1-1 By: Cain S.B. No. 1139
1-2 (In the Senate - Filed March 9, 1995; March 15, 1995, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 12, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 7, Nays 0; April 12, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1139 By: Cain
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the duties and responsibilities of the Motor Vehicle
1-11 Board of the Texas Department of Transportation and of persons
1-12 under the board's authority; providing penalties.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Section 1.02, Texas Motor Vehicle Commission Code
1-15 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-16 read as follows:
1-17 Sec. 1.02. POLICY AND PURPOSE. The distribution and sale of
1-18 <new> motor vehicles in this State vitally affects the general
1-19 economy of the State and the public interest and welfare of its
1-20 citizens. It is the policy of this State and the purpose of this
1-21 Act to exercise the State's police power to insure a sound system
1-22 of distributing and selling <new> motor vehicles through licensing
1-23 and regulating manufacturers, distributors, converters, and dealers
1-24 of those vehicles, and enforcing this Act as to other persons, in
1-25 order to provide for compliance with manufacturer's warranties, and
1-26 to prevent frauds, unfair practices, discriminations, impositions,
1-27 and other abuses of our citizens.
1-28 SECTION 2. 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) "Motor vehicle"
1-32 means:
1-33 (A) every fully self-propelled vehicle which has
1-34 as 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
1-37 self-propelled, titled vehicle which has as its primary purpose the
1-38 transport of a person or persons or property and is not
1-39 manufactured for use on public streets, roads, or highways; or
1-40 (C) an engine, transmission, or rear axle
1-41 manufactured for installation in a vehicle having as its primary
1-42 purpose the transport of a person or persons or property on a
1-43 public highway and having a gross vehicle weight rating of more
1-44 than 16,000 pounds, whether or not attached to a vehicle chassis.
1-45 (2) "New motor vehicle" means a motor vehicle which
1-46 has not been the subject of a "retail sale" without regard to the
1-47 mileage 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) "Franchised dealer <Dealer>" means any person who
1-51 holds a general distinguishing number issued by the Department
1-52 pursuant to the terms of Article 6686, Revised Statutes, and who is
1-53 engaged in the business of buying, selling, or exchanging new motor
1-54 vehicles and servicing or repairing motor vehicles pursuant to the
1-55 terms of a franchise and a manufacturer's warranty at an
1-56 established and permanent place of business pursuant to a franchise
1-57 in effect with a manufacturer or distributor.
1-58 (5) "Manufacturer" means any person who manufactures
1-59 or assembles new motor vehicles either within or without this
1-60 State.
1-61 (6) "Distributor" means any person who distributes
1-62 and/or sells new motor vehicles to franchised dealers and who is
1-63 not a manufacturer.
1-64 (7) "Representative" means any person who is or acts
1-65 as an agent, employee or representative of a manufacturer,
1-66 distributor, or converter who performs any duties in this State
1-67 relating to promoting the distribution and/or sale of new motor
1-68 vehicles or contacts dealers in this State on behalf of a
2-1 manufacturer, distributor, or converter.
2-2 (8) "Franchise" means one or more contracts between a
2-3 franchised dealer as franchisee, and either a manufacturer or a
2-4 distributor as franchisor under which (A) the franchisee is granted
2-5 the right to sell and service new motor vehicles manufactured or
2-6 distributed by the franchisor or only service motor vehicles
2-7 pursuant to the terms of a franchise and a manufacturer's warranty;
2-8 (B) the franchisee as an independent business is a component of
2-9 franchisor's distribution system; (C) the franchisee is
2-10 substantially associated with franchisor's trademark, tradename and
2-11 commercial symbol; (D) the franchisee's business is substantially
2-12 reliant on franchisor for a continued supply of motor vehicles,
2-13 parts, and accessories for the conduct of its business; or (E) any
2-14 right, duty, or obligation granted or imposed by this Act is
2-15 affected. The term includes a written communication from a
2-16 franchisor to a franchisee by which a duty is imposed on the
2-17 franchisee.
2-18 (9) <(10)> "Broker" means a person who, for a fee,
2-19 commission, or other valuable consideration, arranges or offers to
2-20 arrange a transaction involving the sale, for purposes other than
2-21 resale, of a new motor vehicle, and who is not:
2-22 (A) a franchised dealer or bona fide employee of
2-23 a franchised dealer when acting on behalf of a franchised dealer;
2-24 (B) a representative or bona fide employee of a
2-25 representative when acting on behalf of a representative;
2-26 (C) a distributor or bona fide employee of a
2-27 distributor when acting on behalf of a distributor; or
2-28 (D) at any point in the transaction the bona
2-29 fide owner of the vehicle involved in the transaction.
2-30 (10) <(11)> "Motor home" means a motor vehicle which
2-31 is designed to provide temporary living quarters and which:
2-32 (A) is built onto as an integral part of, or is
2-33 permanently attached to, a motor vehicle chassis; and
2-34 (B) contains at least four of the following
2-35 independent life support systems if each is permanently installed
2-36 and designed to be removed only for purposes of repair or
2-37 replacement and meets the standards of the American National
2-38 Standards Institute, Standards for Recreational Vehicles:
2-39 (i) a cooking facility with an on-board
2-40 fuel source;
2-41 (ii) a gas or electric refrigerator;
2-42 (iii) a toilet with exterior evacuation;
2-43 (iv) a heating or air conditioning system
2-44 with an on-board power or fuel source separate from the vehicle
2-45 engine;
2-46 (v) a potable water supply system that
2-47 includes at least a sink, a faucet, and a water tank with an
2-48 exterior service supply connection;
2-49 (vi) a 110-125 volt electric power supply.
2-50 (11) <(12)> "Conversion" means a motor vehicle, other
2-51 than a motor home, which has been substantially modified by a
2-52 person other than the manufacturer or distributor of the chassis of
2-53 the motor vehicle and which has not been the subject of a retail
2-54 sale.
2-55 (12) <(13)> "Motor home manufacturer" means a person
2-56 other than the manufacturer of the chassis of a motor vehicle who,
2-57 prior to the retail sale of the motor vehicle, performs
2-58 modifications on the chassis that result in the finished product
2-59 being classified as a motor home.
2-60 (13) <(14)> "Chassis manufacturer" means a person who
2-61 manufactures and produces the frame upon which is mounted the body
2-62 of a motor vehicle.
2-63 (14) <(15)> "Converter" means a person who prior to
2-64 the retail sale of a motor vehicle, assembles, installs, or affixes
2-65 a body, cab, or special equipment to a chassis, or who
2-66 substantially adds, subtracts from, or modifies a previously
2-67 assembled or manufactured motor vehicle.
2-68 (15) <(16)> "Rule" means a statement by the Commission
2-69 of general and future applicability that implements, interprets, or
2-70 prescribes law or policy or describes the organization or
3-1 procedural practice requirements of the Commission. The term
3-2 includes the amendment or repeal of a prior rule, but does not
3-3 include statements concerning only the internal management of the
3-4 Commission which do not affect the rights of a person not connected
3-5 with the Commission.
3-6 (16) <(17)> "Party" means each person or agency named
3-7 or admitted as a party and whose legal rights, duties, or
3-8 privileges are to be determined by the Commission after an
3-9 opportunity for adjudicative hearing.
3-10 (17) <(18)> "Relocation" means the transfer of an
3-11 existing dealership operation to facilities at a different
3-12 location, including a transfer which results in a consolidation or
3-13 dualing of an existing dealer's operation.
3-14 (18) <(19)> "Retail sale" means the sale of a motor
3-15 vehicle except:
3-16 (A) a sale in which the purchaser acquires a
3-17 vehicle for the purpose of resale; or
3-18 (B) a sale of a vehicle that is operated under
3-19 and in accordance with Article 6686, Revised Statutes.
3-20 (19) <(20)> "Warranty work" means parts, labor, and
3-21 any other expenses incurred by a franchised dealer in complying
3-22 with the terms of a manufacturer's or distributor's warranty.
3-23 (20) <(21)> "Department" means the Texas Department of
3-24 Transportation.
3-25 (21) <(22)> "Transportation Commission" means the
3-26 Texas Transportation Commission of the Texas Department of
3-27 Transportation.
3-28 (22) "Nonfranchised dealer" means a person, other than
3-29 a franchised dealer, who holds a general distinguishing number
3-30 issued by the Department pursuant to the terms of Article 6686,
3-31 Revised Statutes.
3-32 (23) "Dealer" means a person who holds a general
3-33 distinguishing number issued by the Department pursuant to the
3-34 terms of Article 6686, Revised Statutes.
3-35 (24) "Dealership" means the physical premises and
3-36 business facilities on which a franchised dealer operates his
3-37 business, including the sale and repair of motor vehicles. The
3-38 term includes premises or facilities at which a person engages only
3-39 in the repair of motor vehicles if repairs are performed pursuant
3-40 to the terms of a franchise and a motor vehicle manufacturer's
3-41 warranty.
3-42 (25) "Licensee" means a person who holds a license
3-43 issued by the Board under the terms of this Act or a general
3-44 distinguishing number issued by the Department pursuant to the
3-45 terms of Article 6686, Revised Statutes.
3-46 SECTION 3. Subsection (a), Section 2.10, Texas Motor Vehicle
3-47 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
3-48 is amended to read as follows:
3-49 (a) Notwithstanding a law to the contrary, including without
3-50 limitation the provisions of Section 403.094(h), Government Code,
3-51 all <All> money paid to the Commission under this Act shall be
3-52 deposited in the State Treasury to the credit of the state highway
3-53 fund.
3-54 SECTION 4. Section 3.01, Texas Motor Vehicle Commission Code
3-55 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
3-56 read as follows:
3-57 Sec. 3.01. JURISDICTION. (a) The Commission is hereby
3-58 delegated and vested with, in the exercise of the State's police
3-59 power, the general and original power and jurisdiction to regulate
3-60 all aspects of the distribution and sale of <new> motor vehicles
3-61 and to do all things, whether specifically designated in this Act
3-62 or implied herein, or necessary or convenient to the exercise of
3-63 this power and jurisdiction, including the original jurisdiction to
3-64 determine questions of its own jurisdiction. In addition to the
3-65 other duties placed on the Commission by this Act, the Commission
3-66 shall enforce and administer the terms of Article 6686, Revised
3-67 Statutes.
3-68 (b) Unless otherwise specifically provided by Texas law not
3-69 in conflict with the terms of this Act, all aspects of the
3-70 distribution and sale of <new> motor vehicles shall be governed
4-1 exclusively by the provisions of this Act.
4-2 SECTION 5. Subsection (a), Section 3.02, Texas Motor Vehicle
4-3 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
4-4 is amended to read as follows:
4-5 (a) The Commission shall, in accordance with this Act,
4-6 administer the provisions of this Act, establish the qualifications
4-7 of manufacturers, distributors, converters, and dealers, ensure
4-8 that the distribution and sale of motor vehicles is conducted as
4-9 provided herein and under the Commission's rules, provide for
4-10 compliance with warranties, and otherwise prevent fraud, unfair
4-11 practices, discriminations, impositions, and other abuses in
4-12 connection with the distribution and sale of <new> motor vehicles.
4-13 SECTION 6. Subsection (a), Section 3.03, Texas Motor Vehicle
4-14 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
4-15 is amended to read as follows:
4-16 (a) The Commission shall have and may, in its discretion and
4-17 notwithstanding any other provision of law that is inconsistent
4-18 with this Act, exercise the powers set forth in this Act, and shall
4-19 have all other powers necessary, incidental, or convenient to carry
4-20 out its duties and effectuate its express powers and duties. These
4-21 powers and duties include the power to initiate and conduct
4-22 proceedings, investigations, and hearings, administer oaths,
4-23 receive evidence and pleadings, issue subpoenas to compel the
4-24 attendance of any person, order the production of any tangible
4-25 property, including papers, records, and documents, make findings
4-26 of fact on all factual issues arising out of any proceeding
4-27 initiated under this Act, specify, govern, and control appearance,
4-28 practice, and procedure before the Commission, issue rules,
4-29 conclusions of law, decisions, including declaratory decisions or
4-30 orders, enter into contracts or execute instruments, retain
4-31 counsel, utilize the services of the Attorney General of the State
4-32 of Texas and thereafter institute and direct the conduct of legal
4-33 proceedings in any forum or obtain other professional services as
4-34 may be necessary and convenient, sanction for contempt, assess and
4-35 collect fees and costs including attorney's fees, issue, suspend,
4-36 and revoke licenses, prohibit and regulate acts and practices in
4-37 connection with the distribution and sale of <new> motor vehicles
4-38 and warranty performance obligations, issue cease and desist orders
4-39 in the nature of temporary and permanent injunctions, and levy
4-40 civil penalties.
4-41 SECTION 7. Subsection (j), Section 3.08, Texas Motor Vehicle
4-42 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
4-43 is amended to read as follows:
4-44 (j) On motion of any party the Commission may, by final
4-45 order, and in accordance with the terms and procedures set forth in
4-46 Rule 166a, Texas Rules of Civil Procedure, dismiss a complaint,
4-47 protest, or response without holding a contested case hearing <The
4-48 Commission may dismiss a complaint or protest if it determines that
4-49 the complaint or protest is frivolous or was made for purposes of
4-50 harassment>.
4-51 SECTION 8. Section 4.01, Texas Motor Vehicle Commission Code
4-52 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-53 read as follows:
4-54 Sec. 4.01. LICENSE REQUIRED. (a) No person shall engage in
4-55 business as, serve in the capacity of, or act as a dealer,
4-56 manufacturer, distributor, converter, or representative in this
4-57 State or perform or offer to perform repair services on a motor
4-58 vehicle pursuant to the terms of a franchise and a motor vehicle
4-59 manufacturer's warranty, whether or not the person sells or offers
4-60 to sell motor vehicles at the same location, without obtaining a
4-61 license therefor as provided in this Act and the rules of the
4-62 Commission. All new license applications shall be reviewed and, in
4-63 the discretion of the Commission, investigated to determine
4-64 compliance with the provisions of this Act. License renewals may
4-65 be administratively granted unless protested. Licenses issued by
4-66 the Commission shall expire one year from date of issuance. All
4-67 <Notwithstanding the effective date of any franchise agreement,
4-68 all> licenses and renewals thereof are issued subject to all
4-69 provisions of this Act and rules of the Commission in effect upon
4-70 the date of issuance as well as all future provisions of this Act
5-1 and rules which may become effective during the term of the
5-2 license.
5-3 (b) In the case of a nonfranchised dealer, the term
5-4 "license" in this Act means a general distinguishing number issued
5-5 by the Department pursuant to the authority of Article 6686,
5-6 Revised Statutes. A nonfranchised dealer may not operate as a
5-7 dealer without a valid general distinguishing number but is not
5-8 required to obtain an additional license under the terms of this
5-9 Act. A franchised dealer shall have both a general distinguishing
5-10 number and a separate license issued under the terms of this Act.
5-11 SECTION 9. Subsection (a), Section 4.02, Texas Motor Vehicle
5-12 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
5-13 is amended to read as follows:
5-14 (a) An application for a dealer license shall be on a form
5-15 prescribed by the Commission which shall include the information
5-16 required by Article 6686, Revised Statutes, and information on the
5-17 applicant's financial resources, business integrity, business
5-18 ability and experience, franchise agreement if applicable, physical
5-19 facilities, <for sales and service, parts and accessories
5-20 inventory, new> vehicle inventory, and other factors the Commission
5-21 considers necessary to determine an applicant's qualifications to
5-22 adequately serve the motoring public.
5-23 SECTION 10. Subdivision (1), Subsection (c), and Subsection
5-24 (d), Section 4.02, Texas Motor Vehicle Commission Code (Article
5-25 4413(36), Vernon's Texas Civil Statutes), is amended to read as
5-26 follows:
5-27 (1) A franchised dealer may carry on the business of
5-28 his dealership at more than one location; however, a separate
5-29 location for the display and sale of new motor vehicles may not be
5-30 established and maintained by a franchised dealer unless expressly
5-31 authorized by the franchised dealer's franchise and license. An
5-32 application for a franchised dealer's license or to amend a
5-33 franchised dealer's license which proposes the establishment of a
5-34 separate display and sales location is subject to all of the
5-35 provisions of this Act. A separate license shall be required for
5-36 each separate and distinct dealership as determined by the
5-37 Commission.
5-38 (d) A dealer licensed hereunder shall promptly notify the
5-39 Commission of any proposed change in its ownership, location,
5-40 franchise, or any other matters the Commission may require by rule.
5-41 Prior to a change in a dealer's location <of a dealership>, a
5-42 dealer shall obtain a new license for that location.
5-43 SECTION 11. Subsections (a), (b), (c), and (d), Section
5-44 4.03, Texas Motor Vehicle Commission Code (Article 4413(36),
5-45 Vernon's Texas Civil Statutes), is amended to read as follows:
5-46 (a) An application for a manufacturer's, distributor's,
5-47 converter's, or representative's license shall be on a form
5-48 prescribed by the Commission which form shall contain such
5-49 information as the Commission deems necessary to fully determine
5-50 the qualifications of an applicant for a license, including
5-51 financial resources, business integrity and experience, facilities
5-52 and personnel for serving franchised dealers and such other
5-53 information as the Commission considers to be pertinent to
5-54 safeguard the public interest and welfare.
5-55 (b) An applicant for a manufacturer's license shall furnish
5-56 a list of all distributors, representatives acting for applicant,
5-57 and all dealers franchised to sell the applicant's products in this
5-58 State and their respective locations. All applicants for
5-59 manufacturer's licenses and all licensed manufacturers shall
5-60 thereafter advise the Commission within 15 days of any change in
5-61 their list of distributors, representatives, and franchised
5-62 dealers. This information shall become part of the application.
5-63 (c) Each application for a manufacturer's license shall
5-64 include an instrument setting forth the terms and conditions of all
5-65 warranty agreements in force and effect on the products it sells in
5-66 this State so that the Commission may ascertain the degree of
5-67 protection afforded the retail purchasers of its products and the
5-68 obligations of its franchised dealers in connection therewith as
5-69 well as the basis for compensating its franchised dealers for
5-70 labor, parts and other expenses incurred in connection with such
6-1 manufacturer's warranty agreements. Each application shall include
6-2 a statement regarding the manufacturer's compliance with Section
6-3 5.02 of this Act. In addition, each manufacturer's license
6-4 application shall specify the delivery and preparation obligations
6-5 of its franchised dealers prior to delivery of a new motor vehicle
6-6 to a retail purchaser and the schedule of compensation to be paid
6-7 to its franchised dealers for the work and service performed by
6-8 them in connection with such delivery.
6-9 (d) An application for a distributor's license shall
6-10 disclose the manufacturer for whom the distributor will act,
6-11 whether the manufacturer is licensed in this State, the warranty
6-12 covering the vehicles to be sold, the persons in this State who
6-13 will be responsible for compliance with that warranty, and the
6-14 terms of the contract under which the distributor will act for a
6-15 manufacturer. A distributor's license application must disclose
6-16 the franchised dealers with whom the distributor will do business.
6-17 If the distributor is to have any responsibility for warranties,
6-18 the distributor shall furnish the same information pertaining
6-19 thereto as is required of a manufacturer. The Commission shall be
6-20 advised of any change in any such information within 15 days from
6-21 the date thereof and any such new information shall become part of
6-22 the application.
6-23 SECTION 12. Subsection (b), Section 4.04, Texas Motor
6-24 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
6-25 Statutes), is amended to read as follows:
6-26 (b) A manufacturer whose products are offered for sale in
6-27 this State pursuant to a franchise entered into between its
6-28 distributor or representative and a franchised dealer is bound by
6-29 the terms of the franchise agreement and the provisions of this Act
6-30 as if it had executed the franchise agreement. A manufacturer that
6-31 changes its distributor or the method of distribution of its
6-32 products in this State in a manner that results in unlawful
6-33 termination or noncontinuance of a franchise may not directly or
6-34 indirectly distribute its products in this State.
6-35 SECTION 13. Subsection (a), Section 4.05, Texas Motor
6-36 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
6-37 Statutes), is amended to read as follows:
6-38 (a) The annual license fees for licenses issued hereunder
6-39 shall be as follows:
6-40 (1) For each manufacturer and distributor, $900 plus
6-41 $20 for each individual dealer franchised by the manufacturer or
6-42 distributor <$825>.
6-43 (2) For each franchised dealer who sold 200 or fewer
6-44 new motor vehicles during the preceding calendar year, $175 <$165>.
6-45 (3) For each franchised dealer who sold more than 200,
6-46 but not more than 400 <500>, new motor vehicles during the
6-47 preceding calendar year, $275.
6-48 (4) For each franchised dealer who sold more than 400
6-49 <500>, but not more than 800 <1,000>, new motor vehicles during the
6-50 preceding calendar year, $400 <$385>.
6-51 (5) For each franchised dealer who sold more than 800
6-52 but not more than 1,200 <1,000> new motor vehicles during the
6-53 preceding calendar year, $500 <$495>.
6-54 (6) For each franchised dealer who sold more than
6-55 1,200 but not more than 1,600 new motor vehicles during the
6-56 preceding calendar year, $625.
6-57 (7) For each franchised dealer who sold more than
6-58 1,600 new motor vehicles during the preceding calendar year, $750.
6-59 (8) For each representative, $100 <$85>.
6-60 (9) <(7)> For each converter, $375 <$275>.
6-61 (10) <(8)> For each amendment to a dealer's license,
6-62 $25.
6-63 SECTION 14. Section 4.06, Texas Motor Vehicle Commission
6-64 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
6-65 to read as follows:
6-66 Sec. 4.06. Sanctions, denial, revocation, or suspension of
6-67 license. (a) The Commission may deny an application for a
6-68 license, revoke or suspend an outstanding license, or place on
6-69 probation a person whose license has been suspended, or reprimand a
6-70 licensee, for any of the following reasons:
7-1 (1) Unfitness of an applicant or licensee under
7-2 standards set out in this Act or in Commission rules.
7-3 (2) Material misrepresentation in any application or
7-4 other information filed under this Act or Commission rules.
7-5 (3) Failure to comply with this Act or any Commission
7-6 rule or order promulgated by the Commission.
7-7 (4) Failure to maintain the qualifications for a
7-8 license.
7-9 (5) Willfully defrauding any retail buyer.
7-10 (6) Violation of any law relating to the sale,
7-11 distribution, financing, or insuring of <new> motor vehicles.
7-12 (7) Any act or omission by an officer, director,
7-13 partner, trustee, or other person acting in a representative
7-14 capacity for a licensee which act or omission would be cause for
7-15 denying, revoking, or suspending a license to an individual
7-16 licensee.
7-17 (8) Failure to fulfill written agreements between the
7-18 licensee and a retail buyer of a <new> motor vehicle.
7-19 (b) The revocation of a license previously held under this
7-20 Act may be grounds for denying a subsequent application for a
7-21 license.
7-22 (c) The Commission may deny an <a dealer> application to
7-23 establish a dealership if, after protest, the applicant fails to
7-24 establish good cause therefor. In determining good cause, the
7-25 Commission shall consider:
7-26 (1) whether the manufacturer or distributor of the
7-27 same line-make of new motor vehicle is being adequately represented
7-28 as to sales and service;
7-29 (2) whether the protesting franchised dealer
7-30 representing the same line-make of new motor vehicle is in
7-31 substantial compliance with his franchise agreement;
7-32 (3) the desirability of a competitive marketplace;
7-33 (4) any harm to the protesting franchised dealer; and
7-34 (5) the public interest.
7-35 (d) A franchised dealer <person> shall have standing under
7-36 Subsection (c) of this section to protest an <a dealer's>
7-37 application to establish or relocate a dealership if the person
7-38 filing the protest:
7-39 (1) <it> is a franchised dealer of the same line-make
7-40 whose dealership is located in the county in which the proposed
7-41 dealership site is to be located; or
7-42 (2) <it> is a franchised dealer of the same line-make
7-43 whose dealership is located within a 15 mile radius of the proposed
7-44 dealership site.
7-45 (e) Notwithstanding the provisions of Subsection (d) of this
7-46 section, the relocation of a dealership is not subject to protest
7-47 by a franchised dealer whose dealership is not closer to the
7-48 proposed location than it is to the location from which the
7-49 relocated dealership is being relocated.
7-50 (f) The revocation or suspension of a manufacturer's or
7-51 distributor's license may be limited to one or more municipalities
7-52 or counties or any other defined area, or may be revoked or
7-53 suspended in a defined area only as to certain aspects of its
7-54 business, or as to a specified franchised dealer or franchised
7-55 dealers.
7-56 (g) <(f)> No license shall be denied, revoked, or suspended,
7-57 or disciplinary action taken under this section, except on order of
7-58 the Commission after a hearing. The Commission may inspect the
7-59 books and records of a licensee in connection with the performance
7-60 of its duties under this Act.
7-61 (h) <(g)> If a suspension of a license is probated, the
7-62 Commission may:
7-63 (1) require the licensee to report regularly to the
7-64 Commission on matters that are the basis of the probation; or
7-65 (2) limit activities to those prescribed by the
7-66 Commission.
7-67 SECTION 15. Subsection (a), Section 4.07, Texas Motor
7-68 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
7-69 Statutes), is amended to read as follows:
7-70 (a) A franchised dealer licensed under this Act shall
8-1 provide notice of the complaint procedures provided by Sections
8-2 3.08(i) and 6.07 of this Act to each person to whom the franchised
8-3 dealer sells a new motor vehicle.
8-4 SECTION 16. Section 5.01, Texas Motor Vehicle Commission
8-5 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-6 to read as follows:
8-7 Sec. 5.01. FRANCHISED DEALERS. It is <shall be> unlawful
8-8 for any franchised dealer to:
8-9 (1) Require a retail purchaser of a new motor vehicle
8-10 as a condition of sale and delivery thereof to purchase special
8-11 features, equipment, parts, or accessories not ordered or desired
8-12 by the purchaser, provided such features, equipment, parts, or
8-13 accessories are not already installed on the new motor vehicle at
8-14 the time of sale.
8-15 (2) <Use false, deceptive, or misleading advertising.>
8-16 <(3)> Fail to perform the obligations placed on the
8-17 selling franchised dealer in connection with the delivery and
8-18 preparation of a new motor vehicle for retail sale as provided in
8-19 the manufacturer's preparation and delivery agreements on file with
8-20 the Commission and applicable to such vehicle.
8-21 (3) <(4)> Fail to perform the obligations placed on
8-22 the franchised dealer in connection with the manufacturer's
8-23 warranty agreements on file with the Commission.
8-24 (4) <(5) Operate as a dealer without a currently valid
8-25 license from the Commission or otherwise violate this Act or rules
8-26 promulgated by the Commission hereunder.>
8-27 <(6)> Operate without appropriate signs readily and
8-28 easily visible to the public, identifying the franchised dealer's
8-29 place of business and the products the franchised dealer offers for
8-30 sale. In the event of a conflict with another law or ordinance,
8-31 this Subdivision prevails, and in the event of a dispute, the Board
8-32 has exclusive jurisdiction to determine whether a sign or signs are
8-33 in compliance with the terms of this Subdivision. In the event of
8-34 a dispute, the Board shall uphold local ordinances of a home-rule
8-35 city and protect franchised dealers from retribution by
8-36 manufacturers or distributors for having complied with local
8-37 ordinances.
8-38 SECTION 17. The Texas Motor Vehicle Commission Code (Article
8-39 4413(36), Vernon's Texas Civil Statutes) is amended by adding
8-40 Section 5.01A to read as follows:
8-41 Sec. 5.01A. DEALERS. No dealer may:
8-42 (1) use false, deceptive, or misleading advertising;
8-43 (2) operate as a dealer without a currently valid
8-44 license or general distinguishing number issued by the Board;
8-45 (3) violate a rule of the Board; or
8-46 (4) aid or abet a person who violates this Act.
8-47 SECTION 18. Section 5.02, Texas Motor Vehicle Commission
8-48 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-49 to read as follows:
8-50 Sec. 5.02. MANUFACTURERS; DISTRIBUTORS; REPRESENTATIVES.
8-51 (a) In this section, "dealer" means franchised dealer.
8-52 (b) It is <shall be> unlawful for any manufacturer,
8-53 distributor, or representative to:
8-54 (1) Require or attempt to require any dealer to order,
8-55 accept delivery of or pay anything of value, directly or
8-56 indirectly, for any motor vehicle, appliance, part, accessory or
8-57 any other commodity unless voluntarily ordered or contracted for by
8-58 such dealer.
8-59 (2) Refuse or fail to deliver, in reasonable
8-60 quantities and within a reasonable time, to a dealer having a
8-61 franchise agreement for the retail sale of any motor vehicles sold
8-62 or distributed by such manufacturer, distributor, or
8-63 representative, any new motor vehicle or parts or accessories to
8-64 new motor vehicles as are covered by such franchise if such
8-65 vehicle, parts or accessories are publicly advertised as being
8-66 available for delivery or are actually being delivered; provided,
8-67 however, this provision is not violated if such failure is caused
8-68 by acts of God, work stoppage or delays due to strikes or labor
8-69 disputes, freight embargoes or other causes beyond the control of
8-70 the manufacturer, distributor, or representative.
9-1 (3) Notwithstanding the terms of any franchise
9-2 agreement:
9-3 (A) Terminate or refuse to continue any
9-4 franchise with a dealer or directly or indirectly force or attempt
9-5 to force a dealer to discontinue a line-make or parts or products
9-6 related to that line-make unless all of the following conditions
9-7 are met:
9-8 (i) the dealer and the Commission have
9-9 received written notice by registered or certified mail from the
9-10 manufacturer, distributor, or representative not less than 60 days
9-11 before the effective date of termination or noncontinuance setting
9-12 forth the specific grounds for termination or noncontinuance; and
9-13 (ii) the written notice contains on the
9-14 first page thereof a conspicuous statement which reads as follows:
9-15 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
9-16 TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE A HEARING
9-17 IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE
9-18 OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
9-19 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
9-20 (iii) the manufacturer, distributor, or
9-21 representative has received the informed, written consent of the
9-22 affected dealer or the appropriate period for the affected dealer
9-23 to protest the proposed franchise termination or noncontinuance has
9-24 lapsed; or
9-25 (iv) if the affected dealer files a
9-26 protest with the Commission within the greater of (1) 60 days after
9-27 receiving its 60-day notice of proposed termination or
9-28 noncontinuance or (2) the time specified in such notice, the
9-29 Commission determines that the party seeking to terminate or not
9-30 continue a dealer's franchise has established by a preponderance of
9-31 the evidence, at a hearing called by the Commission, that there is
9-32 good cause for the proposed termination or noncontinuance.
9-33 (v) Notwithstanding Subdivisions (3)(A)(i)
9-34 and (3)(A)(iv) of this section, notice may be made not less than 15
9-35 days prior to the effective date of termination or noncontinuance
9-36 if a licensed dealer fails to conduct its customary sales and
9-37 service operations during its customary business hours for seven
9-38 consecutive business days unless such failure is caused by an act
9-39 of God, work stoppage or delays due to strikes or labor disputes,
9-40 an order of the Commission, or other causes beyond the control of
9-41 the dealer.
9-42 (B) Whenever a dealer files a timely protest to
9-43 a proposed franchise termination or noncontinuance, the Commission
9-44 shall notify the party seeking to terminate or to not continue the
9-45 protesting dealer's franchise that a timely protest has been filed,
9-46 that a hearing is required in accordance with this Act, and that
9-47 the party who gave the dealer notice of termination or
9-48 noncontinuance of the franchise may not terminate or refuse to
9-49 continue the franchise until the Commission issues its final
9-50 decision or order.
9-51 (C) If a franchise is terminated or not
9-52 continued, another franchise in the same line-make will be
9-53 established within a reasonable time unless it is shown to the
9-54 Commission by a preponderance of the evidence that the community or
9-55 trade area cannot reasonably support such a dealership. If this
9-56 showing is made, no dealer license shall be thereafter issued in
9-57 the same area unless a change in circumstances is established.
9-58 (4) Notwithstanding the terms of any franchise
9-59 agreement, modify or replace a franchise with a succeeding
9-60 franchise if the modification or replacement would adversely
9-61 affect, to a substantial degree, the dealer's sales, investment, or
9-62 obligations to provide service to the public, unless the
9-63 manufacturer, distributor, or representative has first given the
9-64 Commission and each affected dealer written notice by registered or
9-65 certified mail of any such action 60 days in advance of the
9-66 modification or replacement. The written notice shall contain on
9-67 the first page thereof a conspicuous statement which reads as
9-68 follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST
9-69 WITH THE TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE
9-70 A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED MODIFICATION OR
10-1 REPLACEMENT OF YOUR FRANCHISE WITH A SUCCEEDING FRANCHISE UNDER THE
10-2 TERMS OF THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS
10-3 ACTION." Within the greater of (1) 60 days after receipt of such
10-4 notice or (2) the time specified in such notice, a dealer may file
10-5 a protest with the Commission and the modification or replacement
10-6 shall not become effective unless and until the Commission
10-7 determines that the party seeking to modify or replace a franchise
10-8 with a succeeding franchise has demonstrated by a preponderance of
10-9 the evidence that there is good cause for the modification or
10-10 replacement. The prior franchise shall continue in effect until
10-11 the protest is resolved by the Commission.
10-12 (5) Notwithstanding the terms of any franchise
10-13 agreement, in determining whether good cause has been established
10-14 for modifying, replacing, terminating, or refusing to continue a
10-15 franchise, or for forcing or attempting to force a dealer to
10-16 discontinue a line-make or parts or products related to that
10-17 line-make, the Commission shall consider all the existing
10-18 circumstances including, without limitation by the enumeration
10-19 herein, all the following:
10-20 (A) the dealer's sales in relation to the sales
10-21 in the market;
10-22 (B) the dealer's investment and obligations;
10-23 (C) injury to the public welfare;
10-24 (D) the adequacy of the dealer's service
10-25 facilities, equipment, parts, and personnel in relation to those of
10-26 other dealers of new motor vehicles of the same line-make;
10-27 (E) whether warranties are being honored by the
10-28 dealer;
10-29 (F) the parties' compliance with their franchise
10-30 agreement; and
10-31 (G) the enforceability of the franchise
10-32 agreement from a public policy standpoint, including, without
10-33 limitation, issues of the reasonableness of the franchise
10-34 agreement's terms, oppression, adhesion, and the relative
10-35 bargaining power of the parties.
10-36 Good cause shall not be shown solely by the desire of a
10-37 manufacturer, distributor, or representative for market
10-38 penetration.
10-39 (6) Use any false, deceptive or misleading
10-40 advertising.
10-41 (7) Notwithstanding the terms of any franchise
10-42 agreement, prevent any dealer from reasonably changing the capital
10-43 structure of his dealership or the means by or through which he
10-44 finances the operation thereof, provided that the dealer meets
10-45 reasonable capital requirements.
10-46 (8) Notwithstanding the terms of any franchise
10-47 agreement, fail to give effect to or attempt to prevent any sale or
10-48 transfer of a dealer, dealership or franchise or interest therein
10-49 or management thereof unless, after complaint or protest, it is
10-50 demonstrated to the Commission after hearing that the result of any
10-51 such sale or transfer will be detrimental to the public or the
10-52 representation of the manufacturer or distributor.
10-53 (9) Notwithstanding the terms of any franchise
10-54 agreement, require or attempt to require that a dealer assign to or
10-55 act as an agent for any manufacturer, distributor or representative
10-56 in the securing of promissory notes and security agreements given
10-57 in connection with the sale or purchase of new motor vehicles or
10-58 the securing of policies of insurance on or having to do with the
10-59 operation of vehicles sold.
10-60 (10) Notwithstanding the terms of any franchise
10-61 agreement, fail or refuse, after complaint and hearing, to perform
10-62 the obligations placed on the manufacturer in connection with the
10-63 delivery, preparation and warranty of a new motor vehicle as
10-64 provided in the manufacturer's warranty, preparation, and delivery
10-65 agreements on file with the Commission.
10-66 (11) Notwithstanding the terms of any franchise
10-67 agreement, fail to compensate its dealers for the work and services
10-68 they are required to perform in connection with the dealer's
10-69 delivery and preparation obligations according to the agreements on
10-70 file with the Commission which must be found by the Commission to
11-1 be reasonable, or fail to adequately and fairly compensate its
11-2 dealers for labor, parts and other expenses incurred by such dealer
11-3 to perform under and comply with a manufacturer's or a
11-4 distributor's warranty agreement, or require, as a prerequisite to
11-5 the manufacturer's or distributor's payment of a claim for
11-6 reimbursement as required by this section, that a dealer file with
11-7 the manufacturer or distributor the actual time spent in the
11-8 performance of labor unless actual time is the basis for
11-9 reimbursement. In no event shall any manufacturer or distributor
11-10 pay its dealers an amount of money for warranty work that is less
11-11 than that charged by the dealer to the retail customers of the
11-12 dealer for nonwarranty work of like kind. All claims made by
11-13 dealers for compensation for delivery, preparation, and warranty
11-14 work shall be paid within 30 days after approval and shall be
11-15 approved or disapproved within 30 days after receipt. When any
11-16 claim is disapproved, the dealer shall be notified in writing of
11-17 the grounds for disapproval. No claim which has been approved and
11-18 paid may be charged back to the dealer unless it can be shown that
11-19 the claim was false or fraudulent, that the repairs were not
11-20 properly made or were unnecessary to correct the defective
11-21 condition, or that the dealer failed to reasonably substantiate the
11-22 claim in accordance with reasonable written requirements of the
11-23 manufacturer or distributor, if the dealer has been notified of the
11-24 requirements prior to the time the claim arose, and if the
11-25 requirements were in effect at the time the claim arose. A
11-26 manufacturer or distributor may not audit a claim after the
11-27 expiration of two years following the submission of the claim
11-28 unless the manufacturer or distributor has reasonable grounds to
11-29 suspect that a claim was fraudulent. Notwithstanding the terms of
11-30 a franchise agreement or provision of law in conflict with this
11-31 section, the dealer's delivery, preparation, and warranty
11-32 obligations as filed with the Commission shall constitute the
11-33 dealer's sole responsibility for product liability as between the
11-34 dealer and manufacturer or distributor, and, except for a loss
11-35 caused by the dealer's failure to adhere to these obligations, a
11-36 loss caused by the dealer's negligence or intentional misconduct,
11-37 or a loss caused by the dealer's modification of a product without
11-38 manufacturer or distributor authorization, the manufacturer or
11-39 distributor shall reimburse the dealer for all loss incurred by the
11-40 dealer, including legal fees, court costs, and damages, as a result
11-41 of the dealer having been named a party in a product liability
11-42 action.
11-43 (12) Operate as a manufacturer, distributor, or
11-44 representative without a currently valid license from the
11-45 Commission or otherwise violate this Act or rules promulgated by
11-46 the Commission hereunder.
11-47 (13) Notwithstanding the terms of any franchise
11-48 agreement, to prevent or refuse to honor the succession to a
11-49 dealership by any legal heir or devisee under the will of a dealer
11-50 or under the laws of descent and distribution of this State unless
11-51 it is shown to the Commission, after notice and hearing, that the
11-52 result of such succession will be detrimental to the public
11-53 interest and to the representation of the manufacturer or
11-54 distributor; provided, however, nothing herein shall prevent a
11-55 dealer, during his lifetime, from designating any person as his
11-56 successor dealer, by written instrument filed with the manufacturer
11-57 or distributor.
11-58 (14) Notwithstanding the terms of any franchise
11-59 agreement, require that a dealer pay or assume, directly or
11-60 indirectly, any part of any refund, rebate, discount, or other
11-61 financial adjustment made by the manufacturer, distributor, or
11-62 representative to, or in favor of, any customer of a dealer, unless
11-63 voluntarily agreed to by such dealer.
11-64 (15) Notwithstanding the terms of any franchise
11-65 agreement, deny or withhold approval of a written application to
11-66 relocate a franchise unless (A) the applicant has received written
11-67 notice of the denial or withholding of approval within 60 <90> days
11-68 after receipt of the application containing information reasonably
11-69 necessary to enable the manufacturer or distributor to adequately
11-70 evaluate the application, and if (B) the applicant files a protest
12-1 with the Commission and the manufacturer or distributor establishes
12-2 by a preponderance of the evidence at a hearing called by the
12-3 Commission that the grounds for the denial or withholding of
12-4 approval <, and distance> of<,> the relocation are reasonable.
12-5 (16) Notwithstanding the terms of any franchise
12-6 agreement, fail to pay to a dealer or any lienholder in accordance
12-7 with their respective interest after the termination of a
12-8 franchise:
12-9 (A) the dealer cost of each new motor vehicle in
12-10 the dealer's inventory with mileage of 6,000 miles or less, reduced
12-11 by the net discount value of each, where "net discount value" is
12-12 determined according the following formula: net cost multiplied by
12-13 total mileage divided by 100,000, and where "net cost" equals the
12-14 dealer cost plus any charges by the manufacturer, distributor, or
12-15 representative for distribution, delivery, and taxes, less all
12-16 allowances paid to the dealer by the manufacturer, distributor, or
12-17 representative for new, unsold, undamaged, and complete motor
12-18 vehicles of current model year or one year prior model year in the
12-19 dealer's inventory, except that if a vehicle cannot be reduced by
12-20 the net discount value, the manufacturer or distributor shall pay
12-21 the dealer the net cost of the vehicle;
12-22 (B) the dealer cost of each new, unused,
12-23 undamaged, and unsold part or accessory if the part or accessory is
12-24 in the current parts catalogue and is still in the original,
12-25 resalable merchandising package and in unbroken lots, except that
12-26 in the case of sheet metal, a comparable substitute for the
12-27 original package may be used, and if the part or accessory was
12-28 purchased by the dealer either directly from the manufacturer or
12-29 distributor or from an outgoing authorized dealer as a part of the
12-30 dealer's initial inventory;
12-31 (C) the fair market value of each undamaged sign
12-32 owned by the dealer which bears a trademark or tradename used or
12-33 claimed by the manufacturer, distributor, or representative if the
12-34 sign was purchased from or purchased at the request of the
12-35 manufacturer, distributor, or representative;
12-36 (D) the fair market value of all special tools,
12-37 data processing equipment, and automotive service equipment owned
12-38 by the dealer which were recommended in writing and designated as
12-39 special tools and equipment and purchased from or purchased at the
12-40 request of the manufacturer, distributor, or representative, if the
12-41 tools and equipment are in usable and good condition except for
12-42 reasonable wear and tear;
12-43 (E) the cost of transporting, handling, packing,
12-44 storing, and loading of any property subject to repurchase under
12-45 this section;
12-46 (F) except as provided by this subdivision, any
12-47 sums due as provided by Paragraph (A) of this subdivision within 60
12-48 days after termination of a franchise and any sums due as provided
12-49 by Paragraphs (B) through (E) of this subdivision within 90 days
12-50 after termination of a franchise. As a condition of payment, the
12-51 dealer is to comply with reasonable requirements with respect to
12-52 the return of inventory as are set out in the terms of the
12-53 franchise agreement. A manufacturer or distributor shall reimburse
12-54 a dealer for the dealer's cost for storing any property covered by
12-55 this subdivision beginning 90 days following termination. A
12-56 manufacturer or distributor shall reimburse a dealer for the
12-57 dealer's cost of storing any property covered by this subdivision
12-58 before the expiration of 90 days from the date of termination if
12-59 the dealer notifies the manufacturer or distributor of the
12-60 commencement of storage charges within that period. On receipt of
12-61 notice of the commencement of storage charges, a manufacturer or
12-62 distributor may immediately take possession of the property in
12-63 question by repurchasing the property as provided by this
12-64 subdivision. A manufacturer, distributor, or representative who
12-65 fails to pay those sums within the prescribed time or at such time
12-66 as the dealer and lienholder, if any, proffer good title prior to
12-67 the prescribed time for payment, is liable to the dealer for:
12-68 (i) <(1)> the greatest of dealer cost,
12-69 fair market value, or current price of the inventory;
12-70 (ii) <(2)> interest on the amount due
13-1 calculated at the rate applicable to a judgment of a court; and
13-2 (iii) <(3)> reasonable attorney's fees and
13-3 costs.
13-4 (17) Notwithstanding the terms of any franchise
13-5 agreement, change its distributor, its method of distribution of
13-6 its products in this state, or its business structure or ownership
13-7 in a manner that results in the termination or noncontinuance of a
13-8 franchise without good cause. The manufacturer, distributor, or
13-9 representative shall issue the same notice to the dealer and to the
13-10 Commission as is provided in Subdivisions (3)(A) and (B) of this
13-11 section and said same procedures shall apply to the parties.
13-12 (18) Notwithstanding the terms of any franchise
13-13 agreement, require a dealer to submit to arbitration on any issue
13-14 unless the dealer and the manufacturer, distributor, or
13-15 representative and their respective counsel agree to arbitrate
13-16 after a controversy arises. The arbitrator shall apply the
13-17 provisions of this Act in resolving the pertinent controversy.
13-18 Either party may appeal to the Commission a decision of an
13-19 arbitrator on the ground that the arbitrator failed to apply this
13-20 Act.
13-21 (19) Notwithstanding the terms of any franchise
13-22 agreement, require that a dealer join, contribute to, or affiliate
13-23 with, directly or indirectly, any advertising association.
13-24 (20) Notwithstanding the terms of a franchise
13-25 agreement:
13-26 (A) require adherence to unreasonable sales or
13-27 service standards;
13-28 (B) directly or indirectly, discriminate against
13-29 a dealer or otherwise treat dealers differently as a result of a
13-30 formula or other calculation or process intended to gauge the
13-31 performance of a dealership, except a sales contest or other
13-32 recognition program based on reasonable sales and service criteria;
13-33 (C) unreasonably require that a dealer purchase
13-34 special tools or equipment; or
13-35 (D) fail to compensate a dealer for all costs
13-36 incurred by the dealer as required by the manufacturer in complying
13-37 with the terms of a product recall by the manufacturer or
13-38 distributor, including the costs, if any, incurred by the dealer in
13-39 notifying vehicle owners of the existence of the recall.
13-40 (21) Discriminate unreasonably between or among
13-41 franchisees in the sale of a motor vehicle owned by the
13-42 manufacturer or distributor.
13-43 (22) Directly or indirectly, or through a subsidiary
13-44 or agent, require, as a condition for obtaining financing for a
13-45 motor vehicle, the purchaser of a vehicle to purchase any product
13-46 other than the motor vehicle from the manufacturer or distributor,
13-47 or from an entity owned or controlled by the manufacturer or
13-48 distributor.
13-49 (23) Directly or indirectly, or through a subsidiary
13-50 or agent, require, as a condition of its or its subsidiary's
13-51 agreement to provide financing for a motor vehicle, that any
13-52 insurance policy or service contract purchased by the motor vehicle
13-53 purchaser be purchased from a specific source.
13-54 (24) Compel a dealer through a financing subsidiary of
13-55 the manufacturer or distributor to agree to unreasonable operating
13-56 requirements or directly or indirectly to terminate a dealer
13-57 through the actions of a financing subsidiary of the manufacturer
13-58 or distributor. This subdivision does not limit the right of a
13-59 financing entity to engage in business practices in accordance with
13-60 the usage of trade in retail and wholesale motor vehicle financing.
13-61 (25) Operate as a dealer except on a temporary basis
13-62 and only if:
13-63 (A) the dealership was previously owned by a
13-64 franchised dealer and is currently for sale at a reasonable price;
13-65 or
13-66 (B) the manufacturer, distributor, or
13-67 representative operates the dealership in a bona fide relationship
13-68 with a franchised dealer who is required to make a significant
13-69 investment in the dealership, subject to loss, and who reasonably
13-70 expects to acquire full ownership of the dealership under
14-1 reasonable terms and conditions.
14-2 (26) Notwithstanding the terms of a franchise
14-3 agreement, deny or withhold approval of a dealer's application to
14-4 add a line-make or parts or products related to that line-make
14-5 unless, within 60 days of receipt of the dealer's written
14-6 application to add the line-make, the manufacturer or distributor
14-7 gives the dealer written notice of the denial or withholding of
14-8 approval. After receipt of notice, the dealer may file a protest
14-9 with the Commission. If the dealer files a protest as provided by
14-10 this subdivision, the Commission may uphold the manufacturer's or
14-11 distributor's decision to deny or withhold approval of the addition
14-12 of the line-make only if the manufacturer or distributor proves by
14-13 a preponderance of the evidence that the denial or withholding of
14-14 approval was reasonable. In determining whether or not the
14-15 manufacturer or distributor has met its burden to show that its
14-16 denial or withholding of approval is reasonable, the Commission
14-17 shall consider all existing circumstances, including, without
14-18 limitation, the following:
14-19 (A) the dealer's sales in relation to the sales
14-20 in the market;
14-21 (B) the dealer's investment and obligations;
14-22 (C) injury to the public welfare;
14-23 (D) the adequacy of the dealer's sales and
14-24 service facilities, equipment, parts, and personnel in relation to
14-25 those of other dealers of new motor vehicles of the same line-make;
14-26 (E) whether warranties are being honored by the
14-27 dealer agreement;
14-28 (F) the parties' compliance with their franchise
14-29 agreement;
14-30 (G) the enforceability of the franchise
14-31 agreement from a public policy standpoint, including without
14-32 limitation, issues of the reasonableness of the franchise
14-33 agreement's terms, oppression, adhesion, and the relative
14-34 bargaining power of the parties;
14-35 (H) whether the dealer complies with reasonable
14-36 capitalization requirements or will be able to comply with
14-37 reasonable capitalization requirements within a reasonable time;
14-38 (I) the harm, if any, to the manufacturer if the
14-39 denial or withholding of approval is not upheld; and
14-40 (J) the harm, if any, to the dealer if the
14-41 denial or withholding of approval is upheld.
14-42 SECTION 19. Subsection (a), Section 5.04, Texas Motor
14-43 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
14-44 Statutes), is amended to read as follows:
14-45 (a) No person may engage in the business of buying, selling,
14-46 or exchanging new motor vehicles unless that person:
14-47 (1) holds a valid franchised dealer's license issued
14-48 by the Commission for the make or makes of new motor vehicles being
14-49 bought, sold, or exchanged; or
14-50 (2) is acting as a bona fide employee of the licensee.
14-51 SECTION 20. Subsection (a), Section 6.01, Texas Motor
14-52 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
14-53 Statutes), is amended to read as follows:
14-54 (a) In the event the Commission determines, after a
14-55 proceeding conducted in accordance with this Act and the rules of
14-56 the Commission, that any person is violating or has violated any
14-57 provision of this Act or any rule or order of the Commission issued
14-58 pursuant to this Act, the Commission may levy a civil penalty not
14-59 to exceed $10,000.00 for each day of violation and for each act of
14-60 violation. Notwithstanding a law to the contrary, including
14-61 without limitation the provisions of Section 403.094(h), Government
14-62 Code, all <All> civil penalties recovered under this Act shall be
14-63 deposited in the state treasury to the credit of the state highway
14-64 fund <paid to the General Revenue Fund of the State of Texas>.
14-65 SECTION 21. Section 6.06, Texas Motor Vehicle Commission
14-66 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
14-67 by amending Subsection (a) and by adding Subsection (f) to read as
14-68 follows:
14-69 (a) Notwithstanding any other provision of law, including
14-70 the terms of Subchapter E, Chapter 17, Business & Commerce Code, in
15-1 addition to the other remedies provided by this subchapter, a
15-2 person who has sustained actual damages as a result of a violation
15-3 of Section 5.01 or Section 5.01A of this Act, or a franchised
15-4 dealer who has sustained actual damages as a result of a violation
15-5 of <or> Section 5.02 of this Act, or a violation of Subchapter E,
15-6 Chapter 17, Business & Commerce Code, may maintain an action
15-7 pursuant to the terms of Subchapter E, Chapter 17, Business & <and>
15-8 Commerce Code or any successor statute thereto and shall be
15-9 entitled to all procedures and remedies provided for therein. In
15-10 any action brought under this section, and in the interest of
15-11 judicial economy and efficiency, a judgment rendered pursuant to
15-12 this section shall pay due deference to the findings of fact and
15-13 conclusions of law of the Commission contained in a final order
15-14 which forms the basis of the action.
15-15 (f) A reference in other law to a dealer licensed by the
15-16 Texas Motor Vehicle Commission or a dealer licensed by the Motor
15-17 Vehicle Board of the Texas Department of Transportation means a
15-18 franchised dealer.
15-19 SECTION 22. Section 6.07, Texas Motor Vehicle Commission
15-20 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
15-21 by amending Subsections (b), (d), (g), and (j) and by adding
15-22 Subsection (l) to read as follows:
15-23 (b) If a new motor vehicle does not conform to all
15-24 applicable manufacturer's, converter's, or distributor's express
15-25 warranties, the manufacturer, converter, or distributor shall make
15-26 the repairs necessary to conform the vehicle to the applicable
15-27 express warranties, notwithstanding that the repairs are made after
15-28 the expiration of the warranties, if: (1) the owner or the owner's
15-29 designated agent reported the nonconformity to the manufacturer,
15-30 converter, or distributor, its agent, or its franchised
15-31 <authorized> dealer during the term of such express warranties; or
15-32 (2) a rebuttable presumption relating to the vehicle was created
15-33 under Subsection (d) of this section. This section does not in any
15-34 way limit the remedies available to an owner under a new motor
15-35 vehicle warranty that extends beyond the provisions of this
15-36 section.
15-37 (d) There is a rebuttable presumption that a reasonable
15-38 number of attempts have been undertaken to conform a motor vehicle
15-39 to the applicable express warranties if (1) the same nonconformity
15-40 has been subject to repair four or more times by the manufacturer,
15-41 converter, or distributor, its agent, or its franchised
15-42 <authorized> dealer and two of the repair attempts have been made
15-43 within a period of 12 months following the date of original
15-44 delivery to an owner, or 12,000 miles, whichever occurs first, and
15-45 the other two repair attempts occur within the 12 months or 12,000
15-46 miles immediately following the date of the second repair attempt,
15-47 whichever occurs first, but such nonconformity continues to exist;
15-48 (2) the same nonconformity creates a serious safety hazard and has
15-49 caused the vehicle to have been subject to repair two or more times
15-50 by the manufacturer, converter, or distributor, or an authorized
15-51 agent or franchised dealer, and at least one attempt to repair the
15-52 nonconformity was made in the period of 12 months or 12,000 miles,
15-53 whichever occurs first, and at least one other attempt made in the
15-54 period of 12 months or 12,000 miles after the first repair attempt,
15-55 whichever occurs first, but the nonconformity continues to exist;
15-56 or (3) the vehicle is out of service for repair for a cumulative
15-57 total of 30 or more days in the 24 months or 24,000 miles,
15-58 whichever occurs first, and at least two repair attempts were made
15-59 in the first 12 months or 12,000 miles immediately following the
15-60 date of original delivery to an owner and a nonconformity still
15-61 exists that substantially impairs the vehicle's use or market
15-62 value. The initial 12-month period or 12,000 mile limit, the
15-63 subsequent 12-month period or 12,000 mile limit, and the 30-day
15-64 period shall be extended by any period of time during which repair
15-65 services are not available to the owner because of a war, invasion,
15-66 strike or fire, flood, or other natural disaster. During any
15-67 period of time that the manufacturer or distributor lends a
15-68 comparable motor vehicle to the owner during the time the vehicle
15-69 is being repaired by a franchised <an authorized> dealer, the
15-70 30-day period provided for in this subsection is tolled.
16-1 (g) In a hearing under this section, the Executive Director
16-2 shall make its order with respect to responsibility for payment of
16-3 the cost of any refund or replacement and no manufacturer,
16-4 converter, or distributor may cause any franchised dealer to pay
16-5 directly or indirectly any sum not specifically so ordered by the
16-6 Executive Director. If the Executive Director orders a
16-7 manufacturer, converter, or distributor to refund or replace a
16-8 motor vehicle because it meets the criteria set forth in this
16-9 section, the Executive Director may order the franchised dealer to
16-10 reimburse the owner, lienholder, manufacturer, converter, or
16-11 distributor only for items or options added to the vehicle by the
16-12 franchised dealer and only to the extent that one or more of such
16-13 items or options contributed to the defect that served as the basis
16-14 for the Executive Director's order of refund or replacement. In a
16-15 case involving a leased vehicle, the Executive Director may
16-16 terminate the lease and apportion the allowance for use and other
16-17 allowances or refunds between the lessee and lessor of the vehicle.
16-18 (j)(1) A manufacturer, distributor, or converter that has
16-19 been ordered to repurchase or replace a vehicle shall, through its
16-20 franchised <representative> dealer, issue a disclosure statement
16-21 stating that the vehicle was repurchased or replaced by the
16-22 manufacturer, distributor, or converter under this section. The
16-23 disclosure statement must accompany the vehicle through the first
16-24 retail purchase. The manufacturer, distributor, or converter must
16-25 restore the cause of the repurchase or replacement to factory
16-26 specifications and issue a new 12-month, 12,000-mile warranty on
16-27 the vehicle. The disclosure statement must include a toll-free
16-28 telephone number of the Commission that will enable a purchaser of
16-29 a repurchased or replaced vehicle to obtain information about the
16-30 condition or defect that was the basis of the order for repurchase
16-31 or replacement. The Commission shall adopt rules for the
16-32 enforcement of this subdivision.
16-33 (2) The Commission shall provide a toll-free telephone
16-34 number for providing information to persons who request information
16-35 about a condition or defect that was the basis for repurchase or
16-36 replacement by an order of the Executive Director. The Commission
16-37 shall maintain an effective method of providing information to
16-38 persons who make the requests.
16-39 (l) Information filed with the Board under this section is
16-40 not a public record and is not subject to release under the open
16-41 records law, Chapter 552, Government Code, until the complaint is
16-42 finally resolved by order of the Board.
16-43 SECTION 23. (a) In the event of a conflict between the
16-44 terms of this Act and Article 6686, Revised Statutes, the terms of
16-45 this Act prevail.
16-46 (b) The executive director of the Motor Vehicle Board of the
16-47 Texas Department of Transportation shall oversee the transition of
16-48 duties and responsibilities provided by this Act.
16-49 (c) Except as provided by this section, all general
16-50 distinguishing numbers issued pursuant to Article 6686, Revised
16-51 Statutes, expire one year from the date of issuance. On or before
16-52 March 31, 1996, the Motor Vehicle Board of the Texas Department of
16-53 Transportation shall adopt a rule by which general distinguished
16-54 numbers expire on various dates during the year. For the year in
16-55 which the expiration date is changed, a general distinguishing
16-56 number may be issued for a term less than one year. If a general
16-57 distinguishing number is issued for a term of less than one year,
16-58 the fee payable on the date of issuance shall be prorated on a
16-59 monthly basis so that the licensee shall pay only that portion of
16-60 the license fee which is allocable to the number of months during
16-61 which the license is valid. On renewal of the general
16-62 distinguishing number on the new expiration date, the total fee is
16-63 payable and the general distinguishing number is valid for a term
16-64 of one year.
16-65 SECTION 24. This Act takes effect January 1, 1996.
16-66 SECTION 25. The importance of this legislation and the
16-67 crowded condition of the calendars in both houses create an
16-68 emergency and an imperative public necessity that the
16-69 constitutional rule requiring bills to be read on three several
16-70 days in each house be suspended, and this rule is hereby suspended,
17-1 and that this Act take effect and be in force according to its
17-2 terms, and it is so enacted.
17-3 * * * * *