Senator Curtis S. Bramble proposes the following substitute bill:


1     
NON-VEHICLE FRANCHISE AGREEMENT AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Curtis S. Bramble

5     
House Sponsor: Francis D. Gibson

6     

7     LONG TITLE
8     General Description:
9          This bill amends provisions of the New Automobile Franchise Act and the Motor
10     Vehicle Business Regulation Act.
11     Highlighted Provisions:
12          This bill:
13          ▸     defines terms;
14          ▸     excludes certain trailers from the New Automobile Franchise Act; and
15          ▸     makes technical and conforming changes.
16     Money Appropriated in this Bill:
17          None
18     Other Special Clauses:
19          This bill provides a special effective date.
20     Utah Code Sections Affected:
21     AMENDS:
22          13-14-102, as last amended by Laws of Utah 2018, Chapter 245
23          41-3-102, as last amended by Laws of Utah 2019, Chapter 424
24     

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

26          Section 1. Section 13-14-102 is amended to read:
27          13-14-102. Definitions.
28          As used in this chapter:
29          (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
30     Board created in Section 13-14-103.
31          (2) "Affected municipality" means an incorporated city or town:
32          (a) that is located in the notice area; and
33          (b) (i) within which a franchisor is proposing a new or relocated dealership that is
34     within the relevant market area of an existing dealership of the same line-make owned by
35     another franchisee; or
36          (ii) within which an existing dealership is located and a franchisor is proposing a new
37     or relocated dealership within the relevant market area of that existing dealership of the same
38     line-make.
39          (3) "Affiliate" has the meaning set forth in Section 16-10a-102.
40          (4) "Aftermarket product" means any product or service not included in the franchisor's
41     suggested retail price of the new motor vehicle, as that price appears on the label required by
42     15 U.S.C. Sec. 1232(f).
43          (5) "Dealership" means a site or location in this state:
44          (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
45          (b) that is identified as a new motor vehicle dealer's principal place of business for
46     licensing purposes under Section 41-3-204.
47          (6) "Department" means the Department of Commerce.
48          (7) "Do-not-drive order" means an order issued by a franchisor that instructs an
49     individual not to operate a motor vehicle of the franchisor's line-make due to a recall.
50          (8) "Executive director" means the executive director of the Department of Commerce.
51          (9) (a) "Franchise" or "franchise agreement" means a written agreement, or in the
52     absence of a written agreement, then a course of dealing or a practice for a definite or indefinite
53     period, in which:
54          (i) a person grants to another person a license to use a trade name, trademark, service
55     mark, or related characteristic; and
56          (ii) a community of interest exists in the marketing of new motor vehicles, new motor

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

88          (14) "Mile" means 5,280 feet.
89          (15) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
90     dwelling for travel, recreational, or vacation use.
91          (16) (a) "Motor vehicle" means:
92          (i) except as provided in Subsection (16)(b), a trailer;
93          [(i)] (ii) a travel trailer;
94          [(ii)] (iii) except as provided in Subsection (16)(b), a motor vehicle as defined in
95     Section 41-3-102;
96          [(iii)] (iv) a semitrailer as defined in Section 41-1a-102; and
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          (iv) a trailer that:
104          (A) is not designed for human habitation; and
105          (B) has a gross vehicle weight rating of less than 26,000 pounds.
106          (v) a mobile home as defined in Section 41-1a-102;
107          (vi) a trailer of 750 pounds or less unladen weight; and
108          (vii) a farm tractor or other machine or tool used in the production, harvesting, or care
109     of a farm product.
110          (17) "New motor vehicle" means a motor vehicle that:
111          (a) has never been titled or registered; and
112          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
113     less than 7,500 miles.
114          (18) "New motor vehicle dealer" is a person who is licensed under Subsection
115     41-3-202(1)[(a)] to sell new motor vehicles.
116          (19) "Notice" or "notify" includes both traditional written communications and all
117     reliable forms of electronic communication unless expressly prohibited by statute or rule.
118          (20) "Notice area" means the geographic area that is:

119          (a) within a radius of at least six miles and no more than 10 miles from the site of an
120     existing dealership; and
121          (b) located within a county with a population of at least 225,000.
122          (21) "Primary market area" means:
123          (a) for an existing dealership, the geographic area established by the franchisor that the
124     existing dealership is intended to serve; or
125          (b) for a new or relocated dealership, the geographic area proposed by the franchisor
126     that the new or relocated dealership is intended to serve.
127          (22) "Recall" means a determination by a franchisor or the National Highway Traffic
128     Safety Administration that a motor vehicle has a safety-related defect or fails to meet a federal
129     safety or emissions standard.
130          (23) "Recall repair" means any diagnostic work, labor, or part necessary to resolve an
131     issue that is the basis of a recall.
132          (24) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
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.
141          (25) (a) "Relevant market area," except with respect to recreational vehicles, means:
142          (i) as applied to an existing dealership that is located in a county with a population of
143     less than 225,000:
144          (A) the county in which the existing dealership is located; and
145          (B) the area within a 15-mile radius of the existing dealership; or
146          (ii) as applied to an existing dealership that is located in a county with a population of
147     225,000 or more, the area within a 10-mile radius of the existing dealership.
148          (b) "Relevant market area," with respect to recreational vehicles, means:
149          (i) the county in which the dealership is to be established or relocated; and

150          (ii) the area within a 35-mile radius from the site of the existing dealership.
151          (26) "Sale, transfer, or assignment" means any disposition of a franchise or an interest
152     in a franchise, with or without consideration, including a bequest, inheritance, gift, exchange,
153     lease, or license.
154          (27) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
155     includes any reliable form of communication.
156          (28) "Site-control agreement" means an agreement, however denominated and
157     regardless of the agreement's form or of the parties to the agreement, that has the effect of:
158          (a) controlling in any way the use and development of the premises upon which a
159     franchisee's business operations are located;
160          (b) requiring a franchisee to establish or maintain an exclusive dealership facility on
161     the premises upon which the franchisee's business operations are located; or
162          (c) restricting the ability of the franchisee or, if the franchisee leases the dealership
163     premises, the franchisee's lessor to transfer, sell, lease, develop, redevelop, or change the use of
164     some or all of the dealership premises, whether by sublease, lease, collateral pledge of lease,
165     right of first refusal to purchase or lease, option to purchase or lease, or any similar
166     arrangement.
167          (29) "Stop-sale order" means an order issued by a franchisor that prohibits a franchisee
168     from selling or leasing a certain used motor vehicle of the franchisor's line-make, which then or
169     thereafter is in the franchisee's inventory, due to a recall.
170          (30) "Trailer" means the same as that term is defined in Section 41-3-102.
171          [(30)] (31) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable
172     vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
173     vacation use that does not require a special highway movement permit when drawn by a
174     self-propelled motor vehicle.
175          [(31)] (32) "Used motor vehicle" means a motor vehicle that:
176          (a) has been titled and registered to a purchaser other than a franchisee; or
177          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
178     7,500 or more miles.
179          [(32)] (33) "Value of a used motor vehicle" means the average trade-in value for a used
180     motor vehicle of the same year, make, and model as reported in a recognized, independent

181     third-party used motor vehicle guide.
182          [(33)] (34) "Written," "write," "in writing," or other variations of those terms shall
183     include all reliable forms of electronic communication.
184          Section 2. Section 41-3-102 is amended to read:
185          41-3-102. Definitions.
186          As used in this chapter:
187          (1) "Administrator" means the motor vehicle enforcement administrator.
188          (2) "Agent" means a person other than a holder of any dealer's or salesperson's license
189     issued under this chapter, who for salary, commission, or compensation of any kind, negotiates
190     in any way for the sale, purchase, order, or exchange of three or more motor vehicles for any
191     other person in any 12-month period.
192          (3) "Auction" means a dealer engaged in the business of auctioning motor vehicles,
193     either owned or consigned, to the general public.
194          (4) "Authorized service center" means an entity that:
195          (a) is in the business of repairing exclusively the motor vehicles of the same line-make
196     as the motor vehicles a single direct-sale manufacturer manufactures;
197          (b) the direct-sale manufacturer described in Subsection (4)(a) authorizes to complete
198     warranty repair work for motor vehicles that the direct-sale manufacturer sells, displays for
199     sale, or offers for sale or exchange; and
200          (c) conducts business primarily from an enclosed commercial repair facility that is
201     permanently located in the state.
202          (5) "Board" means the advisory board created in Section 41-3-106.
203          (6) "Body shop" means a person engaged in rebuilding, restoring, repairing, or painting
204     the body of motor vehicles for compensation.
205          (7) "Commission" means the State Tax Commission.
206          (8) "Crusher" means a person who crushes or shreds motor vehicles subject to
207     registration under Title 41, Chapter 1a, Motor Vehicle Act, to reduce the useable materials and
208     metals to a more compact size for recycling.
209          (9) (a) "Dealer" means a person:
210          (i) whose business in whole or in part involves selling new, used, or new and used
211     motor vehicles or off-highway vehicles; and

212          (ii) who sells, displays for sale, or offers for sale or exchange three or more new or
213     used motor vehicles or off-highway vehicles in any 12-month period.
214          (b) "Dealer" includes a representative or consignee of any dealer.
215          (10) "Direct-sale manufacturer" means a person:
216          (a) that is both a manufacturer and a dealer;
217          (b) that, in this state, sells, displays for sale, or offers for sale or exchange only new
218     motor vehicles of the person's own line-make that are:
219          (i) exclusively propelled through the use of electricity, a hydrogen fuel cell, or another
220     non-fossil fuel source;
221          (ii) (A) passenger vehicles with a gross vehicle weight rating of 14,000 pounds or less;
222     or
223          (B) trucks with a gross vehicle weight rating of 14,000 pounds or less; and
224          (iii) manufactured by the person;
225          (c) that is not a franchise holder;
226          (d) that is domiciled in the United States; and
227          (e) whose chief officers direct, control, and coordinate the person's activities as a
228     direct-sale manufacturer from a physical location in the United States.
229          (11) "Direct-sale manufacturer salesperson" means an individual who for a salary,
230     commission, or compensation of any kind, is employed either directly, indirectly, regularly, or
231     occasionally by a direct-sale manufacturer to sell, purchase, or exchange or to negotiate for the
232     sale, purchase, or exchange of a motor vehicle manufactured by the direct-sale manufacturer
233     who employs the individual.
234          (12) (a) "Dismantler" means a person engaged in the business of dismantling motor
235     vehicles subject to registration under Title 41, Chapter 1a, Motor Vehicle Act, for the resale of
236     parts or for salvage.
237          (b) "Dismantler" includes a person who dismantles three or more motor vehicles in any
238     12-month period.
239          (13) "Distributor" means a person who has a franchise from a manufacturer of motor
240     vehicles to distribute motor vehicles within this state and who in whole or in part sells or
241     distributes new motor vehicles to dealers or who maintains distributor representatives.
242          (14) "Distributor branch" means a branch office similarly maintained by a distributor

243     for the same purposes a factory branch is maintained.
244          (15) "Distributor representative" means a person and each officer and employee of the
245     person engaged as a representative of a distributor or distributor branch of motor vehicles to
246     make or promote the sale of the distributor or the distributor branch's motor vehicles, or for
247     supervising or contacting dealers or prospective dealers of the distributor or the distributor
248     branch.
249          (16) "Division" means the Motor Vehicle Enforcement Division created in Section
250     41-3-104.
251          (17) "Factory branch" means a branch office maintained by a person who manufactures
252     or assembles motor vehicles for sale to distributors, motor vehicle dealers, or who directs or
253     supervises the factory branch's representatives.
254          (18) "Factory representative" means a person and each officer and employee of the
255     person engaged as a representative of a manufacturer of motor vehicles or by a factory branch
256     to make or promote the sale of the manufacturer's or factory branch's motor vehicles, or for
257     supervising or contacting the dealers or prospective dealers of the manufacturer or the factory
258     branch.
259          (19) (a) "Franchise" means a contract or agreement between a dealer and a
260     manufacturer of new motor vehicles or a manufacturer's distributor or factory branch by which
261     the dealer is authorized to sell any specified make or makes of new motor vehicles.
262          (b) "Franchise" includes a contract or agreement described in Subsection (19)(a)
263     regardless of whether the contract or agreement is subject to Title 13, Chapter 14, New
264     Automobile Franchise Act, Title 13, Chapter 35, Powersport Vehicle Franchise Act, or neither.
265          (20) (a) "Franchise holder" means a manufacturer who:
266          (i) previously had a franchised dealer in the United States;
267          (ii) currently has a franchised dealer in the United States;
268          (iii) is a successor to another manufacturer who previously had or currently has a
269     franchised dealer in the United States;
270          (iv) is a material owner of another manufacturer who previously had or currently has a
271     franchised dealer in the United States;
272          (v) is under legal or common ownership, or practical control, with another
273     manufacturer who previously had or currently has a franchised dealer in the United States; or

274          (vi) is in a partnership, joint venture, or similar arrangement for production of a
275     commonly owned line-make with another manufacturer who previously had or currently has a
276     franchised dealer in the United States.
277          (b) "Franchise holder" does not include a manufacturer described in Subsection (20)(a),
278     if at all times during the franchised dealer's existence, the manufacturer had legal or practical
279     common ownership or common control with the franchised dealer.
280          (21) "Line-make" means motor vehicles that are offered for sale, lease, or distribution
281     under a common name, trademark, service mark, or brand name of the manufacturer.
282          (22) "Manufacturer" means a person engaged in the business of constructing or
283     assembling new motor vehicles, ownership of which is customarily transferred by a
284     manufacturer's statement or certificate of origin, or a person who constructs three or more new
285     motor vehicles in any 12-month period.
286          (23) "Material owner" means a person who possesses, directly or indirectly, the power
287     to direct, or cause the direction of, the management, policies, or activities of another person:
288          (a) through ownership of voting securities;
289          (b) by contract or credit arrangement; or
290          (c) in another way not described in Subsections (23)(a) and (b).
291          (24) (a) "Motor vehicle" means a vehicle that is:
292          (i) self-propelled;
293          (ii) a trailer[,];
294          (iii) a travel trailer[, or];
295          (iv) a semitrailer; [or]
296          [(iii)] (v) an off-highway vehicle; or
297          (vi) a small trailer.
298          (b) "Motor vehicle" does not include:
299          (i) mobile homes as defined in Section 41-1a-102;
300          (ii) trailers of 750 pounds or less unladen weight;
301          (iii) [farm tractors and other machines and tools] a farm tractor or other machine or
302     tool used in the production, harvesting, [and] or care of a farm [products] product; and
303          (iv) park model recreational vehicles as defined in Section 41-1a-102.
304          (25) "Motorcycle" [has the same meaning as] means the same as that term is defined in

305     Section 41-1a-102.
306          (26) "New motor vehicle" means a motor vehicle that:
307          (a) has never been titled or registered; and
308          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
309     less than 7,500 miles.
310          (27) "Off-highway vehicle" [has the same meaning as provided] means the same as that
311     term is defined in Section 41-22-2.
312          (28) "Pawnbroker" means a person whose business is to lend money on security of
313     personal property deposited with him.
314          (29) (a) "Principal place of business" means a site or location in this state:
315          (i) devoted exclusively to the business for which the dealer, manufacturer,
316     remanufacturer, transporter, dismantler, crusher, or body shop is licensed, and businesses
317     incidental to them;
318          (ii) sufficiently bounded by fence, chain, posts, or otherwise marked to definitely
319     indicate the boundary and to admit a definite description with space adequate to permit the
320     display of three or more new, or new and used, or used motor vehicles and sufficient parking
321     for the public; and
322          (iii) that includes a permanent enclosed building or structure large enough to
323     accommodate the office of the establishment and to provide a safe place to keep the books and
324     other records of the business, at which the principal portion of the business is conducted and
325     the books and records kept and maintained.
326          (b) "Principal place of business" means, with respect to a direct-sale manufacturer, the
327     direct-sale manufacturer's showroom, which shall comply with the requirements of Subsection
328     (29)(a).
329          (30) "Remanufacturer" means a person who reconstructs used motor vehicles subject to
330     registration under Title 41, Chapter 1a, Motor Vehicle Act, to change the body style and
331     appearance of the motor vehicle or who constructs or assembles motor vehicles from used or
332     new and used motor vehicle parts, or who reconstructs, constructs, or assembles three or more
333     motor vehicles in any 12-month period.
334          (31) "Salesperson" means an individual who for a salary, commission, or compensation
335     of any kind, is employed either directly, indirectly, regularly, or occasionally by any new motor

336     vehicle dealer or used motor vehicle dealer to sell, purchase, or exchange or to negotiate for the
337     sale, purchase, or exchange of motor vehicles.
338          (32) "Semitrailer" [has the same meaning as] means the same as that term is defined in
339     Section 41-1a-102.
340          (33) "Showroom" means a site or location in the state that a direct-sale manufacturer
341     uses for the direct-sale manufacturer's business, including the display and demonstration of
342     new motor vehicles that are exclusively of the same line-make that the direct-sale manufacturer
343     manufactures.
344          (34) "Small trailer" means a trailer that has an unladen weight of:
345          (a) more than 750 pounds[, but]; and
346          (b) less than 2,000 pounds.
347          (35) "Special equipment" includes a truck mounted crane, cherry picker, material lift,
348     post hole digger, and a utility or service body.
349          (36) "Special equipment dealer" means a new or new and used motor vehicle dealer
350     engaged in the business of buying new incomplete motor vehicles with a gross vehicle weight
351     of 12,000 or more pounds and installing special equipment on the incomplete motor vehicle.
352          (37) "Trailer" [has the same meaning as] means the same as that term is defined in
353     Section 41-1a-102.
354          (38) "Transporter" means a person engaged in the business of transporting motor
355     vehicles as described in Section 41-3-202.
356          (39) "Travel trailer" [has the same meaning as provided] means the same as that term is
357     defined in Section 41-1a-102.
358          (40) "Used motor vehicle" means a vehicle that:
359          (a) has been titled and registered to a purchaser other than a dealer; or
360          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
361     7,500 or more miles.
362          (41) "Wholesale motor vehicle auction" means a dealer primarily engaged in the
363     business of auctioning consigned motor vehicles to dealers or dismantlers who are licensed by
364     this or any other jurisdiction.
365          Section 3. Effective date.
366          This bill takes effect on October 15, 2020.