BILL ANALYSIS


                                                        H.B. 1736
                                            By: Swinford (Bivins)
                                             Economic Development
                                                          5-22-95
                              Senate Committee Report (Unamended)
BACKGROUND

Farm, industrial and outside power equipment dealers obtain their
inventory through a franchise contractual agreement with a supplier
who is generally a manufacturer, wholesaler or distributor.  In the
1980s, many equipment dealerships went out of business and
attributed a portion of their collapse to dealer/supplier franchise
agreements.  In 1991, the 72nd Legislature responded to this
problem and passed H.B. 1694, providing equipment dealers certain
rights regarding the termination of a franchise agreement. 

Under current law, suppliers must refund dealers the cost of the
equipment that they return new and undamaged.  Suppliers must also
refund 85 percent of the current price of new, undamaged repair
parts returned by the dealer.  The dealer and supplier evenly share
the cost of shipping items to the supplier, who must pay the dealer
within 60 days of receiving the items. 

There are some cases, however, in which a supplier would arrange
for the dealer to deliver the items to a person other than the
supplier.  Current statute does not offer provisions to allow such
arrangements and also offers no requirements for listing inventory
to be returned to the supplier once the franchise agreement has
been terminated. 

PURPOSE

As proposed, H.B. 1736 provides a method for equipment dealers to
return items to a person designated by a supplier and sets forth
the distribution of the shipping costs of such items.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does grant any
additional rulemaking authority to a state officer, agency, or
institution.

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 19.43, Business and Commerce Code, as
follows:

     Sec. 19.43.  RETURN OF INVENTORY.  Requires a supplier, if on
     termination of a dealer agreement the dealer delivers to the
     supplier or a person designated by the supplier the inventory
     that was purchased from the supplier and that is held by the
     dealer on the date of the termination, to pay to the dealer
     the dealer cost of, among other items, new, unsold, undamaged,
     and complete forklifts and material-handling equipment.
     
     (b) Requires the dealer, before returning the inventory and
       no later than 120 days after the effective date of
       termination, to submit to the supplier a list of the
       inventory the dealer intends to return.  Requires the
       supplier to notify the dealer in writing within 60 days
       after receiving the list of each item the dealer claims is
       not subject to reimbursement, and the destination of each
       item the dealer is to deliver to a person designated by the
       supplier.
       
       (c) Provides that the supplier and the dealer are each
       liable for one-half of the delivery costs of the inventory
       to the supplier or to the supplier's designee, except that
       if the dealer delivers an item to a designee, the dealer is
       not responsible for the amount that exceeds the amount for
       which the dealer would have been responsible if the item had
       been delivered to the supplier.
       
       (d) Extends from 60 to 90 days the deadline for payment due
       by the supplier under this section and makes conforming
       changes.
       
       (e) Makes conforming changes.
       
       (f) Authorizes the supplier and dealer by agreement to alter
       the time limits provided by this section.
       
       SECTION 2.   Makes application of this Act prospective.

SECTION 3. Effective date: September 1, 1995.

SECTION 4. Emergency clause.