By Nixon S.B. No. 924
75R6047 BEM-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the operation of a motor home dealership by a motor
1-3 home manufacturer.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 5.02(b), Texas Motor Vehicle Commission
1-6 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
1-7 to read as follows:
1-8 (b) It is unlawful for any manufacturer, distributor, or
1-9 representative to:
1-10 (1) Require or attempt to require any dealer to order,
1-11 accept delivery of or pay anything of value, directly or
1-12 indirectly, for any motor vehicle, appliance, part, accessory or
1-13 any other commodity unless voluntarily ordered or contracted for by
1-14 such dealer.
1-15 (2) Refuse or fail to deliver, in reasonable
1-16 quantities and within a reasonable time, to a dealer having a
1-17 franchise agreement for the retail sale of any motor vehicles sold
1-18 or distributed by such manufacturer, distributor, or
1-19 representative, any new motor vehicle or parts or accessories to
1-20 new motor vehicles as are covered by such franchise if such
1-21 vehicle, parts or accessories are publicly advertised as being
1-22 available for delivery or are actually being delivered; provided,
1-23 however, this provision is not violated if such failure is caused
1-24 by acts of God, work stoppage or delays due to strikes or labor
2-1 disputes, freight embargoes or other causes beyond the control of
2-2 the manufacturer, distributor, or representative.
2-3 (3) Notwithstanding the terms of any franchise
2-4 agreement:
2-5 (A) Terminate or refuse to continue any
2-6 franchise with a dealer or directly or indirectly force or attempt
2-7 to force a dealer to discontinue a line-make or parts or products
2-8 related to that line-make unless all of the following conditions
2-9 are met:
2-10 (i) the dealer and the Commission have
2-11 received written notice by registered or certified mail from the
2-12 manufacturer, distributor, or representative not less than 60 days
2-13 before the effective date of termination or noncontinuance setting
2-14 forth the specific grounds for termination or noncontinuance; and
2-15 (ii) the written notice contains on the
2-16 first page thereof a conspicuous statement which reads as follows:
2-17 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
2-18 TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE A HEARING
2-19 IN WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE
2-20 OF YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
2-21 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
2-22 (iii) the manufacturer, distributor, or
2-23 representative has received the informed, written consent of the
2-24 affected dealer or the appropriate period for the affected dealer
2-25 to protest the proposed franchise termination or noncontinuance has
2-26 lapsed; or
2-27 (iv) if the affected dealer files a
3-1 protest with the Commission within the greater of (1) 60 days after
3-2 receiving its 60-day notice of proposed termination or
3-3 noncontinuance or (2) the time specified in such notice, the
3-4 Commission determines that the party seeking to terminate or not
3-5 continue a dealer's franchise has established by a preponderance of
3-6 the evidence, at a hearing called by the Commission, that there is
3-7 good cause for the proposed termination or noncontinuance.
3-8 (v) Notwithstanding Subdivisions (3)(A)(i)
3-9 and (3)(A)(iv) of this section, notice may be made not less than 15
3-10 days prior to the effective date of termination or noncontinuance
3-11 if a licensed dealer fails to conduct its customary sales and
3-12 service operations during its customary business hours for seven
3-13 consecutive business days unless such failure is caused by an act
3-14 of God, work stoppage or delays due to strikes or labor disputes,
3-15 an order of the Commission, or other causes beyond the control of
3-16 the dealer.
3-17 (B) Whenever a dealer files a timely protest to
3-18 a proposed franchise termination or noncontinuance, the Commission
3-19 shall notify the party seeking to terminate or to not continue the
3-20 protesting dealer's franchise that a timely protest has been filed,
3-21 that a hearing is required in accordance with this Act, and that
3-22 the party who gave the dealer notice of termination or
3-23 noncontinuance of the franchise may not terminate or refuse to
3-24 continue the franchise until the Commission issues its final
3-25 decision or order.
3-26 (C) If a franchise is terminated or not
3-27 continued, another franchise in the same line-make will be
4-1 established within a reasonable time unless it is shown to the
4-2 Commission by a preponderance of the evidence that the community or
4-3 trade area cannot reasonably support such a dealership. If this
4-4 showing is made, no dealer license shall be thereafter issued in
4-5 the same area unless a change in circumstances is established.
4-6 (4) Notwithstanding the terms of any franchise
4-7 agreement, modify or replace a franchise with a succeeding
4-8 franchise if the modification or replacement would adversely
4-9 affect, to a substantial degree, the dealer's sales, investment, or
4-10 obligations to provide service to the public, unless the
4-11 manufacturer, distributor, or representative has first given the
4-12 Commission and each affected dealer written notice by registered or
4-13 certified mail of any such action 60 days in advance of the
4-14 modification or replacement. The written notice shall contain on
4-15 the first page thereof a conspicuous statement which reads as
4-16 follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST
4-17 WITH THE TEXAS MOTOR VEHICLE COMMISSION IN AUSTIN, TEXAS, AND HAVE
4-18 A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED MODIFICATION OR
4-19 REPLACEMENT OF YOUR FRANCHISE WITH A SUCCEEDING FRANCHISE UNDER THE
4-20 TERMS OF THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS
4-21 ACTION." Within the greater of (1) 60 days after receipt of such
4-22 notice or (2) the time specified in such notice, a dealer may file
4-23 a protest with the Commission and the modification or replacement
4-24 shall not become effective unless and until the Commission
4-25 determines that the party seeking to modify or replace a franchise
4-26 with a succeeding franchise has demonstrated by a preponderance of
4-27 the evidence that there is good cause for the modification or
5-1 replacement. The prior franchise shall continue in effect until
5-2 the protest is resolved by the Commission.
5-3 (5) Notwithstanding the terms of any franchise
5-4 agreement, in determining whether good cause has been established
5-5 for modifying, replacing, terminating, or refusing to continue a
5-6 franchise, or for forcing or attempting to force a dealer to
5-7 discontinue a line-make or parts or products related to that
5-8 line-make, the Commission shall consider all the existing
5-9 circumstances including, without limitation by the enumeration
5-10 herein, all the following:
5-11 (A) the dealer's sales in relation to the sales
5-12 in the market;
5-13 (B) the dealer's investment and obligations;
5-14 (C) injury to the public welfare;
5-15 (D) the adequacy of the dealer's service
5-16 facilities, equipment, parts, and personnel in relation to those of
5-17 other dealers of new motor vehicles of the same line-make;
5-18 (E) whether warranties are being honored by the
5-19 dealer;
5-20 (F) the parties' compliance with their franchise
5-21 agreement; and
5-22 (G) the enforceability of the franchise
5-23 agreement from a public policy standpoint, including, without
5-24 limitation, issues of the reasonableness of the franchise
5-25 agreement's terms, oppression, adhesion, and the relative
5-26 bargaining power of the parties.
5-27 Good cause shall not be shown solely by the desire of a
6-1 manufacturer, distributor, or representative for market
6-2 penetration.
6-3 (6) Use any false, deceptive or misleading
6-4 advertising.
6-5 (7) Notwithstanding the terms of any franchise
6-6 agreement, prevent any dealer from reasonably changing the capital
6-7 structure of his dealership or the means by or through which he
6-8 finances the operation thereof, provided that the dealer meets
6-9 reasonable capital requirements.
6-10 (8) Notwithstanding the terms of any franchise
6-11 agreement, fail to give effect to or attempt to prevent any sale or
6-12 transfer of a dealer, dealership or franchise or interest therein
6-13 or management thereof unless, after complaint or protest, it is
6-14 demonstrated to the Commission after hearing that the result of any
6-15 such sale or transfer will be detrimental to the public or the
6-16 representation of the manufacturer or distributor.
6-17 (9) Notwithstanding the terms of any franchise
6-18 agreement, require or attempt to require that a dealer assign to or
6-19 act as an agent for any manufacturer, distributor or representative
6-20 in the securing of promissory notes and security agreements given
6-21 in connection with the sale or purchase of new motor vehicles or
6-22 the securing of policies of insurance on or having to do with the
6-23 operation of vehicles sold.
6-24 (10) Notwithstanding the terms of any franchise
6-25 agreement, fail or refuse, after complaint and hearing, to perform
6-26 the obligations placed on the manufacturer in connection with the
6-27 delivery, preparation and warranty of a new motor vehicle as
7-1 provided in the manufacturer's warranty, preparation, and delivery
7-2 agreements on file with the Commission.
7-3 (11) Notwithstanding the terms of any franchise
7-4 agreement, fail to compensate its dealers for the work and services
7-5 they are required to perform in connection with the dealer's
7-6 delivery and preparation obligations according to the agreements on
7-7 file with the Commission which must be found by the Commission to
7-8 be reasonable, or fail to adequately and fairly compensate its
7-9 dealers for labor, parts and other expenses incurred by such dealer
7-10 to perform under and comply with a manufacturer's or a
7-11 distributor's warranty agreement, or require, as a prerequisite to
7-12 the manufacturer's or distributor's payment of a claim for
7-13 reimbursement as required by this section, that a dealer file with
7-14 the manufacturer or distributor the actual time spent in the
7-15 performance of labor unless actual time is the basis for
7-16 reimbursement. In no event shall any manufacturer or distributor
7-17 pay its dealers an amount of money for warranty work that is less
7-18 than that charged by the dealer to the retail customers of the
7-19 dealer for nonwarranty work of like kind. All claims made by
7-20 dealers for compensation for delivery, preparation, and warranty
7-21 work shall be paid within 30 days after approval and shall be
7-22 approved or disapproved within 30 days after receipt. When any
7-23 claim is disapproved, the dealer shall be notified in writing of
7-24 the grounds for disapproval. No claim which has been approved and
7-25 paid may be charged back to the dealer unless it can be shown that
7-26 the claim was false or fraudulent, that the repairs were not
7-27 properly made or were unnecessary to correct the defective
8-1 condition, or that the dealer failed to reasonably substantiate the
8-2 claim in accordance with reasonable written requirements of the
8-3 manufacturer or distributor, if the dealer has been notified of the
8-4 requirements prior to the time the claim arose, and if the
8-5 requirements were in effect at the time the claim arose. A
8-6 manufacturer or distributor may not audit a claim after the
8-7 expiration of two years following the submission of the claim
8-8 unless the manufacturer or distributor has reasonable grounds to
8-9 suspect that a claim was fraudulent. Notwithstanding the terms of
8-10 a franchise agreement or provision of law in conflict with this
8-11 section, the dealer's delivery, preparation, and warranty
8-12 obligations as filed with the Commission shall constitute the
8-13 dealer's sole responsibility for product liability as between the
8-14 dealer and manufacturer or distributor, and, except for a loss
8-15 caused by the dealer's failure to adhere to these obligations, a
8-16 loss caused by the dealer's negligence or intentional misconduct,
8-17 or a loss caused by the dealer's modification of a product without
8-18 manufacturer or distributor authorization, the manufacturer or
8-19 distributor shall reimburse the dealer for all loss incurred by the
8-20 dealer, including legal fees, court costs, and damages, as a result
8-21 of the dealer having been named a party in a product liability
8-22 action.
8-23 (12) Operate as a manufacturer, distributor, or
8-24 representative without a currently valid license from the
8-25 Commission or otherwise violate this Act or rules promulgated by
8-26 the Commission hereunder.
8-27 (13) Notwithstanding the terms of any franchise
9-1 agreement, to prevent or refuse to honor the succession to a
9-2 dealership by any legal heir or devisee under the will of a dealer
9-3 or under the laws of descent and distribution of this State unless
9-4 it is shown to the Commission, after notice and hearing, that the
9-5 result of such succession will be detrimental to the public
9-6 interest and to the representation of the manufacturer or
9-7 distributor; provided, however, nothing herein shall prevent a
9-8 dealer, during his lifetime, from designating any person as his
9-9 successor dealer, by written instrument filed with the manufacturer
9-10 or distributor.
9-11 (14) Notwithstanding the terms of any franchise
9-12 agreement, require that a dealer pay or assume, directly or
9-13 indirectly, any part of any refund, rebate, discount, or other
9-14 financial adjustment made by the manufacturer, distributor, or
9-15 representative to, or in favor of, any customer of a dealer, unless
9-16 voluntarily agreed to by such dealer.
9-17 (15) Notwithstanding the terms of any franchise
9-18 agreement, deny or withhold approval of a written application to
9-19 relocate a franchise unless (A) the applicant has received written
9-20 notice of the denial or withholding of approval within 60 days
9-21 after receipt of the application containing information reasonably
9-22 necessary to enable the manufacturer or distributor to adequately
9-23 evaluate the application, and if (B) the applicant files a protest
9-24 with the Commission and the manufacturer or distributor establishes
9-25 by a preponderance of the evidence at a hearing called by the
9-26 Commission that the grounds for the denial or withholding of
9-27 approval of the relocation are reasonable.
10-1 (16) Notwithstanding the terms of any franchise
10-2 agreement, fail to pay to a dealer or any lienholder in accordance
10-3 with their respective interest after the termination of a
10-4 franchise:
10-5 (A) the dealer cost of each new motor vehicle in
10-6 the dealer's inventory with mileage of 6,000 miles or less, reduced
10-7 by the net discount value of each, where "net discount value" is
10-8 determined according to the following formula: net cost multiplied
10-9 by total mileage divided by 100,000, and where "net cost" equals
10-10 the dealer cost plus any charges by the manufacturer, distributor,
10-11 or representative for distribution, delivery, and taxes, less all
10-12 allowances paid to the dealer by the manufacturer, distributor, or
10-13 representative for new, unsold, undamaged, and complete motor
10-14 vehicles of current model year or one year prior model year in the
10-15 dealer's inventory, except that if a vehicle cannot be reduced by
10-16 the net discount value, the manufacturer or distributor shall pay
10-17 the dealer the net cost of the vehicle;
10-18 (B) the dealer cost of each new, unused,
10-19 undamaged, and unsold part or accessory if the part or accessory is
10-20 in the current parts catalogue and is still in the original,
10-21 resalable merchandising package and in unbroken lots, except that
10-22 in the case of sheet metal, a comparable substitute for the
10-23 original package may be used, and if the part or accessory was
10-24 purchased by the dealer either directly from the manufacturer or
10-25 distributor or from an outgoing authorized dealer as a part of the
10-26 dealer's initial inventory;
10-27 (C) the fair market value of each undamaged sign
11-1 owned by the dealer which bears a trademark or tradename used or
11-2 claimed by the manufacturer, distributor, or representative if the
11-3 sign was purchased from or purchased at the request of the
11-4 manufacturer, distributor, or representative;
11-5 (D) the fair market value of all special tools,
11-6 data processing equipment, and automotive service equipment owned
11-7 by the dealer which were recommended in writing and designated as
11-8 special tools and equipment and purchased from or purchased at the
11-9 request of the manufacturer, distributor, or representative, if the
11-10 tools and equipment are in usable and good condition except for
11-11 reasonable wear and tear;
11-12 (E) the cost of transporting, handling, packing,
11-13 storing, and loading of any property subject to repurchase under
11-14 this section;
11-15 (F) except as provided by this subdivision, any
11-16 sums due as provided by Paragraph (A) of this subdivision within 60
11-17 days after termination of a franchise and any sums due as provided
11-18 by Paragraphs (B) through (E) of this subdivision within 90 days
11-19 after termination of a franchise. As a condition of payment, the
11-20 dealer is to comply with reasonable requirements with respect to
11-21 the return of inventory as are set out in the terms of the
11-22 franchise agreement. A manufacturer or distributor shall reimburse
11-23 a dealer for the dealer's cost for storing any property covered by
11-24 this subdivision beginning 90 days following termination. A
11-25 manufacturer or distributor shall reimburse a dealer for the
11-26 dealer's cost of storing any property covered by this subdivision
11-27 before the expiration of 90 days from the date of termination if
12-1 the dealer notifies the manufacturer or distributor of the
12-2 commencement of storage charges within that period. On receipt of
12-3 notice of the commencement of storage charges, a manufacturer or
12-4 distributor may immediately take possession of the property in
12-5 question by repurchasing the property as provided by this
12-6 subdivision. A manufacturer, distributor, or representative who
12-7 fails to pay those sums within the prescribed time or at such time
12-8 as the dealer and lienholder, if any, proffer good title prior to
12-9 the prescribed time for payment, is liable to the dealer for:
12-10 (i) the greatest of dealer cost, fair
12-11 market value, or current price of the inventory;
12-12 (ii) interest on the amount due calculated
12-13 at the rate applicable to a judgment of a court; and
12-14 (iii) reasonable attorney's fees and
12-15 costs.
12-16 (17) Notwithstanding the terms of any franchise
12-17 agreement, change its distributor, its method of distribution of
12-18 its products in this state, or its business structure or ownership
12-19 in a manner that results in the termination or noncontinuance of a
12-20 franchise without good cause. The manufacturer, distributor, or
12-21 representative shall issue the same notice to the dealer and to the
12-22 Commission as is provided in Subdivisions (3)(A) and (B) of this
12-23 section and said same procedures shall apply to the parties.
12-24 (18) Notwithstanding the terms of any franchise
12-25 agreement, require a dealer to submit to arbitration on any issue
12-26 unless the dealer and the manufacturer, distributor, or
12-27 representative and their respective counsel agree to arbitrate
13-1 after a controversy arises. The arbitrator shall apply the
13-2 provisions of this Act in resolving the pertinent controversy.
13-3 Either party may appeal to the Commission a decision of an
13-4 arbitrator on the ground that the arbitrator failed to apply this
13-5 Act.
13-6 (19) Notwithstanding the terms of any franchise
13-7 agreement, require that a dealer join, contribute to, or affiliate
13-8 with, directly or indirectly, any advertising association.
13-9 (20) Notwithstanding the terms of a franchise
13-10 agreement:
13-11 (A) require adherence to unreasonable sales or
13-12 service standards;
13-13 (B) directly or indirectly, discriminate against
13-14 a dealer or otherwise treat dealers differently as a result of a
13-15 formula or other calculation or process intended to gauge the
13-16 performance of a dealership, except a sales contest or other
13-17 recognition program based on reasonable sales and service criteria;
13-18 (C) unreasonably require that a dealer purchase
13-19 special tools or equipment; or
13-20 (D) fail to compensate a dealer for all costs
13-21 incurred by the dealer as required by the manufacturer in complying
13-22 with the terms of a product recall by the manufacturer or
13-23 distributor, including the costs, if any, incurred by the dealer in
13-24 notifying vehicle owners of the existence of the recall.
13-25 (21) Discriminate unreasonably between or among
13-26 franchisees in the sale of a motor vehicle owned by the
13-27 manufacturer or distributor.
14-1 (22) Directly or indirectly, or through a subsidiary
14-2 or agent, require, as a condition for obtaining financing for a
14-3 motor vehicle, the purchaser of a vehicle to purchase any product
14-4 other than the motor vehicle from the manufacturer or distributor,
14-5 or from an entity owned or controlled by the manufacturer or
14-6 distributor.
14-7 (23) Directly or indirectly, or through a subsidiary
14-8 or agent, require, as a condition of its or its subsidiary's
14-9 agreement to provide financing for a motor vehicle, that any
14-10 insurance policy or service contract purchased by the motor vehicle
14-11 purchaser be purchased from a specific source.
14-12 (24) Compel a dealer through a financing subsidiary of
14-13 the manufacturer or distributor to agree to unreasonable operating
14-14 requirements or directly or indirectly to terminate a dealer
14-15 through the actions of a financing subsidiary of the manufacturer
14-16 or distributor. This subdivision does not limit the right of a
14-17 financing entity to engage in business practices in accordance with
14-18 the usage of trade in retail and wholesale motor vehicle financing.
14-19 (25) Operate as a dealer, other than a motor home
14-20 dealer, except on a temporary basis and only if:
14-21 (A) the dealership was previously owned by a
14-22 franchised dealer and is currently for sale at a reasonable price;
14-23 or
14-24 (B) the manufacturer, distributor, or
14-25 representative operates the dealership in a bona fide relationship
14-26 with a franchised dealer who is required to make a significant
14-27 investment in the dealership, subject to loss, and who reasonably
15-1 expects to acquire full ownership of the dealership under
15-2 reasonable terms and conditions.
15-3 (26) Notwithstanding the terms of a franchise
15-4 agreement, deny or withhold approval of a dealer's application to
15-5 add a line-make or parts or products related to that line-make
15-6 unless, within 60 days of receipt of the dealer's written
15-7 application to add the line-make, the manufacturer or distributor
15-8 gives the dealer written notice of the denial or withholding of
15-9 approval. After receipt of notice, the dealer may file a protest
15-10 with the Commission. If the dealer files a protest as provided by
15-11 this subdivision, the Commission may uphold the manufacturer's or
15-12 distributor's decision to deny or withhold approval of the addition
15-13 of the line-make only if the manufacturer or distributor proves by
15-14 a preponderance of the evidence that the denial or withholding of
15-15 approval was reasonable. In determining whether or not the
15-16 manufacturer or distributor has met its burden to show that its
15-17 denial or withholding of approval is reasonable, the Commission
15-18 shall consider all existing circumstances, including, without
15-19 limitation, the following:
15-20 (A) the dealer's sales in relation to the sales
15-21 in the market;
15-22 (B) the dealer's investment and obligations;
15-23 (C) injury to the public welfare;
15-24 (D) the adequacy of the dealer's sales and
15-25 service facilities, equipment, parts, and personnel in relation to
15-26 those of other dealers of new motor vehicles of the same line-make;
15-27 (E) whether warranties are being honored by the
16-1 dealer agreement;
16-2 (F) the parties' compliance with their franchise
16-3 agreement;
16-4 (G) the enforceability of the franchise
16-5 agreement from a public policy standpoint, including without
16-6 limitation, issues of the reasonableness of the franchise
16-7 agreement's terms, oppression, adhesion, and the relative
16-8 bargaining power of the parties;
16-9 (H) whether the dealer complies with reasonable
16-10 capitalization requirements or will be able to comply with
16-11 reasonable capitalization requirements within a reasonable time;
16-12 (I) the harm, if any, to the manufacturer if the
16-13 denial or withholding of approval is not upheld; and
16-14 (J) the harm, if any, to the dealer if the
16-15 denial or withholding of approval is upheld.
16-16 SECTION 2. The importance of this legislation and the
16-17 crowded condition of the calendars in both houses create an
16-18 emergency and an imperative public necessity that the
16-19 constitutional rule requiring bills to be read on three several
16-20 days in each house be suspended, and this rule is hereby suspended,
16-21 and that this Act take effect and be in force from and after its
16-22 passage, and it is so enacted.