•  Summary 
  •  
  •  Actions 
  •  
  •  Votes 
  •  
  •  Memo 
  •  
  •  Text 

A07844 Summary:

BILL NO    A07844B

SAME AS    SAME AS S06797-A

SPONSOR    Gantt

COSPNSR    Heastie, Jaffee, McDonald, Abinanti, Tedisco, Weisenberg, Fahy,
           Cusick, Pretlow, Schimel, Crespo, McDonough, Weprin, Hawley,
           Santabarbara, Walter, Gunther, Magnarelli

MLTSPNSR   Crouch, DenDekker, Mayer, Nolan, Palmesano, Perry, Steck, Thiele

Amd SS415, 463 & 465, V & T L

Relates to automobile manufacturers and unfair practices by franchisors.
Go to top

A07844 Text:

                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________

                                        7844--B
                                                               Cal. No. 503

                              2013-2014 Regular Sessions

                                 I N  A S S E M B L Y

                                     June 6, 2013
                                      ___________

       Introduced  by  M.  of  A.  GANTT,  HEASTIE, JAFFEE, McDONALD, ABINANTI,
         TEDISCO, WEISENBERG, FAHY, CUSICK,  PRETLOW,  SCHIMEL,  CRESPO,  McDO-
         NOUGH,  WEPRIN,  HAWLEY, SANTABARBARA, WALTER -- Multi-Sponsored by --
         M. of A. CROUCH, DenDEKKER, MAYER, NOLAN, PERRY, STECK, THIELE -- read
         once and referred to the  Committee  on  Transportation  --  committee
         discharged, bill amended, ordered reprinted as amended and recommitted
         to said committee -- recommitted to the Committee on Transportation in
         accordance  with  Assembly  Rule 3, sec. 2 -- reported from committee,
         advanced to a third reading, amended and ordered reprinted,  retaining
         its place on the order of third reading

       AN  ACT  to amend the vehicle and traffic law, in relation to automobile
         manufacturers and unfair practices by franchisors

         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:

    1    Section 1. Subdivision 5 of section 415 of the vehicle and traffic law
    2  is amended by adding a new paragraph b-2 to read as follows:
    3    B-2.  A STATEMENT INDICATING ANY INTEREST IN THE APPLICANT'S FRANCHISE
    4  ENTITY BY A PERSON OR ENTITY DESCRIBED IN  PARAGRAPH  F  OF  SUBDIVISION
    5  SEVEN OF THIS SECTION.
    6    S  2.  Paragraph  f of subdivision 7 of section 415 of the vehicle and
    7  traffic law, as added by chapter 490 of the laws of 2008, is amended  to
    8  read as follows:
    9    f.  EXCEPT AS PROVIDED IN PARAGRAPH (BB) OF SUBDIVISION TWO OF SECTION
   10  FOUR HUNDRED SIXTY-THREE OF THIS TITLE AND SUBPARAGRAPH  (III)  OF  THIS
   11  PARAGRAPH:
   12    (I)  The  commissioner shall not issue any certificate of registration
   13  authorized by this section to any franchisor, MANUFACTURER, DISTRIBUTOR,
   14  DISTRIBUTOR BRANCH OR FACTORY  BRANCH,  as  such  [term  is]  TERMS  ARE
   15  defined  in  section  four  hundred  sixty-two  of this title, OR TO ANY
   16  SUBSIDIARY, AFFILIATE OR CONTROLLED  ENTITY  THEREOF,  except  that  the
   17  commissioner  may  renew such certificate previously issued or otherwise

        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD11010-07-4
       A. 7844--B                          2

    1  approved to operate to a franchisor prior to [May second,  two  thousand
    2  two]  JULY  FIRST,  TWO  THOUSAND  SIX.  NOTHING  IN  THIS SECTION SHALL
    3  PRECLUDE THE ESTABLISHMENT OF SUCH FACILITIES NECESSARY TO CONTINUE  THE
    4  ONGOING OPERATION OF ANY HOLDER OF A CERTIFICATE OF REGISTRATION AUTHOR-
    5  IZED  BY  THIS  SECTION OR OTHERWISE APPROVED TO OPERATE TO A FRANCHISOR
    6  PROVIDED SUCH ORIGINAL CERTIFICATE OR APPROVAL WAS GRANTED PRIOR TO JULY
    7  FIRST, TWO THOUSAND SIX.
    8    (II) ON OR AFTER THE EFFECTIVE DATE OF THIS SUBPARAGRAPH, THE  COMMIS-
    9  SIONER  SHALL  NOT  ISSUE  ANY CERTIFICATE OF REGISTRATION, OR RENEW ANY
   10  CERTIFICATE, UNLESS THE ORIGINAL  CERTIFICATE  WAS  ISSUED  BEFORE  JULY
   11  FIRST, TWO THOUSAND SIX, TO ANY MOTOR VEHICLE DEALER IN WHICH A FRANCHI-
   12  SOR, MANUFACTURER, DISTRIBUTOR, DISTRIBUTOR BRANCH OR FACTORY BRANCH, AS
   13  SUCH  TERMS ARE DEFINED IN SECTION FOUR HUNDRED SIXTY-TWO OF THIS TITLE,
   14  OR ANY SUBSIDIARY, AFFILIATE OR CONTROLLED ENTITY THEREOF, HAS ACQUIRED,
   15  OR POSSESSES, A CONTROLLING INTEREST IN THE FRANCHISE ENTITY EXCEPT:
   16    (1) WHEN OPERATING SUCH FRANCHISE  FOR  A  TEMPORARY  PERIOD,  NOT  TO
   17  EXCEED ONE YEAR, DURING THE TRANSITION FROM ONE OWNER OF THE MOTOR VEHI-
   18  CLE DEALERSHIP TO ANOTHER, PROVIDED, HOWEVER, THAT SUCH TEMPORARY PERIOD
   19  MAY BE EXTENDED ONCE FOR AN ADDITIONAL PERIOD NOT TO EXCEED ONE YEAR FOR
   20  GOOD  CAUSE.  PROVIDED THAT FOR FRANCHISORS OF HOUSE COACHES, THE PERIOD
   21  OF TEMPORARY OWNERSHIP OF A FRANCHISED HOUSE  COACH  DEALERSHIP  MAY  BE
   22  EXTENDED  IN  ONE  YEAR INCREMENTS FOR GOOD CAUSE SHOWN, EXCEPT THAT THE
   23  AGGREGATE OF SUCH EXTENSIONS SHALL NOT EXCEED FIVE YEARS; OR
   24    (2) WHEN OPERATING SUCH FRANCHISE TEMPORARILY UNDER  A  PLAN  WITH  AN
   25  INDEPENDENT INDIVIDUAL WHO IS OBLIGATED TO MAKE A SIGNIFICANT INVESTMENT
   26  IN  THE DEALERSHIP THAT IS SUBJECT TO LOSS AND HAS AN OWNERSHIP INTEREST
   27  OR EXPECTS TO ACQUIRE  FULL  OWNERSHIP  IN  A  REASONABLE  PERIOD  UNDER
   28  REASONABLE TERMS AND CONDITIONS, PROVIDED THAT A REASONABLE PERIOD SHALL
   29  BE PRESUMED TO NOT EXCEED EIGHT YEARS.
   30    (III)  NOTWITHSTANDING  ANY  OTHER  PROVISION OF THIS PARAGRAPH OR ANY
   31  PROVISION OF PARAGRAPH (BB) OF SUBDIVISION TWO OF SECTION  FOUR  HUNDRED
   32  SIXTY-THREE OF THIS TITLE, THE COMMISSIONER MAY RENEW ANY CERTIFICATE OF
   33  REGISTRATION THAT WAS ISSUED TO A FRANCHISOR, MANUFACTURER, DISTRIBUTOR,
   34  DISTRIBUTOR  BRANCH  OR  FACTORY  BRANCH,  AS  SUCH TERMS ARE DEFINED IN
   35  SECTION FOUR HUNDRED SIXTY-TWO OF THIS  TITLE,  OR  TO  ANY  SUBSIDIARY,
   36  AFFILIATE OR CONTROLLED ENTITY THEREOF, PRIOR TO MARCH TWENTY-SIXTH, TWO
   37  THOUSAND  FOURTEEN; PROVIDED, HOWEVER, THAT SUCH FRANCHISOR, MANUFACTUR-
   38  ER, DISTRIBUTOR, DISTRIBUTOR BRANCH OR FACTORY BRANCH,  OR  ANY  SUBSID-
   39  IARY,  AFFILIATE  OR  CONTROLLED  ENTITY THEREOF, IS A MANUFACTURER THAT
   40  MANUFACTURES OR ASSEMBLES EXCLUSIVELY ZERO EMISSIONS VEHICLES, OR  IS  A
   41  SUBSIDIARY,  AFFILIATE, OR CONTROLLED ENTITY OF SUCH A MANUFACTURER; AND
   42  PROVIDED FURTHER THAT A CONTROLLING INTEREST IN SUCH  ORIGINAL  FRANCHI-
   43  SOR,  MANUFACTURER, DISTRIBUTOR, DISTRIBUTOR BRANCH OR FACTORY BRANCH OR
   44  ANY SUBSIDIARY, AFFILIATE OR CONTROLLED ENTITY WAS NOT TRANSFERRED, SOLD
   45  OR CONVEYED TO ANOTHER PERSON OR ENTITY, OTHER  THAN  TO  A  SUBSIDIARY,
   46  AFFILIATE   OR  CONTROLLED  ENTITY  OF  SUCH  FRANCHISOR,  MANUFACTURER,
   47  DISTRIBUTOR, DISTRIBUTOR BRANCH OR FACTORY BRANCH. FOR PURPOSES OF  THIS
   48  PARAGRAPH,  ZERO  EMISSION VEHICLES SHALL HAVE THE SAME MEANING AS UNDER
   49  PART TWO HUNDRED EIGHTEEN OF TITLE SIX OF THE NEW YORK CODE OF RULES AND
   50  REGULATIONS.
   51    S 3. Subdivision 1 of section 463 of the vehicle and  traffic  law  is
   52  amended by adding a new paragraph (e) to read as follows:
   53    (E)  TO  SELL,  OR  SELL  EXCLUSIVELY  AN  EXTENDED  SERVICE CONTRACT,
   54  EXTENDED MAINTENANCE PLAN OR SIMILAR PRODUCT, INCLUDING, BUT NOT LIMITED
   55  TO, GAP PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR BY THE
   56  FOLLOWING MEANS:
       A. 7844--B                          3

    1    (1) BY A STATEMENT MADE BY THE FRANCHISOR THAT FAILURE TO DO  SO  WILL
    2  SUBSTANTIALLY AND ADVERSELY IMPACT THE DEALER; OR
    3    (2)  BY  A PROVISION IN A FRANCHISE AGREEMENT THAT THE DEALER SELL, OR
    4  SELL EXCLUSIVELY AN EXTENDED SERVICE CONTRACT, EXTENDED MAINTENANCE PLAN
    5  OR SIMILAR PRODUCT OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR; OR
    6    (3) BY MEASURING THE DEALER'S PERFORMANCE UNDER THE FRANCHISE BASED ON
    7  THE SALE OF EXTENDED SERVICE CONTRACTS, EXTENDED  MAINTENANCE  PLANS  OR
    8  SIMILAR  PRODUCTS  OFFERED, ENDORSED OR SPONSORED BY THE MANUFACTURER OR
    9  DISTRIBUTOR; OR
   10    (4) BY REQUIRING  THE  DEALER  TO  EXCLUSIVELY  PROMOTE  THE  SALE  OF
   11  EXTENDED  SERVICE  CONTRACTS,  EXTENDED  MAINTENANCE  PLANS  OR  SIMILAR
   12  PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR.
   13    NOTHING IN THIS SECTION SHALL PROHIBIT A FRANCHISOR FROM:
   14    (A) PROVIDING INCENTIVES TO A DEALER THAT MAKES THE VOLUNTARY DECISION
   15  TO SELL OR SELL EXCLUSIVELY AN EXTENDED SERVICE CONTRACT, EXTENDED MAIN-
   16  TENANCE PLAN OR SIMILAR PRODUCT, INCLUDING,  BUT  NOT  LIMITED  TO,  GAP
   17  PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR, OR
   18    (B)  REQUIRING  THAT A DEALER THAT SELLS AN EXTENDED SERVICE CONTRACT,
   19  EXTENDED MAINTENANCE PLAN, OR  SIMILAR  PRODUCT  THAT  IS  NOT  OFFERED,
   20  ENDORSED  OR  SPONSORED  BY THE FRANCHISOR, DISCLOSE TO THE CONSUMER THE
   21  DISCLOSURES REQUIRED UNDER SECTION SEVEN THOUSAND NINE HUNDRED  FIVE  OF
   22  THE INSURANCE LAW, AND A SEPARATE STATEMENT, ACKNOWLEDGED BY THE CONSUM-
   23  ER,  THAT  THE  EXTENDED  SERVICE CONTRACT, EXTENDED MAINTENANCE PLAN OR
   24  SIMILAR PRODUCT IS NOT OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR,
   25  IF THAT IS THE CASE.
   26    S 4. Paragraph (b) of subdivision 2 of section 463 of the vehicle  and
   27  traffic  law,  as amended by chapter 490 of the laws of 2008, is amended
   28  to read as follows:
   29    (b) To directly or indirectly coerce or attempt to  coerce  any  fran-
   30  chised  motor vehicle dealer to enter into any agreement with such fran-
   31  chisor or officer, agent or other representative thereof, or to  do  any
   32  other  act  prejudicial  to the monetary interests or property rights of
   33  said dealer by threatening to [cancel any unexpired  contractual  agree-
   34  ment  existing  between  such  franchisor  and]  TERMINATE  said dealer.
   35  Provided, however, that good faith notice to any franchised motor  vehi-
   36  cle dealer of said dealer's violation of any terms or provisions of such
   37  franchise shall not constitute a violation of this article.
   38    S  5. Paragraph (c) of subdivision 2 of section 463 of the vehicle and
   39  traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
   40  to read as follows:
   41    (c)  (1)  To  condition  the  renewal or extension of a franchise on a
   42  franchised motor vehicle dealer's substantial renovation of the dealer's
   43  place of business or  on  the  construction,  purchase,  acquisition  or
   44  rental of a new place of business by the franchised motor vehicle dealer
   45  unless the franchisor has advised the franchised motor vehicle dealer in
   46  writing  of  its  intent  to impose such a condition within a reasonable
   47  time prior to the effective date of the  proposed  date  of  renewal  or
   48  extension  (but  in  no  case  less  than  one  hundred eighty days) and
   49  provided the franchisor demonstrates the need for  such  change  in  the
   50  place  of  business and the reasonableness of such demand in view of the
   51  need to service the public and the economic conditions existing  in  the
   52  automobile  industry  at  the  time such action would be required of the
   53  franchised motor vehicle dealer. As part of any such condition the fran-
   54  chisor shall agree, in writing, to supply the dealer with  a  reasonable
   55  quantity  and  mix of additional new motor vehicles which, as determined
   56  by a reasonable analysis of market conditions, are projected to meet the
       A. 7844--B                          4

    1  sales levels necessary to support the increased overhead incurred by the
    2  franchised  motor  vehicle  dealer  by  reason   of   such   renovation,
    3  construction,  purchase,  acquisition  or rental of a new place of busi-
    4  ness.
    5    (2)  TO  REQUIRE  A FRANCHISED MOTOR VEHICLE DEALER TO PURCHASE GOODS,
    6  BUILDING MATERIALS, OR SERVICES FOR  THE  DEALER'S  PLACE  OF  BUSINESS,
    7  INCLUDING, BUT NOT LIMITED TO, OFFICE FURNITURE, DESIGN FEATURES, FLOOR-
    8  ING,  AND  WALL  COVERINGS,  FROM  A  VENDOR CHOSEN BY THE FRANCHISOR IF
    9  GOODS, BUILDING MATERIALS, OR SERVICES OF SUBSTANTIALLY SIMILAR  QUALITY
   10  AND DESIGN ARE AVAILABLE FROM OTHER SOURCES, PROVIDED, HOWEVER, THAT THE
   11  GOODS  OR  BUILDING MATERIALS ARE NOT SUBJECT TO THE FRANCHISOR'S INTEL-
   12  LECTUAL PROPERTY OR TRADEMARK RIGHTS AND THE  FRANCHISED  MOTOR  VEHICLE
   13  DEALER HAS RECEIVED THE FRANCHISOR'S APPROVAL, WHICH APPROVAL MAY NOT BE
   14  UNREASONABLY WITHHELD. NOTHING IN THIS SUBDIVISION SHALL BE CONSTRUED TO
   15  ALLOW  A  FRANCHISED  MOTOR  VEHICLE  DEALER  TO  IMPAIR  OR ELIMINATE A
   16  FRANCHISOR'S INTELLECTUAL PROPERTY OR TRADEMARK RIGHTS AND  TRADE  DRESS
   17  USAGE  GUIDELINES,  OR  TO  IMPAIR OTHER INTELLECTUAL PROPERTY INTERESTS
   18  OWNED OR CONTROLLED BY THE FRANCHISOR.
   19    (3) EXCEPT AS NECESSARY TO COMPLY WITH A HEALTH OR SAFETY LAW,  OR  TO
   20  COMPLY  WITH  A  TECHNOLOGY  REQUIREMENT,  WHICH IS NECESSARY TO SELL OR
   21  SERVICE A MOTOR VEHICLE THAT THE  FRANCHISED  MOTOR  VEHICLE  DEALER  IS
   22  AUTHORIZED  OR LICENSED BY THE FRANCHISOR TO SELL OR SERVICE, TO REQUIRE
   23  A FRANCHISED MOTOR VEHICLE DEALER TO CONSTRUCT A NEW DEALER FACILITY  OR
   24  SUBSTANTIALLY  ALTER  OR  REMODEL AN EXISTING DEALER FACILITY BEFORE THE
   25  DATE THAT IS TEN YEARS AFTER THE DATE THE CONSTRUCTION OF THE NEW DEALER
   26  FACILITY OR SUCH ALTERATION OR REMODELING AT THAT LOCATION WAS COMPLETED
   27  AND SHALL CONTINUE WITH ANY SUCCESSOR OWNER PROVIDED SUCH OWNER HAS BEEN
   28  DESIGNATED AND APPROVED BY THE FRANCHISOR IN  THE  FRANCHISE  AGREEMENT,
   29  AND  SUCH  CONSTRUCTION, ALTERATION OR REMODELING SUBSTANTIALLY COMPLIED
   30  WITH THE FRANCHISOR'S BRAND IMAGE STANDARDS OR PLANS THAT THE FRANCHISOR
   31  PROVIDED AT THE TIME THE CONSTRUCTION,  ALTERATION,  OR  REMODELING  WAS
   32  COMPLETED.
   33    (I) AS USED IN THIS SUBPARAGRAPH, "SUBSTANTIALLY ALTER":
   34    (A)  REFERS  TO AN ALTERATION THAT HAS A MAJOR IMPACT ON THE ARCHITEC-
   35  TURAL FEATURES, CHARACTERISTICS, OR INTEGRITY OF A STRUCTURE OR LOT; AND
   36    (B) DOES NOT INCLUDE ROUTINE MAINTENANCE, SUCH AS  INTERIOR  PAINTING,
   37  REASONABLY  NECESSARY TO KEEP A DEALERSHIP FACILITY IN ATTRACTIVE CONDI-
   38  TION.
   39    (II) NOTHING IN THIS PARAGRAPH SHALL PROHIBIT A FRANCHISOR FROM:
   40    (A) CONTINUING A FACILITY IMPROVEMENT PROGRAM THAT IS IN EFFECT AS  OF
   41  THE EFFECTIVE DATE OF THIS PARAGRAPH WITH MORE THAN ONE FRANCHISED MOTOR
   42  VEHICLE DEALER IN THE STATE OR TO RENEWING OR MODIFYING SUCH PROGRAM; OR
   43    (B)  PROVIDING  LUMP  SUM  OR REGULARLY-SCHEDULED PAYMENTS TO ASSIST A
   44  FRANCHISED MOTOR  VEHICLE  DEALER  IN  MAKING  A  FACILITY  IMPROVEMENT,
   45  INCLUDING  CONSTRUCTION, ALTERATION OR REMODELING, OR INSTALLING SIGNAGE
   46  OR A FRANCHISOR IMAGE ELEMENT;
   47    (C) PROVIDING REIMBURSEMENT TO A FRANCHISED MOTOR  VEHICLE  DEALER  ON
   48  REASONABLE,  WRITTEN TERMS FOR A PORTION OF THE FRANCHISED MOTOR VEHICLE
   49  DEALER'S COST OF MAKING A FACILITY IMPROVEMENT, INCLUDING  CONSTRUCTION,
   50  ALTERATION  OR  REMODELING, THE PURCHASE OF GOODS, BUILDING MATERIALS OR
   51  SERVICES, OR INSTALLING SIGNAGE OR A FRANCHISOR IMAGE ELEMENT.
   52    (4) TO DENY A FRANCHISED  MOTOR  VEHICLE  DEALER  A  FRANCHISOR  IMAGE
   53  ELEMENT  PAYMENT, INCENTIVE OR ALLOWANCE IF THE FRANCHISED MOTOR VEHICLE
   54  DEALER, WITH THE FRANCHISOR'S APPROVAL, BEGAN CONSTRUCTION,  ALTERATIONS
   55  OR  REMODELING  INTENDED  TO  COMPLY WITH THE FRANCHISOR'S IMAGE ELEMENT
   56  PROGRAM BEFORE THE FRANCHISOR SUBSTANTIALLY CHANGED  OR  TERMINATED  THE
       A. 7844--B                          5

    1  PROGRAM PRIOR TO THE PROGRAM'S SCHEDULED ENDING DATE PROVIDED THE DEALER
    2  IS  OTHERWISE ELIGIBLE FOR PROGRAM PAYMENTS AND PROVIDED THAT AFTER SUCH
    3  SUBSTANTIAL CHANGE OR TERMINATION, THE COMPENSATION PAYABLE TO THE DEAL-
    4  ER  SHALL BE LIMITED TO IMAGE ELEMENT PAYMENTS, INCENTIVES OR ALLOWANCES
    5  THAT THE DEALER WOULD HAVE EARNED  THROUGH  PROGRAM'S  SCHEDULED  ENDING
    6  DATE,  PROVIDED  THAT THE DEALER COMPLIES WITH ALL PROGRAM REQUIREMENTS,
    7  AND PROVIDED, FURTHER, THAT SUCH PROGRAM OR PAYMENTS ARE  NOT  OTHERWISE
    8  PROHIBITED BY LAW OR REGULATION.
    9    (5) TO REQUIRE OR ATTEMPT TO REQUIRE A FRANCHISED MOTOR VEHICLE DEALER
   10  TO  ESTABLISH  OR MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES UNLESS JUSTI-
   11  FIED BY CURRENT  AND  REASONABLY  EXPECTED  FUTURE  ECONOMIC  CONDITIONS
   12  EXISTING  IN  THE  DEALER'S RELEVANT MARKET AREA AT THE TIME THE REQUEST
   13  FOR EXCLUSIVE FACILITIES IS MADE; PROVIDED THAT THE FOREGOING SHALL  NOT
   14  RESTRICT  THE TERMS AND CONDITIONS OF ANY AGREEMENT FOR WHICH THE DEALER
   15  HAS VOLUNTARILY ACCEPTED VALUABLE CONSIDERATION SEPARATE FROM THE  FRAN-
   16  CHISED  MOTOR  VEHICLE DEALER'S RIGHT TO SELL AND SERVICE MOTOR VEHICLES
   17  FOR THE FRANCHISOR. THE FACT THAT LOCAL MARKET SHARE, FACING COMPETITIVE
   18  BRAND DEALERSHIPS HAVE EXCLUSIVE DEALERSHIP FACILITIES SHALL  CONSTITUTE
   19  EVIDENCE THAT CURRENT ECONOMIC CONDITIONS MAY JUSTIFY THE REQUIREMENT TO
   20  ESTABLISH AND MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES.
   21    (6)  TO  REQUIRE A SITE CONTROL PROVISION REGARDING THE DEALER'S PLACE
   22  OF BUSINESS TO SURVIVE OR CONTINUE AFTER THE TERMINATION OF  SUCH  DEAL-
   23  ER'S  FRANCHISE  IF THE TERMINATION IS DUE TO THE DISCONTINUATION OF THE
   24  LINE-MAKE THAT WAS THE SUBJECT OF THE AGREEMENT.
   25    S 6. Paragraph (o) of subdivision 2 of section 463 of the vehicle  and
   26  traffic  law,  as amended by chapter 490 of the laws of 2008, is amended
   27  to read as follows:
   28    (o) (1) Upon a termination of a franchise by  a  franchisor  or  fran-
   29  chised  motor  vehicle  dealer under this article, to refuse to accept a
   30  return of new and unused current model motor vehicle inventory which has
   31  been acquired from the franchisor, new and unused noncurrent model motor
   32  vehicle inventory which has been acquired from the franchisor within one
   33  hundred [twenty] EIGHTY days of the effective date of  the  termination;
   34  supplies,  parts,  equipment,  SIGNAGE,  SPECIAL  TOOLS, and furnishings
   35  purchased from the franchisor  or  its  approved  sources  [and  special
   36  tools]. The obligation of the franchisor, EXCEPT WITH RESPECT TO SIGNAGE
   37  shall  be limited to the repurchase of the above property which is unal-
   38  tered and undamaged, in good and useable condition, and, in the case  of
   39  supplies,  parts and equipment to those items which are currently listed
   40  in the franchisor's supplies and parts list.   IN THE CASE  OF  SIGNAGE,
   41  THE  FRANCHISOR SHALL BE OBLIGATED TO REPURCHASE ANY FRANCHISOR REQUIRED
   42  SIGNAGE, PURCHASED WITHIN THE FIVE YEARS PRECEDING TERMINATION AND WHICH
   43  IS IN GOOD AND USEABLE CONDITION LESS DEPRECIATION AS SET FORTH  IN  THE
   44  INTERNAL  REVENUE  CODE  OF  ONE-FIFTEENTH  OF THE INITIAL COST PER YEAR
   45  STARTING THE YEAR  FOLLOWING  THE  DEALER'S  ACQUISITION  OF  THE  ITEM.
   46  Furthermore,  the  obligation  of  the franchisor to repurchase supplies
   47  upon a termination, cancellation or nonrenewal  by  a  franchised  motor
   48  vehicle  dealer shall be limited to supplies mandated by the franchisor.
   49  Parts eligible for repurchase shall include parts which have been renum-
   50  bered in the current parts list but which are identical  in  design  and
   51  material  to the currently numbered part. The return rights afforded the
   52  franchised motor vehicle dealer under the provisions  of  the  paragraph
   53  shall  be in addition to those, if any, provided in the franchise agree-
   54  ment.
   55    (2) The franchisor shall pay fair and reasonable compensation for  the
   56  above described property upon repurchase. In the case of new motor vehi-
       A. 7844--B                          6

    1  cle  inventory,  accessories and parts, fair and reasonable compensation
    2  shall in no instance be less than the net acquisition price paid by  the
    3  franchised motor vehicle dealer to the franchisor or its approved sourc-
    4  es.  Upon  a  termination  of a franchise by a franchisor, within thirty
    5  days of such termination, the franchisor shall send  to  the  franchised
    6  motor  vehicle dealer instructions on the methodology by which the fran-
    7  chised motor vehicle dealer must ship the above  described  property  to
    8  the franchisor; the franchisor shall then remit payment for such proper-
    9  ty  to  the  franchised  motor  vehicle  dealer  within sixty days after
   10  receipt of such property.
   11    (3) Upon a termination of a franchise by a  franchised  motor  vehicle
   12  dealer  where  the  franchise consists primarily of the distribution and
   13  sale of house coaches, the franchisor's repurchase obligations set forth
   14  in this paragraph shall not apply.
   15    (4) IN ADDITION TO ANY OTHER REQUIREMENTS OF THIS SUBDIVISION, IN  THE
   16  EVENT  A  FRANCHISOR TERMINATES A FRANCHISE DUE TO TERMINATION OF A LINE
   17  MAKE, THE FRANCHISOR SHALL COMPENSATE  THE  DEALER  FOR  ANY  FRANCHISOR
   18  REQUIRED   FACILITY   CONSTRUCTION,   ALTERATIONS   OR   REMODELING,  OR
   19  CONSTRUCTION, ALTERATIONS OR REMODELING REQUIRED  FOR  PARTICIPATION  IN
   20  ANY  INCENTIVE  PROGRAMS WHICH WERE COMPLETED BY THE DEALER WITHIN THREE
   21  YEARS OF THE DATE THE FRANCHISOR ANNOUNCED THE TERMINATION OF  THE  LINE
   22  MAKE.    FOR THE PURPOSES OF THIS SECTION, COMPLETION SHALL BE DEEMED TO
   23  OCCUR  AT  THE  LATER  OF  THE  FRANCHISOR'S  FINAL  APPROVAL   OF   THE
   24  CONSTRUCTION,  ALTERATIONS,  OR  REMODELING OR THE ISSUANCE OF A CERTIF-
   25  ICATE OF OCCUPANCY. THE COMPENSATION REQUIRED UNDER THIS  SECTION  SHALL
   26  BE  IN  AN  AMOUNT  EQUAL TO THE DEALER'S COST FOR THE FACILITY UPGRADES
   27  LESS ANY ASSISTANCE PROVIDED TO THE DEALER WITHIN  THREE  YEARS  OF  THE
   28  DATE  THE  FRANCHISOR  ANNOUNCED THE TERMINATION OF THE LINE MAKE BY THE
   29  MANUFACTURER OR DISTRIBUTOR, AND LESS THE AMOUNT FOR DEPRECIATION AS SET
   30  FORTH IN INTERNAL REVENUE CODE OF ONE THIRTY-NINTH OF THE TOTAL  INITIAL
   31  COST  OF SUCH CONSTRUCTION, ALTERATIONS, OR REMODELING PER YEAR STARTING
   32  THE YEAR FOLLOWING THE DEALER'S COMPLETION OF THE FACILITY CONSTRUCTION,
   33  ALTERATIONS, OR REMODELING.
   34    (5) IN ADDITION TO THE REQUIREMENTS OF SUBPARAGRAPH FOUR OF THIS PARA-
   35  GRAPH, IN THE EVENT A FRANCHISOR TERMINATES A FRANCHISE DUE TO A  TERMI-
   36  NATION  OF A LINE MAKE, THE FRANCHISOR SHALL COMPENSATE THE DEALER IN AN
   37  AMOUNT EQUAL TO THE AMOUNT REMAINING ON THE TERMINATED DEALER'S  MANAGE-
   38  MENT  COMPUTER  SYSTEM LEASE OR CONTRACT, OR ONE YEAR OF LEASE PAYMENTS,
   39  WHICHEVER IS LESS IF THE DEALER MANAGEMENT COMPUTER SYSTEM WILL NO LONG-
   40  ER BE UTILIZED AS  A  RESULT  OF  THE  TERMINATION  AND  THE  FRANCHISOR
   41  REQUIRED THE DEALER TO UTILIZE THE PARTICULAR DEALER MANAGEMENT COMPUTER
   42  SYSTEM.
   43    S  7. Paragraph (z) of subdivision 2 of section 463 of the vehicle and
   44  traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
   45  to read as follows:
   46    (z)  To [charge back or otherwise hold liable a franchised motor vehi-
   47  cle dealer for sales incentives or charges related to a] REFUSE TO ALLO-
   48  CATE, SELL, OR DELIVER  MOTOR  VEHICLES,  TO  CHARGE  BACK  OR  WITHHOLD
   49  PAYMENTS  OR OTHER THINGS OF VALUE FOR WHICH THE FRANCHISEE IS OTHERWISE
   50  ELIGIBLE, OR TO TAKE OR THREATEN TO TAKE ANY ADVERSE  ACTION  AGAINST  A
   51  FRANCHISED  MOTOR  VEHICLE  DEALER, IN CONNECTION WITH OR AS A RESULT OF
   52  ANY new motor vehicle sold by the franchised motor  vehicle  dealer  and
   53  subsequently  exported,  providing  such  dealer can demonstrate that he
   54  exercised due diligence and that the sale was made in  good  faith  [and
   55  without knowledge] INCLUDING THAT THE DEALER DID NOT KNOW NOR REASONABLY
   56  SHOULD HAVE KNOWN of the purchaser's intention to export the motor vehi-
       A. 7844--B                          7

    1  cle[,  or that such dealer reasonably relied on approvals from the fran-
    2  chisor to complete a sale]. A  franchised  motor  vehicle  dealer  which
    3  causes  a  new  motor  vehicle  to  be  registered in this state or in a
    4  foreign  state  and causes to be collected the appropriate sales and use
    5  tax, OR THAT REASONABLY RELIED ON A FRANCHISOR TO COMPLETE A SALE  shall
    6  be  presumed  to  have  exercised GOOD FAITH AND due diligence. PRIOR TO
    7  TAKING AN ADVERSE ACTION, INCLUDING A CHARGE BACK, AS  A  RESULT  OF  AN
    8  EXPORT,  A  FRANCHISOR  SHALL  PROVIDE  WRITTEN NOTICE TO THE FRANCHISED
    9  MOTOR VEHICLE DEALER OF THE ADVERSE ACTION, AND, IF A CHARGE  BACK,  THE
   10  SPECIFIC  AMOUNT  OF  THE  CHARGE  BACK,  AND THE VEHICLE OR VEHICLES AT
   11  ISSUE. A DEALER SHALL NOT BE LIABLE FOR THE DELIVERY OF ANY VEHICLE SOLD
   12  THROUGH A FRANCHISOR'S FLEET PROGRAM FOR ANY SUCH DELIVERY IN WHICH  THE
   13  SALE  OR  LEASE  WAS  NOT  INITIATED OR NEGOTIATED BY THE DEALER AND ITS
   14  FUNCTION WAS TO PROVIDE DELIVERY ON BEHALF OF THE FRANCHISOR.
   15    S 8. Subparagraph 2 of paragraph (bb) of subdivision 2 of section  463
   16  of the vehicle and traffic law, as amended by chapter 490 of the laws of
   17  2008, is amended to read as follows:
   18    (2)  when  operating  such  franchise temporarily under a plan with an
   19  independent individual who is obligated to make a significant investment
   20  in the dealership that is subject to loss and has an ownership  interest
   21  or  expects  to  acquire  full  ownership  in  a reasonable period under
   22  reasonable terms and conditions, provided that a reasonable period shall
   23  be presumed to not exceed  eight  years;  PROVIDED,  HOWEVER,  THAT  THE
   24  EXCEPTION  PROVIDED IN THIS SUBPARAGRAPH SHALL NOT APPLY TO ANY FRANCHI-
   25  SOR, MANUFACTURER, DISTRIBUTOR, DISTRIBUTOR  BRANCH  OR  FACTORY  BRANCH
   26  THAT  HOLDS A CERTIFICATE OR REGISTRATION PURSUANT TO SUBPARAGRAPH (III)
   27  OF PARAGRAPH F OF SUBDIVISION SEVEN OF SECTION FOUR HUNDRED  FIFTEEN  OF
   28  THIS TITLE.
   29    S  9.  Subdivision  2 of section 463 of the vehicle and traffic law is
   30  amended by adding three new paragraphs (ii), (jj) and (kk)  to  read  as
   31  follows:
   32    (II)  TO  ALLOCATE  NEW  MOTOR  VEHICLES TO A FRANCHISED MOTOR VEHICLE
   33  DEALER BASED ON A PROGRAM THAT DIFFERENTIATES BETWEEN VEHICLE SALES BY A
   34  FRANCHISED MOTOR VEHICLE DEALER WITHIN A TERRITORY  OR  GEOGRAPHIC  AREA
   35  ASSIGNED  TO  SUCH DEALER AND VEHICLE SALES OUTSIDE OF SUCH TERRITORY OR
   36  GEOGRAPHIC AREA.
   37    (JJ) TO UTILIZE A DISCRIMINATORY, UNREASONABLE,  ARBITRARY  OR  UNFAIR
   38  SYSTEM OF ALLOCATION OF NEW MOTOR VEHICLE INVENTORY.  A FRANCHISOR SHALL
   39  COMMUNICATE  ITS  SYSTEM OF ALLOCATION IN WRITING IN A CLEAR AND CONCISE
   40  MANNER TO ALL SAME LINE-MAKE DEALERS LOCATED IN THIS STATE.
   41    (KK) TO REFUSE TO DISCLOSE TO ANY FRANCHISED MOTOR VEHICLE DEALER  THE
   42  MANNER  AND  MODE  OF  DISTRIBUTION  OF VEHICLES IN THE FRANCHISED MOTOR
   43  VEHICLE DEALER'S LINE MAKE WITHIN THE STATE, AND AN EXPLANATION  OF  THE
   44  ALLOCATION  SYSTEM,  INCLUDING  THE  METHODOLOGY  USED,  IN  A CLEAR AND
   45  COMPREHENSIBLE FORM.
   46    S 10. Subdivision 1 of section 465 of the vehicle and traffic law,  as
   47  amended  by  chapter  490  of  the  laws  of 2008, is amended to read as
   48  follows:
   49    1. Every franchisor shall  properly  fulfill  any  warranty  agreement
   50  and/or  franchisor's  service  contract and shall compensate each of its
   51  franchised motor vehicle dealers for warranty parts and labor in amounts
   52  which reflect [fair and] reasonable  compensation  for  such  work.  All
   53  warranty claims and/or claims under a franchisor's service contract made
   54  by  franchised  motor  vehicle  dealers shall be paid within thirty days
   55  following their approval. For parts  reimbursement,  other  than  compo-
   56  nents,  systems,  fixtures,  appliances,  furnishings,  accessories  and
       A. 7844--B                          8

    1  features of a house coach that are designed, used and maintained  prima-
    2  rily for nonvehicular residential purposes, and for labor reimbursement,
    3  [fair  and] reasonable compensation shall not be less than the price and
    4  rate charged by the franchised motor vehicle dealer for like services to
    5  non-warranty and/or non-service contract customers. For purposes of this
    6  section,  the  price  and  rate  charged by the franchised motor vehicle
    7  dealer for parts may be established by submitting to the franchisor  one
    8  hundred  sequential  nonwarranty  customer-paid service repair orders or
    9  the number of sequential nonwarranty customer-paid service repair orders
   10  written within a ninety day period, whichever is less, covering  repairs
   11  made  no  more  than  one hundred eighty days before the submission, and
   12  declaring the price and rate, including average  markup  for  the  fran-
   13  chised motor vehicle dealer as its reimbursement rate. The reimbursement
   14  rate so declared shall go into effect thirty days following the declara-
   15  tion  and shall be presumed to be [fair and] reasonable, however a fran-
   16  chisor may rebut such presumption by showing that such  rate  so  estab-
   17  lished  is  [unfair  and]  unreasonable in light of the practices of all
   18  other franchised motor vehicle dealers in the vicinity offering the same
   19  line make. The franchised motor  vehicle  dealer  shall  not  request  a
   20  change  in  the  reimbursement rate more often than [twice] ONCE in each
   21  calendar year. In establishing the labor reimbursement rate,  the  fran-
   22  chisor  shall not require a franchised motor vehicle dealer to establish
   23  said rate by a methodology, or by requiring information, that is  unduly
   24  burdensome  or time consuming to provide, including, but not limited to,
   25  a transaction by transaction calculation.   FOR  THE  PURPOSES  OF  THIS
   26  SECTION,  THE FOLLOWING PARTS OR TYPES OF REPAIRS SHALL BE EXCLUDED FROM
   27  THE PARTS AND/OR LABOR CALCULATIONS AND THE  FRANCHISOR'S  REIMBURSEMENT
   28  REQUIREMENTS UNDER THIS SECTION: (A) PARTS SOLD AT WHOLESALE; (B) TIRES;
   29  (C)  ROUTINE  MAINTENANCE NOT COVERED UNDER ANY RETAIL CUSTOMER WARRANTY
   30  SUCH AS FLUIDS, FILTERS AND BELTS NOT PROVIDED IN THE COURSE OF REPAIRS;
   31  (D) VEHICLE RECONDITIONING; AND (E) BATTERIES  REPLACED  AS  PART  OF  A
   32  ROUTINE MAINTENANCE OPERATION. IF THE FRANCHISOR REJECTS THE DECLARATION
   33  OR ATTEMPTS TO REBUT THE DECLARATION BECAUSE OF AN ERROR IN THE DEALER'S
   34  SUBMISSION,  THE  FRANCHISOR  SHALL IDENTIFY WITH SPECIFICITY THE REASON
   35  FOR REJECTION AND IDENTIFY THE ERROR OR ERRORS WITHIN THE SUBMISSION. IN
   36  THE EVENT THE FRANCHISOR REJECTS OR REBUTS THE DEALER'S INITIAL DECLARA-
   37  TION, THE DEALER SHALL HAVE THE OPPORTUNITY, WITHIN SIXTY DAYS TO RESUB-
   38  MIT THE FULL AND CORRECTED DECLARATION ADDRESSING THE ALLEGED  ERROR  OR
   39  ERRORS IDENTIFIED BY THE FRANCHISOR.  THE FRANCHISOR SHALL RESPOND WITH-
   40  IN  SIXTY  DAYS.  THE  ONE HUNDRED EIGHTY DAY REQUIREMENT FOR THE REPAIR
   41  ORDERS SHALL BE STAYED FROM THE  DATE  OF  INITIAL  SUBMISSION.  IN  ANY
   42  ACTION  OR  PROCEEDING HELD PURSUANT TO THIS SUBDIVISION, THE FRANCHISOR
   43  SHALL HAVE THE BURDEN OF PROVING THAT THE RATE DECLARED  BY  THE  DEALER
   44  WAS  UNREASONABLE AS DESCRIBED IN THIS SUBDIVISION AND THAT THE PROPOSED
   45  ADJUSTMENT  OF  THE  AVERAGE  PERCENTAGE  MARKUP  OR  REJECTION  OF  THE
   46  SUBMISSION IS REASONABLE PURSUANT TO THE PROVISIONS OF THIS SUBDIVISION.
   47    S  11.  Subdivisions  3,  4, 6 and 7 of section 465 of the vehicle and
   48  traffic law, as added by chapter 490 of the laws of 2008, are amended to
   49  read as follows:
   50    3. No franchisor shall conduct an audit or charge  back  any  warranty
   51  [or] PAYMENT, OR ANY sales [incentive payment], ADVERTISING OR MARKETING
   52  INCENTIVE  PAYMENT ("INCENTIVE PAYMENTS") or otherwise hold a franchised
   53  motor vehicle dealer liable for charges more  than  one  year,  or  five
   54  years  in  the  case  of  fraud, after the date the franchisor made such
   55  payment to the dealer, WITHOUT PROVIDING A NOTICE TO A FRANCHISED  MOTOR
   56  VEHICLE  DEALER  OF, OR A MECHANISM THAT MAKES AVAILABLE TO A FRANCHISED
       A. 7844--B                          9

    1  MOTOR VEHICLE DEALER, INFORMATION REGARDING ERRORS OR  ISSUES  REGARDING
    2  SUCH DEALER'S WARRANTY, SALES, ADVERTISING OR MARKETING INCENTIVE CLAIMS
    3  THAT ARE THE SUBJECT OF THE AUDIT OR CHARGEBACK. NOTHING IN THIS SECTION
    4  SHALL  BE  DEEMED TO GRANT A DEALER THE RIGHT TO ACCESS ANY FILE HELD BY
    5  THE MANUFACTURER EVALUATING SUCH DEALER. IN CONNECTION WITH A CLAIM  FOR
    6  WARRANTY  REIMBURSEMENTS,  THE DEALER'S FAILURE TO DOCUMENT PROPERLY ONE
    7  PART OF A WARRANTY REPAIR THAT CONTAINS MORE THAN ONE PART SHALL NOT  BE
    8  THE  SOLE  BASIS  TO CHARGE BACK THE ENTIRE REPAIR. A MANUFACTURER SHALL
    9  NOT DENY A CLAIM SUBMITTED UNDER THIS SECTION BASED SOLELY ON A DEALER'S
   10  INCIDENTAL FAILURE TO COMPLY WITH A SPECIFIC CLAIM  PROCESSING  REQUIRE-
   11  MENT,  A  CLERICAL ERROR, OR OTHER ADMINISTRATIVE TECHNICALITY, PROVIDED
   12  THAT THE FAILURE DOES NOT CALL INTO QUESTION THE LEGITIMACY OF THE CLAIM
   13  AND THAT THE DEALER CORRECTS THE CLAIM ACCORDING  TO  FRANCHISOR  GUIDE-
   14  LINES.
   15    4.  A  franchisor  shall  not  charge  a dealer back subsequent to the
   16  payment of a warranty [or], sales [incentive], ADVERTISING OR  MARKETING
   17  INCENTIVE  claim  unless  a  representative of the franchisor has met in
   18  person at the dealership, or by telephone, with an officer  or  employee
   19  of the dealer designated by the dealer and explained in detail the basis
   20  for  each of the proposed charge backs and thereafter given the dealer's
   21  representative a reasonable opportunity at the meeting,  or  during  the
   22  telephone call, to explain the dealer's position relating to each of the
   23  proposed charge backs. In the event the dealer was selected for audit or
   24  review  on the basis that some or all of the dealer's claims were viewed
   25  as excessive in comparison to average, mean or  aggregate  data  accumu-
   26  lated  by  the franchisor, or in relation to claims submitted by a group
   27  of other franchisees, the franchisor shall, at or prior to  the  meeting
   28  or  telephone  call with the dealer's representative, provide the dealer
   29  with a written statement containing the basis or methodology upon  which
   30  the dealer was selected for audit or review.
   31    6.  A  franchisor  shall  not deny or charge back a sales [incentive],
   32  ADVERTISING OR MARKETING INCENTIVE payment made to a dealer  unless  the
   33  claim  was materially false or fraudulent or [that] the dealer failed to
   34  reasonably substantiate  the  claim  [either]  in  accordance  with  the
   35  manufacturer's reasonable procedures.
   36    7.  After  all  internal dispute resolution processes provided through
   37  the franchisor have been resolved, the franchisor shall give  notice  to
   38  the  dealer  of  the  final  amount  of  a proposed warranty [or], sales
   39  [incentive], ADVERTISING OR MARKETING  INCENTIVE  charge  back.  If  the
   40  dealer  institutes an action pursuant to this article within thirty days
   41  of receipt of such notice, the proposed charge  back  shall  be  stayed,
   42  without  bond,  during  the  pendency of such action and until the final
   43  judgment has been rendered in an adjudicatory proceeding  or  action  as
   44  provided  in section four hundred sixty-nine of this article.  THE FRAN-
   45  CHISOR SHALL NOT IMPOSE THE CHARGEBACK, DEBIT THE DEALER'S  ACCOUNT,  OR
   46  OTHERWISE  SEEK  TO  OBTAIN ALL OR ANY PART OF THE CHARGEBACK FUNDS FROM
   47  THE DEALER DURING THE THIRTY-DAY PERIOD IN  WHICH  THE  DEALER  HAS  THE
   48  OPPORTUNITY TO FILE AN ACTION AS SET FORTH ABOVE.
   49    S  12.  Severability.  If  any clause, sentence, paragraph, section or
   50  part of this act shall be adjudged by any court of  competent  jurisdic-
   51  tion  to be invalid and after exhaustion of all further judicial review,
   52  the judgment shall not affect, impair or invalidate the remainder there-
   53  of, but shall be confined in its  operation  to  the  clause,  sentence,
   54  paragraph,  section or part of this act directly involved in the contro-
   55  versy in which the judgment shall have been rendered.
   56    S 13. This act shall take effect immediately.
Go to top
Page display time = 0.1663 sec