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."