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6 Cosponsor:John L. Valentine 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 . enacts a provision authorizing a reinstated franchisee to resume operating as a
14 franchisee under certain circumstances; and
15 . provides a private cause of action for a reinstated franchisee for an act of a specified
16 franchisor that causes a substantial diminution in value of the reinstated franchisee's
17 reinstated franchise.
18 Monies Appropriated in this Bill:
20 Other Special Clauses:
21 This bill provides an immediate effective date.
22 Utah Code Sections Affected:
24 13-14-308, as enacted by Laws of Utah 2008, Chapter 362
26 13-14-302.5, Utah Code Annotated 1953
28 Be it enacted by the Legislature of the state of Utah:
29 Section 1. Section 13-14-302.5 is enacted to read:
30 13-14-302.5. Reinstatement of certain terminated franchises.
31 (1) As used in this section:
32 (a) "Covered franchisee":
33 (i) means a person who was a franchisee under a pre-bankruptcy franchise; and
34 (ii) is a "covered dealership," as that term is defined in the federal franchise arbitration
36 (b) "Covered franchisor":
37 (i) means a person who was a franchisor under a pre-bankruptcy franchise; and
38 (ii) is a "covered manufacturer," as that term is defined in the federal franchise
39 arbitration law.
40 (c) "Federal franchise arbitration law" means Section 747 of the Consolidated
41 Appropriations Act of 2010, Pub. L. No. 111-117.
42 (d) "New franchisor":
43 (i) means a person who is a franchisor of the same line-make as the franchisor under a
44 pre-bankruptcy franchise that has become a terminated franchise; and
45 (ii) is a "covered manufacturer," as that term is defined in the federal franchise
46 arbitration law.
47 (e) "Pre-bankruptcy franchise" means a franchise in effect as of October 3, 2008.
48 (f) "Reinstated franchise" means:
49 (i) a terminated franchise that a reinstatement order determines should be reinstated,
50 renewed, continued, assigned, or assumed; or
51 (ii) a franchise that a reinstatement order otherwise determines should be reestablished
52 in or added to the dealer network of a new franchisor in the geographic area where the covered
53 franchisee was located before October 3, 2008.
54 (g) "Reinstated franchisee" means a covered franchisee that becomes entitled to a
55 reinstated franchise under a reinstatement order.
56 (h) "Reinstatement order" means an arbitrator's written determination:
57 (i) in an arbitration proceeding held under the federal franchise arbitration law; and
58 (ii) (A) that a terminated franchise should be reinstated, renewed, continued, assigned,
59 or assumed; or
60 (B) that a covered franchisee should otherwise be reestablished as a franchisee in or
61 added to the dealer network of a new franchisor in the geographic area where the covered
62 franchisee was located before October 3, 2008.
63 (i) "Terminated franchise" means a covered franchisee's pre-bankruptcy franchise that
64 was terminated or not continued or renewed as a result of a bankruptcy proceeding involving a
65 covered franchisor as the bankruptcy debtor.
66 (2) The process under Sections 13-14-302 , 13-14-304 , and 13-14-306 for the issuance
67 of a franchise, including Subsections 13-14-302 (4) and (5) and Section 13-14-304 relating to a
68 protest by another franchisee in the line-make in the relevant market area against the
69 establishment or relocation of a franchise, does not apply to a reinstated franchise or reinstated
71 (3) A reinstated franchisee may resume operating as a franchisee under a reinstated
72 franchise upon the issuance of a reinstatement order.
73 Section 2. Section 13-14-308 is amended to read:
74 13-14-308. Private right of action.
75 (1) A franchisee has a private right of action for actual damages and an attorney fee
76 against a franchisor for a violation of this chapter that results in damage to the franchisee.
77 (2) (a) As used in this Subsection (2):
78 (i) "New franchisor" has the same meaning as defined in Section 13-14-302.5 .
79 (ii) "Reinstated franchise" has the same meaning as defined in Section 13-14-302.5 .
80 (iii) "Reinstated franchisee" has the same meaning as defined in Section 13-14-302.5 .
81 (b) A reinstated franchisee has a private right of action for actual damages and an
82 attorney fee against a new franchisor for any action of the new franchisor that causes a
83 substantial diminution in value of the reinstated franchisee's reinstated franchise.
84 Section 3. Effective date.
85 If approved by two-thirds of all the members elected to each house, this bill takes effect
86 upon approval by the governor, or the day following the constitutional time limit of Utah
87 Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
88 the date of veto override.
Legislative Review Note
as of 2-19-10 1:14 PM
Office of Legislative Research and General Counsel
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