sb 0152

CHAPTER 209

SB 152-FN - FINAL VERSION

AN ACT relative to the regulation of business practices between motor vehicle manufacturers, distributors, and dealers.

SPONSORS: Sen. Eaton, Dist 10; Sen. D'Allesandro, Dist 20; Rep. Packard, Rock 29

I. Defines "assemble" for purposes of the chapter regulating business practices between motor vehicle manufacturers, distributors, and dealers.

II. Specifically includes distributors in the regulation of terminations and relocations.

III. Prohibits the failure to renew a franchise or selling agreement without good cause.

IV. Permits the New Hampshire motor vehicle industry board to establish initial start-up fees.

V. Permits the department of safety to charge additional fees as necessary to assist in the operation of the board.

VI. Requires franchisors and franchisees to register with the New Hampshire motor vehicle industry board.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to the regulation of business practices between motor vehicle manufacturers, distributors, and dealers.

Be it Enacted by the Senate and House of Representatives in General Court convened:

209:1 New Paragraph; Regulation of Business Practices Between Motor Vehicle Manufacturers, Distributors and Dealers; Definition of Assemble. Amend RSA 357-C:1 by inserting after paragraph XXII the following new paragraph:

XXIII. "Assemble" means engaging in the fitting or adding of parts and/or accessories to new motor vehicles or the substitution of parts contributing to changes in the appearance, performance, or use of vehicles, other than that which is done by new motor vehicle dealers.

209:2 Termination or Cancellation Prohibited Without Good Cause; Failure to Renew Added. Amend RSA 357-C:3, III (c) to read as follows:

209:3 Limitations on Cancellations, Terminations and Nonrenewals; Distributor Added. Amend RSA 357-C:7 to read as follows:

I. Notwithstanding the terms, provisions, or conditions of any agreement or franchise, and notwithstanding the terms or provision to any waiver, no manufacturer, distributor, or branch or division thereof shall cancel, terminate, fail to renew, or refuse to continue any franchise relationship with a licensed new motor vehicle dealer unless:

(a) The manufacturer, distributor, or branch or division thereof has satisfied the notice requirement of paragraph V;

(b) The manufacturer, distributor, or branch or division thereof has acted in good faith;

(c) The manufacturer, distributor, or branch or division thereof has good cause for the cancellation, termination, nonrenewal, or noncontinuance; and

(d)(1) The New Hampshire motor vehicle industry board finds after a hearing and after ruling on any motion to reconsider that is timely filed in accordance with RSA 357-C:12, VII, that there is good cause for cancellation, termination, failure to renew, or refusal to continue any franchise relationship. The new motor vehicle dealer may file a protest with the board within 45 days after receiving the 90-day notice. A copy of the protest shall be served by the new motor vehicle dealer on the manufacturer, distributor, or branch or division thereof. When a protest is filed, the manufacturer, distributor, or branch or division thereof may not cancel, terminate, fail to renew, or refuse to continue dealing with the new motor vehicle dealer in the ordinary course of business until the board makes its findings; nor, thereafter if the board determines that there is no good cause for the cancellation, termination, failure to renew, or refusal to continue dealing or,

(2) The manufacturer, distributor, or branch or division thereof has received the written consent of the new motor vehicle dealer; or

II. Notwithstanding the terms, provisions, or conditions of any agreement or franchise or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation, nonrenewal, or noncontinuance when:

(a) There is a failure by the new motor vehicle dealer to comply with a provision of the franchise, which provision is both reasonable and of material significance to the franchise relationship; provided that compliance on the part of the new motor vehicle dealer is reasonably possible; and that the manufacturer, distributor, or branch or division thereof first acquired actual or constructive knowledge of such failure not more than 180 days prior to the date on which notification is given pursuant to paragraph V.

(b) If the failure by the new motor vehicle dealer, in subparagraph (a), relates to his or her performance in sales or service, then good cause, as used in subparagraph I(c), shall be defined as the failure of the new motor vehicle dealer to effectively carry out the performance provisions of the franchise if:

(1) The new motor vehicle dealer was apprised by the manufacturer, distributor, or branch or division thereof in writing of such failure, the notification stated that notice was provided of failure of performance pursuant to this law, and the new motor vehicle dealer was afforded a reasonable opportunity to exert good faith efforts to correct his or her failures;

(2) Such failure thereafter continued within the period which began not more than 180 days before the date notification of termination, cancellation, or nonrenewal was given pursuant to paragraph V; and

(3) The new motor vehicle dealer has not substantially complied with reasonable performance criteria established by the manufacturer, distributor, or branch or division thereof and communicated to the dealer. Among those factors determining performance criteria shall be the relevancy of the [~~manufacturer's~~] sales of the manufacturer, distributor, or branch or division thereof within the state and the particular market area.

III. Notwithstanding the terms, provisions, or conditions of any agreement or franchise or the terms or provisions of any waiver, the following shall be construed as examples of what do not constitute good cause for the termination, cancellation, nonrenewal, or noncontinuance of a franchise:

(a) The change of ownership of the new motor vehicle dealer's dealership, excluding any change in ownership which would have the effect of the sale of the franchise without the [~~manufacturer's or distributor's~~] reasonable consent of the manufacturer, distributor, or branch or division thereof;

(b) The fact that the new motor vehicle dealer refused to purchase or accept delivery of any new motor vehicle parts, accessories, or any other commodity or services not ordered by the new motor vehicle dealer;

(c) The fact that the new motor vehicle dealer owns, has an investment in, participates in the management of, or holds a license for the sale of another make or line of new motor vehicle, or that the new motor vehicle dealer has established another make or line of new motor vehicle in the same dealership facilities as those of the manufacturer, distributor, or branch or division thereof; provided that the new motor vehicle dealer maintains a reasonable line of credit for each make or line of new motor vehicle, and that the new motor vehicle dealer remains in substantial compliance with any reasonable facilities' requirements of the manufacturer, distributor, or branch or division thereof; and

(d) The fact that the new motor vehicle dealer sells or transfers ownership of the dealership or sells or transfers capital stock in the dealership to the new motor vehicle dealer's spouse, son or daughter. The manufacturer, distributor, or branch or division thereof shall give effect to such change in ownership unless the transfer of the new motor vehicle dealer's license is denied or the new owner is unable to license as the case may be.

IV. The manufacturer, distributor, or branch or division thereof shall bear the burden of proof for showing that it has acted in good faith, that all notice requirements have been satisfied, and that there was good cause for the franchise termination, cancellation, nonrenewal or noncontinuance.

V.(a) Notwithstanding the terms, provisions, or conditions of any agreement or franchise or the terms or provisions of any waiver, prior to the termination, cancellation, or nonrenewal of any franchise, the manufacturer, distributor, or branch or division thereof shall furnish notification of such action to the new motor vehicle dealer and the board in the manner described in subparagraph (b) not less than 90 days prior to the effective date of such termination, cancellation, or nonrenewal, except that the notice required of a controlled financing company of a manufacturer, distributor, or branch or division thereof shall be that period set forth in its contract with the dealer.

(b) Notification under this paragraph shall be in writing; shall be by certified mail, or personally delivered to the new motor vehicle dealer; and shall contain:

(1) A statement of intention to terminate the franchise, cancel the franchise, or not to renew the franchise; and

(2) A statement of the reasons for the termination, cancellation, or nonrenewal; and

(3) The date on which such termination, cancellation, or nonrenewal takes effect.

VI. Within 90 days of the valid termination or nonrenewal with notice, in good faith, and for good cause, of any franchise, and notwithstanding any terms therein to the contrary, the manufacturer [or], distributor, or branch or division thereof shall pay to the new motor vehicle dealer:

(a) The dealer cost plus any charges by the manufacturer [or], distributor, or branch or division thereof for distribution, delivery, and taxes paid by the dealer, less all allowances paid to the dealer by the manufacturer, distributor, or representative, for new, unsold, undamaged and complete motor vehicles of current or one-year-prior model year in the dealer's inventory;

(b) The dealer cost of each new, unused, undamaged, and unsold part or accessory if such part or accessory is in the current parts catalog and is still in the original, resalable merchandising package and in unbroken lots, except that in the case of sheet metal, a comparable substitute for the original package may be used;

(c) The fair market value of each undamaged sign owned by the dealer which bears a trademark, trade name or commercial symbol used or claimed by the manufacturer [or], distributor, or branch or division thereof if such sign was purchased from or at the request of the manufacturer [or], distributor, or branch or division thereof;

(d) The fair market value of all special tools and automotive service equipment owned by the dealer which were recommended in writing and designated as special tools and equipment by the manufacturer [or], distributor, or branch or division thereof and purchased from or at the request of the manufacturer or distributor, if the tools and equipment are in usable and good condition, normal wear and tear excepted; and

(e) The cost of transporting, handling, packing, and loading of motor vehicles, parts, signs, tools, and special equipment subject to repurchase by the manufacturer [or], distributor, or branch or division thereof.

VII. Within 90 days of a termination or nonrenewal without good cause or good faith by the manufacturer or distributor of any franchise, or any branch or division thereof, and notwithstanding any terms therein to the contrary, the manufacturer [or], distributor, or branch or division thereof shall pay to the new motor vehicle dealer the fair market value of the dealership facilities if such facilities were required to be purchased or constructed as a precondition to obtaining the franchise or to its renewal; provided that if such facilities were leased and the lease was required as a precondition to obtaining the franchise or to its renewal, then the manufacturer [or], distributor, or branch or division thereof shall be liable for one year's payment of the rent or the remainder of the term of the lease, whichever is less.

209:4 Limitations on Establishing or Relocating Dealerships; Distributor Added. Amend RSA 357-C:9, I to read as follows:

I. In the event that a manufacturer, distributor, or branch or division thereof seeks to enter into a franchise establishing an additional new motor vehicle dealership or relocating an existing new motor vehicle dealership within a relevant market area where the same line make is then represented, the manufacturer, distributor, or branch or division thereof shall first give written notice to the New Hampshire motor vehicle industry board and each new motor vehicle dealer of such line make in the relevant market area of the intention to establish an additional dealership or to relocate an existing dealership within that market area. Within 15 days of receiving such notice or within 15 days after the end of any appeal procedure provided by the manufacturer, distributor, or branch or division thereof, any such new motor vehicle dealership may file a protest with the New Hampshire motor vehicle industry board to the establishing or relocating of the new motor vehicle dealership. A copy shall be served on the manufacturer, distributor, or branch or division thereof within the 15-day period. When such protest is filed, the manufacturer, distributor, or branch or division thereof may not establish or relocate the proposed new motor vehicle dealership until the board has held a hearing, nor thereafter if the board determines that there is good cause for not permitting such new motor vehicle dealership. For purposes of this paragraph, the reopening in a relevant market area of a new motor vehicle dealership that has not been in operation for one year or more shall be deemed the establishment of an additional new motor vehicle dealership.

209:5 Limitations on Establishing or Relocating Dealerships; Distributor Added. Amend RSA 357-C:9, III to read as follows:

III. At any hearing conducted by the New Hampshire motor vehicle industry board under this section, the manufacturer, distributor, or branch or division thereof seeking to establish an additional new motor vehicle dealership or relocate an existing new motor vehicle dealership shall have the burden of proof in establishing that good cause exists.

209:6 New Paragraph; Enforcement; New Hampshire Motor Vehicle Industry Board; Attorney's Fees. Amend RSA 357-C:12 by inserting after paragraph IX the following new paragraph:

X. In cases where the board finds that a violation of this chapter has occurred or there has been a failure to show good cause under RSA 357-C:7 or RSA 357-C:9, the superior court, upon petition, shall determine reasonable attorney's fees and costs and award them to the prevailing party.

209:7 Enforcement; New Hampshire Motor Vehicle Industry Board; Fee References Changed. Amend RSA 357-C:12, VIII (b) to read as follows:

(b) To fund the New Hampshire motor vehicle industry board fund and to pay the start-up expenses of administration and enforcement of this chapter, the board shall impose an initial [~~one-time~~] start-up fee upon each new motor vehicle dealer of $100 for each vehicle make represented by that dealer, and an initial [~~one-time~~] start-up fee of $1,000 for each manufacturer which sells or distributes new motor vehicles within the state. However, in no case shall the initial start-up fee imposed upon any new motor vehicle dealer exceed $500 per year. Upon the filing of a protest under this chapter, the protesting party shall pay into the fund a fee of $1,500.

209:8 Enforcement; New Hampshire Motor Vehicle Industry Board; Fee Reference Changed. Amend RSA 357-C:12, VIII(d) to read as follows:

(d) The board shall establish all fees, in addition to the initial start-up fees, required under this chapter in accordance with RSA 357-C:12, I(c).

209:9 New Subparagraph; New Hampshire Motor Vehicle Industry Board; Additional Fees. Amend RSA 357-C:12, VIII by inserting after subparagraph (d) the following new subparagraph:

(e) The commissioner of safety shall have the authority to impose an additional operational fee upon any motor vehicle dealer or manufacturer which sells or distributes new motor vehicles within the state in addition to the initial start-up fee imposed pursuant to this section, if the commissioner determines that the imposition of such fee is necessary to fund the ongoing operations of the board. However, in no case shall the additional operational fee imposed exceed $500 per year for any motor vehicle dealer and $1000 per year for any manufacturer.

209:10 New Section; Franchisor and Franchisee Registration with New Hampshire Motor Vehicle Industry Board. Amend RSA 357-C by inserting after section 12 the following new section:

357:12-a Franchisor and Franchisee Registration. Each franchisor and franchisee shall register annually with the New Hampshire motor vehicle industry board pursuant to rules adopted by the board in accordance with RSA 541-A.