Bill Summary for S 342 (2021)

Summary date: 

May 5 2021

Bill Information:

View NCGA Bill Details2021
Senate Bill 342 (Public) Filed Wednesday, March 24, 2021
AN ACT TO REVISE AND CLARIFY THE LAWS GOVERNING NEW MOTOR VEHICLE DEALER FRANCHISES.
Intro. by B. Jackson, Perry, Sawyer.

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Bill summary

Senate 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). 

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