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A BILL TO BE ENTITLED
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AN ACT
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relating to certain rights of a motor vehicle manufacturer or |
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distributor concerning a proposed transfer of ownership of a |
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dealership. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 2301.359, Occupations Code, is amended |
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by amending Subsection (i) and adding Subsections (j) and (k) to |
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read as follows: |
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(i) Except as provided by Subsection (j), it [It] is |
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unreasonable for a manufacturer or distributor to reject a |
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prospective transferee who is of good moral character and who |
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satisfies the criteria developed under Subsection (g)(3). |
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(j) A manufacturer or distributor has a right of first |
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refusal as specified in the franchise agreement to acquire the |
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assets or ownership of a dealership for which an application is |
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filed under Subsection (a) if the application proposes a change in |
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control of the dealership, a change in the controlling interest of |
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the dealership, or a sale or transfer of 50 percent or more of the |
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dealership's assets and all of the following conditions are met: |
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(1) the manufacturer or distributor notifies the |
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dealer in writing of the intent to exercise the manufacturer's or |
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distributor's right of first refusal during the 60-day period |
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prescribed by Subsection (d); |
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(2) the manufacturer's or distributor's exercise of |
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the right of first refusal will result in the dealer and the |
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dealer's owners receiving consideration, terms, and conditions |
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that are equal to or better than the consideration, terms, and |
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conditions the dealer or owners would receive under the dealer's |
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agreement with the proposed transferee, as evidenced by a written |
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contract between the dealer and proposed transferee; and |
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(3) the proposed change of the dealership's ownership |
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or the sale or transfer of assets does not involve the transfer of a |
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controlling interest in the dealership, the transfer of the |
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controlling assets of the dealer, or the transfer or issuance of the |
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controlling stock position of a dealer's owner to: |
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(A) a designated family member of the owner, |
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including the owner's spouse, child, grandchild, sibling, niece, |
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nephew, or parent, or the spouse of the owner's child or grandchild; |
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(B) a manager of the dealer who: |
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(i) has been employed continuously by the |
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dealer in the dealership during the four years preceding the date of |
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the application; and |
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(ii) is otherwise qualified as a dealer |
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operator according to the usual standards of the manufacturer or |
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distributor; |
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(C) a partnership or corporation controlled by |
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any person described by Paragraph (A); or |
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(D) a trust arrangement established or to be |
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established to: |
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(i) allow the dealer to continue to qualify |
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under the manufacturer's or distributor's usual standards; or |
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(ii) provide for the succession of the |
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franchise agreement to a designated family member or qualified |
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manager in the event of the death or incapacity of the dealer or a |
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principal owner of the dealer. |
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(k) Except as otherwise provided by this subsection, a |
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manufacturer or distributor exercising the right of first refusal |
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under Subsection (j) must agree to pay the reasonable expenses of |
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the prospective transferee in negotiating and implementing the |
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contract for the proposed change of ownership or transfer of assets |
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incurred before the manufacturer's or distributor's exercise of |
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that right. Reasonable expenses under this subsection include |
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reasonable attorney's fees. Payment of expenses and attorney's fees |
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is not required if the dealer fails to submit an accounting of those |
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expenses before the 21st day after the date the dealer receives the |
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manufacturer's or distributor's written request for an accounting. |
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An expense accounting may be requested by a manufacturer or |
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distributor before exercising the right of first refusal. |
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SECTION 2. The change in law made by this Act to Section |
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2301.359, Occupations Code, applies only to an application to sell |
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or transfer a dealership that is made on or after the effective date |
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of this Act. An application made before that date is governed by |
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the law in effect on the date the application was made, and the |
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former law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2013. |