§ 4097. Manufacturer violations
It shall be a violation of this chapter for any manufacturer defined under this chapter:
(1) To delay, refuse, or fail to deliver new motor vehicles or new motor vehicle parts
or accessories in a reasonable time, and in reasonable quantity relative to the new
motor vehicle dealer’s facilities and sales potential in the new motor vehicle dealer’s
relevant market area, after acceptance of an order from a new motor vehicle dealer
having a franchise for the retail sale of any new motor vehicle sold or distributed
by the manufacturer, any new motor vehicle, or parts or accessories to new vehicles
as are covered by such franchise, if such vehicle, parts, or accessories are publicly
advertised as being available for delivery or actually being delivered. This subdivision
is not violated, however, if failure is caused by acts or causes beyond the control
of the manufacturer.
(2) To refuse to disclose to any new motor vehicle dealer handling the same line-make
the manner and mode of distribution of that line-make within the State.
(3) To obtain money, goods, service, or any other benefit from any other person with whom
the new motor vehicle dealer does business, on account of, or in relation to, the
transaction between the new motor vehicle dealer and such other person, other than
for compensation for services rendered, unless such benefit is promptly accounted
for, and transmitted to, the new motor vehicle dealer.
(4) To increase prices of new motor vehicles that the new motor vehicle dealer had ordered
for private retail consumers prior to the new motor vehicle dealer’s receipt of the
written official price increase notification. A sales contract signed by a private
retail consumer shall constitute evidence of each such order, provided that the vehicle
is in fact delivered to that consumer. In the event of manufacturer price reductions
or cash rebates paid to the new motor vehicle dealer, the amount of any reduction
or rebate received by a new motor vehicle dealer shall be passed on to the private
retail consumer by the new motor vehicle dealer. Price reductions shall apply to all
vehicles in the dealer’s inventory that were subject to the price reduction. Price
differences applicable to a new model or series shall not be considered a price increase
or price decrease. Price changes caused by either the addition to a motor vehicle
of required or optional equipment; or revaluation of the U.S. dollar, in the case
of foreign-make vehicles or components; or an increase in transportation charges due
to increased rates imposed by common carriers shall not be subject to the provisions
of this subdivision.
(5) To offer any refunds or other types of inducements to any person for the purchase
of new motor vehicles of a certain line or make to be sold to the State or any political
subdivision thereof without making the same offer available upon request to all other
new motor vehicle dealers in the same line-make within the State.
(6) To release to any outside party, except under subpoena or as otherwise required by
law or in an administrative, judicial, or arbitration proceeding involving the manufacturer
or new motor vehicle dealer, any business, financial, or personal information that
may be from time to time provided by the new motor vehicle dealer to the manufacturer,
without the express written consent of the new motor vehicle dealer.
(7) To deny any new motor vehicle dealer the right of free association with any other
new motor vehicle dealer for any lawful purpose.
(8)(A) To compete with a new motor vehicle dealer operating under an agreement or franchise
from the aforementioned manufacturer in the State.
(B) For purposes of this subdivision (8), any manufacturer that is not a non-franchised
zero-emission vehicle manufacturer competes with a new motor vehicle dealer if it
engages in the business of any of the following with respect to new motor vehicles
or the retail sale of parts and accessories for those new motor vehicles:
(i) selling or leasing;
(ii) offering to sell or lease;
(iii) soliciting or advertising the sale or lease; or
(iv) offering through a subscription or like agreement.
(C) A manufacturer shall not, however, be deemed to be competing when operating a dealership
either temporarily for a reasonable period, or in a bona fide retail operation that
is for sale to any qualified independent person at a fair and reasonable price, or
in a bona fide relationship in which an independent person has made a significant
investment subject to loss in the dealership and can reasonably expect to acquire
full ownership of the dealership on reasonable terms and conditions.
(9) To unfairly discriminate among its new motor vehicle dealers with respect to warranty
reimbursement.
(10) To unreasonably withhold consent to a change in executive management or the sale,
transfer, or exchange of the franchise to a qualified buyer capable of being licensed
as a new motor vehicle dealer in this State. If a new motor vehicle dealer desires
to make a change in its executive management or ownership or to sell its principal
assets, the new motor vehicle dealer will give the franchisor written notice of the
proposed change or sale. The franchisor shall not arbitrarily refuse to agree to such
proposed change or sale and may not disapprove or withhold approval of such change
or sale unless the franchisor can prove that:
(A) its decision is not arbitrary; and
(B) the new management, owner, or transferee is unfit or unqualified to be a dealer based
on the franchisor’s prior written, reasonable, objective standards or qualifications
that directly relate to the prospective transferee’s business experience, moral character,
and financial qualifications.
(11) To fail to respond in writing to a request for consent as specified in subdivision
(10) of this section within 60 days of receipt of a written request on the forms,
if any, generally utilized by the manufacturer or distributor for such purposes and
containing the information required therein. Such failure to respond shall be deemed
to be consent to the request.
(12) To unfairly prevent a new motor vehicle dealer from receiving fair and reasonable
compensation for the value of the new motor vehicle dealership.
(13) To engage in any predatory practice or in any action or failure to act with respect
to a new motor vehicle dealer if the action or failure to act is arbitrary, in bad
faith, or discriminatory compared to similarly situated new motor vehicle dealers.
(14) To terminate any franchise solely because of the death or incapacity of an owner who
is not listed in the franchise as one on whose expertise and abilities the manufacturer
relied in the granting of the franchise.
(15) To require a motor vehicle franchisee to agree to a term or condition in a franchise,
or in any lease related to the operation of the franchise or agreement ancillary or
collateral to a franchise, as a condition to the offer, grant, or renewal of the franchise,
lease, or agreement, that:
(A) requires the motor vehicle franchisee to waive trial by jury in actions involving
the motor vehicle franchisor;
(B) specifies the jurisdictions, venues, or tribunals in which disputes arising with respect
to the franchise, lease, or agreement shall or shall not be submitted for resolution
or otherwise prohibits a motor vehicle franchisee from bringing an action in a particular
forum otherwise available under the law of this State;
(C) requires that disputes between the motor vehicle franchisor and motor vehicle franchisee
be submitted to arbitration or to any other binding alternate dispute resolution procedure;
provided, however, that any franchise, lease, or agreement may authorize the submission
of a dispute to arbitration or to binding alternate dispute resolution if the motor
vehicle franchisor and motor vehicle franchisee voluntarily agree to submit the dispute
to arbitration or binding alternate dispute resolution at the time the dispute arises;
(D) provides that in any administrative or judicial proceeding arising from any dispute
with respect to the agreements in this section that the franchisor shall be entitled
to recover its costs, reasonable attorney’s fees, and other expenses of litigation
from the franchisee; or
(E) grants the manufacturer an option to purchase the franchise, or real estate, or business
assets of the franchisee.
(16) To impose unreasonable standards of performance or unreasonable facilities, financial,
operating, or other requirements upon a motor vehicle franchisee.
(17) To fail or refuse to sell or offer to sell to all motor vehicle franchisees of a line-make,
all models manufactured for that line-make, or to require a motor vehicle franchisee
to do any of the following as a prerequisite to receiving a model or series of vehicles:
requiring the dealer to pay any extra fee; requiring a dealer to execute a separate
franchise agreement, purchase unreasonable advertising displays or other materials,
or relocate, expand, improve, remodel, renovate, recondition, or alter the dealer’s
existing facilities; or requiring the dealer to provide exclusive facilities. However,
a manufacturer may require reasonable improvements to the existing facility that are
necessary to accommodate special or unique features of a specific model or line. The
failure to deliver any such motor vehicle, however, shall not be considered a violation
of this section if the failure is due to a lack of manufacturing capacity or to a
strike or labor difficulty, a shortage of materials, a freight embargo, or other cause
over which the franchisor has no control. This subdivision shall not apply to a manufacturer
of a motor home.
(18) To prevent or attempt to prevent any new motor vehicle dealer or any officer, partner,
or stockholder of any new motor vehicle dealer from transferring any part of the interest
of any of them to any other person; provided, however, that no dealer, officer, partner,
or stockholder shall have the right to sell, transfer, or assign the franchise or
power of management or control without the consent of the manufacturer or distributor
unless such consent is unreasonably withheld. Failure to respond within 60 days of
receipt of a written request and applicable manufacturer application forms and related
reasonable information customarily required for consent to a sale, transfer, or assignment
shall be deemed consent to the request. Within 20 days of receipt of notice from the
dealer, the manufacturer shall provide the dealer with a copy of all application forms
and all other required reasonable information necessary to evaluate the dealer’s request.
(19) To provide any term or condition in any lease or other agreement ancillary or collateral
to a franchise, which term or condition directly or indirectly violates this title.
(20) To use a promotional program or device or an incentive, payment, or other benefit,
whether paid at the time of sale of the new motor vehicle to the dealer or later,
that results in the sale of or offer to sell a new motor vehicle at a lower price,
including the price for vehicle transportation, than the price at which the same model
similarly equipped is offered or is available to another dealer in the State during
a similar time period. This subdivision shall not prohibit a promotional or incentive
program that is available functionally and equally to competing dealers of the same
line-make in the State.
(21)(A) To vary the price charged to any of its franchised new motor vehicle dealers located
in this State for new motor vehicles based on:
(i) the dealer’s purchase of new facilities, supplies, tools, equipment, or other merchandise
from the manufacturer;
(ii) the dealer’s relocation, remodeling, repair, or renovation of existing dealerships
or construction of a new facility;
(iii) the dealer’s participation in training programs sponsored, endorsed, or recommended
by the manufacturer;
(iv) whether or not the dealer offers for sale more than one line-make of new motor vehicle
in the same dealership facility;
(v) the dealer’s sales penetration, sales volume, or level of sales or customer service
satisfaction;
(vi) the dealer’s purchase of advertising materials, signage, nondiagnostic computer hardware
or software, communications devices, or furnishings; or
(vii) the dealer’s participation in used motor vehicle inspection or certification programs
sponsored or endorsed by the manufacturer.
(B) The price of the vehicle, for purposes of this subdivision (21), shall include the
manufacturer’s use of rebates, credits, or other consideration that has the effect
of causing a variance in the price of new motor vehicles offered to its franchised
dealers located in the State.
(22) To modify a franchise during the term of the franchise or upon its renewal if the
modification substantially and adversely affects the new motor vehicle dealer’s rights,
obligations, investment, or return on investment without giving 60 days’ written notice
of the proposed modification to the new motor vehicle dealer, unless the modification
is required by law, court order, or the Board. Within the 60-day notice period, the
new motor vehicle dealer may file with the Board and serve notice upon the manufacturer
a protest requesting a determination of whether there is good cause for permitting
the proposed modification. Multiple protests pertaining to the same proposed modification
shall be consolidated for hearing. The proposed modification shall not take effect
pending the determination of the matter. The manufacturer shall have the burden of
establishing good cause for the proposed modification. In determining whether there
is good cause for permitting a proposed modification, the Board shall consider any
relevant factors, including:
(A) the reasons for the proposed modification;
(B) whether the proposed modification is applied to or affects all new motor vehicle dealers
in a nondiscriminatory manner;
(C) whether the proposed modification will have a substantial and adverse effect upon
the new motor vehicle dealer’s investment or return on investment;
(D) whether the proposed modification is in the public interest;
(E) whether the proposed modification is necessary to the orderly and profitable distribution
of products by the manufacturer; and
(F) whether the proposed modification is offset by other modifications beneficial to the
new motor vehicle dealer.
(23) To engage in any action that is arbitrary, in bad faith, or unconscionable.
(24) To change the relevant market area set forth in the franchise agreement without good
cause. For purposes of this subdivision, good cause shall include changes in the dealer’s
registration pattern, demographics, customer convenience, and geographic barriers. (Added 1981, No. 157 (Adj. Sess.), § 1, eff. April 14, 1982; amended 1989, No. 84, § 2; 2009, No. 57, § 1, eff. June 1, 2009; 2021, No. 63, § 4, eff. June 7, 2021; 2021, No. 63, § 4a, eff. July 1, 2022.)