Chief Sponsor: Ralph Okerlund

House Sponsor: ____________


8     General Description:
9          This bill amends provisions related to motor vehicle franchises.
10     Highlighted Provisions:
11          This bill:
12          ▸     requires a franchisor to compensate a franchisee for performing a recall repair on a
13     used motor vehicle under certain circumstances;
14          ▸     requires a franchisor to compensate a franchisee for a used motor vehicle that is
15     subject to a stop-sale or do-not-drive order under certain circumstances; and
16          ▸     provides procedures for a franchisee owed compensation by a franchisor to make a
17     claim for reimbursement.
18     Money Appropriated in this Bill:
19          None
20     Other Special Clauses:
21          None
22     Utah Code Sections Affected:
23     AMENDS:
24          13-14-102, as last amended by Laws of Utah 2015, Chapter 268
25     ENACTS:
26          13-14-207, Utah Code Annotated 1953

28     Be it enacted by the Legislature of the state of Utah:
29          Section 1. Section 13-14-102 is amended to read:
30          13-14-102. Definitions.
31          As used in this chapter:
32          (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
33     Board created in Section 13-14-103.
34          (2) "Affected municipality" means an incorporated city or town:
35          (a) that is located in the notice area; and
36          (b) (i) within which a franchisor is proposing a new or relocated dealership that is
37     within the relevant market area of an existing dealership of the same line-make owned by
38     another franchisee; or
39          (ii) within which an existing dealership is located and a franchisor is proposing a new
40     or relocated dealership within the relevant market area of that existing dealership of the same
41     line-make.
42          (3) "Affiliate" has the meaning set forth in Section 16-10a-102.
43          (4) "Aftermarket product" means any product or service not included in the franchisor's
44     suggested retail price of the new motor vehicle, as that price appears on the label required by
45     15 U.S.C. Sec. 1232(f).
46          (5) "Dealership" means a site or location in this state:
47          (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
48          (b) that is identified as a new motor vehicle dealer's principal place of business for
49     licensing purposes under Section 41-3-204.
50          (6) "Department" means the Department of Commerce.
51          (7) "Executive director" means the executive director of the Department of Commerce.
52          (8) (a) "Franchise" or "franchise agreement" means a written agreement, or in the
53     absence of a written agreement, then a course of dealing or a practice for a definite or indefinite
54     period, in which:
55          (i) a person grants to another person a license to use a trade name, trademark, service
56     mark, or related characteristic; and
57          (ii) a community of interest exists in the marketing of new motor vehicles, new motor
58     vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or

59     retail.
60          (b) "Franchise" or "franchise agreement" includes a sales and service agreement.
61          (9) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
62     writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
63     produced, represented, or distributed by the franchisor.
64          (10) "Franchisor" means a person who has, in writing or in practice, agreed with or
65     permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
66     produced, assembled, represented, or distributed by the franchisor, and includes:
67          (a) the manufacturer, producer, assembler, or distributor of the new motor vehicles;
68          (b) an intermediate distributor; and
69          (c) an agent, officer, or field or area representative of the franchisor.
70          (11) "Lead" means the referral by a franchisor to a franchisee of a potential customer
71     whose contact information was obtained from a franchisor's program, process, or system
72     designed to generate referrals for the purchase or lease of a new motor vehicle, or for service
73     work related to the franchisor's vehicles.
74          (12) "Line-make" means:
75          (a) for other than a recreational vehicle, the motor vehicles that are offered for sale,
76     lease, or distribution under a common name, trademark, service mark, or brand name of the
77     franchisor; or
78          (b) for a recreational vehicle, a specific series of recreational vehicle product that:
79          (i) is identified by a common series trade name or trademark;
80          (ii) is targeted to a particular market segment, as determined by decor, features,
81     equipment, size, weight, and price range;
82          (iii) has a length and floor plan that distinguish the recreational vehicle from other
83     recreational vehicles with substantially the same decor, features, equipment, size, weight, and
84     price;
85          (iv) belongs to a single, distinct classification of recreational vehicle product type
86     having a substantial degree of commonality in the construction of the chassis, frame, and body;
87     and
88          (v) a franchise agreement authorizes a dealer to sell.
89          (13) "Mile" means 5,280 feet.

90          (14) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
91     dwelling for travel, recreational, or vacation use.
92          (15) (a) "Motor vehicle" means:
93          (i) a travel trailer;
94          (ii) except as provided in Subsection (15)(b), a motor vehicle as defined in Section
95     41-3-102;
96          (iii) a semitrailer as defined in Section 41-1a-102;
97          (iv) a trailer as defined in Section 41-1a-102; and
98          (v) a recreational vehicle.
99          (b) "Motor vehicle" does not include:
100          (i) a motorcycle as defined in Section 41-1a-102;
101          (ii) an off-highway vehicle as defined in Section 41-3-102; and
102          (iii) a small trailer as defined in Section 41-3-102.
103          (16) "New motor vehicle" means a motor vehicle as defined in Subsection (15) that has
104     never been titled or registered and has been driven less than 7,500 miles, unless the motor
105     vehicle is a trailer, travel trailer, or semitrailer, in which case the mileage limit does not apply.
106          (17) "New motor vehicle dealer" is a person who is licensed under Subsection
107     41-3-202(1)(a) to sell new motor vehicles.
108          (18) "Notice" or "notify" includes both traditional written communications and all
109     reliable forms of electronic communication unless expressly prohibited by statute or rule.
110          (19) "Notice area" means the geographic area that is:
111          (a) within a radius of at least six miles and no more than 10 miles from the site of an
112     existing dealership; and
113          (b) located within a county with a population of at least 225,000.
114          (20) "Primary market area" means:
115          (a) for an existing dealership, the geographic area established by the franchisor that the
116     existing dealership is intended to serve; or
117          (b) for a new or relocated dealership, the geographic area proposed by the franchisor
118     that the new or relocated dealership is intended to serve.
119          (21) "Recall" means a determination, made by a franchisor or by the National Highway
120     Traffic Safety Administration, that a motor vehicle has a safety-related defect or fails to meet a

121     federal or state safety or emissions standard.
122          (22) "Recall repair" means any diagnostic, labor, or part necessary to resolve a motor
123     vehicle defect or to make a motor vehicle compliant with a standard that is the basis of a recall.
124          [(21)] (23) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
125     primarily designed as a temporary dwelling for travel, recreational, or vacation use, that is
126     either self-propelled or pulled by another vehicle.
127          (b) "Recreational vehicle" includes:
128          (i) a travel trailer;
129          (ii) a camping trailer;
130          (iii) a motor home;
131          (iv) a fifth wheel trailer; and
132          (v) a van.
133          [(22)] (24) (a) "Relevant market area," except with respect to recreational vehicles,
134     means:
135          (i) as applied to an existing dealership that is located in a county with a population of
136     less than 225,000:
137          (A) the county in which the existing dealership is located; and
138          (B) the area within a 15-mile radius of the existing dealership; or
139          (ii) as applied to an existing dealership that is located in a county with a population of
140     225,000 or more, the area within a 10-mile radius of the existing dealership.
141          (b) "Relevant market area," with respect to recreational vehicles, means:
142          (i) the county in which the dealership is to be established or relocated; and
143          (ii) the area within a 35-mile radius from the site of the existing dealership.
144          [(23)] (25) "Sale, transfer, or assignment" means any disposition of a franchise or an
145     interest in a franchise, with or without consideration, including a bequest, inheritance, gift,
146     exchange, lease, or license.
147          [(24)] (26) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
148     includes any reliable form of communication.
149          [(25)] (27) "Site-control agreement" means an agreement, however denominated and
150     regardless of the agreement's form or of the parties to the agreement, that has the effect of:
151          (a) controlling in any way the use and development of the premises upon which a

152     franchisee's business operations are located;
153          (b) requiring a franchisee to establish or maintain an exclusive dealership facility on
154     the premises upon which the franchisee's business operations are located; or
155          (c) restricting the ability of the franchisee or, if the franchisee leases the dealership
156     premises, the franchisee's lessor to transfer, sell, lease, develop, redevelop, or change the use of
157     some or all of the dealership premises, whether by sublease, lease, collateral pledge of lease,
158     right of first refusal to purchase or lease, option to purchase or lease, or any similar
159     arrangement.
160          [(26)] (28) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable
161     vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
162     vacation use that does not require a special highway movement permit when drawn by a
163     self-propelled motor vehicle.
164          (29) "Used motor vehicle" means a motor vehicle that is not a new motor vehicle.
165          [(27)] (30) "Written," "write," "in writing," or other variations of those terms shall
166     include all reliable forms of electronic communication.
167          Section 2. Section 13-14-207 is enacted to read:
168          13-14-207. Motor vehicle recalls -- Franchisee compensation.
169          (1) As used in this section:
170          (a) "Do-not-drive order" means an order issued by a franchisor that advises an
171     individual not to drive a motor vehicle of the franchisor's line-make due to a recall.
172          (b) "Stop-sale order" means an order issued by a franchisor that prohibits a franchisee
173     from selling a motor vehicle of the franchisor's line-make due to a recall.
174          (2) A franchisor shall cover the reasonable cost to a franchisee of performing a recall
175     repair to a used motor vehicle of the franchisor's line-make using the time allowance and
176     compensation standards specified by the franchisor in accordance with Section 13-14-204.
177          (3) If a franchisor issues a stop-sale or a do-not-drive order for a used motor vehicle
178     subject to a recall and held by a franchisee, the franchisor shall compensate the franchisee for
179     the used motor vehicle, during the time period described in Subsection (4), in an amount that is
180     equal to the greater of:
181          (a) 1.75% of the value of the used motor vehicle each month; or
182          (b) an amount available under a national recall compensation program.

183          (4) A franchisor shall compensate a franchisee under Subsection (3) beginning on a day
184     15 days after the day on which the franchisor issues a stop-sale or do-not-drive order and
185     ending on the earlier of:
186          (a) the day the franchisee has all necessary parts to complete a recall repair for the used
187     motor vehicle; or
188          (b) the day the stop-sale or do-not-drive order is lifted.
189          (5) The value of a used motor vehicle subject to a recall for the purposes of Subsection
190     (3) is the average trade-in value for a used motor vehicle of the same year, line-make, model,
191     and mileage of the used motor vehicle subject to the recall, as reported in a recognized,
192     independent, third-party used motor vehicle value guide.
193          (6) A franchisor may not reduce the amount of compensation due a franchisee under
194     Subsection (2) or (3) by any means, including by:
195          (a) a chargeback;
196          (b) removing the franchisee from an incentive program; or
197          (c) reducing an amount owed to the franchisee under an incentive program.
198          (7) A franchisee that is owed compensation by a franchisor under Subsection (2) or (3)
199     shall submit a claim to a franchisor for reimbursement.
200          (8) For a claim submitted by a franchisee under Subsection (7), a franchisor shall:
201          (a) approve or deny the claim 30 days or fewer after the day on which the franchisee
202     submits the claim; and
203          (b) reimburse the franchisee for any approved claim 30 days or fewer after the day on
204     which the franchisor approved the claim.
205          (9) If a franchisor does not expressly deny a claim submitted by a franchisee within the
206     time period described in Subsection (8), the claim is considered approved.

Legislative Review Note
Office of Legislative Research and General Counsel