AN ACT TO REVISE AND CLARIFY THE LAWS GOVERNING NEW MOTOR VEHICLE DEALER FRANCHISES.
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.