1-1 By: Cain (Senate Sponsor - Henderson) H.B. No. 941
1-2 (In the Senate - Received from the House March 22, 1993;
1-3 March 23, 1993, read first time and referred to Committee on State
1-4 Affairs; April 7, 1993, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 11, Nays 0;
1-6 April 7, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Harris of Dallas x
1-10 Rosson x
1-11 Carriker x
1-12 Henderson x
1-13 Leedom x
1-14 Lucio x
1-15 Luna x
1-16 Nelson x
1-17 Patterson x
1-18 Shelley x
1-19 Sibley x
1-20 West x
1-21 Whitmire x
1-22 COMMITTEE SUBSTITUTE FOR H.B. No. 941 By: Henderson
1-23 A BILL TO BE ENTITLED
1-24 AN ACT
1-25 relating to the authority and responsibility of the Texas Motor
1-26 Vehicle Board of the Texas Department of Transportation.
1-27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-28 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-29 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-30 read as follows:
1-31 Sec. 1.03. Definitions. In this Act:
1-32 (1) "Motor vehicle" means:
1-33 (A) every fully self-propelled vehicle which has as
1-34 its primary purpose the transport of a person or persons, or
1-35 property, on a public highway, and having two or more wheels;
1-36 (B) every two or more wheeled fully self-propelled,
1-37 titled vehicle which has as its primary purpose the transport of a
1-38 person or persons or property and is not manufactured for use on
1-39 public streets, roads, or highways; or
1-40 (C) an engine, transmission, or rear axle manufactured
1-41 for installation in a vehicle having as its primary purpose the
1-42 transport of a person or persons or property on a public highway
1-43 and having a gross vehicle weight rating of more than 16,000
1-44 pounds, whether or not attached to a vehicle chassis.
1-45 (2) "New motor vehicle" means a motor vehicle which has not
1-46 been the subject of a "retail sale" without regard to the mileage
1-47 of the vehicle.
1-48 (3) "Person" means a natural person, partnership,
1-49 corporation, association, trust, estate, or any other legal entity.
1-50 (4) "Dealer" means any person engaged in the business of
1-51 buying, selling or exchanging new motor vehicles at an established
1-52 and permanent place of business pursuant to a franchise in effect
1-53 with a manufacturer or distributor.
1-54 (5) "Manufacturer" means any person who manufactures or
1-55 assembles new motor vehicles either within or without this State.
1-56 (6) "Distributor" means any person who distributes and/or
1-57 sells new motor vehicles to dealers and who is not a manufacturer.
1-58 (7) "Representative" means any person who is or acts as an
1-59 agent, employee or representative of a manufacturer, distributor,
1-60 or converter who performs any duties in this State relating to
1-61 promoting the distribution and/or sale of new motor vehicles or
1-62 contacts dealers in this State on behalf of a manufacturer,
1-63 distributor, or converter.
1-64 (8) "Franchise" means one or more contracts between a dealer
1-65 as franchisee, and either a manufacturer or a distributor as
1-66 franchisor under which (A) the franchisee is granted the right to
1-67 sell new motor vehicles manufactured or distributed by the
1-68 franchisor; (B) the franchisee as an independent business is a
2-1 component of franchisor's distribution system; (C) the franchisee
2-2 is substantially associated with franchisor's trademark, tradename
2-3 and commercial symbol; (D) the franchisee's business is
2-4 substantially reliant on franchisor for a continued supply of motor
2-5 vehicles, parts, and accessories for the conduct of its business;
2-6 or (E) any right, duty, or obligation granted or imposed by this
2-7 Act is affected. The term includes a written communication from a
2-8 franchisor to a franchisee by which a duty is imposed on the
2-9 franchisee.
2-10 (9)
2-11 (10) "Broker" means a person who, for a fee, commission, or
2-12 other valuable consideration, arranges or offers to arrange a
2-13 transaction involving the sale, for purposes other than resale, of
2-14 a new motor vehicle, and who is not:
2-15 (A) a dealer or bona fide employee of a dealer when
2-16 acting on behalf of a dealer;
2-17 (B) a representative or bona fide employee of a
2-18 representative when acting on behalf of a representative;
2-19 (C) a distributor or bona fide employee of a
2-20 distributor when acting on behalf of a distributor; or
2-21 (D) at any point in the transaction the bona fide
2-22 owner of the vehicle involved in the transaction.
2-23 (11) "Motor home" means a motor vehicle which is designed to
2-24 provide temporary living quarters and which:
2-25 (A) is built onto as an integral part of, or is
2-26 permanently attached to, a motor vehicle chassis; and
2-27 (B) contains at least four of the following
2-28 independent life support systems if each is permanently installed
2-29 and designed to be removed only for purposes of repair or
2-30 replacement and meets the standards of the American National
2-31 Standards Institute, Standards for Recreational Vehicles:
2-32 (i) a cooking facility with an on-board fuel
2-33 source;
2-34 (ii) a gas or electric refrigerator;
2-35 (iii) a toilet with exterior evacuation;
2-36 (iv) a heating or air conditioning system with
2-37 an on-board power or fuel source separate from the vehicle engine;
2-38 (v) a potable water supply system that includes
2-39 at least a sink, a faucet, and a water tank with an exterior
2-40 service supply connection;
2-41 (vi) a 110-125 volt electric power supply.
2-42 (12) "Conversion" means a motor vehicle, other than a motor
2-43 home, which has been substantially modified by a person other than
2-44 the manufacturer or distributor of the chassis of the motor vehicle
2-45 and which has not been the subject of a retail sale.
2-46 (13) "Motor home manufacturer" means a person other than the
2-47 manufacturer of the chassis of a motor vehicle who, prior to the
2-48 retail sale of the motor vehicle, performs modifications on the
2-49 chassis that result in the finished product being classified as a
2-50 motor home.
2-51 (14) "Chassis manufacturer" means a person who manufactures
2-52 and produces the frame upon which is mounted the body of a motor
2-53 vehicle.
2-54 (15) "Converter" means a person who prior to the retail sale
2-55 of a motor vehicle, assembles, installs, or affixes a body, cab, or
2-56 special equipment to a chassis, or who substantially adds,
2-57 subtracts from, or modifies a previously assembled or manufactured
2-58 motor vehicle.
2-59 (16) "Rule" means a statement by the Commission of general
2-60 and future applicability that implements, interprets, or prescribes
2-61 law or policy or describes the organization or procedural practice
2-62 requirements of the Commission. The term includes the amendment or
2-63 repeal of a prior rule, but does not include statements concerning
2-64 only the internal management of the Commission which do not affect
2-65 the rights of a person not connected with the Commission.
2-66 (17) "Party" means each person or agency named or admitted
2-67 as a party and whose legal rights, duties, or privileges are to be
2-68 determined by the Commission after an opportunity for adjudicative
2-69 hearing.
2-70 (18) "Relocation" means the transfer of an existing
3-1 dealership operation to facilities at a different location,
3-2 including a transfer which results in a consolidation or dualing of
3-3 an existing dealer's operation.
3-4 (19) "Retail sale" means the sale of a motor vehicle except:
3-5 (A) a sale in which the purchaser acquires a vehicle
3-6 for the purpose of resale; or
3-7 (B) a sale of a vehicle that is operated under and in
3-8 accordance with Article 6686, Revised Statutes.
3-9 (20) "Warranty work" means parts, labor, and any other
3-10 expenses incurred by a dealer in complying with the terms of a
3-11 manufacturer's or distributor's warranty.
3-12 (21) "Department" means the Texas Department of
3-13 Transportation.
3-14 (22) "Transportation Commission" means the Texas
3-15 Transportation Commission of the Texas Department of
3-16 Transportation.
3-17 SECTION 2. Section 1.04, Texas Motor Vehicle Commission Code
3-18 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
3-19 read as follows:
3-20 Sec. 1.04. Construction and severability. This Act
3-21 shall be liberally construed so as to effectuate its purposes. The
3-22 provisions of this Act are severable and if any phrase, clause,
3-23 sentence, or provision of this Act is declared to be contrary to
3-24 the constitution of this state, or of the United States or the
3-25 applicability thereof to any person or circumstance is held
3-26 invalid, the validity of the remainder of this Act and the
3-27 applicability thereof to any person or circumstance is not affected
3-28 thereby. An agreement to waive the terms of this Act is void and
3-29 unenforceable.
3-30 SECTION 3. Subsection (c), Section 2.01, Texas Motor Vehicle
3-31 Commission Code, (Article 4413(36), Vernon's Texas Civil Statutes),
3-32 is amended to read as follows:
3-33 (c) A reference in this Act to the "Executive
3-34 Director" or the Executive Director of the Texas Motor Vehicle
3-35 Commission means the Director of the Motor Vehicle Division of the
3-36 Texas Department of Transportation. A reference in other law, rule
3-37 or regulation to the Executive Director of the Texas Motor Vehicle
3-38 Commission <Board> means the Director of the Motor Vehicle Division
3-39 of the Texas Department of Transportation.
3-40 SECTION 4. Section 3.08, Texas Motor Vehicle Commission Code
3-41 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
3-42 read as follows:
3-43 Sec. 3.03. General commission powers. (a) The
3-44 Commission shall have and may, in its discretion and
3-45 notwithstanding any other provision of law that is inconsistent
3-46 with this Act, exercise the powers set forth in this Act, and shall
3-47 have all other powers necessary, incidental, or convenient to carry
3-48 out its duties and effectuate its express powers and duties. These
3-49 powers and duties include the power to initiate and conduct
3-50 proceedings, investigations, and hearings, administer oaths,
3-51 receive evidence and pleadings, issue subpoenas to compel the
3-52 attendance of any person, order the production of any tangible
3-53 property, including papers, records, and documents, make findings
3-54 of fact on all factual issues arising out of any proceeding
3-55 initiated under this Act, specify, govern, and control appearance,
3-56 practice, and procedure before the Commission, issue rules,
3-57 conclusions of law, decisions, including declaratory decisions or
3-58 orders, enter into contracts or execute instruments, retain
3-59 counsel, utilize the services of the Attorney General of the State
3-60 of Texas and thereafter institute and direct the conduct of legal
3-61 proceedings in any forum or obtain other professional services as
3-62 may be necessary and convenient, sanction for contempt, assess and
3-63 collect fees and costs including attorney's fees, issue, suspend,
3-64 and revoke licenses, prohibit and regulate acts and practices in
3-65 connection with the distribution and sale of new motor vehicles and
3-66 warranty performance obligations, issue cease and desist orders in
3-67 the nature of temporary and permanent injunctions, and levy civil
3-68 penalties.
3-69 (b) The commission may conduct hearings in
3-70 contested cases brought pursuant to, and as provided by, Article
4-1 6686, Revised Statutes. The procedures applicable to a hearing
4-2 conducted under this Subsection, and the disposition of a final
4-3 order after a hearing conducted under this Subsection, are those
4-4 applicable to a hearing conducted as provided by Section 6.07(e)(2)
4-5 of this Act. A decision or final order issued under this
4-6 Subsection is final, and no appeal may, as a matter of right, be
4-7 made to the Texas Transportation Commission. The department may
4-8 adopt rules applicable to procedures, hearings, and enforcement
4-9 proceedings in an action brought pursuant to this Subsection.
4-10 SECTION 5. Subsection (e), Section 4.05, Texas Motor Vehicle
4-11 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
4-12 is amended to read as follows:
4-13 (e) The filing fees for a contested case or
4-14 protest that involves a hearing are:
4-15 (1) for a complaint filed under Section
4-16 6.07 of this Act, $35 <$75>; and
4-17 (2) for all other complaints or protests,
4-18 $200.
4-19 SECTION 6. Section 5.01, Texas Motor Vehicle Commission Code
4-20 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-21 read as follows:
4-22 Sec. 5.01. Dealers. It shall be unlawful for any
4-23 dealer to:
4-24 (1) Require a retail purchaser of a new motor
4-25 vehicle as a condition of sale and delivery thereof to purchase
4-26 special features, equipment, parts, or accessories not ordered or
4-27 desired by the purchaser, provided such features, equipment, parts,
4-28 or accessories are not already installed on the new motor vehicle
4-29 at the time of sale.
4-30 (2) Use false, deceptive, or misleading
4-31 advertising.
4-32 (3) Fail to perform the obligations placed on
4-33 the selling dealer in connection with the delivery and preparation
4-34 of a new motor vehicle for retail sale as provided in the
4-35 manufacturer's preparation and delivery agreements on file with the
4-36 Commission and applicable to such vehicle.
4-37 (4) Fail to perform the obligations placed on
4-38 the dealer in connection with the manufacturer's warranty
4-39 agreements on file with the Commission.
4-40 (5) Operate as a dealer without a currently
4-41 valid license from the Commission or otherwise violate this Act or
4-42 rules promulgated by the Commission hereunder.
4-43 (6) Operate without appropriate signs readily
4-44 and easily visible to the public, identifying the dealer's place of
4-45 business and the products the dealer offers for sale. In the event
4-46 of a conflict with another law or ordinance, this Subdivision
4-47 prevails, and in the event of a dispute, the Board has exclusive
4-48 jurisdiction to determine whether a sign or signs are in compliance
4-49 with the terms of this Subdivision.
4-50 SECTION 7. Section 5.02, Texas Motor Vehicle Commission Code
4-51 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-52 read as follows:
4-53 Sec. 5.02. Manufacturers; Distributors;
4-54 Representatives. It shall be unlawful for any manufacturer,
4-55 distributor, or representative to:
4-56 (1) Require or attempt to require any dealer to
4-57 order, accept delivery of or pay anything of value, directly or
4-58 indirectly, for any motor vehicle, appliance, part, accessory or
4-59 any other commodity unless voluntarily ordered or contracted for by
4-60 such dealer.
4-61 (2) Refuse or fail to deliver, in reasonable
4-62 quantities and within a reasonable time, to <after receipt of an
4-63 order from> a dealer having a franchise agreement for the retail
4-64 sale of any motor vehicles sold or distributed by such
4-65 manufacturer, distributor, or representative, any new motor vehicle
4-66 or parts or accessories to new motor vehicles as are covered by
4-67 such franchise if such vehicle, parts or accessories are publicly
4-68 advertised as being available for delivery or are actually being
4-69 delivered; provided, however, this provision is not violated if
4-70 such failure is caused by acts of God, work stoppage or delays due
5-1 to strikes or labor disputes, freight embargoes or other causes
5-2 beyond the control of the manufacturer, distributor, or
5-3 representative.
5-4 (3) Notwithstanding the terms of any franchise
5-5 agreement:
5-6 (A) Terminate or refuse to continue any
5-7 franchise with a dealer unless all of the following conditions are
5-8 met:
5-9 (i) the dealer and the
5-10 Commission have received written notice by registered or certified
5-11 mail from the manufacturer, distributor, or representative not less
5-12 than 60 days before the effective date of termination or
5-13 noncontinuance setting forth the specific grounds for termination
5-14 or noncontinuance; and
5-15 (ii) the written notice
5-16 contains on the first page thereof a conspicuous statement which
5-17 reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE
5-18 A PROTEST WITH THE TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS,
5-19 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
5-20 TERMINATION OR NONCONTINUANCE OF YOUR FRANCHISE UNDER THE TERMS OF
5-21 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS
5-22 ACTION."; and
5-23 (iii) the manufacturer,
5-24 distributor, or representative has received the informed, written
5-25 consent of the affected dealer or the appropriate period for the
5-26 affected dealer to protest the proposed franchise termination or
5-27 noncontinuance has lapsed; or
5-28 (iv) if the affected dealer
5-29 files a protest with the Commission within the greater of (1) 60
5-30 days after receiving its 60-day notice of proposed termination or
5-31 noncontinuance or (2) the time specified in such notice, the
5-32 Commission determines that the party seeking to terminate or not
5-33 continue a dealer's franchise has established by a preponderance of
5-34 the evidence, at a hearing called by the Commission, that there is
5-35 good cause for the proposed termination or noncontinuance.
5-36 (v) Notwithstanding
5-37 Subdivisions (3)(A)(i) and (3)(A)(iv) of this section, notice may
5-38 be made not less than 15 days prior to the effective date of
5-39 termination or noncontinuance if a licensed dealer fails to conduct
5-40 its customary sales and service operations during its customary
5-41 business hours for seven consecutive business days unless such
5-42 failure is caused by an act of God, work stoppage or delays due to
5-43 strikes or labor disputes, an order of the Commission, or other
5-44 causes beyond the control of the dealer.
5-45 (B) Whenever a dealer files a timely
5-46 protest to a proposed franchise termination or noncontinuance, the
5-47 Commission shall notify the party seeking to terminate or to not
5-48 continue the protesting dealer's franchise that a timely protest
5-49 has been filed, that a hearing is required in accordance with this
5-50 Act, and that the party who gave the dealer notice of termination
5-51 or noncontinuance of the franchise may not terminate or refuse to
5-52 continue the franchise until the Commission issues its final
5-53 decision or order.
5-54 (C) If a franchise is terminated or not
5-55 continued, another franchise in the same line-make will be
5-56 established within a reasonable time unless it is shown to the
5-57 Commission by a preponderance of the evidence that the community or
5-58 trade area cannot reasonably support such a dealership. If this
5-59 showing is made, no dealer license shall be thereafter issued in
5-60 the same area unless a change in circumstances is established.
5-61 (4) Notwithstanding the terms of any franchise
5-62 agreement, modify or replace a franchise with a succeeding
5-63 franchise if the modification or replacement would adversely
5-64 affect, to a substantial degree, the dealer's sales, investment, or
5-65 obligations to provide service to the public, unless the
5-66 manufacturer, distributor, or representative has first given the
5-67 Commission and each affected dealer written notice by registered or
5-68 certified mail of any such action 60 days in advance of the
5-69 modification or replacement. The written notice shall contain on
5-70 the first page thereof a conspicuous statement which reads as
6-1 follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST
6-2 WITH THE TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE
6-3 A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED MODIFICATION OR
6-4 REPLACEMENT OF YOUR FRANCHISE WITH A SUCCEEDING FRANCHISE UNDER THE
6-5 TERMS OF THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS
6-6 ACTION." Within the greater of (1) 60 days after receipt of such
6-7 notice or (2) the time specified in such notice, a dealer may file
6-8 a protest with the Commission and the modification or replacement
6-9 shall not become effective unless and until the Commission
6-10 determines that the party seeking to modify or replace a franchise
6-11 with a succeeding franchise has demonstrated by a preponderance of
6-12 the evidence that there is good cause for the modification or
6-13 replacement. The prior franchise shall continue in effect until
6-14 the protest is resolved by the Commission.
6-15 (5) Notwithstanding the terms of any franchise
6-16 agreement, in determining whether good cause has been established
6-17 for modifying, replacing, terminating, or refusing to continue a
6-18 franchise, the Commission shall consider all the existing
6-19 circumstances including, without limitation by the enumeration
6-20 herein, all the following:
6-21 (A) the dealer's sales in relation to the
6-22 sales in the market;
6-23 (B) the dealer's investment and
6-24 obligations;
6-25 (C) injury to the public welfare;
6-26 (D) the adequacy of the dealer's service
6-27 facilities, equipment, parts, and personnel in relation to those of
6-28 other dealers of new motor vehicles of the same line-make;
6-29 (E) whether warranties are being honored
6-30 by the dealer;
6-31 (F) the parties' compliance with their
6-32 franchise agreement; and
6-33 (G) the enforceability of the franchise
6-34 agreement from a public policy standpoint, including, without
6-35 limitation, issues of the reasonableness of the franchise
6-36 agreement's terms, oppression, adhesion, and the relative
6-37 bargaining power of the parties.
6-38 Good cause shall not be shown solely by the
6-39 desire of a manufacturer, distributor, or representative for market
6-40 penetration.
6-41 (6) Use any false, deceptive or misleading
6-42 advertising.
6-43 (7) Notwithstanding the terms of any franchise
6-44 agreement, prevent any dealer from reasonably changing the capital
6-45 structure of his dealership or the means by or through which he
6-46 finances the operation thereof, provided that the dealer meets
6-47 reasonable capital requirements.
6-48 (8) Notwithstanding the terms of any franchise
6-49 agreement, fail to give effect to or attempt to prevent any sale or
6-50 transfer of a dealer, dealership or franchise or interest therein
6-51 or management thereof unless, after complaint or protest, it is
6-52 demonstrated to the Commission after hearing that the result of any
6-53 such sale or transfer will be detrimental to the public or the
6-54 representation of the manufacturer or distributor.
6-55 (9) Notwithstanding the terms of any franchise
6-56 agreement, require or attempt to require that a dealer assign to or
6-57 act as an agent for any manufacturer, distributor or representative
6-58 in the securing of promissory notes and security agreements given
6-59 in connection with the sale or purchase of new motor vehicles or
6-60 the securing of policies of insurance on or having to do with the
6-61 operation of vehicles sold.
6-62 (10) Notwithstanding the terms of any franchise
6-63 agreement, fail or refuse, after complaint and hearing, to perform
6-64 the obligations placed on the manufacturer in connection with the
6-65 delivery, preparation and warranty of a new motor vehicle as
6-66 provided in the manufacturer's warranty, preparation, and delivery
6-67 agreements on file with the Commission.
6-68 (11) Notwithstanding the terms of any franchise
6-69 agreement, fail to compensate its dealers for the work and services
6-70 they are required to perform in connection with the dealer's
7-1 delivery and preparation obligations according to the agreements on
7-2 file with the Commission which must be found by the Commission to
7-3 be reasonable, or fail to adequately and fairly compensate its
7-4 dealers for labor, parts and other expenses incurred by such dealer
7-5 to perform under and comply with a manufacturer's or a
7-6 distributor's warranty agreement, or require, as a prerequisite to
7-7 the manufacturer's or distributor's payment of a claim for
7-8 reimbursement as required by this section, that a dealer file with
7-9 the manufacturer or distributor the actual time spent in the
7-10 performance of labor unless actual time is the basis for
7-11 reimbursement. In no event shall any manufacturer or distributor
7-12 pay its dealers an amount of money for warranty work that is less
7-13 than that charged by the dealer to the retail customers of the
7-14 dealer for nonwarranty work of like kind. All claims made by
7-15 dealers for compensation for delivery, preparation, and warranty
7-16 work shall be paid within 30 days after approval and shall be
7-17 approved or disapproved within 30 days after receipt. When any
7-18 claim is disapproved, the dealer shall be notified in writing of
7-19 the grounds for disapproval. No claim which has been approved and
7-20 paid may be charged back to the dealer unless it can be shown that
7-21 the claim was false or fraudulent, that the repairs were not
7-22 properly made or were unnecessary to correct the defective
7-23 condition, or that the dealer failed to reasonably substantiate the
7-24 claim in accordance with reasonable <the> written requirements of
7-25 the manufacturer or distributor, if the dealer has been notified of
7-26 the requirements prior to the time the claim arose, and if the
7-27 requirements were in effect at the time the claim arose. A
7-28 manufacturer or distributor may not audit a claim after the
7-29 expiration of two years following the submission of the claim
7-30 unless the manufacturer or distributor has reasonable grounds to
7-31 suspect that a claim was fraudulent. Notwithstanding the terms of
7-32 a franchise agreement or provision of law in conflict with this
7-33 section, the dealer's delivery, preparation, and warranty
7-34 obligations as filed with the Commission shall constitute the
7-35 dealer's sole responsibility for product liability as between the
7-36 dealer and manufacturer or distributor, and, except for a loss
7-37 caused by the dealer's failure to adhere to these obligations, a
7-38 loss caused by the dealer's negligence or intentional misconduct,
7-39 or a loss caused by the dealer's modification of a product without
7-40 manufacturer or distributor authorization, the manufacturer or
7-41 distributor shall reimburse the dealer for all loss incurred by the
7-42 dealer, including legal fees, court costs, and damages, as a result
7-43 of the dealer having been named a party in a product liability
7-44 action.
7-45 (12) Operate as a manufacturer, distributor, or
7-46 representative without a currently valid license from the
7-47 Commission or otherwise violate this Act or rules promulgated by
7-48 the Commission hereunder.
7-49 (13) Notwithstanding the terms of any franchise
7-50 agreement, to prevent or refuse to honor the succession to a
7-51 dealership by any legal heir or devisee under the will of a dealer
7-52 or under the laws of descent and distribution of this State unless
7-53 it is shown to the Commission, after notice and hearing, that the
7-54 result of such succession will be detrimental to the public
7-55 interest and to the representation of the manufacturer or
7-56 distributor; provided, however, nothing herein shall prevent a
7-57 dealer, during his lifetime, from designating any person as his
7-58 successor dealer, by written instrument filed with the manufacturer
7-59 or distributor.
7-60 (14) Notwithstanding the terms of any franchise
7-61 agreement, require that a dealer pay or assume, directly or
7-62 indirectly, any part of any refund, rebate, discount, or other
7-63 financial adjustment made by the manufacturer, distributor, or
7-64 representative to, or in favor of, any customer of a dealer, unless
7-65 voluntarily agreed to by such dealer.
7-66 (15) Notwithstanding the terms of any franchise
7-67 agreement, deny or withhold approval of a written application to
7-68 relocate a franchise unless (A) the applicant has received written
7-69 notice of the denial or withholding of approval within 90 days
7-70 after receipt of the application containing information reasonably
8-1 necessary to enable the manufacturer or distributor to adequately
8-2 evaluate the application, and if (B) the applicant files a protest
8-3 with the Commission and establishes by a preponderance of the
8-4 evidence at a hearing called by the Commission that the grounds
8-5 for, and distance of, the relocation are reasonable.
8-6 (16) Notwithstanding the terms of any franchise
8-7 agreement, fail to pay to a dealer or any lienholder in accordance
8-8 with their respective interest after the termination of a
8-9 franchise:
8-10 (A) the dealer cost of each new motor
8-11 vehicle in the dealer's inventory with mileage of 6,000 miles or
8-12 less, reduced by the net discount value of each, where "net
8-13 discount value" is determined according to the following formula:
8-14 net cost multiplied by total mileage divided by 100,000, and where
8-15 "net cost" equals the dealer cost plus any charges by the
8-16 manufacturer, distributor, or representative for distribution,
8-17 delivery, and taxes, less all allowances paid to the dealer by the
8-18 manufacturer, distributor, or representative for new, unsold,
8-19 undamaged, and complete motor vehicles of current model year or one
8-20 year prior model year in the dealer's inventory, except that if a
8-21 vehicle cannot be reduced by the net discount value, the
8-22 manufacturer or distributor shall pay the dealer the net cost of
8-23 the vehicle;
8-24 (B) the dealer cost of each new, unused,
8-25 undamaged, and unsold part or accessory if the part or accessory is
8-26 in the current parts catalogue and is still in the original,
8-27 resalable merchandising package and in unbroken lots, except that
8-28 in the case of sheet metal, a comparable substitute for the
8-29 original package may be used, and if the part or accessory was
8-30 purchased by the dealer either directly from the manufacturer or
8-31 distributor or from an outgoing authorized dealer as a part of the
8-32 dealer's initial inventory;
8-33 (C) the fair market value of each
8-34 undamaged sign owned by the dealer which bears a trademark or
8-35 tradename used or claimed by the manufacturer, distributor, or
8-36 representative if the sign was purchased from or purchased at the
8-37 request of the manufacturer, distributor, or representative;
8-38 (D) the fair market value of all special
8-39 tools, data processing equipment, and automotive service equipment
8-40 owned by the dealer which were recommended in writing and
8-41 designated as special tools and equipment and purchased from or
8-42 purchased at the request of the manufacturer, distributor, or
8-43 representative, if the tools and equipment are in usable and good
8-44 condition except for reasonable wear and tear;
8-45 (E) the cost of transporting, handling,
8-46 packing, storing, and loading of any property subject to repurchase
8-47 under this section;
8-48 (F) except as provided by this
8-49 subdivision, any sums due as provided by Paragraph (A) of this
8-50 subdivision within 60 days after termination of a franchise and any
8-51 sums due as provided by Paragraphs (B) through (E) of this
8-52 subdivision within 90 days after termination of a franchise. As a
8-53 condition of payment, the dealer is to comply with reasonable
8-54 requirements with respect to the return of inventory as are set out
8-55 in the terms of the franchise agreement. A manufacturer or
8-56 distributor shall reimburse a dealer for the dealer's cost for
8-57 storing any property covered by this subdivision beginning 90 days
8-58 following termination. A manufacturer or distributor shall
8-59 reimburse a dealer for the dealer's cost of storing any property
8-60 covered by this subdivision before the expiration of 90 days from
8-61 the date of termination if the dealer notifies the manufacturer or
8-62 distributor of the commencement of storage charges within that
8-63 period. On receipt of notice of the commencement of storage
8-64 charges, a manufacturer or distributor may immediately take
8-65 possession of the property in question by repurchasing the property
8-66 as provided by this subdivision. A manufacturer, distributor, or
8-67 representative who fails to pay those sums within the prescribed
8-68 time or at such time as the dealer and lienholder, if any, proffer
8-69 good title prior to the prescribed time for payment, is liable to
8-70 the dealer for:
9-1 (1) the greatest of dealer
9-2 cost, fair market value, or current price of the inventory;
9-3 (2) interest on the amount
9-4 due calculated at the rate applicable to a judgment of a court; and
9-5 (3) reasonable attorney's
9-6 fees and costs.
9-7 (17) Notwithstanding the terms of any franchise
9-8 agreement, change its distributor, its method of distribution of
9-9 its products in this state, or its business structure or ownership
9-10 in a manner that results in the termination or noncontinuance of a
9-11 franchise without good cause. The manufacturer, distributor, or
9-12 representative shall issue the same notice to the dealer and to the
9-13 Commission as is provided in Subdivisions (3)(A) and (B) of this
9-14 section and said same procedures shall apply to the parties.
9-15 (18) Notwithstanding the terms of any franchise
9-16 agreement, require a dealer to submit to arbitration on any issue
9-17 unless the dealer and the manufacturer, distributor, or
9-18 representative and their respective counsel agree to arbitrate
9-19 after a controversy arises. The arbitrator shall apply the
9-20 provisions of this Act in resolving the pertinent controversy.
9-21 Either party may appeal to the Commission a decision of an
9-22 arbitrator on the ground that the arbitrator failed to apply this
9-23 Act.
9-24 (19) Notwithstanding the terms of any franchise
9-25 agreement, require that a dealer join, contribute to, or affiliate
9-26 with, directly or indirectly, any advertising association.
9-27 (20) Notwithstanding the terms of a franchise
9-28 agreement:<,>
9-29 (A) require adherence to unreasonable
9-30 sales or service standards;
9-31 (B) directly or indirectly, discriminate
9-32 against a dealer or otherwise treat dealers differently as a result
9-33 of a formula or other calculation or process intended to gauge the
9-34 performance of a dealership, except a sales contest or other
9-35 recognition program based on reasonable sales and service criteria;
9-36 (C) unreasonably require that a dealer
9-37 purchase special tools or equipment; or
9-38 (D) fail to compensate a dealer for all
9-39 costs incurred by the dealer as required by the manufacturer in
9-40 complying with the terms of a product recall by the manufacturer or
9-41 distributor, including the costs, if any, incurred by the dealer in
9-42 notifying vehicle owners of the existence of the recall.
9-43 (21) Discriminate unreasonably between or among
9-44 franchisees in the sale of a motor vehicle owned by the
9-45 manufacturer or distributor.
9-46 (22) Directly or indirectly, or through a
9-47 subsidiary or agent, require, as a condition for obtaining
9-48 financing for a motor vehicle, the purchaser of a vehicle to
9-49 purchase any product other than the motor vehicle from the
9-50 manufacturer or distributor, or from an entity owned or controlled
9-51 by the manufacturer or distributor.
9-52 (23) Directly or indirectly, or through a
9-53 subsidiary or agent, require, as a condition of its or its
9-54 subsidiary's agreement to provide financing for a motor vehicle,
9-55 that any insurance policy or service contract purchased by the
9-56 motor vehicle purchaser be purchased from a specific source.
9-57 (24) Compel a dealer through a financing
9-58 subsidiary of the manufacturer or distributor to agree to
9-59 unreasonable operating requirements or directly or indirectly to
9-60 terminate a dealer through the actions of a financing subsidiary of
9-61 the manufacturer or distributor. This subdivision does not limit
9-62 the right of a financing entity to engage in business practices in
9-63 accordance with the usage of trade in retail and wholesale motor
9-64 vehicle financing.
9-65 SECTION 8. The importance of this legislation and the
9-66 crowded condition of the calendars in both houses create an
9-67 emergency and an imperative public necessity that the
9-68 constitutional rule requiring bills to be read on three several
9-69 days in each house be suspended, and this rule is hereby suspended,
9-70 and that this Act take effect and be in force from and after its
10-1 passage, and it is so enacted.
10-2 * * * * *
10-3 Austin,
10-4 Texas
10-5 April 7, 1993
10-6 Hon. Bob Bullock
10-7 President of the Senate
10-8 Sir:
10-9 We, your Committee on State Affairs to which was referred H.B. No.
10-10 941, have had the same under consideration, and I am instructed to
10-11 report it back to the Senate with the recommendation that it do not
10-12 pass, but that the Committee Substitute adopted in lieu thereof do
10-13 pass and be printed.
10-14 Harris of
10-15 Dallas, Chairman
10-16 * * * * *
10-17 WITNESSES
10-18 FOR AGAINST ON
10-19 ___________________________________________________________________
10-20 Name: Gene Fondren x
10-21 Representing: Texas Auto Dealers Assn
10-22 City: Austin
10-23 -------------------------------------------------------------------