Substitute For
HOUSE BILL NO. 6233
A bill to
amend 1981 PA 118, entitled
"Motor vehicle franchise act
by amending sections 6, and 14 (MCL 445.1566, and 445.1574), sections 6 and 14 as amended by 2018 PA 668.
the people of the state of michigan enact:
Sec. 6. (1)
"Relevant market area" means 1 of the following:
(a) In a county that has a population of more than 150,000,
the area within a radius of 9 miles of the site of the intended place of
business of a proposed new vehicle dealer or the intended place of business of
a new vehicle dealer that plans to relocate its place of business. For purposes
of this section, the 9-mile distance is determined by measuring the distance
between the nearest surveyed boundary of an existing
new motor vehicle dealer's principal place of business and the nearest surveyed
boundary line of the proposed or relocated new motor vehicle dealer's principal
place of business.
(b) In a county that has a population of 150,000 or fewer,
the area within a radius of 15 miles of the site of the intended place of
business of a proposed new vehicle dealer or the intended place of business of
a new vehicle dealer that plans to relocate its place of business. For purposes
of this section, the 15-mile distance is determined by measuring the distance
between the nearest surveyed boundary line of an existing new motor vehicle
dealer's principal place of business and the nearest surveyed boundary line of
the proposed or relocated new motor vehicle dealer's principal place of business.
(2)
"Sell" or "selling" as it applies to a new motor vehicle
means to engage in the business of selling, trading, leasing, or offering for
sale or lease, negotiating, or otherwise attempting to sell, trade, or lease a
new motor vehicle, or any interest in, or written instrument pertaining to, a
new motor vehicle to a customer at retail.
(3)
(2) "Stop-sale
order" means a notification issued by a manufacturer to its franchised new
motor vehicle dealers stating that certain used vehicles in inventory shall not
be driven, sold, or leased, at either retail or wholesale, due to a federal
safety recall or manufacturer issued recall for a defect or a noncompliance, or
a federal emissions recall.
(4)
(3) "Successor
manufacturer" means a manufacturer that acquires, succeeds to, or assumes
any part of the business of another manufacturer as the result of any of the
following:
(a) A change in ownership,
operation, or control of a predecessor manufacturer by sale or transfer of
assets, corporate stock, or other equity interest, assignment, merger,
consolidation, combination, joint venture, redemption, court-approved sale,
operation of law, or any other means.
(b) Termination, suspension, or cessation of a part or all of
the business operations of a predecessor manufacturer.
(c) Discontinuance of the sale of a product line.
(d) A change in distribution system by a predecessor
manufacturer, whether through a change in distributor or the predecessor
manufacturer's decision to cease conducting any business through a particular
distributor.
(5)
(4) "Used motor
vehicle" means a motor vehicle that is not a new motor vehicle.
(6)
(5) "Used motor
vehicle dealer" means a person that is engaged in the business of
purchasing, selling, exchanging, or dealing in used motor vehicles and that has
an established place of business in this state at which it conducts that
business. The term does not include a new motor vehicle dealer purchasing,
selling, exchanging, or dealing in used motor vehicles as part of its business
of purchasing, selling, exchanging, or dealing in new motor vehicles.
Sec. 14. (1) A manufacturer shall not do any of the following:
(a) Adopt, change, establish, or implement a plan or system
for the allocation and distribution of new motor vehicles to new motor vehicle
dealers that is arbitrary or capricious or based on unreasonable sales and
service standards, or modify an existing plan or system that causes the plan or
system to be arbitrary or capricious or based on unreasonable sales and service
standards.
(b) If requested in writing by a new
motor vehicle dealer, fail or refuse to advise or disclose to the dealer the
basis on which new motor vehicles of the same line-make are allocated or
distributed to new motor vehicle dealers in this state and the basis on which
the current allocation or distribution is being made or will be made to that
new motor vehicle dealer.
(c) Refuse to deliver to a new motor vehicle dealer in
reasonable quantities and within a reasonable time after receipt of the dealer's
order, any new motor vehicles that are covered by the dealer agreement and
specifically publicly advertised in this state by the manufacturer as available
for immediate delivery. However, the failure to deliver any motor vehicle is
not considered a violation of this act if the failure is due to an act of God,
a work stoppage or delay due to a strike or labor difficulty, a shortage of
materials, a lack of manufacturing capacity, a freight embargo, or other cause
over which the manufacturer has no control. If a manufacturer requires a new
motor vehicle dealer to purchase essential service tools with a purchase price
in the aggregate of more than $7,500.00 in order to receive a specific model of
vehicle, the manufacturer shall on written request provide the dealer with a good faith good-faith
estimate in writing of the number of vehicles of that specific
model the dealer will be allocated in the model year in which the dealer is
required to purchase the tool.
(d) Increase the price of a new motor vehicle that the new
motor vehicle dealer had ordered, and then eventually delivered to, the same
retail consumer for whom the vehicle was ordered, if the order was made before
the dealer's receipt of a written official price increase notification. A sales
contract signed by a private retail consumer and
binding on the dealer constitutes evidence of a vehicle order. In the event of
manufacturer price reductions or cash rebates, the dealer shall pass on the
amount of any reduction or rebate received by the dealer to the private retail
consumer. Any price reduction in excess of $5.00 shall apply to all vehicles in
the dealer's inventory that were subject to the price reduction. A price
difference applicable to new model or series motor vehicles at the time of the
introduction of the new models or the series is not considered a price increase
or price decrease. This subdivision does not apply to price changes caused by
any of the following:
(i) The addition to a
motor vehicle of required or optional equipment under state or federal law.
(ii) In the case of foreign made vehicles or components,
revaluation of the United States dollar.
(iii) Any increase in transportation charges due to an increase
in rates charged by a common carrier or transporter.
(e) Offer any of the following
to any new motor vehicle dealer of a specific line-make without making the same
offer available to all other new motor vehicle dealers of the same line-make:
(i) Any specific model or series of new motor vehicles
manufactured for that line-make.
(ii) Any incentives, rebates, bonuses, promotional items, or
other similar benefits payable to the new motor vehicle dealer for selling new
motor vehicles or purchasing new motor vehicles from the manufacturer.
(iii) Any consumer rebates, vehicle price reductions, or interest
rate reductions or other changes to finance terms that benefit the consumer.
(iv) Any program that provides marketing and sales assistance to new motor vehicle dealers, including, but not
limited to, internet listings, sales leads, marketing programs, and dealer
recognition programs.
(f) Release to an
outside party, except under subpoena or in an administrative or judicial
proceeding to which the new motor vehicle dealer or the manufacturer are
parties, any business, financial, or personal information that has been
provided by the dealer to the manufacturer, unless the new motor vehicle dealer
gives written consent.
(g) Deny a new motor
vehicle dealer the right to associate with another new motor vehicle dealer for
any lawful purpose.
(h) Directly or
indirectly own, operate, or control a new motor vehicle dealer, including, but
not limited to, a new motor vehicle dealer engaged primarily in performing
warranty repair services on motor vehicles under the manufacturer's warranty,
or a used motor vehicle dealer. This subdivision does not apply to any of the
following:
(i) The ownership, operation, or control by a manufacturer of a
new motor vehicle dealer for a period of not more than 24 months during the
transition from 1 owner or operator to another. The circuit court may extend
the 24-month time period for an additional 12 months upon receipt of an
application from a manufacturer and a showing of good cause.
(ii) The ownership, operation, or control of a new motor vehicle
dealer or a used motor vehicle dealer by a manufacturer while it is being sold
under a bona fide contract or purchase option to the operator of the new motor
vehicle dealer or the used motor vehicle dealer.
(iii) The direct or indirect ownership by a manufacturer of an entity that owns, operates, or controls a new motor
vehicle dealer of the same line-make franchised by the manufacturer, if all of
the following conditions are met:
(A) As of May 1, 2000,
the manufacturer for a period of not less than 12 months has continuously
owned, directly or indirectly, 1 or more new motor vehicle dealers in this
state.
(B) All of the new motor
vehicle dealers selling the manufacturer's motor vehicles in this state trade
exclusively in the manufacturer's line-make.
(C) As of January 1, 2000,
not fewer than 1/2 of the new motor vehicle dealers of the line-make within
this state own and operate 2 or more new motor vehicle dealer facilities in the
geographic territory or area covered by the franchise agreement with the
manufacturer.
(D) For a manufacturer
or any entity in which the manufacturer has more than a 45% ownership interest,
the manufacturer or entity has not acquired, operated, or controlled a new
motor vehicle dealer that the manufacturer did not directly or indirectly own
as of May 1, 2000.
(iv) The acquisition by a manufacturer of a used motor vehicle
dealer's license for the purpose of selling motor vehicles to nonretail buyers.
(i) Sell any new motor
vehicle directly to a retail customer other than through franchised dealers,
unless the retail customer is a nonprofit organization or a federal, state, or
local government or agency. This subdivision does not prohibit a manufacturer
from providing information to a consumer for the purpose of marketing or
facilitating the sale of new motor vehicles or from establishing a program to
sell or offer to sell new motor vehicles through
franchised new motor vehicle dealers that sell and service new motor vehicles
produced by the manufacturer.
(j) Prevent or attempt
to prevent by contract or otherwise any new motor vehicle dealer from changing
the executive management of a new motor vehicle dealer unless the manufacturer,
having the burden of proof, can show that the change of executive management
will result in executive management by a person or persons who are not of good
moral character or who do not meet reasonable, preexisting, and equitably
applied standards of the manufacturer. If a manufacturer rejects a proposed
change in the executive management, the manufacturer shall give written notice
of its reasons to the dealer within 75 days after receiving written notice from
the dealer of the proposed change and all related information reasonably
requested by the manufacturer, or the change in executive management is
considered approved.
(k) Unreasonably
withhold consent to the sale, transfer, or exchange of a new motor vehicle
dealership to a qualified buyer that meets the manufacturer's uniformly applied
requirements and criteria to be a new motor vehicle dealer and that is capable
of being licensed as a new motor vehicle dealer in this state.
(l) Fail to respond to a written request from a new motor
vehicle dealer that has submitted an agreement for the sale, transfer, or
exchange of a new motor vehicle dealership. The manufacturer shall provide the
dealer with all forms generally utilized and requested by the manufacturer for
the approval of a sale, transfer, or exchange of a new motor vehicle dealership
not later than 30 days after receiving a written request from the dealer for
the forms. A manufacturer shall have 75 days after the date the manufacturer
receives all the properly completed forms and information
generally utilized and requested by the manufacturer to approve or disapprove
the sale, transfer, or exchange of the new motor vehicle dealership. The
failure of the manufacturer to approve or disapprove the sale, transfer, or
exchange within the 75-day time period is considered approval.
(m) Unfairly prevent a
new motor vehicle dealer that sells, transfers, or exchanges a new motor
vehicle dealership from receiving reasonable compensation for the value of the
new motor vehicle dealership.
(n) Subject to section
13(1)(i) and (2), unless the manufacturer enters into a written agreement with
the new motor vehicle dealer that clearly states the amount of the incentive
payments and the period of time during which the incentive payments are paid,
offer incentive payments to a new motor vehicle dealer in consideration for a
new motor vehicle dealer's promise to do any of the following:
(i) Make material alterations to any facilities at the dealer's
place of business.
(ii) Construct new facilities for the conduct of the business of
the dealership.
(o) Require unreasonable
improvements to a facility as a condition to entering into or renewing a dealer
agreement.
(p) Authorize a motor
vehicle service and repair facility to perform motor vehicle warranty repairs
and recall work, unless the work meets any of the following:
(i) Is required for emergency service of a vehicle.
(ii) Is work performed at a service center owned or operated by
a manufacturer on a manufacturer-owned vehicle.
(iii) Is work performed by the vehicle
manufacturer or employees of a fleet
operator on its the fleet
operator's own vehicles.
(q) Own Directly or indirectly own a
motor vehicle service and repair facility, except that a manufacturer may own a
service and repair facility for the repair of manufacturer-owned vehicles and, at the request of a fleet operator, for the repair of a
fleet operator's vehicles as permitted under subdivision (p)(iii).
(r) Engage in conduct
that meets all of the following:
(i) Materially affects a new motor vehicle dealer.
(ii) Is capricious, is not in good faith, or is unconscionable.
(iii) Causes material damage to a new motor vehicle dealer.
(s) Require, attempt to
require, coerce, or attempt to coerce a new motor vehicle dealer to adhere to
unreasonable performance standards that are not applied uniformly to other
similarly situated new motor vehicle dealers.
(t) Use or consider the
performance of a new motor vehicle dealer in selling the manufacturer's
vehicles or the new motor vehicle dealer's ability to satisfy any minimum sales
or market share quota or responsibility relating to the sale of the new motor
vehicles in determining any of the following:
(i) The new motor vehicle dealer's eligibility to purchase
program, certified, or other used motor vehicles from the manufacturer.
(ii) The volume, type, or model of program, certified, or other
used motor vehicles that a new motor vehicle dealer is eligible to purchase
from the manufacturer.
(iii) The price of any program, certified, or other used motor
vehicle that the new motor vehicle dealer purchases from the manufacturer.
(iv) The availability or amount of any discount, credit, rebate, or sales incentive that the new motor vehicle
dealer is eligible to receive from the manufacturer in connection with any
program, certified, or other used motor vehicle offered for sale by the
manufacturer.
(u) Require that a new
motor vehicle dealer provide its customer lists or service files to the
manufacturer, unless necessary for the sale and delivery of a new motor vehicle
to a consumer, to validate and pay consumer or dealer incentives, or in
connection with the submission of a claim to the manufacturer for services
supplied by the new motor vehicle dealer for any claim for warranty repairs.
This section does not limit a manufacturer's authority to require or use
customer information to satisfy any safety or recall obligation.
(v) Establish a
performance standard or program for measuring new motor vehicle dealer
performance that may have a material and adverse impact on a new motor vehicle
dealer that is not fair, reasonable, and equitable. For purposes of this
subdivision, all of the following apply if a manufacturer does not provide a
complete program description explaining the performance standard or program
details to a new motor vehicle dealer on or before the beginning of the
program:
(i) Within 10 days after receiving a request from the new motor
vehicle dealer, the manufacturer shall provide the new motor vehicle dealer
with a written description of how a performance standard or program is
designed.
(ii) Within 30 days after receiving a written request from the
new motor vehicle dealer, the manufacturer shall provide all of the following
to the dealer:
(A) The specific
information relied on by the manufacturer relating
to how the performance standard or program was applied to the new motor vehicle
dealer. The manufacturer is not required to disclose any proprietary or
confidential information for purposes of this sub-subparagraph. However, the
result of the application of a performance standard or program to a particular
new motor vehicle dealer is not considered proprietary or confidential as
between the manufacturer and that particular new motor vehicle dealer.
(B) An explanation as to
how the manufacturer applies a performance standard or program to a new motor
vehicle dealer's performance.
(iii) On written request, a manufacturer or a new motor vehicle
dealer shall meet with the other party, in person or telephonically, under
reasonable circumstances and as agreed to by both parties, to present, explain,
or discuss information the manufacturer is required to provide under
subparagraph (ii)(A) and (B).
(w) If a new motor
vehicle dealer sold or leased a new motor vehicle to a customer that exported
the motor vehicle to a foreign country or resold the motor vehicle, and at the
time of delivery to the customer the vehicle was titled and registered in this
state or another state of the United States by the dealer, refuse to allocate,
sell, or deliver new motor vehicles to the dealer; charge back or withhold
payments or other things of value for which the dealer is otherwise eligible
under a sales promotion, program, or contest; prevent a new motor vehicle
dealer from participating in any sales promotion, program, or contest; or take
or threaten to take any other adverse action against a new motor vehicle
dealer, including, but not limited to, reducing vehicle allocations or
terminating or threatening to terminate a dealer agreement, unless the manufacturer proves that the new motor vehicle
dealer knew or reasonably should have known that the customer intended to
export or resell the motor vehicle. In an action by a new motor vehicle dealer
for a violation of this subdivision, there is a rebuttable presumption that a
new motor vehicle dealer did not know or should not reasonably have known of
its customer's intent to export or resell a motor vehicle if the vehicle was
titled and registered in the United States, and the manufacturer bears the
burden of rebutting that presumption.
(x) If a new motor
vehicle dealer is a party to a dealer agreement on August 4, 2010, and the
dealer agreement provides for sale of a competing line-make of new motor
vehicles at the same place of business where the manufacturer's line-make is
sold, require or otherwise coerce the new motor vehicle dealer to remove the
sale or servicing of new motor vehicles of that competing line-make from that
place of business.
(y) Prevent, attempt to
prevent, prohibit, coerce, or attempt to coerce a new motor vehicle dealer from
charging a consumer any documentary preparation fee allowed to be charged by
the dealer under the laws of this state or require the disclosure of the
documentary preparation fee in a written format that is not otherwise required
by law.
(z) Prohibit, prevent,
or attempt to prevent a new motor vehicle dealer from transferring a dealership
to or naming a spouse, child, or executive manager as dealership successor to
own and operate the dealership unless the manufacturer, having the burden of
proof, can show that at the time the successor is named or the dealership is
transferred, the successor spouse, child, or executive manager of the dealer is
not of good moral character, has a felony
conviction, does not meet the manufacturer's uniformly applied requirements and
criteria to be a dealer, or is otherwise disqualified from holding a license as
a new motor vehicle dealer under any applicable statute of this state. All of
the following apply for purposes of this subdivision:
(i) The manufacturer is required to provide the new motor
vehicle dealer, in writing, with its current uniformly applied requirements and
criteria to be a dealer within 30 days of receiving the new motor vehicle
dealer's written request for the uniformly applied requirements and criteria to
be a dealer.
(ii) Within 75 days after receiving the manufacturer's current
uniformly applied written requirements and criteria to be a dealer from the
manufacturer, the new motor vehicle dealer may submit a written request to the
manufacturer for a meeting, in person or telephonically, with the manufacturer,
under reasonable circumstances as agreed to by both parties, to address the
requirements and criteria. The parties shall meet, in person or telephonically,
within 45 days after the new motor vehicle dealer's request for a meeting,
unless otherwise agreed. During the meeting, the manufacturer shall provide the
dealer an opportunity to present, in writing, facts, data, and evidence that
establish that there are factors beyond the reasonable control or influence of
the new motor vehicle dealer that materially and adversely impact the proposed
transferee's ability to meet the manufacturer's current uniformly applied
written requirements to be a dealer. If the manufacturer does not provide the
new motor vehicle dealer an opportunity to present, in writing, facts, data,
and evidence, or does not in good faith evaluate the effect of the facts, data,
and evidence presented by the dealer, then the manufacturer may not prohibit or prevent the new motor vehicle dealer from
transferring the dealership to a spouse, child, or executive manager, or naming
a spouse, child, or executive manager as the dealership successor to own and
operate the dealership.
(iii) The manufacturer must make any decision to decline the new
motor vehicle dealer's request to transfer a new motor vehicle dealership to a
spouse, child, or executive manager, or name a spouse, child, or executive
manager as dealership successor, in good faith, including the opportunity for a
meeting, in person or telephonically as provided in subparagraph (ii). If requested by the new motor vehicle dealer in writing,
the manufacturer must provide the new motor vehicle dealer with the information
that it relied on when concluding that the spouse, child, or executive manager
did not satisfy the uniformly required requirements and criteria to be a new
motor vehicle dealer. However, the manufacturer is not required to disclose
proprietary or confidential information and is not required to disclose any
information if disclosure is prohibited by law.
(aa) Make any material
change in a dealer agreement without giving the new motor vehicle dealer
written notice of the change at least 30 days before the effective date of the
change. In any dispute under this subdivision, the new motor vehicle dealer has
the burden of proving the modification is sufficiently significant and material
to require notice under this subdivision.
(bb) Unless otherwise
agreed, require a new motor vehicle dealer to sell or offer to sell an extended
service contract or extended maintenance plan offered, sold, backed by, or
sponsored by the manufacturer.
(2) A manufacturer,
either directly or through any subsidiary, shall
not terminate, cancel, fail to renew, or discontinue any lease of a new motor
vehicle dealer's established place of business except for a material breach of
the lease.
(3) Within 30 days after
receiving a written request from the dealer, a manufacturer shall provide a new
motor vehicle dealer that is seeking to sell, transfer, or exchange a new motor
vehicle dealership with all forms generally utilized and requested by the
manufacturer in connection with the sale, transfer, or exchange of a new motor
vehicle dealership.
(4) A failure by a
manufacturer or distributor to approve or disapprove a dealer's request to
sell, transfer, or exchange its new motor vehicle dealership within the 75-day
period after it receives a completed application, including all required
documentation and information requested by the manufacturer or distributor, is
considered approval by the manufacturer of the sale, transfer, or exchange of
the dealership.
(5) This section applies
to a manufacturer that sells, services, displays, or advertises its new motor
vehicles in this state.