By: Brown S.B. No. 849
2001S0563/1
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the duties and authority of the Motor Vehicle Board of
1-3 the Texas Department of Transportation and to the regulation of the
1-4 sale of motor vehicles.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Subdivisions (6) and (15), Section 1.03, Texas
1-7 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
1-8 Civil Statutes), are amended to read as follows:
1-9 (6) "Converter" means a person who prior to the retail
1-10 sale of a motor vehicle, assembles, installs, or affixes a body,
1-11 cab, or special equipment to a chassis, or who substantially adds,
1-12 subtracts from, or modifies a previously assembled or manufactured
1-13 motor vehicle other than a motor home.
1-14 (15) "Franchised dealer" means any person who holds a
1-15 franchised motor vehicle dealer's license [general distinguishing
1-16 number] issued by the Department pursuant to the terms of Chapter
1-17 503, Transportation Code, and who is engaged in the business of
1-18 buying, selling, or exchanging new motor vehicles and servicing or
1-19 repairing motor vehicles pursuant to the terms of a franchise and a
1-20 manufacturer's warranty at an established and permanent place of
1-21 business pursuant to a franchise in effect with a manufacturer or
1-22 distributor.
1-23 SECTION 2. Subsections (b) and (c), Section 2.03, Texas
1-24 Motor Vehicle Commission Code (Article 4413(36), Vernon's Texas
1-25 Civil Statutes), are amended to read as follows:
2-1 (b) Except as provided by this section, the office of a
2-2 member is automatically vacated and shall be filled as any other
2-3 vacancy, if:
2-4 (1) the member becomes a licensee under this Act;
2-5 (2) the member acquires a substantial [an] interest in
2-6 a business that manufactures, distributes, converts, leases, or
2-7 sells motor vehicles;
2-8 (3) the member becomes an [officer,] employee[,] or
2-9 paid consultant of a trade association in the motor vehicle
2-10 industry; or
2-11 (4) a person related to the member within the first
2-12 degree by consanguinity or affinity, as determined under Chapter
2-13 573, Government Code, becomes an [officer,] employee[,] or paid
2-14 consultant of a trade association in the motor vehicle industry,
2-15 becomes a licensee under this Act, or acquires a substantial [an]
2-16 interest in a business that manufactures, distributes, converts,
2-17 leases, or sells motor vehicles.
2-18 (c) Notwithstanding the terms of Subsection (b) of this
2-19 section, the office of a member appointed to the board pursuant to
2-20 the terms of Section 2.02(b)(1) [2.02(c)(1)] of this Act is not
2-21 vacated by virtue of the fact that the member, or a person related
2-22 to the member within the first degree by consanguinity or affinity,
2-23 as determined under Chapter 573, Government Code, subsequently
2-24 acquires an interest in a dealership.
2-25 SECTION 3. Subsection (d), Section 2.08, Texas Motor Vehicle
2-26 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
3-1 is amended to read as follows:
3-2 (d) A member of the board appointed pursuant to the terms of
3-3 Section 2.02(b) [2.02(c)] of this Act may not vote on an issue
3-4 involving a dispute in which both a dealer and a manufacturer are
3-5 named parties.
3-6 SECTION 4. Subsection (c), Section 2.12, Texas Motor Vehicle
3-7 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
3-8 is amended to read as follows:
3-9 (c) With regard to each complaint filed by the board for the
3-10 purpose of enforcing this Act [with the Commission], the board
3-11 [Commission] shall keep the following information:
3-12 (1) the date the complaint is filed;
3-13 (2) the name of the person filing the complaint;
3-14 (3) the subject matter of the complaint;
3-15 (4) a record of each person contacted in relation to
3-16 the complaint;
3-17 (5) a summary of the results of the review or
3-18 investigation of the complaint; and
3-19 (6) if the board [Commission] takes no action on the
3-20 complaint, an explanation of the reasons that no action was taken.
3-21 SECTION 5. Subsection (a), Section 3.01, Texas Motor Vehicle
3-22 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
3-23 is amended to read as follows:
3-24 (a) The board has the exclusive [general and] original
3-25 [power and] jurisdiction to regulate all aspects of the
3-26 distribution, sale, and leasing of motor vehicles as provided by
4-1 this Act and to do all things, whether specifically designated in
4-2 this Act or implied herein, or necessary or convenient to the
4-3 exercise of this power and jurisdiction, including the original
4-4 jurisdiction to determine questions of its own jurisdiction. In
4-5 addition to the other duties placed on the board by this Act, the
4-6 board shall enforce and administer the terms of Chapter 503,
4-7 Transportation Code.
4-8 SECTION 6. Section 3.03, Texas Motor Vehicle Commission Code
4-9 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
4-10 read as follows:
4-11 Sec. 3.03. GENERAL BOARD [COMMISSION] POWERS. (a) The
4-12 board [Commission] shall have and may, in its discretion and
4-13 notwithstanding any other provision of law that is inconsistent
4-14 with this Act, exercise the powers set forth in this Act, and shall
4-15 have all other powers necessary, incidental, or convenient to carry
4-16 out its duties and effectuate its express powers and duties. These
4-17 powers and duties include the power to initiate and conduct
4-18 proceedings, investigations, and hearings, administer oaths,
4-19 receive evidence and pleadings, issue subpoenas to compel the
4-20 attendance of any person, order the production of any tangible
4-21 property, including papers, records, and documents, make findings
4-22 of fact on all factual issues arising out of any proceeding
4-23 initiated under this Act, specify, govern, and control appearance,
4-24 practice, and procedure before the board [Commission], issue rules,
4-25 conclusions of law, decisions, including declaratory decisions or
4-26 orders, enter into contracts or execute instruments, retain
5-1 counsel, utilize the services of the Attorney General of the State
5-2 of Texas and thereafter institute and direct the conduct of legal
5-3 proceedings in any forum or obtain other professional services as
5-4 may be necessary and convenient, sanction for contempt, assess and
5-5 collect fees and costs including attorney's fees, issue, suspend,
5-6 and revoke licenses, prohibit and regulate acts and practices in
5-7 connection with the distribution and sale of motor vehicles and
5-8 warranty performance obligations, issue cease and desist orders in
5-9 the nature of temporary and permanent injunctions, and levy civil
5-10 penalties. Notwithstanding other law, the board has the authority
5-11 to enter an order necessary to implement the terms of this Act,
5-12 including an order requiring that a person:
5-13 (1) pay money to the board or another person;
5-14 (2) perform an act other than the payment of money; or
5-15 (3) refrain from performing an act.
5-16 (b) The board may conduct hearings in contested cases
5-17 brought pursuant to, and as provided by, Chapter 503,
5-18 Transportation Code. The procedures applicable to a hearing
5-19 conducted under this Subsection, and the disposition of a final
5-20 order after a hearing conducted under this Subsection, are those
5-21 applicable to a hearing conducted as provided by Section 6.07(e)(2)
5-22 of this Act. A decision or final order issued under this
5-23 Subsection is final, and no appeal may, as a matter of right, be
5-24 made to the Texas Transportation Commission. The board
5-25 [department] may adopt rules applicable to procedures, hearings,
5-26 and enforcement proceedings in an action brought pursuant to this
6-1 Subsection.
6-2 SECTION 7. Subsection (a), Section 3.05, Texas Motor Vehicle
6-3 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
6-4 is amended to read as follows:
6-5 (a) Whenever the Board has reason to believe, through
6-6 receipt of a complaint or otherwise, that a violation of this Act
6-7 or a Board rule, order, or decision has occurred or is likely to
6-8 occur, the Board shall conduct an investigation unless it
6-9 determines that a complaint is frivolous or for the purpose of
6-10 harassment. If the Board's investigation establishes that a
6-11 violation of this Act or a Board rule, order, or decision has
6-12 occurred or is likely to occur, the Board shall institute
6-13 proceedings as it deems appropriate to enforce this Act or its
6-14 rules, orders, and decisions. Notwithstanding other provisions of
6-15 this Act, the Board is not required to pay a filing fee when filing
6-16 a complaint or other enforcement action.
6-17 SECTION 8. The Texas Motor Vehicle Commission Code (Article
6-18 4413(36), Vernon's Texas Civil Statutes), is amended by adding
6-19 Section 3.07B to read as follows:
6-20 Sec. 3.07B. CERTAIN TIME LIMITS TOLLED DURING PENDENCY OF
6-21 MANDATORY MEDIATION PROCEEDINGS. A time limit relating to board
6-22 proceedings imposed on the board or on a dealer by the terms of
6-23 this Act is tolled during the pendency of mandatory mediation
6-24 proceedings required by this Act or by a franchise agreement.
6-25 SECTION 9. Subsection (a), Section 4.01, Texas Motor Vehicle
6-26 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
7-1 is amended to read as follows:
7-2 (a) Except as provided by this Section, no person shall
7-3 engage in business as, serve in the capacity of, or act as a
7-4 dealer, manufacturer, distributor, converter, representative,
7-5 lessor, or lease facilitator in this State or perform or offer to
7-6 perform repair services on a motor vehicle pursuant to the terms of
7-7 a franchise and a motor vehicle manufacturer's warranty, whether or
7-8 not the person sells or offers to sell motor vehicles at the same
7-9 location, without obtaining a license therefor as provided in this
7-10 Act and the rules of the board [Commission]. All new license
7-11 applications shall be reviewed and, in the discretion of the board
7-12 [Commission], investigated to determine compliance with the
7-13 provisions of this Act. License renewals may be administratively
7-14 granted unless protested. Licenses issued by the board
7-15 [Commission] shall expire one year from date of issuance. All
7-16 licenses and renewals thereof are issued subject to all provisions
7-17 of this Act and rules of the board [Commission] in effect upon the
7-18 date of issuance as well as all future provisions of this Act and
7-19 rules which may become effective during the term of the license. A
7-20 lessor or lease facilitator is not required to obtain a lessor or
7-21 lease facilitator license or pay a license fee under this code if
7-22 the lessor or lease facilitator is a state or federally chartered
7-23 financial institution or a regulated subsidiary of a state or
7-24 federally chartered financial institution. A trust or other entity
7-25 that owns an interest in a lease and the vehicle that is the
7-26 subject of the lease is not required to obtain a lessor license or
8-1 lease facilitator license or pay a license fee with respect to a
8-2 lease initiated, managed, serviced, and administered by a licensed
8-3 lessor. A franchised dealer licensed under this code is not
8-4 required to obtain a lessor or lease facilitator license or pay a
8-5 license fee under this code to engage in the business of leasing
8-6 motor vehicles, including new motor vehicles, that the dealer is
8-7 licensed to sell. The board may issue a duplicate license for any
8-8 license it issues, charge a fee for the issuance of a duplicate
8-9 license, and adopt rules applicable to the issuance of a duplicate
8-10 license.
8-11 SECTION 10. Subsection (c), Section 4.03, Texas Motor
8-12 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
8-13 Statutes), is amended to read as follows:
8-14 (c) Each application for a manufacturer's license shall
8-15 include an instrument setting forth the terms and conditions of all
8-16 warranty agreements in force and effect on the products it sells in
8-17 this State so that the board [Commission] may ascertain the degree
8-18 of protection afforded the retail purchasers of its products and
8-19 the obligations of its franchised dealers in connection therewith
8-20 as well as the basis for compensating its franchised dealers for
8-21 labor, parts and other expenses incurred in connection with such
8-22 manufacturer's warranty agreements. Each application shall include
8-23 a statement regarding the manufacturer's compliance with Sections
8-24 5.02A, 5.02B, and 5.02C [Section 5.02] of this Act. In addition,
8-25 each manufacturer's license application shall specify the delivery
8-26 and preparation obligations of its franchised dealers prior to
9-1 delivery of a new motor vehicle to a retail purchaser and the
9-2 schedule of compensation to be paid to its franchised dealers for
9-3 the work and service performed by them in connection with such
9-4 delivery.
9-5 SECTION 11. Subsection (a), Section 4.05, Texas Motor
9-6 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
9-7 Statutes), is amended to read as follows:
9-8 (a) The annual license fees for licenses issued hereunder
9-9 shall be as follows:
9-10 (1) For each manufacturer and distributor, $900 plus
9-11 $20 for each individual dealer franchised by the manufacturer or
9-12 distributor.
9-13 (2) For each franchised dealer who sold 200 or fewer
9-14 new motor vehicles during the preceding calendar year, $175.
9-15 (3) For each franchised dealer who sold more than 200,
9-16 but not more than 400, new motor vehicles during the preceding
9-17 calendar year, $275.
9-18 (4) For each franchised dealer who sold more than 400,
9-19 but not more than 800, new motor vehicles during the preceding
9-20 calendar year, $400.
9-21 (5) For each franchised dealer who sold more than 800
9-22 but not more than 1,200 new motor vehicles during the preceding
9-23 calendar year, $500.
9-24 (6) For each franchised dealer who sold more than
9-25 1,200 but not more than 1,600 new motor vehicles during the
9-26 preceding calendar year, $625.
10-1 (7) For each franchised dealer who sold more than
10-2 1,600 new motor vehicles during the preceding calendar year, $750.
10-3 (8) For each location separate from his dealership at
10-4 which a franchised dealer offers no motor vehicle for sale, but
10-5 performs warranty service on vehicles the dealer is franchised and
10-6 licensed to sell, $100.
10-7 (9) For each amendment to a [dealer's] license, $25.
10-8 (10) For each representative, $100.
10-9 (11) For each converter, $375.
10-10 (12) For each lessor who leased 200 or fewer motor
10-11 vehicles during the preceding calendar year, $175.
10-12 (13) For each lessor who leased more than 200 but not
10-13 more than 400 motor vehicles during the preceding calendar year,
10-14 $275.
10-15 (14) For each lessor who leased more than 400 but not
10-16 more than 800 motor vehicles during the preceding calendar year,
10-17 $400.
10-18 (15) For each lessor who leased more than 800 but not
10-19 more than 1,200 motor vehicles during the preceding calendar year,
10-20 $500.
10-21 (16) For each lessor who leased more than 1,200 but
10-22 not more than 1,600 motor vehicles during the preceding calendar
10-23 year, $625.
10-24 (17) For each lessor who leased more than 1,600 motor
10-25 vehicles during the preceding calendar year, $750.
10-26 (18) For each lease facilitator, $375.
11-1 (19) For each duplicate license, $50.
11-2 SECTION 12. Subsection (a), Section 4.06, Texas Motor
11-3 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
11-4 Statutes), is amended to read as follows:
11-5 (a) The board may deny an application for a license, revoke
11-6 or suspend an outstanding license, or place on probation a person
11-7 whose license has been suspended, or reprimand a licensee, for any
11-8 of the following reasons:
11-9 (1) Unfitness of an applicant or licensee under
11-10 standards set out in this Act or in board rules.
11-11 (2) Material misrepresentation in any application or
11-12 other information filed under this Act or board rules.
11-13 (3) Failure to comply with this Act or any board rule
11-14 or order promulgated by the board.
11-15 (4) Failure to maintain the qualifications for a
11-16 license.
11-17 (5) Willfully defrauding any [retail] buyer.
11-18 (6) Violation of any law relating to the sale,
11-19 distribution, financing, or insuring of motor vehicles.
11-20 (7) Any act or omission by an officer, director,
11-21 partner, trustee, or other person acting in a representative
11-22 capacity for a licensee which act or omission would be cause for
11-23 denying, revoking, or suspending a license to an individual
11-24 licensee.
11-25 (8) Failure to fulfill written agreements between the
11-26 licensee and a retail buyer of a motor vehicle.
12-1 SECTION 13. Subsection (b), Section 5.02, Texas Motor
12-2 Vehicle Commission Code (Article 4413(36), Vernon's Texas Civil
12-3 Statutes), is amended to read as follows:
12-4 (b) It is unlawful for any manufacturer, distributor, or
12-5 representative to:
12-6 (1) Require or attempt to require any dealer to order,
12-7 accept delivery of or pay anything of value, directly or
12-8 indirectly, for any motor vehicle, appliance, part, accessory or
12-9 any other commodity unless voluntarily ordered or contracted for by
12-10 such dealer.
12-11 (2) Refuse or fail to deliver, in reasonable
12-12 quantities and within a reasonable time, to a dealer having a
12-13 franchise agreement for the retail sale of any motor vehicles sold
12-14 or distributed by such manufacturer, distributor, or
12-15 representative, any new motor vehicle or parts or accessories to
12-16 new motor vehicles as are covered by such franchise if such
12-17 vehicle, parts or accessories are publicly advertised as being
12-18 available for delivery or are actually being delivered; provided,
12-19 however, this provision is not violated if such failure is caused
12-20 by acts of God, work stoppage or delays due to strikes or labor
12-21 disputes, freight embargoes or other causes beyond the control of
12-22 the manufacturer, distributor, or representative.
12-23 (3) Notwithstanding the terms of any franchise
12-24 agreement:
12-25 (A) Terminate or refuse to continue any
12-26 franchise with a dealer or directly or indirectly force or attempt
13-1 to force a dealer to relocate or discontinue a line-make or parts
13-2 or products related to that line-make unless all of the following
13-3 conditions are met:
13-4 (i) the dealer and the board have received
13-5 written notice by registered or certified mail from the
13-6 manufacturer, distributor, or representative not less than 60 days
13-7 before the effective date of termination or noncontinuance setting
13-8 forth the specific grounds for termination or noncontinuance; and
13-9 (ii) the written notice contains on the
13-10 first page thereof a conspicuous statement which reads as follows:
13-11 "NOTICE TO DEALER: YOU MAY BE ENTITLED TO FILE A PROTEST WITH THE
13-12 TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS, AND HAVE A HEARING IN
13-13 WHICH YOU MAY PROTEST THE PROPOSED TERMINATION OR NONCONTINUANCE OF
13-14 YOUR FRANCHISE UNDER THE TERMS OF THE TEXAS MOTOR VEHICLE
13-15 COMMISSION CODE IF YOU OPPOSE THIS ACTION."; and
13-16 (iii) the manufacturer, distributor, or
13-17 representative has received the informed, written consent of the
13-18 affected dealer or the appropriate period for the affected dealer
13-19 to protest the proposed franchise termination or noncontinuance has
13-20 lapsed; or
13-21 (iv) if the affected dealer files a
13-22 protest with the board within the greater of (1) 60 days after
13-23 receiving its 60-day notice of proposed termination or
13-24 noncontinuance or (2) the time specified in such notice, the board
13-25 determines that the party seeking to terminate or not continue a
13-26 dealer's franchise has established by a preponderance of the
14-1 evidence, at a hearing called by the board, that there is good
14-2 cause for the proposed termination or noncontinuance.
14-3 (v) Notwithstanding Subdivisions (3)(A)(i)
14-4 and (3)(A)(iv) of this section, notice may be made not less than 15
14-5 days prior to the effective date of termination or noncontinuance
14-6 if a licensed dealer fails to conduct its customary sales and
14-7 service operations during its customary business hours for seven
14-8 consecutive business days unless such failure is caused by an act
14-9 of God, work stoppage or delays due to strikes or labor disputes,
14-10 an order of the board, or other causes beyond the control of the
14-11 dealer.
14-12 (B) Whenever a dealer files a timely protest to
14-13 a proposed franchise termination or noncontinuance, the board shall
14-14 notify the party seeking to terminate or to not continue the
14-15 protesting dealer's franchise that a timely protest has been filed,
14-16 that a hearing is required in accordance with this Act, and that
14-17 the party who gave the dealer notice of termination or
14-18 noncontinuance of the franchise may not terminate or refuse to
14-19 continue the franchise until the board issues its final decision or
14-20 order.
14-21 (C) If a franchise is terminated or not
14-22 continued, another franchise in the same line-make will be
14-23 established within a reasonable time unless it is shown to the
14-24 board by a preponderance of the evidence that the community or
14-25 trade area cannot reasonably support such a dealership. If this
14-26 showing is made, no dealer license shall be thereafter issued in
15-1 the same area unless a change in circumstances is established.
15-2 (4) Notwithstanding the terms of any franchise
15-3 agreement, modify or replace a franchise if the modification or
15-4 replacement would adversely affect, to a substantial degree, the
15-5 dealer's sales, investment, or obligations to provide service to
15-6 the public, unless the manufacturer, distributor, or representative
15-7 has first given the board and each affected dealer written notice
15-8 by registered or certified mail of any such action 60 days in
15-9 advance of the modification or replacement. The written notice
15-10 shall contain on the first page thereof a conspicuous statement
15-11 which reads as follows: "NOTICE TO DEALER: YOU MAY BE ENTITLED TO
15-12 FILE A PROTEST WITH THE TEXAS MOTOR VEHICLE BOARD IN AUSTIN, TEXAS,
15-13 AND HAVE A HEARING IN WHICH YOU MAY PROTEST THE PROPOSED
15-14 MODIFICATION OR REPLACEMENT OF YOUR FRANCHISE UNDER THE TERMS OF
15-15 THE TEXAS MOTOR VEHICLE COMMISSION CODE IF YOU OPPOSE THIS ACTION."
15-16 Within the greater of (1) 60 days after receipt of such notice or
15-17 (2) the time specified in such notice, a dealer may file a protest
15-18 with the board and the modification or replacement shall not become
15-19 effective unless and until the board determines that the party
15-20 seeking to modify or replace a franchise has demonstrated by a
15-21 preponderance of the evidence that there is good cause for the
15-22 modification or replacement. The prior franchise shall continue in
15-23 effect until the protest is resolved by the board.
15-24 (5) Notwithstanding the terms of any franchise
15-25 agreement, in determining whether good cause has been established
15-26 for modifying, replacing, terminating, or refusing to continue a
16-1 franchise, or for forcing or attempting to force a dealer to
16-2 relocate or discontinue a line-make or parts or products related to
16-3 that line-make, the board shall consider all the existing
16-4 circumstances including, without limitation by the enumeration
16-5 herein, all the following:
16-6 (A) the dealer's sales in relation to the sales
16-7 in the market;
16-8 (B) the dealer's investment and obligations;
16-9 (C) injury or benefit to the public;
16-10 (D) the adequacy of the dealer's service
16-11 facilities, equipment, parts, and personnel in relation to those of
16-12 other dealers of new motor vehicles of the same line-make;
16-13 (E) whether warranties are being honored by the
16-14 dealer;
16-15 (F) the parties' compliance with their franchise
16-16 agreement except to the extent that the franchise agreement is in
16-17 conflict with this Act; and
16-18 (G) the enforceability of the franchise
16-19 agreement from a public policy standpoint, including, without
16-20 limitation, issues of the reasonableness of the franchise
16-21 agreement's terms, oppression, adhesion, and the relative
16-22 bargaining power of the parties.
16-23 Good cause shall not be shown solely by the desire of a
16-24 manufacturer, distributor, or representative for market
16-25 penetration.
16-26 (6) Use any false, deceptive or misleading
17-1 advertising.
17-2 (7) Notwithstanding the terms of any franchise
17-3 agreement, prevent any dealer from reasonably changing the capital
17-4 structure of his dealership or the means by or through which he
17-5 finances the operation thereof, provided that the dealer meets
17-6 reasonable capital requirements.
17-7 (8) Notwithstanding the terms of any franchise
17-8 agreement, fail to give effect to or attempt to prevent any sale or
17-9 transfer of a dealer, dealership or franchise or interest therein
17-10 or management thereof except as provided by Section 5.01B.
17-11 (9) Notwithstanding the terms of any franchise
17-12 agreement, require or attempt to require that a dealer assign to or
17-13 act as an agent for any manufacturer, distributor or representative
17-14 in the securing of promissory notes and security agreements given
17-15 in connection with the sale or purchase of new motor vehicles or
17-16 the securing of policies of insurance on or having to do with the
17-17 operation of vehicles sold.
17-18 (10) Notwithstanding the terms of any franchise
17-19 agreement, fail or refuse, after complaint and hearing, to perform
17-20 the obligations placed on the manufacturer in connection with the
17-21 delivery, preparation and warranty of a new motor vehicle as
17-22 provided in the manufacturer's warranty, preparation, and delivery
17-23 agreements on file with the board.
17-24 (11) Notwithstanding the terms of any franchise
17-25 agreement or provision of law in conflict with this section, the
17-26 dealer's delivery, preparation, and warranty obligations as filed
18-1 with the board shall constitute the dealer's sole responsibility
18-2 for product liability as between the dealer and manufacturer or
18-3 distributor, and, except for a loss caused by the dealer's failure
18-4 to adhere to these obligations, a loss caused by the dealer's
18-5 negligence or intentional misconduct, or a loss caused by the
18-6 dealer's modification of a product without manufacturer or
18-7 distributor authorization, the manufacturer or distributor shall
18-8 reimburse the dealer for all loss incurred by the dealer, including
18-9 legal fees, court costs, and damages, as a result of the dealer
18-10 having been named a party in a product liability action.
18-11 (12) Operate as a manufacturer, distributor, or
18-12 representative without a currently valid license from the board or
18-13 otherwise violate this Act or rules promulgated by the board
18-14 hereunder.
18-15 (13) Notwithstanding the terms of any franchise
18-16 agreement, to prevent or refuse to honor the succession to a
18-17 dealership by any legal heir or devisee under the will of a dealer
18-18 or under the laws of descent and distribution of this State unless
18-19 it is shown to the board, after notice and hearing, that the result
18-20 of such succession will be detrimental to the public interest and
18-21 to the representation of the manufacturer or distributor; provided,
18-22 however, nothing herein shall prevent a dealer, during his
18-23 lifetime, from designating any person as his successor dealer, by
18-24 written instrument filed with the manufacturer or distributor.
18-25 (14) Notwithstanding the terms of any franchise
18-26 agreement, require that a dealer pay or assume, directly or
19-1 indirectly, any part of any refund, rebate, discount, or other
19-2 financial adjustment made by the manufacturer, distributor, or
19-3 representative to, or in favor of, any customer of a dealer, unless
19-4 voluntarily agreed to by such dealer.
19-5 (15) Notwithstanding the terms of any franchise
19-6 agreement, deny or withhold approval of a written application to
19-7 relocate a franchise unless (A) the applicant has received written
19-8 notice of the denial or withholding of approval within 60 days
19-9 after receipt of the application containing information reasonably
19-10 necessary to enable the manufacturer or distributor to adequately
19-11 evaluate the application, and if (B) the applicant files a protest
19-12 with the board and the manufacturer or distributor establishes by a
19-13 preponderance of the evidence at a hearing called by the board that
19-14 the grounds for the denial or withholding of approval of the
19-15 relocation are reasonable.
19-16 (16) Notwithstanding the terms of any franchise
19-17 agreement, fail to pay to a dealer or any lienholder in accordance
19-18 with their respective interest after the termination of a
19-19 franchise:
19-20 (A) the dealer cost of each new motor vehicle in
19-21 the dealer's inventory with mileage of 6,000 miles or less,
19-22 exclusive of mileage placed on the motor vehicle before it was
19-23 delivered to the dealer, reduced by the net discount value of each,
19-24 where "net discount value" is determined according to the following
19-25 formula: net cost multiplied by total mileage, exclusive of
19-26 mileage placed on the motor vehicle before it was delivered to the
20-1 dealer, divided by 100,000, and where "net cost" equals the dealer
20-2 cost plus any charges by the manufacturer, distributor, or
20-3 representative for distribution, delivery, and taxes, less all
20-4 allowances paid to the dealer by the manufacturer, distributor, or
20-5 representative for new, unsold, undamaged, and complete motor
20-6 vehicles of current model year or one year prior model year in the
20-7 dealer's inventory, except that if a vehicle cannot be reduced by
20-8 the net discount value, the manufacturer or distributor shall pay
20-9 the dealer the net cost of the vehicle;
20-10 (B) the dealer cost of each new, unused,
20-11 undamaged, and unsold part or accessory if the part or accessory is
20-12 in the current parts catalogue and is still in the original,
20-13 resalable merchandising package and in unbroken lots, except that
20-14 in the case of sheet metal, a comparable substitute for the
20-15 original package may be used, and if the part or accessory was
20-16 purchased by the dealer either directly from the manufacturer or
20-17 distributor or from an outgoing authorized dealer as a part of the
20-18 dealer's initial inventory;
20-19 (C) the fair market value of each undamaged sign
20-20 owned by the dealer which bears a trademark or tradename used or
20-21 claimed by the manufacturer, distributor, or representative if the
20-22 sign was purchased from or purchased at the request of the
20-23 manufacturer, distributor, or representative;
20-24 (D) the fair market value of all special tools,
20-25 data processing equipment, and automotive service equipment owned
20-26 by the dealer which were recommended in writing and designated as
21-1 special tools and equipment and purchased from or purchased at the
21-2 request of the manufacturer, distributor, or representative, if the
21-3 tools and equipment are in usable and good condition except for
21-4 reasonable wear and tear;
21-5 (E) the cost of transporting, handling, packing,
21-6 storing, and loading of any property subject to repurchase under
21-7 this section;
21-8 (F) except as provided by this subdivision, any
21-9 sums due as provided by Paragraph (A) of this subdivision within 60
21-10 days after termination of a franchise and any sums due as provided
21-11 by Paragraphs (B) through (E) of this subdivision within 90 days
21-12 after termination of a franchise. As a condition of payment, the
21-13 dealer is to comply with reasonable requirements with respect to
21-14 the return of inventory as are set out in the terms of the
21-15 franchise agreement. A manufacturer or distributor shall reimburse
21-16 a dealer for the dealer's cost for storing any property covered by
21-17 this subdivision beginning 90 days following termination. A
21-18 manufacturer or distributor shall reimburse a dealer for the
21-19 dealer's cost of storing any property covered by this subdivision
21-20 before the expiration of 90 days from the date of termination if
21-21 the dealer notifies the manufacturer or distributor of the
21-22 commencement of storage charges within that period. On receipt of
21-23 notice of the commencement of storage charges, a manufacturer or
21-24 distributor may immediately take possession of the property in
21-25 question by repurchasing the property as provided by this
21-26 subdivision. A manufacturer, distributor, or representative who
22-1 fails to pay those sums within the prescribed time or at such time
22-2 as the dealer and lienholder, if any, proffer good title prior to
22-3 the prescribed time for payment, is liable to the dealer for:
22-4 (i) the greatest of dealer cost, fair
22-5 market value, or current price of the inventory;
22-6 (ii) interest on the amount due calculated
22-7 at the rate applicable to a judgment of a court; and
22-8 (iii) reasonable attorney's fees and
22-9 costs.
22-10 (17) Notwithstanding the terms of any franchise
22-11 agreement, change its distributor, its method of distribution of
22-12 its products in this state, or its business structure or ownership
22-13 in a manner that results in the termination or noncontinuance of a
22-14 franchise without good cause. The manufacturer, distributor, or
22-15 representative shall issue the same notice to the dealer and to the
22-16 board as is provided in Subdivisions (3)(A) and (B) of this section
22-17 and said same procedures shall apply to the parties.
22-18 (18) Notwithstanding the terms of any franchise
22-19 agreement, require a dealer to submit to arbitration on any issue
22-20 unless the dealer and the manufacturer, distributor, or
22-21 representative and their respective counsel agree to arbitrate
22-22 after a controversy arises. The arbitrator shall apply the
22-23 provisions of this Act in resolving the pertinent controversy.
22-24 Either party may appeal to the board a decision of an arbitrator on
22-25 the ground that the arbitrator failed to apply this Act.
22-26 (19) Notwithstanding the terms of any franchise
23-1 agreement, require that a dealer join, contribute to, or affiliate
23-2 with, directly or indirectly, any advertising association.
23-3 (20) Notwithstanding the terms of a franchise
23-4 agreement:
23-5 (A) require adherence to unreasonable sales or
23-6 service standards;
23-7 (B) directly or indirectly, discriminate against
23-8 a dealer or otherwise treat dealers differently as a result of a
23-9 formula or other calculation or process intended to gauge the
23-10 performance of a dealership;
23-11 (C) unreasonably require that a dealer purchase
23-12 special tools or equipment; or
23-13 (D) fail to compensate a dealer for all costs
23-14 incurred by the dealer as required by the manufacturer in complying
23-15 with the terms of a product recall by the manufacturer or
23-16 distributor, including the costs, if any, incurred by the dealer in
23-17 notifying vehicle owners of the existence of the recall.
23-18 (21) Discriminate unreasonably between or among
23-19 franchisees in the sale of a motor vehicle owned by the
23-20 manufacturer or distributor.
23-21 (22) Directly or indirectly, or through a subsidiary
23-22 or agent, require, as a condition for obtaining financing for a
23-23 motor vehicle, the purchaser of a vehicle to purchase any product
23-24 other than the motor vehicle from the manufacturer or distributor,
23-25 or from an entity owned or controlled by the manufacturer or
23-26 distributor.
24-1 (23) Directly or indirectly, or through a subsidiary
24-2 or agent, require, as a condition of its or its subsidiary's
24-3 agreement to provide financing for a motor vehicle, that any
24-4 insurance policy or service contract purchased by the motor vehicle
24-5 purchaser be purchased from a specific source.
24-6 (24) Compel a dealer through a financing subsidiary of
24-7 the manufacturer or distributor to agree to unreasonable operating
24-8 requirements or directly or indirectly to terminate a dealer
24-9 through the actions of a financing subsidiary of the manufacturer
24-10 or distributor. This subdivision does not limit the right of a
24-11 financing entity to engage in business practices in accordance with
24-12 the usage of trade in retail and wholesale motor vehicle financing.
24-13 (25) Notwithstanding the terms of a franchise
24-14 agreement, deny or withhold approval of a dealer's application to
24-15 add a line-make or parts or products related to that line-make
24-16 unless, within 60 days of receipt of the dealer's written
24-17 application to add the line-make, the manufacturer or distributor
24-18 gives the dealer written notice of the denial or withholding of
24-19 approval. After receipt of notice, the dealer may file a protest
24-20 with the board. If the dealer files a protest as provided by this
24-21 subdivision, the board may uphold the manufacturer's or
24-22 distributor's decision to deny or withhold approval of the addition
24-23 of the line-make only if the manufacturer or distributor proves by
24-24 a preponderance of the evidence that the denial or withholding of
24-25 approval was reasonable. In determining whether or not the
24-26 manufacturer or distributor has met its burden to show that its
25-1 denial or withholding of approval is reasonable, the board shall
25-2 consider all existing circumstances, including, without limitation,
25-3 the following:
25-4 (A) the dealer's sales in relation to the sales
25-5 in the market;
25-6 (B) the dealer's investment and obligations;
25-7 (C) injury or benefit to the public;
25-8 (D) the adequacy of the dealer's sales and
25-9 service facilities, equipment, parts, and personnel in relation to
25-10 those of other dealers of new motor vehicles of the same line-make;
25-11 (E) whether warranties are being honored by the
25-12 dealer agreement;
25-13 (F) the parties' compliance with their franchise
25-14 agreement to the extent that the franchise agreement is not in
25-15 conflict with this Act;
25-16 (G) the enforceability of the franchise
25-17 agreement from a public policy standpoint, including without
25-18 limitation, issues of the reasonableness of the franchise
25-19 agreement's terms, oppression, adhesion, and the relative
25-20 bargaining power of the parties;
25-21 (H) whether the dealer complies with reasonable
25-22 capitalization requirements or will be able to comply with
25-23 reasonable capitalization requirements within a reasonable time;
25-24 (I) the harm, if any, to the manufacturer if the
25-25 denial or withholding of approval is not upheld; and
25-26 (J) the harm, if any, to the dealer if the
26-1 denial or withholding of approval is upheld.
26-2 (26) Fail or refuse to offer to its same line-make
26-3 franchised dealers all models manufactured for that line-make, or
26-4 require a dealer to pay any extra fee, purchase unreasonable
26-5 advertising displays or other materials, or remodel, renovate, or
26-6 recondition the dealer's existing facilities as a prerequisite to
26-7 receiving a model or series of vehicles.
26-8 (27) Require a dealer to compensate the manufacturer
26-9 or distributor for any court costs, attorney's fees, or other
26-10 expenses incurred in an administrative or civil proceeding arising
26-11 under this Act, except that this subdivision does not prohibit a
26-12 manufacturer and dealer from entering into an agreement to share
26-13 costs in a proceeding in which the dealer and manufacturer have the
26-14 same or similar interests.
26-15 SECTION 14. This Act takes effect immediately if it receives
26-16 a vote of two-thirds of all the members elected to each house, as
26-17 provided by Section 39, Article III, Texas Constitution. If this
26-18 Act does not receive the vote necessary for immediate effect, this
26-19 Act takes effect September 1, 2001.