GEC H.B. 533 75(R)    BILL ANALYSIS


BUSINESS & INDUSTRY
H.B. 533
By: Swinford
4-2-97
Committee Report (Amended)



BACKGROUND 

Currently, the relationship between an equipment dealer and the supplier,
who is a manufacturer, wholesaler or distributor, is primarily determined
by a franchise contractual agreement.  In the past, many dealers have
suffered significant damage in customer relations, finances and reputation
when a manufacturer arbitrarily and unilaterally cancels the dealer
contract solely for their own purposes and without regard to the
investment in time, money and employee training to develop the acceptance
of the manufacturer's products in the dealer's territory.  Chapter 19 of
the Business & Commerce Code sets forth provisions related to such issues
as return of inventory, warranty claims and renewal or termination of
franchise for farm, industrial and outdoor power equipment dealers.
Off-road construction equipment needs to be added to the Code for the same
protection granted these other dealers.   

PURPOSE

As proposed, H.B. 533 would add off-road construction equipment dealers to
Chapter 19, Business & Commerce Code. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS


SECTION 1.  Amends the heading of Chapter 19, Business & Commerce Code by
adding offroad construction. 

SECTION 2.  Amends Sections 19.01(5) and (8), Business & Commerce Code by
adding offroad construction equipment to the definition and deleting the
provision that excludes off-road construction equipment. 

SECTION 3.  Amends Section 19.43(a), Business & Commerce Code by adding
off-road construction equipment to the list of equipment to be included in
the return of inventory. 

SECTION 4.  Effective date of September 1, 1997.

SECTION 5.  Emergency clause.

EXPLANATION OF AMENDMENTS

Committee Amendment #1 amends Section 2, (5), line 12, after the word
"equipment." by adding, "The term dealer shall not include a single line
dealer primarily engaged in the retail sale and service of off-road
construction and earthmoving equipment."  

Committee Amendment #1 also amends Section 2 by adding "(9) "Single line
dealer" means a person, partnership, or corporation which:  (a) has
purchased 75 percent or more of the dealer's  total new product inventory
from a single supplier under all agreements with that supplier, and (b)
had a total annual average sales volume for the three previous years with
that single supplier in excess of $100 million for the territory for which
that dealer is responsible within the state."