Bill Summaries: H403 CLARIFY MOTOR VEHICLE FRANCHISE LAWS.

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  • Summary date: Sep 13 2021 - More information

    AN ACT TO REVISE AND CLARIFY THE LAWS GOVERNING NEW MOTOR VEHICLE DEALER FRANCHISES. SL 2021-147. Enacted Sept. 10, 2021. Section 12 is effective Jan. 1, 2022. The remainder is effective Sept. 10, 2021, except as otherwise provided.


  • Summary date: Aug 24 2021 - More information

    Senate committee substitute to the 2nd edition makes the following changes.

    Adds to the new provisions in GS 20-305(4)(i), which makes it unlawful for a manufacturer to condition the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership upon the existing or proposed dealer's willingness to renovate, construct, or relocate the dealership facility, or to enroll in a facility program. Adds that this new provision does not annul or impair an existing agreement regarding the renovation, construction, or relocation of a dealership facility that existed prior to the transfer, sale, succession, assignment of the dealer's franchise, change in executive management or change in principal operator. Further adds that this new provision does not prevent a manufacturer or distributor from requiring changes to a facility that are necessary in order to sell or service a motor vehicle. 

    Regarding the procedure for a manufacturer or distributor to object to an owner's appointment of a designated successor set forth in GS 20-305(7), amends the subdivision to require the manufacturer or dealer to prove that the designated successor does not meet uniformly applied minimum business experience standards in the market area for the proposed principal operator of the dealership (rather than the proposed day to day principal operator of the dealership).

    Modifies the proposed changes to GS 20-305(6) regarding a termination, cancellation or nonrenewal of a franchise by eliminating the new provision deeming the establishment of a separate franchise that sells or distributes exclusively or primarily electric vehicles a change of an establishment plan or system of distribution, whereby a franchise is to continue in full force and operation notwithstanding the change. 

    Replaces the proposed changes to GS 20-305(9), which makes it unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in the State to (1) purchase or lease any electric vehicles charging stations at the dealer's expense unless the dealer has indicated to the manufacturer or distributor the dealer's intention to begin offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor, or (2) if the dealer is offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor, purchase or lease at the dealer's expense either more than the number of electric vehicle charging stations for use by service technicians and customer education than would be reasonably necessary for the dealer to have for these purposes during the following three-year period, or any electric vehicle charging stations for use anywhere other than the dealer's service area. Now, makes it unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in the State to purchase or lease any electric vehicle charging stations at the dealer's expense unless the dealer has notified the manufacturer or distributor of the dealer's intention to begin selling and servicing electric vehicles manufactured or distributed by that manufacturer or distributor. Adds that if the dealer is actually offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor the dealer cannot be required to purchase or lease, at the dealer's expense: (1) more than the number of electric vehicle charging stations for use by service technicians and customer education than would reasonably be necessary for the dealer to perform these functions based on the dealer's estimated sales and service volume during the following three-year period; or (2) to make electric vehicle charging stations located at the dealership available for use by the general public. Specifies that these provisions do not prohibit a manufacturer or distributor from establishing an incentive program for its dealers for financial assistance to purchase or install electric charging stations, within parameters specified. Maintains the previously proposed language making it unlawful for any manufacturer or distributor to require that any of its franchised dealers in the State purchase or lease any diagnostic equipment or tool for the maintenance, servicing, or repair of electric vehicles if the dealer has other such tools available for servicing another brand or line-make of vehicle manufactured or distributed by that manufacturer or distributor, and can perform the work to the approved, applicable required standards of the manufacturer or distributor (previously, did not specify that the standards must be approved by the applicable manufacturer or distributor). Adds that the approval cannot be unreasonably withheld. Makes technical changes to delete existing statutory language reproduced in Section 3(a) of the act, which further amends GS 20-305(9) to make it unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in the State to purchase off-lease or other pre-owned vehicles.

    Further amends GS 20-305(12), which prohibits requiring, coercing, or attempting to coerce any new motor vehicle dealer to change location of the dealership, to now condition the prohibition upon the act of doing so would be unreasonable or without written assurance of a sufficient supply of new motor vehicles to justify the expense (was, the expansion). Modifies the proposed new provisions to GS 20-305(12), which require that, if a dealer is required by the manufacturer to change the location of the dealership and has not sold its existing dealership facility and real estate within 90 days of listing the property for sale, upon the written request of the dealer, the manufacturer must purchase the dealer's existing dealership facility and real estate at fair market value, entitling the manufacturer or distributor to sole ownership, possession, use and control of any items, buildings, or property included in the purchase contract. Now makes the new provisions applicable to distributors as well as manufacturers, and changes the time upon which a dealer can request the manufacturer or distributor to purchase the dealer's existing dealership to the later of 180 days of listing the property for sale or 90 days after the facility relocation. 

    Revises the changes to GS 20-305(30) to extend the provisions making lawful a manufacturer's program that varies the price charged to to its franchised dealers in violation of the subdivision (which prohibits varying prices based on the dealer's purchase of facilities, supplies, etc., relocation, renovation, or participation in training programs), as specified, from June 30, 2024 (2022 in current law), until June 30, 2025.

    Deletes the proposed changes to GS 20-305(14) requiring that, for a new motor vehicle dealer in the State who sold a total of 225 or fewer new motor vehicles manufactured or distributed by a particular manufacturer or distributor during the immediately preceding 12 calendar months, the manufacturer or distributor must allocate and deliver to the dealer within 60 days no fewer than the number of new motor vehicles of each model or series that dealer sold at retail during the immediately previous calendar month. Eliminates the corresponding new provisions regarding the dealer's right of refusal and the manufacturers and distributors' required distribution of the allocation process, a monthly summary of allocation, and the provisions of an appeals process to dealers. Instead enacts a new requirement for every manufacturer, factory branch, distributor, or distributor branch to provide each of its franchised dealers a process for a dealer to appeal the dealer's vehicle allocation should the dealer believe it was not allocated or did not receive vehicle inventory in a manner that complies with the subdivision and the manufacturer's or the distributor's uniformly applied allocation formula. Specifies that participation in the appeals process does not waive or impair any rights, claims or defenses available to the dealer, manufacturer or distributor under applicable law. Requires all proceedings related to the appeal process to be conducted in the State unless otherwise agreed to by the parties. Makes a technical correction. 

    Amends the proposed changes to GS 20-305(33), which make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to fail to reimburse a dealer located in the State in full for the actual cost of providing a loaner or rental vehicle to any customer who is having a vehicle serviced at the dealership if required by the manufacturer. Regarding the new prohibition making it unlawful for a manufacturer to fail to reimburse the dealer in full as provided by the subdivision in the event all or some of the time the dealer has provided the loaner or rental is due to the unavailability of one or more parts sold or distributed by the manufacturer or through a supplier designated or approved by the manufacturer, conditions the prohibition upon the provision of a rental or loaner vehicle to a customer is required or approved by the manufacturer or distributor.

    Revises the new provisions of GS 20-305(50) which prohibits requiring, coercing, or attempting to coerce the relocation of certain new motor vehicle dealerships. Specifies that if during a 10-year period a manufacturer revises or discontinues an existing program, standard, or policy or establishes a new one relating to construction or substantial alteration of a dealership, a motor vehicle dealer that completed construction or alteration of a dealership at a cost of $250,000 or more as part of a prior program and elects not to participate in the new or revised program, the dealer is not entitled to the benefits under the new or revise program (was, the facility bonus incentive portion of the new or revised program), but is entitled to all benefits (was, facility benefits) under the prior program. 

    Adds to the changes to the requirements for rebutting the presumption of customary parts markup and labor rates under GS 20-305.1 by using rates charges by all other franchise motor vehicle dealers located in the dealer's relevant market area instead, or if none, by other same segment franchise dealers selling competing line-makes of vehicles within the dealer's relevant market area. Provides that if there are no other such same segment franchised dealers within the dealer's relevant market area, the manufacturer or distributor is authorized to compare the dealer's retail rate for parts and labor with the retail rates charged for parts and labor by other same line-make dealers or same-segment franchised dealers who are selling competing line-makes of vehicles that are located within the relevant market area of the franchised dealers who is located in closest proximity, measured by straight-line distance, to the dealer, provided that they are not all owned, operated or controlled by the subject dealer. Defines relevant market area by statutory cross-reference. Eliminates the proposed extension of the period within which only one audit can be conducted for the following from 12 to 24 months, excluding audits for cause: for warranty or recall parts or service compensation or compensation for used motor vehicle recalls, and for sales incentives, service incentives, rebates, or other forms of incentive compensation. Eliminates the proposed changes to the definition given for audits conducted for cause to include an audit based on the fact that the dealer cannot reasonably substantiate the claim either in accordance with the manufacturer's reasonable written procedures or by other reasonable means; maintains that the phrase includes that the dealer's claims submissions violate reasonable claims documentation or other requirements of the applicable manufacturer, factory branch, distributor, or distributor branch. 

    Revises the expansion of the definition of motor vehicle dealer under GS 20-286, applicable to Article 12, to no longer add a person who for commission, money or value offers for subscription five or more motor vehicles within any 12 consecutive months, or (2) engages in the business of offering for subscription new motor vehicles or new or used motor vehicles, or used motor vehicles only and sells five or more motor vehicles within any 12 consecutive months. Instead, expands the definition of motor vehicle dealer to distinctly add a new qualification to the definition to include a person who, for commission, money, or other thing of value, or on behalf of another person sharing 10% or more common ownership, offers new vehicles as part of a subscription program. Excludes from this new qualification persons providing a vehicle subscription or monthly rental program on or after January 1, 2025. 

    Adds the following new content.

    Amends GS 20-305 by adding a new subdivision as follows. Makes it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to do any of six described acts if it has any franchised dealers in the State and permits retail customers the option of reserving or requesting to purchase or lease a vehicle directly from such manufacturer or distributor, including: (1) failing to assign any retail vehicle reservation or request to purchase or lease received from a resident to the franchised dealer authorized to sell that make and model designated by the customer, or if not designated the dealer authorized to sell that make and model located in closest proximity to the customer's location, with assignment to another franchised dealer authorized if the customer does not purchase or lease the vehicle from the dealer within 10 days of assignment; (2) prohibiting a retail customer who has reserved or requested to purchase or lease a vehicle directly from the manufacturer or distributor and the dealer to whom the reservation or request has been assigned from directly negotiating the trade-in value the customer will receive or prohibiting the assigned dealer from inspecting the condition of a trade-in vehicle before the dealer becomes contractually obligated to accept the value negotiated; and (3) using a third party to accomplish what would otherwise by prohibited by the new subdivision. Adds parameters for the construction of the new provision, including that the new prohibitions do not: (1) require a manufacturer or distributor from allocating or supplying additional or supplemental inventory to a franchised dealer to satisfy a retail customer's vehicle reservation or request submitted directly to the manufacturer or distributor; (2) apply to the generation of sales leads, excluding ant reservation or request to purchase or lease a vehicle submitted directly by a customer or potential customer to a manufacturer or distribution; or (3) apply to a reservation or request to purchase or lease a vehicle directly from the manufacturer or distributor received from customer that is a resident if the customer designated a dealer outside of the State to be assigned or if the dealer located in closest proximity to the customer's location is in another state and assigned the reservation or request to that dealer. Applies to all existing and future programs and policies of all manufacturers and distributors having any franchised dealers in the State as of January 1, 2022. 

    Adds another subdivision to GS 20-305, making it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prohibit or unreasonably limit or restrict a dealer from using electronic signature technology that complies with specified state law to facilitate or execute loaner, demonstrator, rental, or test drive agreements and forms. 

    Amends GS 20-183.4C to except from the required safety inspection of new and used vehicles prior to delivery to a retail purchaser vehicles previously inspected by an affiliated dealership or between dealerships having common or interrelated ownership when the inspection occurred either within 180 days from the date of sale or within 300 miles from the mileage recorded at the date of sale. 

    Amends GS 20-292 by adding a requirement that dealers who display vehicles at a trade show or exhibit where no selling related to the vehicle takes place must display the dealer's name and business location. Additionally allows for dealers to display vehicles at the home or place of business of a customer with the permission or consent of the customer, alternatively to the customer's request. Adds a new provision specifying that Article 12, which governs motor vehicle dealer and manufacturing licensing, does not prohibit or restrict a new or used motor vehicle dealers or any employee, agent or contractee of a new or used motor vehicle dealer from doing three described acts, including: (1) delivering a motor vehicle purchased or leased by a customer to the customer's home or place of business or having the customer execute forms and other documents related to the vehicle or other products and services provided to the customer by or through the dealer that are presented to a customer at their home or place of business by an employee or authorized agent of the dealer, subject to specified parameters; (2) having any employee or authorized agent explain vehicle operation, features, care, and warranties to the customer at the time of the delivery to the customer; and (3) retrieving from the customer's home or place of business a motor vehicle that has been sold by the customer to the dealer. 

    Makes technical changes to the act's effective date provisions. 


  • Summary date: May 5 2021 - More information

    House committee substitute to the 1st edition makes the following changes.

    Revises the proposed changes to changes to GS 20-305(4)(i), which makes it unlawful for a manufacturer to condition the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership upon the existing or proposed dealer's willingness to renovate, construct, or relocate the dealership facility, or to enroll in a facility program. Qualifies that this provision does not apply to or affect the validity of an ownership transfer or change in executive management or principal operator of the dealership that occurred prior to July 1, 2021. 

    Deletes the proposed changes to GS 20-305(7), which makes it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prevent or refuse to honor the succession to a dealership by a motor vehicle dealer's designated successor. Instead, amends the subdivision's provisions regarding the procedure for a manufacturer or distributor's objection to an owner's appointment of a designated successor to require the manufacturer or dealer to prove that the designated successor does not meet uniformly applied minimum business experience standards in the market area for the proposed day to day principal operator of the dealership (was, generally the uniformly applies minimum business experience standards in the market area). Makes technical changes. 

    Deletes the proposed changes to GS 20-305(18) and instead amends the subdivision to make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prevent or attempt to prevent, through the exercise of any contractual option to purchase (was, first right of refusal or otherwise), a dealer located in the State from transferring the franchised business to such persons or other entities as the dealer is permitted to designate under subdivision (4).

    Adds to the proposed changes to GS 20-305(9), making it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to require, coerce, or attempt to coerce a new motor vehicle dealer to purchase unnecessary charging stations. Revises the new provisions to GS 20-305(9) as follows. Now makes it unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in the State to (1) purchase or lease any electric vehicles charging stations at the dealer's expense unless the dealer has indicated to the manufacturer or distributor the dealer's intention to begin offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor, or (2) if the dealer is offering for sale to the public or providing warranty service on electric vehicles manufactured or distributed by that manufacturer or distributor, purchase or lease at the dealer's expense either more than the number of electric vehicle charging stations for use by service technicians and customer education than would be reasonably necessary for the dealer to have for these purposes during the following three-year period, or any electric vehicle charging stations for use anywhere other than the dealer's service area. Additionally makes it unlawful for any manufacturer or distributor to require that any of its franchised dealers in the State purchase or lease any diagnostic equipment or tool for the maintenance, servicing, or repair of electric vehicles if the dealer has other such tools available for servicing another brand or line-make of vehicle manufactured or distributed by that manufacturer or distributor, and can perform the work to the applicable required standards of the manufacturer or distributor. Eliminates the proposed new requirement for manufacturers and distributors having franchised dealers in the State that sell or service multiple brands of electric vehicles manufactured or distributed by the same manufacturer or distributor to design, manufacture and distribute diagnostic equipment, tools, and parts that can be used interchangeably with all brands of electric vehicles sold or distributed to their dealers in the State to the extent practicable.

    Revises the changes to the definition of motor vehicle set out in GS 20-286, applicable to Article 12, Motor Vehicle Dealers and Manufacturers Licensing Law. Now expands the term to include any motor propelled vehicle, regardless of the size and type of motor or source of power (no longer adding regardless of the mode of operation). 

    Further amends GS 20-305(9) to make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to require, coerce, or attempt to coerce any new motor vehicle dealer in the State to purchase off-lease or other pre-owned vehicles (no longer qualifying as either as part of the franchise agreement or as a part of an incentive program).

    Deletes the proposed changes to GS 20-305(12) and instead adds the following provisions to the subdivision. Requires that, if a dealer is required by the manufacturer to change the location of the dealership and has not sold its existing dealership facility and real estate within 90 days of listing the property for sale, upon the written request of the dealer, the manufacturer must purchase the dealer's existing dealership facility and real estate at fair market value, entitling the manufacturer or distributor to sole ownership, possession, use and control of any items, buildings, or property included in the purchase contract. Eliminates proposed subdivision (12a), which prohibited requiring or coercing new motor vehicle dealers to make unreasonable substantial alterations to the dealership premises or facilities. Eliminates proposed subdivision (13a) which made it unlawful for manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to enter into any release or waiver of rights created under Article 12 with one of its franchised dealers in the state unless the release or waiver complied with six specified criteria.

    Amends GS 20-305(30) to extend the provisions making lawful a manufacturer's program that varies the price charged to to its franchised dealers in violation of the subdivision (which prohibits varying prices based on the dealer's purchase of facilities, supplies, etc., relocation, renovation, or participation in training programs), as specified, from June 30, 2022, until June 30, 2024.

    Revises and adds to the proposed changes to GS 20-305(14) regarding delaying, refusing, or failing to deliver motor vehicles or parts and accessories in reasonable quantities or as ordered pursuant to the franchise and advertised. For a new motor vehicle dealer in the State who sold a total of 225 (was, 250) or fewer new motor vehicles manufactured or distributed by a particular manufacturer or distributor during the immediately preceding 12 calendar months, require the manufacturer or distributor to allocate and deliver to the dealer within 60 days (was, deliver in a timely manner, monthly) on a model by model or series basis, no fewer than the number of new motor vehicles of each such model or series that dealer sold at retail during the immediately previous calendar month. Specifies that the dealer's right to refuse to accept all or any portion of any allocation of vehicles made available pursuant to the new requirement is qualified to the extent that accepting additional inventory would cause the dealer to exceed the dealer's floor plan allowance. Adds an additional requirement for manufacturers, factory branches, distributors, and distributor branches to provide to each of its franchised dealers a process that allows the dealer to appeal the dealer's vehicle allocation that includes both manufacturer representatives and dealer representatives. 

    Modifies the proposed changes to GS 20-305(33), which make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to fail to reimburse a dealer located in the State in full for the actual cost of providing a loaner or rental vehicle to any customer who is having a vehicle serviced at the dealership if required by the manufacturer. No longer expands the provisions to include situations where the manufacturer has represented or indicated to the customer that a loaner or rental vehicle will be provided or that the customer is entitled to such. Regarding the new prohibitions, makes it unlawful for a manufacturer to fail to reimburse the dealer in full as provided by the subdivision in the event all or some of the time the dealer has provided the loaner or rental is due to the unavailability of one or more parts sold or distributed by the manufacturer or through a supplier designated or approved by the manufacturer (previously due to the unavailability of one or more parts).

    Revises the new provisions of GS 20-305(50) which prohibits requiring, coercing, or attempting to coerce the relocation of certain new motor vehicle dealerships. Provides that if a manufacturer, factory branch, distributor, or distributor branch offers incentives or other payments under a program that are in any part conditioned on a dealer's construction of a new facility, made facility improvements, or installed signs or other image elements required or approved by the manufacturer that were completed at a cost of more than $250,000 within the preceding 10 years to be deemed to be in compliance with any applicable facility requirements included in the manufacturer's program, and the dealer is entitled to receive all such incentives or other payments awarded under the program (was, deemed to be in compliance with the manufacturer's new or successor program requirements and entitled to receive all incentive or other payments awardable under the new or successor program). Adds the following. Provides that if during the 10-year period the manufacturer revises or discontinues an existing program, standard, or policy or establishes a new one relating to construction or substantial alteration of a dealership, a motor vehicle dealer that completed construction or alteration of a dealership at a cost of $250,000 or more as part of a prior program and elects not to participate in the new or revised program, deems the dealer not entitled to the facility bonus incentive portion of the new or revised program, but entitled to all facility benefits under the prior program. Requires payment or provision of benefits under the prior program for the ten-year term as the program existed when the dealer began to perform under the prior program.

    Revises the proposed changes to the information each motor vehicle manufacturer, factory branch, distributor or distributor branch must specify in writing to each of its licensed motor vehicle dealers pursuant to GS 20-305.1 to no longer include the dealer's goodwill repairs. Adds to the items to be included in the accompanying schedule of compensation to include reasonable compensation for shipping, if required by the manufacturer or distributor, and for or other disposal charges and all other associated fees that were actually incurred by the dealer (was, battery disposal or other disposal charges and shipping and all other associated fees). Changes the requirements for rebutting the presumption of customary parts markup and labor rates by using rates charges by all other franchise motor vehicle dealers located in the dealer's city to town offering the same line-make vehicles, or if none exist, other same segment franchised dealers who are selling competing line-makers of vehicles within the dealer's city or town, to now refer to the dealer's relevant market area instead (previously referred to the dealer's market). Eliminates the changes regarding the manufacturer's authority to not provide compensation or chargeback when the dealer has failed to comply with the same claim documentation procedure in the previous 12 months and the manufacturer provided a written warning to the dealer in the same period. 

    Revises the expansion of the definition of motor vehicle dealer under GS 20-286, applicable to Article 12, to include a person who for commission, money or value leases at retail (previously leases) or offers for subscription five or more motor vehicles within any 12 consecutive months, or (2) engages in the business of leasing at retail (was, leasing) or offering for subscription new motor vehicles or new or used motor vehicles, or used motor vehicles only (whether or not owned by the person) and sells five or more motor vehicles within any 12 consecutive months. 

    Revises the new provisions of GS 20-305(20) regarding the confidentiality of business, financial, or personal information of new motor vehicle dealers. Now prohibits a manufacturer from requiring, or including in any incentive program, a requirement that any of its motor vehicle dealers in the State provide a financial statement for a franchise or line-make when the dealer company operates more than one franchise or sells more than one line-make (was, provide a financial statement more than once per calendar quarter, or an exclusive financial statement for a franchise when the dealer company operates more than one franchise). 


  • Summary date: Mar 24 2021 - More information

    Identical to S 342, filed 3/24/21.

    Makes the following changes to GS 20-305(4), which makes it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prevent or refuse to approve the sale or transfer of ownership of a dealership, a change in management or principal operator of the dealership, a change in the use of an existing facility to provide for the sales or service of additional line-makers of new vehicles, or relocation of the dealership to another site within the market area, if the Commissioner of Motor Vehicles (Commissioner) has determined the objection to be unreasonable under the circumstances following a hearing on the matter. Makes technical and clarifying changes as well as organizational changes. Adds the following to the unlawful activity of a manufacturer identified in the provisions now organized as subdivision i. Makes it unlawful for a manufacturer to condition the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership upon the existing or proposed dealer's willingness to renovate, construct, or relocate the dealership facility, or to enroll in a facility program. Also makes it unlawful for a manufacturer to condition the approval of the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale, succession, or assignment of a dealer's franchise, or a change in the executive management or principal operator of the dealership, or a dealer's proposed relocation of the dealership facility, or a dealer's satisfaction of the terms of any incentive program or contest, upon the existing or proposed dealer's willingness to enter into a right of first refusal in favor of the manufacturer. 

    Makes the following changes to GS 20-305(7), which makes it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prevent or refuse to honor the succession to a dealership by a motor vehicle dealer's designated successor. Regarding the procedure for a manufacturer or distributor to object to an owner's appointment of a designated successor, allows the manufacturer or distributor to request personal and financial data that is reasonably necessary to determine the general business qualifications of the designated successor, in addition to the designated successor's financial ability. Makes conforming changes regarding the timing of the objection following notice of the designation and general information as to the designation's qualifications. Changes the burden of proof placed on the manufacturer or distributor at the evidentiary hearing to determine whether good cause exists for rejection of the owner's appointed designated successor, requires proving that the designated successor is not of good moral character or does not possess reasonable minimum general business experience (rather than alternative proving the successor does not meet the franchisor's existing written and reasonable standards and the uniformly applied minimum business experience standards in the market area considering the volume of sales and service of the new motor vehicle dealer). Makes a similar change to allow the manufacturer or distributor to request the designated successor to complete the application forms generally utilized by the manufacturer or distributor to review the successor's general business qualifications to establish a successor dealership (previously generally referred to the successor's qualifications). Adds a new provision to deem the failure or refusal of the designated successor to agree to any terms or provisions that are in addition to or that vary from the terms or provisions contained in the existing franchise between the parties not to be good cause for the manufacturer or distributor to object to the designated successor. Makes technical changes.

    Expands GS 20-305(18) to make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to prevent or attempt to prevent through the exercise of any contractual right of first refusal or otherwise, a dealer located in the State from purchasing, entering into an option to purchase, or complying with any subjective standards or asserting any legal or equitable rights relating to the franchise. 

    Amends GS 20-305(6) regarding a termination, cancellation or nonrenewal of a franchise. Adds a new provision to deem the establishment of a separate franchise that sells or distributes exclusively or primarily electric vehicles a change of an establishment plan or system of distribution, whereby a franchise is to continue in full force and operation notwithstanding the change. Current law requires the Division of Motor Vehicles (Division) to deny an application of a manufacturer, factory branch, distributor or distributor branch for a license or license renewal upon occurrence of a change in the established plan or system of distribution under the franchise unless the applicant offers to each motor vehicle dealer who is a party to the franchise that line-make, without any separate or additional fee or charge, a new franchise agreement substantially similar to the previous agreement or files an affidavit acknowledging its undertaking to assume and fulfill, without any separate or additional fee or charge to its dealers, the rights, duties, and obligations of its predecessor under the previous agreement (currently does not specify that the applicant cannot apply separate or additional fees or charge upon the occurrence of a change). Adds a new provision that requires the Division to deny renewal of a license that the Division failed to deny following a change until the applicant offers to each motor vehicle dealer who is a party to a franchise for that line-make a new franchise agreement on substantially the same provisions which were contained in the previous agreement. 

    Adds the following new provisions to GS 20-305(9). Makes it unlawful for any manufacturer or distributor to require, coerce, or attempt to coerce any of its franchised dealers in the State to either (1) purchase or lease any electric vehicles charging stations at the dealer's expense unless the dealer is actually offering for sale to the public or providing warranty service on electric vehicles manufacturer or distributed by that manufacturer or distributor, or (2) purchase or lease more than one electric vehicle charging station per dealership location owned by the dealer at the dealer's expense. Additionally makes it unlawful for any manufacturer or distributor to require that any of its franchised dealers in the State purchase or lease any diagnostic equipment or tool for the maintenance, servicing, or repair of electric vehicles if the dealer has other such tools available and can perform the work to the applicable required standards of the manufacturer or distributor. Adds a new requirement for manufacturers and distributors having franchised dealers in the State that sell or service multiple brands of electric vehicles manufactured or distributed by the same manufacturer or distributor to design, manufacture and distribute diagnostic equipment, tools, and parts that can be used interchangeably with all brands of electric vehicles sold or distributed to their dealers in the State to the extent practicable.

    Changes the definition of motor vehicle set out in GS 20-286, applicable to Article 12, Motor Vehicle Dealers and Manufacturers Licensing Law. Expands the term to include any motor propelled vehicle, regardless of the size and type of motor, source of power, or mode of operation. 

    Further amends GS 20-205(9) to make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to require, coerce, or attempt to coerce any new motor vehicle dealer in the State to purchase off-lease or other pre-owned vehicles either as part of the franchise agreement or as a part of an incentive program.

    Expands GS 20-305(28) to make it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to require, coerce, or attempt to coerce any new motor vehicle dealer to purchase, order, or accept any pre-owned or new motor vehicle as a precondition to purchasing, ordering, or receiving any other new motor vehicle(s) (currently limited to purchasing or ordering new motor vehicles as a precondition). 

    Makes a clarifying change to separate the prohibitions set forth in GS 20-305(12). Subdivision (12) now prohibits requiring, coercing, or attempting to coerce any new motor vehicle dealer to change location of the dealership, removing any further specifications. Enacts new subdivision (12a) to prohibit requiring, coercing, or attempting to coerce any new motor vehicle dealer to make any substantial alterations to the dealership premises or facilities when doing so would be unreasonable, or without written assurance of a sufficient supply of new motor vehicles to justify an expansion, in light of the current market and economic conditions. 

    Enacts new GS 20-205-(13) as follows. Makes it unlawful for manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to enter into any release or waiver of rights created under Article 12 with one of its franchised dealers in the state unless the release or waiver complies with six specified criteria, including that the release or waiver does not relate to nonreleasable or nonwaivable rights under the Article, the release or waiver is in no part prospective and is contained to a standalone document. Requires this subdivision to be strictly construed, with any release or waiver found in noncompliance deemed null and void. 

    Amends and adds to GS 20-305(14) regarding delaying, refusing, or failing to deliver motor vehicles or parts and accessories in reasonable quantities or as ordered pursuant to the franchise and advertised. Regarding sales objectives, requires every manufacturer, factory branch, distributor, or distributor branch to provide each of its franchised dealers with an adequate supply of vehicles in a fair, reasonable, and equitable manner based on each dealer's historical selling patter and planning potential (was, and reasonable sales standards as compared to other same line make dealers in the State). Adds the following new provisions. For a new motor vehicle dealer in the State who sold a total of 250 or fewer new motor vehicles manufactured or distributed by a particular manufacturer or distributor during the immediately preceding 12 calendar months, require the manufacturer or distributor to allocate to the dealer and deliver in a timely manner, monthly and on a model by model or series basis, no fewer than the number of new motor vehicles of each such model or series that dealer sold at retail during the immediately previous calendar month. Specifies that the dealer reserves the right to refuse to accept all or any portion of any allocation of vehicles made available pursuant to the new requirement. Adds an additional requirement for manufacturers, factory branches, distributors, and distributor branches to provide to each of its franchised dealers in the State the manufacturer's formula used for allocating motor vehicles, and the monthly summary of the number of motor vehicles allocated to each of the franchised dealers in the State by series, product line, and model. 

    Expands GS 20-305(33), making it unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative of the like, to fail to reimburse a dealer located in the State in full for the actual cost of providing a loaner or rental vehicle to any customer who is having a vehicle serviced at the dealership if required by the manufacturer (previously only referred to loaner vehicles). Specifies that the actual costs includes applicable taxes and third-party fees. Expands the provisions to include situations where the manufacturer has represented or indicated to the customer that a loaner or rental vehicle will be provided or that the customer is entitled to such. Adds the following prohibitions. Makes it unlawful for a manufacturer to fail to reimburse the dealer in full as provided by the subdivision whether or not the dealer provides the customer with a motor vehicle similar to the customer's vehicle brought in for service if the dealer does not have a similar model loaner or rental available, or in the event all or some of the time the dealer has provided the loaner or rental is due to the unavailability of one or more parts. 

    Adds the following to the provisions of GS 20-305(50) which prohibits requiring, coercing, or attempting to coerce the relocation of certain new motor vehicle dealerships. Provides that if a manufacturer, factory branch, distributor, or distributor branch offers incentives or other payments under a program that are in any part conditioned on a dealer's construction of a new facility, facility improvements, or installation of signs or other image elements, a dealer that constructed a new facility, made facility improvements, or installed signs or other image elements required or approved by the manufacturer that were completed at a cost of more than $250,000 within the preceding 10 years is deemed to be in compliance with the manufacturer's new or successor program requirements and entitled to receive all incentive or other payments awardable under the new or successor program. Removes the governance of a change in location from the cross-referenced provisions. 

    Adds to the information each motor vehicle manufacturer, factory branch, distributor or distributor branch must specify in writing to each of its licensed motor vehicle dealers pursuant to GS 20-305.1 to include the dealer's manufacturer-sponsored maintenance programs, manufacturer extended warranty, goodwill repairs, and parts exchange programs. Adds to the items to be included in the accompanying schedule of compensation to include reasonable compensation for battery disposal or other disposal charges and shipping and all other associated fees. Changes the requirements for rebutting the presumption of customary parts markup and labor rates by using rates charges by all other franchise motor vehicle dealers located in the dealer's city to town offering the same line-make vehicles, or if none exist, other same segment franchised dealers who are selling competing line-makers of vehicles within the dealer's city or town (previously referred to the dealer's market). Extends the period within which only one audit can be conducted for the following from 12 to 24 months, excluding audits for cause: for warranty or recall parts or service compensation or compensation for used motor vehicle recalls, and for sales incentives, service incentives, rebates, or other forms of incentive compensation. Changes the definition given for audits conducted for cause to include an audit based on the fact that the dealer cannot reasonably substantiate the claim either in accordance with the manufacturer's reasonable written procedures or by other reasonable means; no longer includes that the dealer's claims submissions violate reasonable claims documentation or other requirements of the applicable manufacturer, factory branch, distributor, or distributor branch. Requires a manufacturer to fully compensate a dealer for warranty or recall work and make any chargeback to the dealer's account based on the dealer's failure to comply with the manufacturer's documentation procedure(s) so long as the dealer has documented by other reasonable means. No longer allows the manufacturer to not provide compensation or chargeback when the dealer has failed to comply with the same claim documentation procedure in the previous 12 months and the manufacturer provided a written warning to the dealer in the same period. Adds audits and auditor compensation governed by subsection (b4) to the provisions of the statute of which can be petitioned and heard by the Commissioner in the event of a dispute pursuant to the provisions of subsection (c).

    Expands the definition of motor vehicle dealer under GS 20-286, applicable to Article 12, to include a person who for commission, money or value leases or offers for subscription five or more motor vehicles within any 12 consecutive months, or (2) engages in the business of leasing or offering for subscription new motor vehicles or new or used motor vehicles, or used motor vehicles only (whether or not owned by the person) and sells five or more motor vehicles within any 12 consecutive months. 

    Adds to the provisions of GS 20-305(20) regarding the confidentiality of business, financial, or personal information of new motor vehicle dealers. Prohibits a manufacturer from requiring, or including in any incentive program, a requirement that any of its motor vehicle dealers in the State provide either a financial statement more than once per calendar quarter, or an exclusive financial statement for a franchise when the dealer company operates more than one franchise. 

    Includes a severability clause.


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