7 LONG TITLE
8 General Description:
9 This bill modifies provisions relating to new automobile franchises.
10 Highlighted Provisions:
11 This bill:
12 ▸ defines terms;
13 ▸ addresses the procedure by which a franchisor may establish or relocate a dealership
14 in the same line-make as an existing dealership in the relevant market area;
15 ▸ modifies the membership of the Utah Motor Vehicle Franchise Advisory Board;
16 ▸ provides that an affected municipality may participate in a hearing before the Utah
17 Motor Vehicle Franchise Advisory Board;
18 ▸ clarifies who may appeal a final decision of the executive director of the
19 Department of Commerce;
20 ▸ requires the Utah Motor Vehicle Franchise Advisory Board to submit an annual
21 report to the Business and Labor Interim Committee; and
22 ▸ makes technical and conforming changes.
23 Money Appropriated in this Bill:
25 Other Special Clauses:
27 Utah Code Sections Affected:
29 13-14-102, as last amended by Laws of Utah 2010, Chapter 33
30 13-14-103, as last amended by Laws of Utah 2010, Chapter 286
31 13-14-104, as last amended by Laws of Utah 2008, Chapters 362 and 382
32 13-14-302, as last amended by Laws of Utah 2011, Chapter 203
33 13-14-302.5, as enacted by Laws of Utah 2010, Chapter 41
34 13-14-304, as last amended by Laws of Utah 2008, Chapter 362
35 13-14-306, as last amended by Laws of Utah 2008, Chapter 362
37 13-14-310, Utah Code Annotated 1953
39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 13-14-102 is amended to read:
41 13-14-102. Definitions.
42 As used in this chapter:
43 (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
44 Board created in Section 13-14-103.
45 (2) "Affected municipality" means an incorporated city or town:
46 (a) that is located in the notice area; and
47 (b) (i) within which a franchisor is proposing a new or relocated dealership that is
48 within the relevant market area of an existing dealership of the same line-make owned by
49 another franchisee; or
50 (ii) within which an existing dealership is located and a franchisor is proposing a new
51 or relocated dealership within the relevant market area of that existing dealership of the same
55 franchisor's suggested retail price of the new motor vehicle, as that price appears on the label
56 required by 15 U.S.C. Sec. 1232(f).
58 (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
59 (b) that is identified as a new motor vehicle dealer's principal place of business for
60 licensing purposes under Section 41-3-204.
65 absence of a written agreement, then a course of dealing or a practice for a definite or indefinite
66 period, in which:
67 (i) a person grants to another person a license to use a trade name, trademark, service
68 mark, or related characteristic; and
69 (ii) a community of interest exists in the marketing of new motor vehicles, new motor
70 vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or
72 (b) "Franchise" or "franchise agreement" includes a sales and service agreement.
74 in writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
75 produced, represented, or distributed by the franchisor.
77 or permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
78 produced, assembled, represented, or distributed by the franchisor, and includes:
79 (a) the manufacturer, producer, assembler, or distributor of the new motor vehicles;
80 (b) an intermediate distributor; and
81 (c) an agent, officer, or field or area representative of the franchisor.
83 customer whose contact information was obtained from a franchisor's program, process, or
84 system designed to generate referrals for the purchase or lease of a new motor vehicle, or for
85 service work related to the franchisor's vehicles.
87 (a) for other than a recreational vehicle, the motor vehicles that are offered for sale,
88 lease, or distribution under a common name, trademark, service mark, or brand name of the
89 franchisor; or
90 (b) for a recreational vehicle, a specific series of recreational vehicle product that:
91 (i) is identified by a common series trade name or trademark;
92 (ii) is targeted to a particular market segment, as determined by decor, features,
93 equipment, size, weight, and price range;
94 (iii) has a length and floor plan that distinguish the recreational vehicle from other
95 recreational vehicles with substantially the same decor, features, equipment, size, weight, and
97 (iv) belongs to a single, distinct classification of recreational vehicle product type
98 having a substantial degree of commonality in the construction of the chassis, frame, and body;
100 (v) a franchise agreement authorizes a dealer to sell.
103 temporary dwelling for travel, recreational, or vacation use.
105 (i) a travel trailer;
106 (ii) except as provided in Subsection [
107 Section 41-3-102;
108 (iii) a semitrailer as defined in Section 41-1a-102;
109 (iv) a trailer as defined in Section 41-1a-102; and
110 (v) a recreational vehicle.
111 (b) "Motor vehicle" does not include:
112 (i) a motorcycle as defined in Section 41-1a-102;
113 (ii) an off-highway vehicle as defined in Section 41-3-102; and
114 (iii) a small trailer as defined in Section 41-3-102.
116 (15) that has never been titled or registered and has been driven less than 7,500 miles, unless
117 the motor vehicle is a trailer, travel trailer, or semitrailer, in which case the mileage limit does
118 not apply.
120 41-3-202(1)(a) to sell new motor vehicles.
122 all reliable forms of electronic communication unless expressly prohibited by statute or rule.
123 (19) "Notice area" means the geographic area that is:
124 (a) within a radius of at least six miles and no more than 10 miles from the site of an
125 existing dealership; and
126 (b) located within a county with a population of at least 225,000.
127 (20) "Primary market area" means:
128 (a) for an existing dealership, the geographic area established by the franchisor that the
129 existing dealership is intended to serve; or
130 (b) for a new or relocated dealership, the geographic area proposed by the franchisor
131 that the new or relocated dealership is intended to serve.
133 primarily designed as a temporary dwelling for travel, recreational, or vacation use, that is
134 either self-propelled or pulled by another vehicle.
135 (b) "Recreational vehicle" includes:
136 (i) a travel trailer;
137 (ii) a camping trailer;
138 (iii) a motor home;
139 (iv) a fifth wheel trailer; and
140 (v) a van.
145 (i) as applied to an existing dealership that is located in a county with a population of
146 less than 225,000:
147 (A) the county in which the existing dealership is located; and
148 (B) the area within a 15-mile radius of the existing dealership; or
149 (ii) as applied to an existing dealership that is located in a county with a population of
150 225,000 or more, the area within a 10-mile radius of the existing dealership.
151 (b) "Relevant market area," with respect to recreational vehicles, means:
152 (i) the county in which the dealership is to be established or relocated; and
153 (ii) the area within a 35-mile radius from the site of the [
156 interest in a franchise, with or without consideration, including a bequest, inheritance, gift,
157 exchange, lease, or license.
159 includes any reliable form of communication.
161 regardless of [
163 (a) controlling in any way the use and development of the premises upon which a
164 franchisee's business operations are located;
165 (b) requiring a franchisee to establish or maintain an exclusive dealership facility on
166 the premises upon which the franchisee's business operations are located; or
167 (c) restricting the ability of the franchisee or, if the franchisee leases the dealership
168 premises, the franchisee's lessor to transfer, sell, lease, develop, redevelop, or change the use of
169 some or all of the dealership premises, whether by sublease, lease, collateral pledge of lease,
170 right of first refusal to purchase or lease, option to purchase or lease, or any similar
173 vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
174 vacation use that does not require a special highway movement permit when drawn by a
175 self-propelled motor vehicle.
177 include all reliable forms of electronic communication.
178 Section 2. Section 13-14-103 is amended to read:
179 13-14-103. Utah Motor Vehicle Franchise Advisory Board -- Creation --
180 Appointment of members -- Alternate members -- Chair -- Quorum -- Conflict of interest.
181 (1) There is created within the department the Utah Motor Vehicle Franchise Advisory
182 Board that consists of:
183 (a) the executive director or the executive director's designee; and
184 (b) [
185 the governor as follows:
186 (i) one recreational motor vehicle franchisee;
187 (ii) three new motor vehicle franchisees from different congressional districts in the
188 state; [
189 (iii) [
190 department pursuant to Section 13-14-105;
192 franchisee; [
195 (v) one representative of the Utah League of Cities and Towns.
196 (2) (a) The executive director shall appoint, with the concurrence of the governor,
198 described in Subsections (1)(b)(i)[
199 motor vehicle franchisee alternate [
200 may be from any congressional district.
201 (b) An alternate shall take the place of a regular advisory board member from the same
202 designation at a meeting of the advisory board where that regular advisory board member is
203 absent or otherwise disqualified from participating in the advisory board meeting.
204 (3) (a) (i) Members of the advisory board appointed under Subsections (1)(b) and (2)
205 are appointed for a term of four years.
206 (ii) No specific term applies to the executive director or the executive director's
208 (b) The executive director may adjust the term of members who were appointed to the
209 advisory board prior to July 1, 2001, by extending the unexpired term of a member for up to
210 two additional years in order to insure that approximately half of the members are appointed
211 every two years.
212 (c) In the event of a vacancy on the advisory board of a member appointed under
213 Subsection (1)(b) or (2), the executive director with the concurrence of the governor, shall
214 appoint an individual to complete the unexpired term of the member whose office is vacant.
215 (d) A member may not be appointed to more than two consecutive terms.
216 (4) (a) The executive director or the executive director's designee is the chair of the
217 advisory board.
218 (b) The department shall keep a record of all hearings, proceedings, transactions,
219 communications, and recommendations of the advisory board.
220 (5) (a) Four or more members of the advisory board constitute a quorum for the
221 transaction of business.
222 (b) The action of a majority of a quorum present is considered the action of the
223 advisory board.
224 (6) (a) A member of the advisory board may not participate as a board member in a
225 proceeding or hearing:
226 (i) involving the member's licensed business or employer; or
227 (ii) when a member, a member's business or family, or employer has a pecuniary
228 interest in the outcome or other conflict of interest concerning an issue before the advisory
230 (b) If a member of the advisory board is disqualified under Subsection (6)(a), the
231 executive director shall select the appropriate alternate member to act on the issue before the
232 advisory board as provided in Subsection (2).
233 (7) Except for the executive director or the executive director's designee, an individual
234 may not be appointed or serve on the advisory board while holding any other elective or
235 appointive state or federal office.
236 (8) A member may not receive compensation or benefits for the member's service, but
237 may receive per diem and travel expenses in accordance with:
238 (a) Section 63A-3-106;
239 (b) Section 63A-3-107; and
240 (c) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
242 (9) The department shall provide necessary staff support to the advisory board.
243 Section 3. Section 13-14-104 is amended to read:
244 13-14-104. Powers and duties of the advisory board and the executive director.
245 (1) (a) Except as provided in Subsection 13-14-106(3), the advisory board shall make
246 recommendations to the executive director on the administration and enforcement of this
247 chapter, including adjudicative and rulemaking proceedings.
248 (b) The executive director shall:
249 (i) consider the advisory board's recommendations; and
250 (ii) issue any rules or final [
251 (2) The executive director, in consultation with the advisory board, shall make rules for
252 the administration of this chapter in accordance with Title 63G, Chapter 3, Utah Administrative
253 Rulemaking Act.
254 (3) (a) An adjudicative proceeding under this chapter shall be conducted in accordance
255 with Title 63G, Chapter 4, Administrative Procedures Act.
256 (b) In an adjudicative proceeding under this chapter, any order issued by the executive
258 (i) shall comply with Section 63G-4-208, whether the proceeding is a formal or an
259 informal adjudicative proceeding under Title 63G, Chapter 4, Administrative Procedures Act;
261 (ii) if the order modifies or rejects a finding of fact in a recommendation from the
262 advisory board, shall be made on the basis of information learned from the executive director's:
263 (A) personal attendance at the hearing; or
264 (B) review of the record developed at the hearing.
265 (4) The executive director's decision under this section shall be made available to the
267 Section 4. Section 13-14-302 is amended to read:
268 13-14-302. Issuance of additional franchises -- Relocation of existing franchisees.
269 (1) Except as provided in Subsection (6), a franchisor shall provide the notice and
270 documentation required under Subsection (2) if the franchisor seeks to:
271 (a) enter into a franchise agreement establishing a motor vehicle dealership within a
272 relevant market area where the same line-make is represented by another franchisee; or
273 (b) relocate an existing motor vehicle franchisee.
274 (2) In determining whether a new or relocated dealership is within a relevant market
275 area where the same line-make is represented by an existing dealership, the relevant market
276 area is measured from the closest property boundary line of the existing dealership to the
277 closest property boundary line of the new or relocated dealership.
279 before taking the action, the franchisor shall, in writing, notify the advisory board, each
280 affected municipality, and each franchisee in that line-make in the relevant market area.
281 (b) The notice required by Subsection [
282 (i) specify the intended action described under Subsection (1);
283 (ii) specify the good cause on which it intends to rely for the action; and
284 (iii) be delivered by registered or certified mail or by any form of reliable delivery
285 through which receipt is verifiable.
287 to the advisory board, each affected municipality, and each franchisee in that line-make in the
288 relevant market area the following documents relating to the notice described under Subsection
290 (i) (A) any aggregate economic data and all existing reports, analyses, or opinions
291 based on the aggregate economic data that were relied on by the franchisor in reaching the
292 decision to proceed with the action described in the notice; and
293 (B) the aggregate economic data under Subsection [
294 (I) motor vehicle registration data;
295 (II) market penetration data; and
296 (III) demographic data;
297 (ii) written documentation that the franchisor has in [
298 it intends to rely on in establishing good cause under Section 13-14-306 relating to the notice;
299 (iii) a statement that describes in reasonable detail how the establishment of a new
300 franchisee or the relocation of an existing franchisee will affect the amount of business
301 transacted by other franchisees of the same line-make in the relevant market area, as compared
302 to business available to the franchisees; and
303 (iv) a statement that describes in reasonable detail how the establishment of a new
304 franchisee or the relocation of an existing franchisee will be beneficial or injurious to the
305 public welfare or public interest.
306 (b) The franchisor shall provide the documents described under Subsection [
307 with the notice required under Subsection [
308 (c) The franchisor is not required to disclose any documents under Subsection [
309 (4)(a) if:
310 (i) the documents would be privileged under the Utah Rules of Evidence;
311 (ii) the documents contain confidential proprietary information;
312 (iii) the documents are subject to federal or state privacy laws;
313 (iv) the documents are correspondence between the franchisor and existing franchisees
314 in that line-make in the relevant market area; or
315 (v) the franchisor reasonably believes that disclosure of the documents would violate:
316 (A) the privacy of another franchisee; or
317 (B) Section 13-14-201.
319 any franchisee that is required to receive notice under Subsection [
320 advisory board the establishment or relocation of the dealership.
321 (b) [
322 department shall inform the franchisor that:
323 (i) a timely protest has been filed;
324 (ii) a hearing is required;
325 (iii) the franchisor may not establish or relocate the proposed dealership until the
326 advisory board has held a hearing; and
327 (iv) the franchisor may not establish or relocate a proposed dealership if the executive
328 director determines that there is not good cause for permitting the establishment or relocation
329 of the dealership.
331 consolidated to expedite the disposition of the issue.
333 successor dealer to a location that is:
334 (a) within the same county and less than two [
335 location of the existing or successor franchisee's dealership; or
336 (b) further away from a dealership of a franchisee of the same line-make.
338 (a) relocation of an existing franchisee's dealership in excess of two [
339 miles from [
340 additional franchise in the line-make of the relocating franchise;
341 (b) the reopening in a relevant market area of a dealership that has not been in
342 operation for one year or more is considered the establishment of an additional motor vehicle
343 dealership; and
344 (c) (i) except as provided in Subsection [
345 temporary additional place of business by a recreational vehicle franchisee is considered the
346 establishment of an additional motor vehicle dealership; and
347 (ii) the establishment of a temporary additional place of business by a recreational
348 vehicle franchisee is not considered the establishment of an additional motor vehicle dealership
349 if the recreational vehicle franchisee is participating in a trade show where three or more
350 recreational vehicle dealers are participating.
351 Section 5. Section 13-14-302.5 is amended to read:
352 13-14-302.5. Application of new franchise process with respect to certain
353 terminated franchises.
354 (1) As used in this section:
355 (a) "Covered franchisee":
356 (i) means a person who was a franchisee under a pre-bankruptcy franchise; and
357 (ii) is a "covered dealership," as that term is defined in the federal franchise arbitration
359 (b) "Covered franchisor":
360 (i) means a person who was a franchisor under a pre-bankruptcy franchise; and
361 (ii) is a "covered manufacturer," as that term is defined in the federal franchise
362 arbitration law.
363 (c) "Federal franchise arbitration law" means Section 747 of the Consolidated
364 Appropriations Act of 2010, Pub. L. No. 111-117.
365 (d) "New franchisor":
366 (i) means a person who is a franchisor of the same line-make as the franchisor under a
367 pre-bankruptcy franchise that has become a terminated franchise; and
368 (ii) is a "covered manufacturer," as that term is defined in the federal franchise
369 arbitration law.
370 (e) "Pre-bankruptcy franchise" means a franchise in effect as of October 3, 2008.
371 (f) "Reinstated franchise" means:
372 (i) a terminated franchise that a reinstatement order determines should be reinstated,
373 renewed, continued, assigned, or assumed; or
374 (ii) a franchise that a reinstatement order otherwise determines should be reestablished
375 in or added to the dealer network of a new franchisor in the geographic area where the covered
376 franchisee was located before October 3, 2008.
377 (g) "Reinstated franchisee" means a covered franchisee:
378 (i) whose franchise became a terminated franchise with less than 90 days' notice prior
379 to termination; and
380 (ii) that becomes entitled to a reinstated franchise under a reinstatement order.
381 (h) "Reinstatement order" means an arbitrator's written determination:
382 (i) in an arbitration proceeding held under the federal franchise arbitration law; and
383 (ii) (A) that a terminated franchise should be reinstated, renewed, continued, assigned,
384 or assumed; or
385 (B) that a covered franchisee should otherwise be reestablished as a franchisee in or
386 added to the dealer network of a new franchisor in the geographic area where the covered
387 franchisee was located before October 3, 2008.
388 (i) "Terminated franchise" means a covered franchisee's pre-bankruptcy franchise that
389 was terminated or not continued or renewed as a result of a bankruptcy proceeding involving a
390 covered franchisor as the bankruptcy debtor.
391 (2) The process under Sections 13-14-302, 13-14-304, and 13-14-306 for the issuance
392 of a franchise, including Subsections 13-14-302[
393 relating to a protest by another franchisee in the line-make in the relevant market area against
394 the establishment or relocation of a franchise, does not apply to a reinstated franchise or
395 reinstated franchisee.
396 Section 6. Section 13-14-304 is amended to read:
397 13-14-304. Hearing regarding termination, relocation, or establishment of
399 (1) (a) Within 10 days [
400 an application from a franchisee under Subsection 13-14-301(3) challenging [
401 right to terminate or not continue a franchise, or an application under Section 13-14-302
402 challenging the establishment or relocation of a franchise, the executive director shall:
403 (i) enter an order designating the time and place for the hearing; and
404 (ii) send a copy of the order by certified or registered mail, with return receipt
405 requested, or by any form of reliable delivery through which receipt is verifiable to:
406 (A) the applicant;
407 (B) the franchisor; and
408 (C) if the application involves the establishment of a new franchise or the relocation of
409 an existing dealership, [
410 the relevant market area engaged in the business of offering to sell or lease the same line-make.
411 (b) A copy of an order mailed under Subsection (1)(a) shall be addressed to the
412 franchisee at the place where the franchisee's business is conducted.
413 (2) [
414 in the application may intervene as a party to the hearing, whether or not that person receives
416 (3) Any person, including an affected municipality, may appear and testify on the
417 question of the public interest in the termination or noncontinuation of a franchise or in the
418 establishment of an additional franchise.
419 (4) (a) (i) Any hearing ordered under Subsection (1) shall be conducted no later than
421 (ii) A final decision on the challenge shall be made by the executive director no later
422 than [
423 (b) Failure to comply with the time requirements of Subsection (4)(a) is considered a
424 determination that the franchisor acted with good cause or, in the case of a protest of a
425 proposed establishment or relocation of a dealer, that good cause exists for permitting the
426 proposed additional or relocated new motor vehicle dealer, unless:
427 (i) the delay is caused by acts of the franchisor or the additional or relocating
428 franchisee; or
429 (ii) the delay is waived by the parties.
430 (5) The franchisor has the burden of proof to establish by a preponderance of the
431 evidence that under the provisions of this chapter it should be granted permission to:
432 (a) terminate or not continue the franchise;
433 (b) enter into a franchise agreement establishing an additional franchise; or
434 (c) relocate the dealership of an existing franchisee.
435 (6) Any party to the hearing may appeal the executive director's final decision in
436 accordance with Title 63G, Chapter 4, Administrative Procedures Act, including the franchisor,
437 an existing franchisee of the same line-make whose relevant market area includes the site of the
438 proposed dealership, or an affected municipality.
439 Section 7. Section 13-14-306 is amended to read:
440 13-14-306. Evidence to be considered in determining cause to relocate or
441 establish a new franchised dealership.
442 In determining whether a franchisor has established good cause for relocating an
443 existing franchisee or establishing a new franchised dealership for the same line-make in a
444 given relevant market area, the advisory board and the executive director shall consider:
445 (1) the amount of business transacted by other franchisees of the same line-make in
446 that relevant market area, as compared to business available to the franchisees;
447 (2) the investment necessarily made and obligations incurred by other franchisees of
448 the same line-make in that relevant market area in the performance of their part of their
449 franchisee agreements;
450 (3) the permanency of the existing and proposed investment;
451 (4) whether it is injurious or beneficial to the public welfare or public interest for an
452 additional franchise to be established[
453 (a) the impact on any affected municipality;
454 (b) population growth trends in any affected municipality;
455 (c) the number of dealerships in the primary market area of the new or relocated
456 dealership compared to the number of dealerships in each primary market area adjacent to the
457 new or relocated dealership's primary market area; and
458 (d) how the new or relocated dealership would impact the distance and time that an
459 individual in the new or relocated dealership's primary market area would have to travel to
460 access a dealership in the same line-make as the new or relocated dealership.
461 (5) whether the franchisees of the same line-make in that relevant market area are
462 providing adequate service to consumers for the motor vehicles of the line-make, which shall
463 include the adequacy of:
464 (a) the motor vehicle sale and service facilities;
465 (b) equipment;
466 (c) supply of vehicle parts; and
467 (d) qualified service personnel; and
468 (6) whether the relocation or establishment would cause any material negative
469 economic effect on a dealer of the same line-make in the relevant market area.
470 Section 8. Section 13-14-310 is enacted to read:
471 13-14-310. Reporting requirement.
472 By November 30 of each year, the advisory board shall submit an annual report to the
473 Business and Labor Interim Committee that, for the 12 months before the day on which the
474 report is submitted, describes:
475 (1) the number of applications for a new or relocated dealership that the advisory board
476 received; and
477 (2) for each application described in Subsection (1):
478 (a) the number of protests that the advisory board received;
479 (b) whether the advisory board conducted a hearing;
480 (c) if the advisory board conducted a hearing, the disposition of the hearing; and
481 (d) the basis for any disposition described in Subsection (2)(c).