13-14-201, as last amended by Laws of Utah 2009, Chapter 318
             33          13-14-204, as last amended by Laws of Utah 2009, Chapter 318
             34          13-14-302, as last amended by Laws of Utah 2005, Chapter 249
             35          13-14-307, as last amended by Laws of Utah 2009, Chapter 318
             36      ENACTS:
             37          13-14-206, Utah Code Annotated 1953
             38          13-14-307.5, Utah Code Annotated 1953
             39     
             40      Be it enacted by the Legislature of the state of Utah:
             41          Section 1. Section 13-14-102 is amended to read:
             42           13-14-102. Definitions.
             43          As used in this chapter:
             44          (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
             45      Board created in Section 13-14-103 .
             46          (2) "Affiliate" has the meaning set forth in Section 16-10a-102 .
             47          (3) "Aftermarket product" means any product or service not included in the
             48      [manufacturer's] franchisor's suggested retail price of the new motor vehicle, as that price
             49      appears on the label required by 15 U.S.C. Sec. 1232(f).
             50          (4) "Dealership" means a site or location in this state:
             51          (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
             52          (b) that is identified as a new motor vehicle dealer's principal place of business for
             53      licensing purposes under Section 41-3-204 .
             54          (5) "Department" means the Department of Commerce.
             55          (6) "Executive director" means the executive director of the Department of Commerce.
             56          (7) (a) "Franchise" or "franchise agreement" means a written agreement, or in the


             57      absence of a written agreement, then a course of dealing or a practice for a definite or indefinite
             58      period, in which:
             59          (i) a person grants to another person a license to use a trade name, trademark, service
             60      mark, or related characteristic; and
             61          (ii) 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          (b) "Franchise" or "franchise agreement" includes a sales and service agreement.
             65          (8) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
             66      writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
             67      produced, represented, or distributed by the franchisor.
             68          (9) "Franchisor" means a person who has, in writing or in practice, agreed with or
             69      permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
             70      produced, assembled, represented, or distributed by the franchisor, and includes:
             71          (a) the manufacturer, producer, assembler, or distributor of the new motor vehicles;
             72          (b) an intermediate distributor; and
             73          (c) an agent, officer, or field or area representative of the franchisor.
             74          (10) "Lead" means the referral by a franchisor to a franchisee of a potential customer
             75      whose contact information was obtained from a franchisor's program, process, or system
             76      designed to generate referrals for the purchase or lease of a new motor vehicle, or for service
             77      work related to the franchisor's vehicles.
             78          (11) "Line-make" means:
             79          (a) for other than a recreational vehicle, the motor vehicles that are offered for sale,
             80      lease, or distribution under a common name, trademark, service mark, or brand name of the
             81      franchisor[, or manufacturer of the motor vehicle]; or
             82          (b) for a recreational vehicle, a specific series of recreational vehicle product that:
             83          (i) is identified by a common series trade name or trademark;
             84          (ii) is targeted to a particular market segment, as determined by decor, features,
             85      equipment, size, weight, and price range;
             86          (iii) has a length and floor plan that distinguish the recreational vehicle from other
             87      recreational vehicles with substantially the same decor, features, equipment, size, weight, and


             88      price;
             89          (iv) belongs to a single, distinct classification of recreational vehicle product type
             90      having a substantial degree of commonality in the construction of the chassis, frame, and body;
             91      and
             92          (v) a franchise agreement authorizes a dealer to sell.
             93          (12) "Mile" means 5,280 feet.
             94          (13) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
             95      dwelling for travel, recreational, or vacation use.
             96          (14) (a) "Motor vehicle" means:
             97          (i) a travel trailer;
             98          (ii) except as provided in Subsection (14)(b), a motor vehicle as defined in Section
             99      41-3-102 ;
             100          (iii) a semitrailer as defined in Section 41-1a-102 ;
             101          (iv) a trailer as defined in Section 41-1a-102 ; and
             102          (v) a recreational vehicle.
             103          (b) "Motor vehicle" does not include:
             104          (i) a motorcycle as defined in Section 41-1a-102 ;
             105          (ii) an off-highway vehicle as defined in Section 41-3-102 ; and
             106          (iii) a small trailer as defined in Section 41-3-102 .
             107          (15) "New motor vehicle" means a motor vehicle as defined in Subsection (14) that has
             108      never been titled or registered and has been driven less than 7,500 miles, unless the motor
             109      vehicle is a trailer, travel trailer, or semitrailer, in which case the mileage limit does not apply.
             110          (16) "New motor vehicle dealer" is a person who is licensed under Subsection
             111      41-3-202 (1)(a) to sell new motor vehicles.
             112          (17) "Notice" or "notify" includes both traditional written communications and all
             113      reliable forms of electronic communication unless expressly prohibited by statute or rule.
             114          (18) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
             115      primarily designed as a temporary dwelling for travel, recreational, or vacation use, that is
             116      either self-propelled or pulled by another vehicle.
             117          (b) "Recreational vehicle" includes:
             118          (i) a travel trailer;


             119          (ii) a camping trailer;
             120          (iii) a motor home;
             121          (iv) a fifth wheel trailer; and
             122          (v) a van.
             123          (19) (a) "Relevant market area," except with respect to recreational vehicles, means:
             124          (i) the county in which a dealership is to be established or relocated; and
             125          (ii) the area within a [ten-mile] 15-mile radius from the site of the new or relocated
             126      dealership.
             127          (b) "Relevant market area," with respect to recreational vehicles, means:
             128          (i) the county in which the dealership is to be established or relocated; and
             129          (ii) the area within a 35-mile radius from the site of the new or relocated dealership.
             130          (20) "Sale, transfer, or assignment" means any disposition of a franchise or an interest
             131      in a franchise, with or without consideration, including a bequest, inheritance, gift, exchange,
             132      lease, or license.
             133          (21) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
             134      includes any reliable form of communication.
             135          (22) "Site-control agreement" means an agreement, however denominated and
             136      regardless of its form or of the parties to it, that has the effect of:
             137          (a) controlling in any way the use and development of the premises upon which a
             138      franchisee's business operations are located;
             139          (b) requiring a franchisee to establish or maintain an exclusive dealership facility on
             140      the premises upon which the franchisee's business operations are located; or
             141          (c) restricting the ability of the franchisee or, if the franchisee leases the dealership
             142      premises, the franchisee's lessor to transfer, sell, lease, develop, redevelop, or change the use of
             143      some or all of the dealership premises, whether by sublease, lease, collateral pledge of lease,
             144      right of first refusal to purchase or lease, option to purchase or lease, or any similar
             145      arrangement.
             146          [(22)] (23) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable
             147      vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
             148      vacation use that does not require a special highway movement permit when drawn by a
             149      self-propelled motor vehicle.


             150          [(23)] (24) "Written," "write," "in writing," or other variations of those terms shall
             151      include all reliable forms of electronic communication.
             152          Section 2. Section 13-14-201 is amended to read:
             153           13-14-201. Prohibited acts by franchisors -- Affiliates -- Disclosures.
             154          (1) A franchisor may not in this state:
             155          (a) except as provided in Subsection (3), require a franchisee to order or accept
             156      delivery of any new motor vehicle, part, accessory, equipment, or other item not otherwise
             157      required by law that is not voluntarily ordered by the franchisee;
             158          (b) require a franchisee to:
             159          (i) participate monetarily in any advertising campaign; or
             160          (ii) contest, or purchase any promotional materials, display devices, or display
             161      decorations or materials;
             162          (c) require a franchisee to change the capital structure of the franchisee's dealership or
             163      the means by or through which the franchisee finances the operation of the franchisee's
             164      dealership, if the dealership at all times meets reasonable capital standards determined by and
             165      applied in a nondiscriminatory manner by the franchisor;
             166          (d) require a franchisee to refrain from participating in the management of, investment
             167      in, or acquisition of any other line of new motor vehicles or related products, if the franchisee:
             168          (i) maintains a reasonable line of credit for each make or line of vehicles; and
             169          (ii) complies with reasonable capital and facilities requirements of the franchisor;
             170          (e) require a franchisee to prospectively agree to a release, assignment, novation,
             171      waiver, or estoppel that would:
             172          (i) relieve a franchisor from any liability, including notice and hearing rights imposed
             173      on the franchisor by this chapter; or
             174          (ii) require any controversy between the franchisee and a franchisor to be referred to a
             175      third party if the decision by the third party would be binding;
             176          (f) require a franchisee to change the location of the principal place of business of the
             177      franchisee's dealership or make any substantial alterations to the dealership premises, if the
             178      change or alterations would be unreasonable or cause the franchisee to lose control of the
             179      premises or impose any other unreasonable requirement related to the facilities or premises;
             180          (g) coerce or attempt to coerce a franchisee to join, contribute to, or affiliate with an


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


             212      by each make, series, and model covered under the franchise agreement;
             213          (n) require or otherwise coerce a franchisee to under-utilize the franchisee's existing
             214      dealer facility or facilities, including by:
             215          (i) requiring or otherwise coercing a franchisee to exclude or remove from the
             216      franchisee's facility operations the selling or servicing of a line-make of vehicles for which the
             217      franchisee has a franchise agreement to utilize the facilities; or
             218          (ii) prohibiting the franchisee from locating, relocating, or occupying a franchise or
             219      line-make in an existing facility owned or occupied by the franchisee that includes the selling
             220      or servicing of another franchise or line-make at the facility provided that the franchisee gives
             221      the franchisor written notice of the franchise co-location;
             222          (o) fail to include in any franchise agreement or other agreement governing a
             223      franchisee's ownership of a dealership or a franchisee's conduct of business under a franchise
             224      the following language or language to the effect that: "If any provision in this agreement
             225      contravenes the laws or regulations of any state or other jurisdiction where this agreement is to
             226      be performed, or provided for by such laws or regulations, the provision is considered to be
             227      modified to conform to such laws or regulations, and all other terms and provisions shall
             228      remain in full force.";
             229          (p) engage in the distribution, sale, offer for sale, or lease of a new motor vehicle to
             230      purchasers who acquire the vehicle in this state except through a franchisee with whom the
             231      franchisor has established a written franchise agreement, if the franchisor's trade name,
             232      trademark, service mark, or related characteristic is an integral element in the distribution, sale,
             233      offer for sale, or lease;
             234          (q) engage in the distribution or sale of a recreational vehicle that is manufactured,
             235      rented, sold, or offered for sale in this state without being constructed in accordance with the
             236      standards set by the American National Standards Institute for recreational vehicles and
             237      evidenced by a seal or plate attached to the vehicle;
             238          (r) except as provided in Subsection (2), authorize or permit a person to perform
             239      warranty service repairs on motor vehicles, except warranty service repairs:
             240          (i) by a franchisee with whom the franchisor has entered into a franchise agreement for
             241      the sale and service of the franchisor's motor vehicles; or
             242          (ii) on owned motor vehicles by a person or government entity who has purchased new


             243      motor vehicles pursuant to a franchisor's [or manufacturer's] fleet discount program;
             244          (s) fail to provide a franchisee with a written franchise agreement;
             245          (t) (i) except as provided in Subsection (1)(t)(ii) and notwithstanding any other
             246      provisions of this chapter:
             247          (A) unreasonably fail or refuse to offer to its same line-make franchised dealers all
             248      models manufactured for that line-make;
             249          (B) unreasonably require a dealer to:
             250          (I) pay any extra fee, remodel, renovate, recondition the dealer's existing facilities; or
             251          (II) purchase unreasonable advertising displays or other materials as a prerequisite to
             252      receiving a model or series of vehicles;
             253          (ii) notwithstanding Subsection (1)(t)(i), a recreational vehicle [manufacturer]
             254      franchisor may split a line-make between motor home and travel trailer products;
             255          (u) except as provided in Subsection (6), directly or indirectly:
             256          (i) own an interest in a new motor vehicle dealer or dealership;
             257          (ii) operate or control a new motor vehicle dealer or dealership;
             258          (iii) act in the capacity of a new motor vehicle dealer, as defined in Section 13-14-102 ;
             259      or
             260          (iv) operate a motor vehicle service facility;
             261          (v) fail to timely pay for all reimbursements to a franchisee for incentives and other
             262      payments made by the franchisor;
             263          (w) directly or indirectly influence or direct potential customers to franchisees in an
             264      inequitable manner, including:
             265          (i) charging a franchisee a fee for a referral regarding a potential sale or lease of any of
             266      the franchisee's products or services in an amount exceeding the actual cost of the referral;
             267          (ii) giving a customer referral to a franchisee on the condition that the franchisee agree
             268      to sell the vehicle at a price fixed by the franchisor; or
             269          (iii) advising a potential customer as to the amount that the potential customer should
             270      pay for a particular product;
             271          (x) fail to provide comparable delivery terms to each franchisee for a product of the
             272      franchisor, including the time of delivery after the placement of an order by the franchisee;
             273          (y) if personnel training is provided by the franchisor to its franchisees, unreasonably


             274      fail to make that training available to each franchisee on proportionally equal terms;
             275          (z) condition a franchisee's eligibility to participate in a sales incentive program on the
             276      requirement that a franchisee use the financing services of the franchisor or a subsidiary or
             277      affiliate of the franchisor for inventory financing;
             278          (aa) make available for public disclosure, except with the franchisee's permission or
             279      under subpoena or in any administrative or judicial proceeding in which the franchisee or the
             280      franchisor is a party, any confidential financial information regarding a franchisee, including:
             281          (i) monthly financial statements provided by the franchisee;
             282          (ii) the profitability of a franchisee; or
             283          (iii) the status of a franchisee's inventory of products;
             284          (bb) use any performance standard, incentive program, or similar method to measure
             285      the performance of franchisees unless the standard or program:
             286          (i) is designed and administered in a fair, reasonable, and equitable manner;
             287          (ii) if based upon a survey, utilizes an actuarially generally acceptable, valid sample;
             288      and
             289          (iii) is, upon request by a franchisee, disclosed and explained in writing to the
             290      franchisee, including:
             291          (A) how the standard or program is designed;
             292          (B) how the standard or program will be administered; and
             293          (C) the types of data that will be collected and used in the application of the standard or
             294      program;
             295          (cc) other than sales to the federal government, directly or indirectly, sell, lease, offer
             296      to sell, or offer to lease, a new motor vehicle or any motor vehicle owned by the franchisor,
             297      except through a franchised new motor vehicle dealer;
             298          (dd) compel a franchisee, through a finance subsidiary, to agree to unreasonable
             299      operating requirements, except that this Subsection (1)(dd) may not be construed to limit the
             300      right of a financing subsidiary to engage in business practices in accordance with the usage of
             301      trade in retail and wholesale motor vehicle financing;
             302          (ee) condition the franchisor's participation in co-op advertising for a product category
             303      on the franchisee's participation in any program related to another product category or on the
             304      franchisee's achievement of any level of sales in a product category other than that which is the


             305      subject of the co-op advertising;
             306          (ff) except as provided in Subsections (7) through (9), discriminate against a franchisee
             307      in the state in favor of another franchisee of the same line-make in the state:
             308          (i) by selling or offering to sell a new motor vehicle to one franchisee at a higher actual
             309      price, including the price for vehicle transportation, than the actual price at which the same
             310      model similarly equipped is offered to or is made available by the franchisor to another
             311      franchisee in the state during a similar time period;
             312          (ii) except as provided in Subsection (8), by using a promotional program or device or
             313      an incentive, payment, or other benefit, whether paid at the time of the sale of the new motor
             314      vehicle to the franchisee or later, that results in the sale of or offer to sell a new motor vehicle
             315      to one franchisee in the state at a higher price, including the price for vehicle transportation,
             316      than the price at which the same model similarly equipped is offered or is made available by
             317      the franchisor to another franchisee in the state during a similar time period;
             318          (iii) except as provided in Subsection (9), by failing to provide or direct a lead in a fair,
             319      equitable, and timely manner; or
             320          (iv) if the franchisee complies with any reasonable requirement concerning the sale of
             321      new motor vehicles, by using or considering the performance of any of its franchisees located
             322      in this state relating to the sale of the [manufacturer's] franchisor's new motor vehicles in
             323      determining the:
             324          (A) dealer's eligibility to purchase program, certified, or other used motor vehicles
             325      from the [manufacturer] franchisor;
             326          (B) volume, type, or model of program, certified, or other used motor vehicles the
             327      dealer is eligible to purchase from the [manufacturer] franchisor;
             328          (C) price of any program, certified, or other used motor vehicles that the dealer is
             329      eligible to purchase from the [manufacturer] franchisor; or
             330          (D) availability or amount of any discount, credit, rebate, or sales incentive the dealer
             331      is eligible to receive from the manufacturer for the purchase of any program, certified, or other
             332      motor vehicle offered for sale by the [manufacturer] franchisor;
             333          (gg) (i) take control over funds owned or under the control of a franchisee based on the
             334      findings of a warranty audit or sales incentive audit unless the following conditions are
             335      satisfied:


             336          (A) the franchisor fully identifies in writing the basis for the franchisor's claim or
             337      charge back arising from the audit, including notifying the franchisee that the franchisee has 20
             338      days from the day on which the franchisee receives the franchisor's claim or charge back to
             339      assert a protest in writing to the franchisor identifying the basis for the protest;
             340          (B) the franchisee's protest shall inform the franchisor that the protest shall be
             341      submitted to a mediator in the state who is identified by name and address in the franchisee's
             342      notice to the franchisor;
             343          (C) if mediation is requested under Subsection (1)(gg)(i)(B), mediation shall occur no
             344      later than 30 days after the day on which the franchisor receives the franchisee's protest of a
             345      claim or charge back;
             346          (D) if mediation does not lead to a resolution of the protest, the protest shall be set for
             347      binding arbitration in the same venue in which the mediation occurred;
             348          (E) binding arbitration under Subsection (1)(gg)(i)(D) shall be conducted:
             349          (I) by an arbitrator mutually agreed upon by the franchisor and the franchisee; and
             350          (II) on a date mutually agreed upon by the franchisor and the franchisee, but shall be
             351      held no later than 90 days after the franchisor's receipt of the franchisee's notice of protest;
             352          (F) this Subsection (1)(gg)(i) applies exclusively to warranty audits and sales incentive
             353      audits;
             354          (G) Subsections (1)(gg)(i)(A) through (E) do not apply if the franchisor reasonably
             355      believes that the amount of the claim or charge back is related to a fraudulent act by the
             356      franchisee; and
             357          (H) the costs of the mediator or arbitrator instituted under this Subsection (1)(gg) shall
             358      be shared equally by the franchisor and the franchisee[.]; or
             359          (ii) [A franchisor may not] require a franchisee to execute a written waiver of the
             360      requirements of Subsection (1)(gg)(i);
             361          (hh) coerce, or attempt to coerce a franchisee to purchase or sell an aftermarket product
             362      manufactured by the franchisor, or obtained by the franchisor for resale from a third-party
             363      supplier and the franchisor or its affiliate derives a financial benefit from the franchisee's sale
             364      or purchase of the aftermarket product as a condition to obtaining preferential status from the
             365      franchisor;
             366          (ii) through an affiliate, take any action that would otherwise be prohibited under this


             367      chapter; [or]
             368          (jj) impose any fee, surcharge, or other charge on a franchisee designed to recover the
             369      cost of a warranty repair for which the franchisee is paid by the franchisor[.];
             370          (kk) directly or indirectly condition any of the following actions on the willingness of a
             371      franchisee, prospective new franchisee, or owner of an interest in a dealership facility to enter
             372      into a site-control agreement:
             373          (i) the awarding of a franchise to a prospective new franchisee;
             374          (ii) the addition of a line-make or franchise to an existing franchisee;
             375          (iii) the renewal of an existing franchisee's franchise;
             376          (iv) the approval of the relocation of an existing franchisee's dealership facility, unless
             377      the franchisor pays, and the franchisee voluntarily accepts, additional specified cash
             378      consideration to facilitate the relocation; or
             379          (v) the approval of the sale or transfer of a franchise's ownership, unless the franchisor
             380      pays, and the buyer voluntarily accepts, additional specified cash consideration to facilitate the
             381      sale or transfer;
             382          (ll) subject to Subsection (11), deny a franchisee the right to return any or all parts or
             383      accessories that:
             384          (i) were specified for and sold to the franchisee under an automated ordering system
             385      required by the franchisor; and
             386          (ii) (A) are in good, resalable condition; and
             387          (B) (I) the franchisee received within the previous 12 months; or
             388          (II) are listed in the current parts catalog; or
             389          (mm) subject to Subsection (12), obtain from a franchisee a waiver of a franchisee's
             390      right, by threatening:
             391          (i) to impose a detriment upon the franchisee's business; or
             392          (ii) to withhold any entitlement, benefit, or service:
             393          (A) to which the franchisee is entitled under a franchise agreement, contract, statute,
             394      rule, regulation, or law; or
             395          (B) that has been granted to more than one other franchisee of the franchisor in the
             396      state.
             397          (2) Notwithstanding Subsection (1)(r), a franchisor may authorize or permit a person to


             398      perform warranty service repairs on motor vehicles if the warranty services is for a franchisor
             399      of recreational vehicles.
             400          (3) Subsection (1)(a) does not prevent the franchisor from requiring that a franchisee
             401      carry a reasonable inventory of:
             402          (a) new motor vehicle models offered for sale by the franchisor; and
             403          (b) parts to service the repair of the new motor vehicles.
             404          (4) Subsection (1)(d) does not prevent a franchisor from requiring that a franchisee
             405      maintain separate sales personnel or display space.
             406          (5) Upon the written request of any franchisee, a franchisor shall disclose in writing to
             407      the franchisee the basis on which new motor vehicles, parts, and accessories are allocated,
             408      scheduled, and delivered among the franchisor's dealers of the same line-make.
             409          (6) (a) A franchisor may engage in any of the activities listed in Subsection (1)(u), for a
             410      period not to exceed 12 months if:
             411          (i) (A) the person from whom the franchisor acquired the interest in or control of the
             412      new motor vehicle dealership was a franchised new motor vehicle dealer; and
             413          (B) the franchisor's interest in the new motor vehicle dealership is for sale at a
             414      reasonable price and on reasonable terms and conditions; or
             415          (ii) the franchisor is engaging in the activity listed in Subsection (1)(u) for the purpose
             416      of broadening the diversity of its dealer body and facilitating the ownership of a new motor
             417      vehicle dealership by a person who:
             418          (A) is part of a group that has been historically underrepresented in the franchisor's
             419      dealer body;
             420          (B) would not otherwise be able to purchase a new motor vehicle dealership;
             421          (C) has made a significant investment in the new motor vehicle dealership which is
             422      subject to loss;
             423          (D) has an ownership interest in the new motor vehicle dealership; and
             424          (E) operates the new motor vehicle dealership under a plan to acquire full ownership of
             425      the dealership within a reasonable period of time and under reasonable terms and conditions.
             426          (b) After receipt of the advisory board's recommendation, the executive director may,
             427      for good cause shown, extend the time limit set forth in Subsection (6)(a) for an additional
             428      period not to exceed 12 months.


             429          (c) A franchisor who was engaged in any of the activities listed in Subsection (1)(u) in
             430      this state prior to May 1, 2000, may continue to engage in that activity, but may not expand that
             431      activity to acquire an interest in any other new motor vehicle dealerships or motor vehicle
             432      service facilities after May 1, 2000.
             433          (d) Notwithstanding Subsection (1)(u), a franchisor may own, operate, or control a new
             434      motor vehicle dealership trading in a line-make of motor vehicle if:
             435          (i) as to that line-make of motor vehicle, there are no more than four franchised new
             436      motor vehicle dealerships licensed and in operation within the state as of January 1, 2000;
             437          (ii) the franchisor does not own directly or indirectly, more than a 45% interest in the
             438      dealership;
             439          (iii) at the time the franchisor first acquires ownership or assumes operation or control
             440      of the dealership, the distance between the dealership thus owned, operated, or controlled and
             441      the nearest unaffiliated new motor vehicle dealership trading in the same line-make is not less
             442      than 150 miles;
             443          (iv) all the franchisor's franchise agreements confer rights on the franchisee to develop
             444      and operate as many dealership facilities as the franchisee and franchisor shall agree are
             445      appropriate within a defined geographic territory or area; and
             446          (v) as of January 1, 2000, no fewer than half of the franchisees of the line-make within
             447      the state own and operate two or more dealership facilities in the geographic area covered by
             448      the franchise agreement.
             449          (7) Subsection (1)(ff) does not apply to recreational vehicles.
             450          (8) Subsection (1)(ff)(ii) does not prohibit a promotional or incentive program that is
             451      functionally available to all competing franchisees of the same line-make in the state on
             452      substantially comparable terms.
             453          (9) Subsection (1)(ff)(iii) may not be construed to:
             454          (a) permit provision of or access to customer information that is otherwise protected
             455      from disclosure by law or by contract between a franchisor and a franchisee; or
             456          (b) require a franchisor to disregard the preference volunteered by a potential customer
             457      in providing or directing a lead.
             458          (10) Subsection (1)(ii) does not limit the right of an affiliate to engage in business
             459      practices in accordance with the usage of trade in which the affiliate is engaged.


             460          (11) (a) Subsection (1)(ll) does not apply to parts or accessories that the franchisee
             461      ordered and purchased outside of an automated parts ordering system required by the
             462      franchisor.
             463          (b) In determining whether parts or accessories in a franchisee's inventory were
             464      specified and sold under an automated ordering system required by the franchisor, the parts and
             465      accessories in the franchisee's inventory are presumed to be the most recent parts and
             466      accessories that the franchisor sold to the franchisee.
             467          (12) (a) Subsection (1)(mm) does not apply to a good faith settlement of a dispute,
             468      including a dispute relating to contract negotiations, in which the franchisee gives a waiver in
             469      exchange for fair consideration in the form of a benefit conferred on the franchisee.
             470          (b) Subsection (12)(a) may not be construed to defeat a franchisee's claim that a waiver
             471      has been obtained in violation of Subsection (1)(mm).
             472          Section 3. Section 13-14-204 is amended to read:
             473           13-14-204. Franchisor's obligations related to service -- Franchisor audits -- Time
             474      limits.
             475          (1) Each franchisor shall specify in writing to each of its franchisees licensed as a new
             476      motor vehicle dealer in this state:
             477          (a) the franchisee's obligations for new motor vehicle preparation, delivery, and
             478      warranty service on its products;
             479          (b) the schedule of compensation to be paid to the franchisee for parts, work, and
             480      service; and
             481          (c) the time allowance for the performance of work and service.
             482          (2) (a) The schedule of compensation described in Subsection (1) shall include
             483      reasonable compensation for diagnostic work, as well as repair service, parts, and labor.
             484          (b) Time allowances described in Subsection (1) for the diagnosis and performance of
             485      warranty work and service shall be reasonable and adequate for the work to be performed.
             486          (3) (a) In the determination of what constitutes reasonable compensation under this
             487      section, the principal factor to be considered is the prevailing wage rates being paid by
             488      franchisees in the relevant market area in which the franchisee is doing business.
             489          (b) Compensation of the franchisee for warranty service work may not be less than the
             490      amount charged by the franchisee for like parts and service to retail or fleet customers, if the


             491      amounts are reasonable. In the case of a recreational vehicle franchisee, reimbursement for
             492      parts used in the performance of warranty repairs, including those parts separately warranted
             493      directly to the consumer by a recreational vehicle parts supplier, may not be less than the
             494      franchisee's cost plus 20%. For purposes of this Subsection (3)(b), the term "cost" shall be that
             495      same price paid by a franchisee to a franchisor or supplier for the part when the part is
             496      purchased for a nonwarranty repair.
             497          (4) A franchisor may not fail to:
             498          (a) perform any warranty obligation;
             499          (b) include in written notices of franchisor's recalls to new motor vehicle owners and
             500      franchisees the expected date by which necessary parts and equipment will be available to
             501      franchisees for the correction of the defects; or
             502          (c) compensate any of the franchisees for repairs effected by the recall.
             503          (5) If a franchisor disallows a franchisee's claim for a defective part, alleging that the
             504      part is not defective, the franchisor at its option shall:
             505          (a) return the part to the franchisee at the franchisor's expense; or
             506          (b) pay the franchisee the cost of the part.
             507          (6) (a) A claim made by a franchisee pursuant to this section for labor and parts shall
             508      be paid within 30 days after its approval.
             509          (b) A claim shall be either approved or disapproved by the franchisor within 30 days
             510      after receipt of the claim on a form generally used by the franchisor and containing the
             511      generally required information. Any claim not specifically disapproved of in writing within 30
             512      days after the receipt of the form is considered to be approved and payment shall be made
             513      within 30 days.
             514          (7) Warranty service audits of franchisee records may be conducted by the franchisor
             515      on a reasonable basis.
             516          (8) A franchisee's claim for warranty compensation may [not] be denied [except for
             517      good cause such as performance of nonwarranty repairs, lack of material documentation, fraud,
             518      or misrepresentation.] only if:
             519          (a) the franchisee's claim is based on a nonwarranty repair;
             520          (b) the franchisee lacks material documentation for the claim;
             521          (c) the franchisee fails to comply materially with specific substantive terms and


             522      conditions of the franchisor's warranty compensation program; or
             523          (d) the franchisor has a bona fide belief based on competent evidence that the
             524      franchisee's claim is intentionally false, fraudulent, or misrepresented.
             525          (9) (a) Any charge backs for warranty parts or service compensation and service
             526      incentives shall only be enforceable for the [12-month] six-month period immediately
             527      following the date the payment for warranty reimbursement was made by the franchisor.
             528          (b) Except as provided in Subsection (9)(c), all charge backs levied by a franchisor for
             529      sales compensation or sales incentives arising out of the sale or lease of a motor vehicle sold or
             530      leased by a franchisee shall be compensable only if written notice of the charge back is
             531      received by the franchisee within [12] six months immediately following the sooner of:
             532          (i) the date when the sales incentive program terminates; or
             533          (ii) the date when payment for the sales compensation or sales incentive was made by
             534      the franchisor to the franchisee.
             535          (c) (i) Upon an audit, the franchisor shall provide the franchisee automated or written
             536      notice explaining the amount of and reason for a charge back.
             537          (ii) A franchisee may respond in writing within 30 days after the notice under
             538      Subsection (9)(c)(i) to:
             539          (A) explain a deficiency; or
             540          (B) provide materials or information to correct and cure compliance with a provision
             541      that is a basis for a charge back.
             542          (d) A charge back:
             543          (i) may not be based on a nonmaterial error that is clerical in nature; and
             544          (ii) (A) shall be based on one or more specific instances of material noncompliance
             545      with the franchisor's warranty compensation program or sales incentive program; and
             546          (B) may not be extrapolated from a sampling of warranty claims or sales incentive
             547      claims.
             548          [(c)] (e) The time limitations of this Subsection (9) do not preclude charge backs for
             549      any fraudulent claim that was previously paid.
             550          Section 4. Section 13-14-206 is enacted to read:
             551          13-14-206. Site-control agreements.
             552          (1) A site-control agreement entered into on or after May 11, 2010:


             553          (a) may be voluntarily terminated by a franchisee, subject to Subsection (2)(a); and
             554          (b) terminates immediately upon:
             555          (i) a franchisor's sale, assignment, or other transfer of the right to manufacture or
             556      distribute the line-make of vehicles covered by the franchisee's franchise;
             557          (ii) a franchisor's ceasing to manufacture or distribute the line-make of vehicles
             558      covered by the franchisee's franchise;
             559          (iii) a franchisor's termination of a franchisee's franchise without cause and against the
             560      franchisee's will; or
             561          (iv) the failure of the franchisor or its affiliate to exercise a right of first refusal to
             562      purchase the assets or ownership of the franchisee's business when given the opportunity to do
             563      so under the franchise or other agreement, subject to the repayment requirements of Subsection
             564      (2) if the right of first refusal arises because of the voluntary action of the franchisee.
             565          (2) (a) If a franchisee voluntarily terminates a site-control agreement after the
             566      franchisor has paid and the franchisee or other recipient has accepted additional specified cash
             567      consideration, the site-control agreement remains valid only until the franchisee or other
             568      recipient satisfies the repayment terms specified in Subsection (2)(b).
             569          (b) (i) If the franchisor's additional specified cash consideration was used for the
             570      construction of a building or improvement on the property that is the subject of the site-control
             571      agreement, the amount of the repayment under Subsection (2)(a):
             572          (A) is based on any repayment terms specified in the site-control agreement, if the
             573      parties to the site-control agreement have willingly agreed to the terms; and
             574          (B) may not exceed the market value of the portion of the building or improvement
             575      constructed with the additional specified cash consideration paid by the franchisor, after
             576      allowing for depreciation based on a market-based depreciation schedule, as determined by an
             577      independent appraiser at the request of the franchisee or other recipient.
             578          (ii) If the franchisor's additional specified cash consideration was not used for
             579      construction of a building or improvement on the property that is the subject of the site-control
             580      agreement, the amount of the repayment under Subsection (2)(a) is an equitable portion of the
             581      cash consideration, as determined under any terms specified in the site-control agreement for
             582      the equitable repayment following a franchisee's voluntary termination of the agreement.
             583          (c) Immediately upon the repayment under Subsection (2)(b):


             584          (i) the site-control agreement is terminated; and
             585          (ii) the franchisor or other party that is the beneficiary under the site-control agreement
             586      shall prepare and deliver to the franchisee a recordable notice of termination of:
             587          (A) the site-control agreement; and
             588          (B) any lien or encumbrance arising because of the site-control agreement and
             589      previously recorded against the property that is the subject of the site-control agreement.
             590          Section 5. Section 13-14-302 is amended to read:
             591           13-14-302. Issuance of additional franchises -- Relocation of existing franchisees.
             592          (1) Except as provided in Subsection (6), a franchisor shall provide the notice and
             593      documentation required under Subsection (2) if the franchisor seeks to:
             594          (a) enter into a franchise agreement establishing a motor vehicle dealership within a
             595      relevant market area where the same line-make is represented by another franchisee; or
             596          (b) relocate an existing motor vehicle franchisee.
             597          (2) (a) If a franchisor seeks to take an action listed Subsection (1), prior to taking the
             598      action, the franchisor shall, in writing, notify the advisory board and each franchisee in that
             599      line-make in the relevant market area.
             600          (b) The notice required by Subsection (2)(a) shall:
             601          (i) specify the intended action described under Subsection (1);
             602          (ii) specify the good cause on which it intends to rely for the action; and
             603          (iii) be delivered by registered or certified mail or by any form of reliable delivery
             604      through which receipt is verifiable.
             605          (3) (a) Except as provided in Subsection (3)(c), the franchisor shall provide to the
             606      advisory board and each franchisee in that line-make in the relevant market area the following
             607      documents relating to the notice described under Subsection (2):
             608          (i) (A) any aggregate economic data and all existing reports, analyses, or opinions
             609      based on the aggregate economic data that were relied on by the franchisor in reaching the
             610      decision to proceed with the action described in the notice; and
             611          (B) the aggregate economic data under Subsection (3)(a)(i)(A) includes:
             612          (I) motor vehicle registration data;
             613          (II) market penetration data; and
             614          (III) demographic data;


             615          (ii) written documentation that the franchisor has in its possession that it intends to rely
             616      on in establishing good cause under Section 13-14-306 relating to the notice;
             617          (iii) a statement that describes in reasonable detail how the establishment of a new
             618      franchisee or the relocation of an existing franchisee will affect the amount of business
             619      transacted by other franchisees of the same line-make in the relevant market area, as compared
             620      to business available to the franchisees; and
             621          (iv) a statement that describes in reasonable detail how the establishment of a new
             622      franchisee or the relocation of an existing franchisee will be beneficial or injurious to the
             623      public welfare or public interest.
             624          (b) The franchisor shall provide the documents described under Subsection (3)(a) with
             625      the notice required under Subsection (2).
             626          (c) The franchisor is not required to disclose any documents under Subsection (3)(a) if:
             627          (i) the documents would be privileged under the Utah Rules of Evidence;
             628          (ii) the documents contain confidential proprietary information;
             629          (iii) the documents are subject to federal or state privacy laws;
             630          (iv) the documents are correspondence between the franchisor and existing franchisees
             631      in that line-make in the relevant market area; or
             632          (v) the franchisor reasonably believes that disclosure of the documents would violate:
             633          (A) the privacy of another franchisee; or
             634          (B) Section 13-14-201 .
             635          (4) (a) Within 45 days of receiving notice required by Subsection (2), any franchisee
             636      that is required to receive notice under Subsection (2) may protest to the advisory board the
             637      establishment or relocation of the dealership.
             638          (b) When a protest is filed, the department shall inform the franchisor that:
             639          (i) a timely protest has been filed;
             640          (ii) a hearing is required;
             641          (iii) the franchisor may not establish or relocate the proposed dealership until the
             642      advisory board has held a hearing; and
             643          (iv) the franchisor may not establish or relocate a proposed dealership if the executive
             644      director determines that there is not good cause for permitting the establishment or relocation
             645      of the dealership.


             646          (5) If multiple protests are filed under Subsection (4), hearings may be consolidated to
             647      expedite the disposition of the issue.
             648          (6) Subsections (1) through (5) do not apply to a relocation of an existing or successor
             649      dealer to a location that is:
             650          (a) within the same county and less than [one] two aeronautical [mile] miles from the
             651      existing location of the existing or successor franchisee's dealership; [and] or
             652          [(b) within the same county.]
             653          (b) further away from a dealership of a franchisee of the same line-make.
             654          (7) For purposes of this section:
             655          (a) relocation of an existing franchisee's dealership in excess of one mile from its
             656      existing location is considered the establishment of an additional franchise in the line-make of
             657      the relocating franchise;
             658          (b) the reopening in a relevant market area of a dealership that has not been in
             659      operation for one year or more is considered the establishment of an additional motor vehicle
             660      dealership; and
             661          (c) (i) except as provided in Subsection (7)(c)(ii), the establishment of a temporary
             662      additional place of business by a recreational vehicle franchisee is considered the establishment
             663      of an additional motor vehicle dealership; and
             664          (ii) the establishment of a temporary additional place of business by a recreational
             665      vehicle franchisee is not considered the establishment of an additional motor vehicle dealership
             666      if the recreational vehicle franchisee is participating in a trade show where three or more
             667      recreational vehicle dealers are participating.
             668          Section 6. Section 13-14-307 is amended to read:
             669           13-14-307. Franchisor's obligations upon termination or noncontinuation of
             670      franchise or line-make.
             671          (1) Upon the termination or noncontinuation of a franchise or a line-make [by the
             672      franchisor], the franchisor shall pay the franchisee:
             673          (a) an amount calculated by:
             674          [(a)] (i) including the franchisee's cost of [new, undamaged, and] unsold motor
             675      vehicles that:
             676          (A) are in the franchisee's inventory;


             677          (B) were acquired:
             678          (I) from the franchisor; or
             679          (II) in the ordinary course of business from another franchisee of the same line-make
             680      [representing both];
             681          (C) are new, undamaged, and, except for franchisor accessories, unaltered; or
             682          (D) represent the current model year at the time of termination or noncontinuation [and
             683      the immediately prior model year vehicles:], or the two model years immediately before the
             684      time of termination or noncontinuation;
             685          (ii) reducing the amount in Subsection (1)(a)(i) by a prorated 1% for each 1,000 miles
             686      over 500 miles registered on a new vehicle's odometer;
             687          [(i) plus] (iii) adding any charges made by the franchisor, for distribution, delivery, or
             688      taxes;
             689          [(ii) plus] (iv) adding the franchisee's cost of any franchisor accessories added on the
             690      vehicle, except only those recreational vehicle accessories that are listed in the franchisor's
             691      wholesale product literature as options for that vehicle shall be repurchased; and
             692          [(iii) less] (v) subtracting all allowances paid or credited to the franchisee by the
             693      franchisor;
             694          (b) the franchisee's cost of new and undamaged motor vehicles in the franchisee's
             695      inventory of demonstrator vehicles, reduced by a prorated 1% for each 1000 miles over 500
             696      miles registered on the demonstrator vehicle's odometer, except recreational vehicles whose
             697      cost shall be reduced by 2% for each 1,000 miles registered on the odometer of demonstrator
             698      self-propelled recreational vehicles, exclusive of miles incurred in delivery of the vehicle, and
             699      the cost of demonstrator nonself-propelled recreational vehicles shall be reduced by 10% of the
             700      franchisee's vehicle cost:
             701          (i) plus any charges made by the franchisor for distribution, delivery, or taxes;
             702          (ii) plus the franchisee's cost of any accessories added on the vehicles, except only
             703      those recreational vehicle accessories that are listed in the franchisor's wholesale product
             704      literature as options for that vehicle shall be repurchased; and
             705          (iii) less all allowances paid or credited to the franchisee by the franchisor;
             706          (c) the cost of all new, undamaged, and unsold supplies, parts, and accessories as set
             707      forth in the franchisor's catalog at the time of termination or noncontinuation for the supplies,


             708      parts, and accessories, less all allowances paid or credited to the franchisee by the franchisor;
             709          (d) the fair market value, but not less than the franchisee's depreciated acquisition cost
             710      of each undamaged sign owned by the franchisee that bears a common name, trade name, or
             711      trademark of the franchisor if acquisition of the sign was recommended or required by the
             712      franchisor. If a recreational vehicle franchisee has a sign with multiple manufacturers listed,
             713      the franchisor is only responsible for its pro rata portion of the sign;
             714          (e) the fair market value, but not less than the franchisee's depreciated acquisition cost,
             715      of all special tools, equipment, and furnishings acquired from the franchisor or sources
             716      approved by the franchisor that were [recommended or] required by the franchisor and are in
             717      good and usable condition;
             718          (f) the cost of transporting, handling, packing, and loading motor vehicles, supplies,
             719      parts, accessories, signs, special tools, equipment, and furnishings;
             720          (g) subject to Subsection (5), reasonable compensation to the franchisee for any cost
             721      incurred pertaining to the unexpired term of a lease agreement for the dealership's existing
             722      location;
             723          (h) the negotiated fair market value of the dealership premises, based on the fair market
             724      value of the real property, if the dealer opts to sell the dealership premises; and
             725          (i) compensate the franchisee for the blue sky or goodwill of the dealership, as
             726      determined in accordance with the applicable industry standards taking into consideration the
             727      effect that the timing of the manufacturer's announcement of discontinuance of a line make has
             728      or will have on future profitability of the dealership.
             729          (2) Subsections (1)(g), (h), and (i) do not apply if a franchise is terminated:
             730          (a) by the franchisor for cause as defined in Subsections 13-14-301 (1)(b) and (2)(a);
             731          (b) upon mutual written agreement of the franchisor and franchisee as provided in
             732      Subsection 13-14-301 (2)(b); or
             733          (c) upon voluntary termination by the franchisee as provided in Subsection
             734      13-14-301 (4).
             735          (3) The franchisor shall pay the franchisee the amounts specified in Subsection (1)
             736      within 90 days after the tender of the property to the franchisor if the franchisee:
             737          (a) has clear title to the property; and
             738          (b) is in a position to convey title to the franchisor.


             739          (4) If repurchased inventory, equipment, or demonstrator vehicles are subject to a
             740      security interest, the franchisor may make payment jointly to the franchisee and to the holder of
             741      the security interest.
             742          (5) Subsection (1)(g) does not relieve the franchisee or its lessor from an obligation
             743      under their lease agreement to mitigate damages.
             744          (6) (a) This section does not apply to a franchisee's voluntary termination or
             745      noncontinuation of its franchise that occurs as a result of the franchisee's sale of its dealership
             746      business entity or substantially all of the assets of that entity to a third party if the franchisor
             747      contemporaneously grants a franchise to the third party on terms and conditions that are
             748      comparable to those of the terminating or noncontinuing franchise.
             749          (b) Subsection (6)(a) may not be construed to impair a contractual right of a
             750      terminating or noncontinuing franchisee under a franchise or related agreement with a
             751      franchisor or its affiliate, including a right to return unsold parts.
             752          (7) This section does not apply to a termination, cancellation, or nonrenewal of:
             753          (a) a recreational vehicle franchise; or
             754          (b) a line-make by a recreational vehicle franchisor.
             755          Section 7. Section 13-14-307.5 is enacted to read:
             756          13-14-307.5. Termination, cancellation, or nonrenewal of a recreational vehicle
             757      franchise agreement.
             758          (1) This section applies only to a recreational vehicle franchisee's termination,
             759      cancellation, or nonrenewal of:
             760          (a) a recreational vehicle franchise; or
             761          (b) a recreational vehicle line-make.
             762          (2) (a) A recreational vehicle franchisee may, at any time and with or without good
             763      cause, terminate, cancel, or not renew its recreational vehicle franchise agreement or a
             764      recreational vehicle line-make by giving 30 days' prior written notice to the recreational vehicle
             765      franchisor.
             766          (b) A franchisee has the burden of showing that a termination, cancellation, or
             767      nonrenewal is for good cause.
             768          (c) Good cause for a franchisee's termination, cancellation, or nonrenewal is considered
             769      to exist if:


             770          (i) the franchisor is convicted of or enters a plea of nolo contendere to a felony;
             771          (ii) the business operations of the franchisor are:
             772          (A) abandoned; or
             773          (B) closed for 10 consecutive business days, unless the closing is due to an act of God,
             774      a strike, a labor difficulty, or another cause over which the franchisor has no control;
             775          (iii) the franchisor makes a misrepresentation that materially and adversely affects the
             776      business relationship with the recreational vehicle franchisee;
             777          (iv) a material violation of this chapter is not cured within 30 days after the franchisee
             778      gives 30 days' written notice of the violation to the recreational vehicle franchisor; or
             779          (v) the recreational vehicle franchisor:
             780          (A) becomes insolvent;
             781          (B) declares bankruptcy; or
             782          (C) makes an assignment for the benefit of creditors.
             783          (3) If the franchisee terminates, cancels, or does not renew the recreational vehicle
             784      franchise agreement or line-make for cause, the franchisor shall, at the franchisee's election and
             785      within 45 days after termination, cancellation, or nonrenewal, repurchase:
             786          (a) (i) all new, unaltered recreational vehicles, including demonstrators, that the
             787      franchisee acquired from the franchisor within 18 months before the date of the termination,
             788      cancellation, or nonrenewal; and
             789          (ii) for a repurchase price equal to 100% of the original net invoice cost, including
             790      transportation, reduced by:
             791          (A) any applicable rebates and discounts to the franchisee; and
             792          (B) the cost to repair any damage to a repurchased recreational vehicle, if the vehicle is
             793      damaged after delivery to the franchisee but before repurchase occurs;
             794          (b) (i) all undamaged accessories and proprietary parts sold by the recreational vehicle
             795      franchisor to the franchisee within one year before termination, cancellation, or nonrenewal, if
             796      accompanied by the original invoice; and
             797          (ii) for a repurchase price equal to 100% of the original net invoice cost, plus an
             798      additional five percent of the original net invoice cost to compensate the franchisee for packing
             799      and shipping the returned accessories and parts to the franchisor; and
             800          (c) (i) any properly functioning diagnostic equipment, special tools, current signage,


             801      and other equipment and machinery that:
             802          (A) the franchisee purchased:
             803          (I) from the franchisor within five years before termination, cancellation, or
             804      nonrenewal; and
             805          (II) at the franchisor's request or because of the franchisor's requirement; and
             806          (B) are no longer usable in the normal course of the franchisee's ongoing business, as
             807      the franchisee reasonably determines; and
             808          (ii) for a repurchase price equal to 100% of the original net cost that the franchisee
             809      paid, plus any applicable shipping charges and sales taxes.
             810          (4) A recreational vehicle franchisor shall pay the franchisee all money due under
             811      Subsection (3) within 30 days after the franchisor's receipt of the repurchased items.


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