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S.B. 121

This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Tue, Feb 1, 2011 at 11:52 AM by rday. -->              1     

NEW AUTOMOBILE FRANCHISE ACT AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Daniel R. Liljenquist

             5     
House Sponsor: Holly J. Richardson

             6     

             7      LONG TITLE
             8      General Description:
             9          This bill modifies the New Automobile Franchise Act.
             10      Highlighted Provisions:
             11          This bill:
             12          .    specifies a plan or system that a franchisor may not adopt, change, establish,
             13      enforce, modify, or implement for the allocation, scheduling, or delivery of new
             14      motor vehicles, parts, or accessories to its franchisees; and
             15          .    modifies the distance within which a relocation of an existing franchisee's
             16      dealership is considered to be the establishment of an additional franchise in the
             17      line-make of the relocating franchise.
             18      Money Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          13-14-201, as last amended by Laws of Utah 2010, Chapter 33
             25          13-14-302, as last amended by Laws of Utah 2010, Chapter 33
             26     

             27      Be it enacted by the Legislature of the state of Utah:



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         Section 1. Section 13-14-201 is amended to read:
             29           13-14-201. Prohibited acts by franchisors -- Affiliates -- Disclosures.
             30          (1) A franchisor may not in this state:
             31          (a) except as provided in Subsection (3), require a franchisee to order or accept
             32      delivery of any new motor vehicle, part, accessory, equipment, or other item not otherwise
             33      required by law that is not voluntarily ordered by the franchisee;
             34          (b) require a franchisee to:
             35          (i) participate monetarily in any advertising campaign; or
             36          (ii) contest, or purchase any promotional materials, display devices, or display
             37      decorations or materials;
             38          (c) require a franchisee to change the capital structure of the franchisee's dealership or
             39      the means by or through which the franchisee finances the operation of the franchisee's
             40      dealership, if the dealership at all times meets reasonable capital standards determined by and
             41      applied in a nondiscriminatory manner by the franchisor;
             42          (d) require a franchisee to refrain from participating in the management of, investment
             43      in, or acquisition of any other line of new motor vehicles or related products, if the franchisee:
             44          (i) maintains a reasonable line of credit for each make or line of vehicles; and
             45          (ii) complies with reasonable capital and facilities requirements of the franchisor;
             46          (e) require a franchisee to prospectively agree to a release, assignment, novation,
             47      waiver, or estoppel that would:
             48          (i) relieve a franchisor from any liability, including notice and hearing rights imposed
             49      on the franchisor by this chapter; or
             50          (ii) require any controversy between the franchisee and a franchisor to be referred to a
             51      third party if the decision by the third party would be binding;
             52          (f) require a franchisee to change the location of the principal place of business of the
             53      franchisee's dealership or make any substantial alterations to the dealership premises, if the
             54      change or alterations would be unreasonable or cause the franchisee to lose control of the
             55      premises or impose any other unreasonable requirement related to the facilities or premises;
             56          (g) coerce or attempt to coerce a franchisee to join, contribute to, or affiliate with an
             57      advertising association;
             58          (h) require, coerce, or attempt to coerce a franchisee to enter into an agreement with the



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     franchisor or do any other act that is unfair or prejudicial to the franchisee, by threatening to
             60      cancel a franchise agreement or other contractual agreement or understanding existing between
             61      the franchisor and franchisee;
             62          (i) adopt, change, establish, enforce, modify, or implement a plan or system for the
             63      allocation, scheduling, or delivery of new motor vehicles, parts, or accessories to its franchisees
             64      so that the plan or system is not fair, reasonable, and equitable, including a plan or system that
             65      imposes a vehicle sales objective, goal, or quota on a franchisee, or that evaluates a franchisee's
             66      sales effectiveness or overall sales performance, without providing a reasonable opportunity for
             67      the franchisee to acquire the necessary vehicles in a timely manner from the franchisor on
             68      commercially reasonable terms;
             69          (j) increase the price of any new motor vehicle that the franchisee has ordered from the
             70      franchisor and for which there exists at the time of the order a bona fide sale to a retail
             71      purchaser if the order was made prior to the franchisee's receipt of an official written price
             72      increase notification;
             73          (k) fail to indemnify and hold harmless its franchisee against any judgment for
             74      damages or settlement approved in writing by the franchisor:
             75          (i) including court costs and attorney fees arising out of actions, claims, or proceedings
             76      including those based on:
             77          (A) strict liability;
             78          (B) negligence;
             79          (C) misrepresentation;
             80          (D) express or implied warranty;
             81          (E) revocation as described in Section 70A-2-608 ; or
             82          (F) rejection as described in Section 70A-2-602 ; and
             83          (ii) to the extent the judgment or settlement relates to alleged defective or negligent
             84      actions by the franchisor;
             85          (l) threaten or coerce a franchisee to waive or forbear its right to protest the
             86      establishment or relocation of a same line-make franchisee in the relevant market area of the
             87      affected franchisee;
             88          (m) fail to ship monthly to a franchisee, if ordered by the franchisee, the number of
             89      new motor vehicles of each make, series, and model needed by the franchisee to achieve a



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     percentage of total new vehicle sales of each make, series, and model equitably related to the
             91      total new vehicle production or importation being achieved nationally at the time of the order
             92      by each make, series, and model covered under the franchise agreement;
             93          (n) require or otherwise coerce a franchisee to under-utilize the franchisee's existing
             94      dealer facility or facilities, including by:
             95          (i) requiring or otherwise coercing a franchisee to exclude or remove from the
             96      franchisee's facility operations the selling or servicing of a line-make of vehicles for which the
             97      franchisee has a franchise agreement to utilize the facilities; or
             98          (ii) prohibiting the franchisee from locating, relocating, or occupying a franchise or
             99      line-make in an existing facility owned or occupied by the franchisee that includes the selling
             100      or servicing of another franchise or line-make at the facility provided that the franchisee gives
             101      the franchisor written notice of the franchise co-location;
             102          (o) fail to include in any franchise agreement or other agreement governing a
             103      franchisee's ownership of a dealership or a franchisee's conduct of business under a franchise
             104      the following language or language to the effect that: "If any provision in this agreement
             105      contravenes the laws or regulations of any state or other jurisdiction where this agreement is to
             106      be performed, or provided for by such laws or regulations, the provision is considered to be
             107      modified to conform to such laws or regulations, and all other terms and provisions shall
             108      remain in full force.";
             109          (p) engage in the distribution, sale, offer for sale, or lease of a new motor vehicle to
             110      purchasers who acquire the vehicle in this state except through a franchisee with whom the
             111      franchisor has established a written franchise agreement, if the franchisor's trade name,
             112      trademark, service mark, or related characteristic is an integral element in the distribution, sale,
             113      offer for sale, or lease;
             114          (q) engage in the distribution or sale of a recreational vehicle that is manufactured,
             115      rented, sold, or offered for sale in this state without being constructed in accordance with the
             116      standards set by the American National Standards Institute for recreational vehicles and
             117      evidenced by a seal or plate attached to the vehicle;
             118          (r) except as provided in Subsection (2), authorize or permit a person to perform
             119      warranty service repairs on motor vehicles, except warranty service repairs:
             120          (i) by a franchisee with whom the franchisor has entered into a franchise agreement for



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     the sale and service of the franchisor's motor vehicles; or
             122          (ii) on owned motor vehicles by a person or government entity who has purchased new
             123      motor vehicles pursuant to a franchisor's fleet discount program;
             124          (s) fail to provide a franchisee with a written franchise agreement;
             125          (t) (i) except as provided in Subsection (1)(t)(ii) and notwithstanding any other
             126      provisions of this chapter:
             127          (A) unreasonably fail or refuse to offer to its same line-make franchised dealers all
             128      models manufactured for that line-make;
             129          (B) unreasonably require a dealer to:
             130          (I) pay any extra fee, remodel, renovate, recondition the dealer's existing facilities; or
             131          (II) purchase unreasonable advertising displays or other materials as a prerequisite to
             132      receiving a model or series of vehicles;
             133          (ii) notwithstanding Subsection (1)(t)(i), a recreational vehicle franchisor may split a
             134      line-make between motor home and travel trailer products;
             135          (u) except as provided in Subsection (6), directly or indirectly:
             136          (i) own an interest in a new motor vehicle dealer or dealership;
             137          (ii) operate or control a new motor vehicle dealer or dealership;
             138          (iii) act in the capacity of a new motor vehicle dealer, as defined in Section 13-14-102 ;
             139      or
             140          (iv) operate a motor vehicle service facility;
             141          (v) fail to timely pay for all reimbursements to a franchisee for incentives and other
             142      payments made by the franchisor;
             143          (w) directly or indirectly influence or direct potential customers to franchisees in an
             144      inequitable manner, including:
             145          (i) charging a franchisee a fee for a referral regarding a potential sale or lease of any of
             146      the franchisee's products or services in an amount exceeding the actual cost of the referral;
             147          (ii) giving a customer referral to a franchisee on the condition that the franchisee agree
             148      to sell the vehicle at a price fixed by the franchisor; or
             149          (iii) advising a potential customer as to the amount that the potential customer should
             150      pay for a particular product;
             151          (x) fail to provide comparable delivery terms to each franchisee for a product of the



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     franchisor, including the time of delivery after the placement of an order by the franchisee;
             153          (y) if personnel training is provided by the franchisor to its franchisees, unreasonably
             154      fail to make that training available to each franchisee on proportionally equal terms;
             155          (z) condition a franchisee's eligibility to participate in a sales incentive program on the
             156      requirement that a franchisee use the financing services of the franchisor or a subsidiary or
             157      affiliate of the franchisor for inventory financing;
             158          (aa) make available for public disclosure, except with the franchisee's permission or
             159      under subpoena or in any administrative or judicial proceeding in which the franchisee or the
             160      franchisor is a party, any confidential financial information regarding a franchisee, including:
             161          (i) monthly financial statements provided by the franchisee;
             162          (ii) the profitability of a franchisee; or
             163          (iii) the status of a franchisee's inventory of products;
             164          (bb) use any performance standard, incentive program, or similar method to measure
             165      the performance of franchisees unless the standard or program:
             166          (i) is designed and administered in a fair, reasonable, and equitable manner;
             167          (ii) if based upon a survey, utilizes an actuarially generally acceptable, valid sample;
             168      and
             169          (iii) is, upon request by a franchisee, disclosed and explained in writing to the
             170      franchisee, including:
             171          (A) how the standard or program is designed;
             172          (B) how the standard or program will be administered; and
             173          (C) the types of data that will be collected and used in the application of the standard or
             174      program;
             175          (cc) other than sales to the federal government, directly or indirectly, sell, lease, offer
             176      to sell, or offer to lease, a new motor vehicle or any motor vehicle owned by the franchisor,
             177      except through a franchised new motor vehicle dealer;
             178          (dd) compel a franchisee, through a finance subsidiary, to agree to unreasonable
             179      operating requirements, except that this Subsection (1)(dd) may not be construed to limit the
             180      right of a financing subsidiary to engage in business practices in accordance with the usage of
             181      trade in retail and wholesale motor vehicle financing;
             182          (ee) condition the franchisor's participation in co-op advertising for a product category



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     on the franchisee's participation in any program related to another product category or on the
             184      franchisee's achievement of any level of sales in a product category other than that which is the
             185      subject of the co-op advertising;
             186          (ff) except as provided in Subsections (7) through (9), discriminate against a franchisee
             187      in the state in favor of another franchisee of the same line-make in the state:
             188          (i) by selling or offering to sell a new motor vehicle to one franchisee at a higher actual
             189      price, including the price for vehicle transportation, than the actual price at which the same
             190      model similarly equipped is offered to or is made available by the franchisor to another
             191      franchisee in the state during a similar time period;
             192          (ii) except as provided in Subsection (8), by using a promotional program or device or
             193      an incentive, payment, or other benefit, whether paid at the time of the sale of the new motor
             194      vehicle to the franchisee or later, that results in the sale of or offer to sell a new motor vehicle
             195      to one franchisee in the state at a higher price, including the price for vehicle transportation,
             196      than the price at which the same model similarly equipped is offered or is made available by
             197      the franchisor to another franchisee in the state during a similar time period;
             198          (iii) except as provided in Subsection (9), by failing to provide or direct a lead in a fair,
             199      equitable, and timely manner; or
             200          (iv) if the franchisee complies with any reasonable requirement concerning the sale of
             201      new motor vehicles, by using or considering the performance of any of its franchisees located
             202      in this state relating to the sale of the franchisor's new motor vehicles in determining the:
             203          (A) dealer's eligibility to purchase program, certified, or other used motor vehicles
             204      from the franchisor;
             205          (B) volume, type, or model of program, certified, or other used motor vehicles the
             206      dealer is eligible to purchase from the franchisor;
             207          (C) price of any program, certified, or other used motor vehicles that the dealer is
             208      eligible to purchase from the franchisor; or
             209          (D) availability or amount of any discount, credit, rebate, or sales incentive the dealer
             210      is eligible to receive from the manufacturer for the purchase of any program, certified, or other
             211      motor vehicle offered for sale by the franchisor;
             212          (gg) (i) take control over funds owned or under the control of a franchisee based on the
             213      findings of a warranty audit or sales incentive audit unless the following conditions are



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     satisfied:
             215          (A) the franchisor fully identifies in writing the basis for the franchisor's claim or
             216      charge back arising from the audit, including notifying the franchisee that the franchisee has 20
             217      days from the day on which the franchisee receives the franchisor's claim or charge back to
             218      assert a protest in writing to the franchisor identifying the basis for the protest;
             219          (B) the franchisee's protest shall inform the franchisor that the protest shall be
             220      submitted to a mediator in the state who is identified by name and address in the franchisee's
             221      notice to the franchisor;
             222          (C) if mediation is requested under Subsection (1)(gg)(i)(B), mediation shall occur no
             223      later than 30 days after the day on which the franchisor receives the franchisee's protest of a
             224      claim or charge back;
             225          (D) if mediation does not lead to a resolution of the protest, the protest shall be set for
             226      binding arbitration in the same venue in which the mediation occurred;
             227          (E) binding arbitration under Subsection (1)(gg)(i)(D) shall be conducted:
             228          (I) by an arbitrator mutually agreed upon by the franchisor and the franchisee; and
             229          (II) on a date mutually agreed upon by the franchisor and the franchisee, but shall be
             230      held no later than 90 days after the franchisor's receipt of the franchisee's notice of protest;
             231          (F) this Subsection (1)(gg)(i) applies exclusively to warranty audits and sales incentive
             232      audits;
             233          (G) Subsections (1)(gg)(i)(A) through (E) do not apply if the franchisor reasonably
             234      believes that the amount of the claim or charge back is related to a fraudulent act by the
             235      franchisee; and
             236          (H) the costs of the mediator or arbitrator instituted under this Subsection (1)(gg) shall
             237      be shared equally by the franchisor and the franchisee; or
             238          (ii) require a franchisee to execute a written waiver of the requirements of Subsection
             239      (1)(gg)(i);
             240          (hh) coerce, or attempt to coerce a franchisee to purchase or sell an aftermarket product
             241      manufactured by the franchisor, or obtained by the franchisor for resale from a third-party
             242      supplier and the franchisor or its affiliate derives a financial benefit from the franchisee's sale
             243      or purchase of the aftermarket product as a condition to obtaining preferential status from the
             244      franchisor;



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         (ii) through an affiliate, take any action that would otherwise be prohibited under this
             246      chapter;
             247          (jj) impose any fee, surcharge, or other charge on a franchisee designed to recover the
             248      cost of a warranty repair for which the franchisee is paid by the franchisor;
             249          (kk) directly or indirectly condition any of the following actions on the willingness of a
             250      franchisee, prospective new franchisee, or owner of an interest in a dealership facility to enter
             251      into a site-control agreement:
             252          (i) the awarding of a franchise to a prospective new franchisee;
             253          (ii) the addition of a line-make or franchise to an existing franchisee;
             254          (iii) the renewal of an existing franchisee's franchise;
             255          (iv) the approval of the relocation of an existing franchisee's dealership facility, unless
             256      the franchisor pays, and the franchisee voluntarily accepts, additional specified cash
             257      consideration to facilitate the relocation; or
             258          (v) the approval of the sale or transfer of a franchise's ownership, unless the franchisor
             259      pays, and the buyer voluntarily accepts, additional specified cash consideration to facilitate the
             260      sale or transfer;
             261          (ll) subject to Subsection (11), deny a franchisee the right to return any or all parts or
             262      accessories that:
             263          (i) were specified for and sold to the franchisee under an automated ordering system
             264      required by the franchisor; and
             265          (ii) (A) are in good, resalable condition; and
             266          (B) (I) the franchisee received within the previous 12 months; or
             267          (II) are listed in the current parts catalog; or
             268          (mm) subject to Subsection (12), obtain from a franchisee a waiver of a franchisee's
             269      right, by threatening:
             270          (i) to impose a detriment upon the franchisee's business; or
             271          (ii) to withhold any entitlement, benefit, or service:
             272          (A) to which the franchisee is entitled under a franchise agreement, contract, statute,
             273      rule, regulation, or law; or
             274          (B) that has been granted to more than one other franchisee of the franchisor in the
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         (2) Notwithstanding Subsection (1)(r), a franchisor may authorize or permit a person to
             277      perform warranty service repairs on motor vehicles if the warranty services is for a franchisor
             278      of recreational vehicles.
             279          (3) Subsection (1)(a) does not prevent the franchisor from requiring that a franchisee
             280      carry a reasonable inventory of:
             281          (a) new motor vehicle models offered for sale by the franchisor; and
             282          (b) parts to service the repair of the new motor vehicles.
             283          (4) Subsection (1)(d) does not prevent a franchisor from requiring that a franchisee
             284      maintain separate sales personnel or display space.
             285          (5) Upon the written request of any franchisee, a franchisor shall disclose in writing to
             286      the franchisee the basis on which new motor vehicles, parts, and accessories are allocated,
             287      scheduled, and delivered among the franchisor's dealers of the same line-make.
             288          (6) (a) A franchisor may engage in any of the activities listed in Subsection (1)(u), for a
             289      period not to exceed 12 months if:
             290          (i) (A) the person from whom the franchisor acquired the interest in or control of the
             291      new motor vehicle dealership was a franchised new motor vehicle dealer; and
             292          (B) the franchisor's interest in the new motor vehicle dealership is for sale at a
             293      reasonable price and on reasonable terms and conditions; or
             294          (ii) the franchisor is engaging in the activity listed in Subsection (1)(u) for the purpose
             295      of broadening the diversity of its dealer body and facilitating the ownership of a new motor
             296      vehicle dealership by a person who:
             297          (A) is part of a group that has been historically underrepresented in the franchisor's
             298      dealer body;
             299          (B) would not otherwise be able to purchase a new motor vehicle dealership;
             300          (C) has made a significant investment in the new motor vehicle dealership which is
             301      subject to loss;
             302          (D) has an ownership interest in the new motor vehicle dealership; and
             303          (E) operates the new motor vehicle dealership under a plan to acquire full ownership of
             304      the dealership within a reasonable period of time and under reasonable terms and conditions.
             305          (b) After receipt of the advisory board's recommendation, the executive director may,
             306      for good cause shown, extend the time limit set forth in Subsection (6)(a) for an additional



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     period not to exceed 12 months.
             308          (c) A franchisor who was engaged in any of the activities listed in Subsection (1)(u) in
             309      this state prior to May 1, 2000, may continue to engage in that activity, but may not expand that
             310      activity to acquire an interest in any other new motor vehicle dealerships or motor vehicle
             311      service facilities after May 1, 2000.
             312          (d) Notwithstanding Subsection (1)(u), a franchisor may own, operate, or control a new
             313      motor vehicle dealership trading in a line-make of motor vehicle if:
             314          (i) as to that line-make of motor vehicle, there are no more than four franchised new
             315      motor vehicle dealerships licensed and in operation within the state as of January 1, 2000;
             316          (ii) the franchisor does not own directly or indirectly, more than a 45% interest in the
             317      dealership;
             318          (iii) at the time the franchisor first acquires ownership or assumes operation or control
             319      of the dealership, the distance between the dealership thus owned, operated, or controlled and
             320      the nearest unaffiliated new motor vehicle dealership trading in the same line-make is not less
             321      than 150 miles;
             322          (iv) all the franchisor's franchise agreements confer rights on the franchisee to develop
             323      and operate as many dealership facilities as the franchisee and franchisor shall agree are
             324      appropriate within a defined geographic territory or area; and
             325          (v) as of January 1, 2000, no fewer than half of the franchisees of the line-make within
             326      the state own and operate two or more dealership facilities in the geographic area covered by
             327      the franchise agreement.
             328          (7) Subsection (1)(ff) does not apply to recreational vehicles.
             329          (8) Subsection (1)(ff)(ii) does not prohibit a promotional or incentive program that is
             330      functionally available to all competing franchisees of the same line-make in the state on
             331      substantially comparable terms.
             332          (9) Subsection (1)(ff)(iii) may not be construed to:
             333          (a) permit provision of or access to customer information that is otherwise protected
             334      from disclosure by law or by contract between a franchisor and a franchisee; or
             335          (b) require a franchisor to disregard the preference volunteered by a potential customer
             336      in providing or directing a lead.
             337          (10) Subsection (1)(ii) does not limit the right of an affiliate to engage in business



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     practices in accordance with the usage of trade in which the affiliate is engaged.
             339          (11) (a) Subsection (1)(ll) does not apply to parts or accessories that the franchisee
             340      ordered and purchased outside of an automated parts ordering system required by the
             341      franchisor.
             342          (b) In determining whether parts or accessories in a franchisee's inventory were
             343      specified and sold under an automated ordering system required by the franchisor, the parts and
             344      accessories in the franchisee's inventory are presumed to be the most recent parts and
             345      accessories that the franchisor sold to the franchisee.
             346          (12) (a) Subsection (1)(mm) does not apply to a good faith settlement of a dispute,
             347      including a dispute relating to contract negotiations, in which the franchisee gives a waiver in
             348      exchange for fair consideration in the form of a benefit conferred on the franchisee.
             349          (b) Subsection (12)(a) may not be construed to defeat a franchisee's claim that a waiver
             350      has been obtained in violation of Subsection (1)(mm).
             351          Section 2. Section 13-14-302 is amended to read:
             352           13-14-302. Issuance of additional franchises -- Relocation of existing franchisees.
             353          (1) Except as provided in Subsection (6), a franchisor shall provide the notice and
             354      documentation required under Subsection (2) if the franchisor seeks to:
             355          (a) enter into a franchise agreement establishing a motor vehicle dealership within a
             356      relevant market area where the same line-make is represented by another franchisee; or
             357          (b) relocate an existing motor vehicle franchisee.
             358          (2) (a) If a franchisor seeks to take an action listed Subsection (1), prior to taking the
             359      action, the franchisor shall, in writing, notify the advisory board and each franchisee in that
             360      line-make in the relevant market area.
             361          (b) The notice required by Subsection (2)(a) shall:
             362          (i) specify the intended action described under Subsection (1);
             363          (ii) specify the good cause on which it intends to rely for the action; and
             364          (iii) be delivered by registered or certified mail or by any form of reliable delivery
             365      through which receipt is verifiable.
             366          (3) (a) Except as provided in Subsection (3)(c), the franchisor shall provide to the
             367      advisory board and each franchisee in that line-make in the relevant market area the following
             368      documents relating to the notice described under Subsection (2):



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             369
         (i) (A) any aggregate economic data and all existing reports, analyses, or opinions
             370      based on the aggregate economic data that were relied on by the franchisor in reaching the
             371      decision to proceed with the action described in the notice; and
             372          (B) the aggregate economic data under Subsection (3)(a)(i)(A) includes:
             373          (I) motor vehicle registration data;
             374          (II) market penetration data; and
             375          (III) demographic data;
             376          (ii) written documentation that the franchisor has in its possession that it intends to rely
             377      on in establishing good cause under Section 13-14-306 relating to the notice;
             378          (iii) a statement that describes in reasonable detail how the establishment of a new
             379      franchisee or the relocation of an existing franchisee will affect the amount of business
             380      transacted by other franchisees of the same line-make in the relevant market area, as compared
             381      to business available to the franchisees; and
             382          (iv) a statement that describes in reasonable detail how the establishment of a new
             383      franchisee or the relocation of an existing franchisee will be beneficial or injurious to the
             384      public welfare or public interest.
             385          (b) The franchisor shall provide the documents described under Subsection (3)(a) with
             386      the notice required under Subsection (2).
             387          (c) The franchisor is not required to disclose any documents under Subsection (3)(a) if:
             388          (i) the documents would be privileged under the Utah Rules of Evidence;
             389          (ii) the documents contain confidential proprietary information;
             390          (iii) the documents are subject to federal or state privacy laws;
             391          (iv) the documents are correspondence between the franchisor and existing franchisees
             392      in that line-make in the relevant market area; or
             393          (v) the franchisor reasonably believes that disclosure of the documents would violate:
             394          (A) the privacy of another franchisee; or
             395          (B) Section 13-14-201 .
             396          (4) (a) Within 45 days of receiving notice required by Subsection (2), any franchisee
             397      that is required to receive notice under Subsection (2) may protest to the advisory board the
             398      establishment or relocation of the dealership.
             399          (b) When a protest is filed, the department shall inform the franchisor that:



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Senate 2nd Reading Amendments 2-1-2011 rd/rhr
             400
         (i) a timely protest has been filed;
             401          (ii) a hearing is required;
             402          (iii) the franchisor may not establish or relocate the proposed dealership until the
             403      advisory board has held a hearing; and
             404          (iv) the franchisor may not establish or relocate a proposed dealership if the executive
             405      director determines that there is not good cause for permitting the establishment or relocation
             406      of the dealership.
             407          (5) If multiple protests are filed under Subsection (4), hearings may be consolidated to
             408      expedite the disposition of the issue.
             409          (6) Subsections (1) through (5) do not apply to a relocation of an existing or successor
             410      dealer to a location that is:
             411          (a) within the same county and less than two aeronautical miles from the existing
             412      location of the existing or successor franchisee's dealership; or
             413          (b) further away from a dealership of a franchisee of the same line-make.
             414          (7) For purposes of this section:
             415          (a) relocation of an existing franchisee's dealership in excess of [one mile] two S.
             415a      aeronautical .S miles
             416      from its existing location is considered the establishment of an additional franchise in the
             417      line-make of the relocating franchise;
             418          (b) the reopening in a relevant market area of a dealership that has not been in
             419      operation for one year or more is considered the establishment of an additional motor vehicle
             420      dealership; and
             421          (c) (i) except as provided in Subsection (7)(c)(ii), the establishment of a temporary
             422      additional place of business by a recreational vehicle franchisee is considered the establishment
             423      of an additional motor vehicle dealership; and
             424          (ii) the establishment of a temporary additional place of business by a recreational
             425      vehicle franchisee is not considered the establishment of an additional motor vehicle dealership
             426      if the recreational vehicle franchisee is participating in a trade show where three or more
             427      recreational vehicle dealers are participating.



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Legislative Review Note
    as of 1-18-11 9:43 AM


Office of Legislative Research and General Counsel


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