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SENATE BILL NO. 1308
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S1308.......................................by COMMERCE AND HUMAN RESOURCES
MOTOR VEHICLES - Amends existing law to make it unlawful for any
manufacturer or distributor to sell a new motor vehicle to an Idaho
consumer, except through a licensed new motor vehicle dealer holding a
franchise for the line make of the motor vehicle; and to provide
01/26 Senate intro - 1st rdg - to printing
01/27 Rpt prt - to Com/HuRes
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
IN THE SENATE
SENATE BILL NO. 1308
BY COMMERCE AND HUMAN RESOURCES COMMITTEE
1 AN ACT
2 RELATING TO LICENSED MOTOR VEHICLE DEALERS; AMENDING SECTION 49-1613, IDAHO
3 CODE, TO MAKE IT UNLAWFUL FOR ANY MANUFACTURER OR DISTRIBUTOR TO SELL A
4 NEW MOTOR VEHICLE TO AN IDAHO CONSUMER EXCEPT THROUGH A LICENSED NEW MOTOR
5 VEHICLE DEALER HOLDING A FRANCHISE FOR THE LINE MAKE OF THE MOTOR VEHICLE
6 AND PROVIDING EXCEPTIONS; AND PROVIDING AN EFFECTIVE DATE.
7 Be It Enacted by the Legislature of the State of Idaho:
8 SECTION 1. That Section 49-1613, Idaho Code, be, and the same is hereby
9 amended to read as follows:
10 49-1613. UNLAWFUL ACTS BY LICENSEE. (1) It shall be unlawful for the
11 holder of any license issued under the provisions of this chapter to:
12 (a) Intentionally publish or circulate any advertising which is mislead-
13 ing or inaccurate in any material particular or which misrepresents any of
14 the products sold or furnished by a licensed dealer;
15 (b) Violate any of the provisions of this chapter or any of the applica-
16 ble rules;
17 (c) Knowingly purchase, sell or otherwise acquire or dispose of a stolen
19 (d) Violate any law respecting commerce in vehicles or any lawful rule
20 respecting commerce in vehicles promulgated by any licensing or regulating
21 authority now existing or hereafter created by the laws of the state;
22 (e) Engage in the business for which the dealer is licensed without at
23 all times maintaining a principal place of business;
24 (f) Engage in a type of business respecting the selling or exchanging of
25 vehicles for which he is not licensed;
26 (g) Knowingly purchase a vehicle which has an altered or removed vehicle
27 identification number plate or alter or remove a vehicle identification
28 number plate;
29 (h) Violate any provision of this title or any rules promulgated;
30 (i) Violate any provision of the federal motor vehicle safety standards,
31 federal odometer laws or regulations; or
32 (j) Display for sale, exchange, or sell any vehicle for which the vehicle
33 dealer does not hold title or consignment agreement.
34 (2) It shall be unlawful for any manufacturer or distributor to offer to
35 sell or sell, directly or indirectly, any new motor vehicle to an Idaho con-
36 sumer except through a new motor vehicle dealer holding a franchise for the
37 line make covering such motor vehicle and licensed pursuant to this chapter.
38 This subsection shall not apply to sales to the federal government, charitable
39 organizations or employees of the manufacturer.
40 (3) It shall be unlawful for any manufacturer licensed under this chapter
41 to require, attempt to require, coerce, or attempt to coerce, any new vehicle
42 dealer in this state to:
43 (a) Order or accept delivery of any new vehicle, part or accessory,
1 equipment or any other commodity not required by law which shall not have
2 been voluntarily ordered by the new vehicle dealer. This paragraph is not
3 intended to modify or supersede any terms or provisions of a franchise
4 requiring dealers to market a representative line of vehicles which the
5 manufacturer or distributor is publicly advertising.
6 (b) Order or accept delivery of any new vehicle with special features,
7 accessories or equipment not included in the list price of such vehicles
8 as publicly advertised by the manufacturer or distributor.
9 (c) Participate monetarily in an advertising campaign or contest, or to
10 purchase any promotional materials, training materials, showroom or other
11 display decorations or materials at the expense of the dealer.
12 (d) Enter into any agreement with the manufacturer or to do any other act
13 prejudicial to the dealer by threatening to terminate or cancel a fran-
14 chise or any contractual agreement existing between the dealer and the
15 manufacturer. This paragraph is not intended to preclude the manufacturer
16 or distributor from insisting on compliance with reasonable terms or pro-
17 visions of the franchise or other contractual agreement, and notice in
18 good faith to any dealer of the dealer's violation of those terms or pro-
19 visions shall not constitute a violation of the provisions of this chap-
21 (e) Change the capital structure of the dealer or the means by or through
22 which the dealer finances the operation of the dealership, provided that
23 the dealer at all times meets any reasonable capital standards determined
24 by the manufacturer in accordance with uniformly applied criteria. No
25 change in the capital structure shall cause a change in the principal man-
26 agement or have the effect of a sale of the franchise without the consent
27 of the manufacturer or distributor. Consent shall not be unreasonably
29 (f) Refrain from participation in the management of, investment in, or
30 the acquisition of any other line of new vehicle or related products. This
31 paragraph does not apply unless the dealer maintains a reasonable line of
32 credit for each make or line of new vehicle, and the dealer remains in
33 compliance with any reasonable facilities requirements of the manufac-
34 turer, and no change is made in the principal management of the dealer-
36 (g) Prospectively assent to a release, assignment, novation, waiver or
37 estoppel which would relieve any person from liability to be imposed by
38 this chapter or to require any controversy between a dealer and a manufac-
39 turer, distributor, or representatives, to be referred to any person other
40 than the duly constituted courts of the state or the United States, or to
41 the director, if that referral would be binding upon the dealer.
42 (h) Either establish or maintain exclusive facilities, personnel, or dis-
43 play space.
44 (i) Expand facilities without a written guarantee of a sufficient supply
45 of new vehicles so as to justify an expansion, in light of the market and
46 economic conditions.
47 (j) Make significant modifications to an existing dealership or to con-
48 struct a new vehicle dealership facility without providing a written guar-
49 antee of a sufficient supply of new vehicles so as to justify modification
50 or construction, in light of the market and economic conditions.
51 ( 34) It shall be unlawful for any manufacturer licensed under this chap-
52 ter to:
53 (a) Delay, refuse, or fail to deliver new vehicles or new vehicle parts
54 or accessories in a reasonable time, and in reasonable quantity relative
55 to the dealer's facilities and sales potential in the dealer's relevant
1 market area, after acceptance of an order from a dealer having a franchise
2 for the retail sale of any new vehicle sold or distributed by the manufac-
3 turer, any new vehicle, parts or accessories to new vehicles as are cov-
4 ered by the franchise, if the vehicle, parts, or accessories are publicly
5 advertised as being available for delivery or actually being delivered.
6 These provisions are not violated, however, if failure is caused by acts
7 or causes beyond the control of the manufacturer.
8 (b) Refuse to disclose to any dealer handling the same line, the manner
9 and mode of distribution of that line within the relevant market area.
10 (c) Obtain money, goods, service, or any other benefit from any other
11 person with whom the dealer does business, on account of, or in relation
12 to, the transaction between the dealer and other person, other than for
13 compensation for services rendered, unless the benefit is promptly
14 accounted for, and transmitted to the dealer.
15 (d) Increase prices of new vehicles which the dealer had ordered for con-
16 sumers prior to the dealer's receipt of the written official price
17 increase notification. A sales contract signed by a consumer shall consti-
18 tute evidence of each such order, provided that the vehicle is in fact
19 delivered to that customer. In the event of manufacturer price reductions
20 or cash rebates paid to the dealer, the amount of any reduction or rebate
21 received by a dealer shall be passed on to the private retail consumer by
22 the dealer. Price reductions shall apply to all vehicles in the dealer's
23 inventory which were subject to the price reduction. Price differences
24 applicable to new model or series shall not be considered a price increase
25 or price decrease. Price changes caused by the addition to a vehicle of
26 required or optional equipment, or revaluation of the United States dol-
27 lar, in the case of foreign-make vehicles or components, or an increase in
28 transportation charges due to increased rates imposed by a carrier, shall
29 not be subject to the provisions of this subsection.
30 (e) Release to any outside party, except under subpoena or as otherwise
31 required by law or in an administrative, judicial or arbitration proceed-
32 ing involving the manufacturer or dealer, any business, financial, or per-
33 sonal information which may be provided from time to time by the dealer to
34 the manufacturer without the express written consent of the dealer.
35 (f) Deny any dealer the right of free association with any other dealer
36 for any lawful purpose.
37 (g) Unfairly compete with a dealer in the same line make, operating under
38 an agreement or franchise from the aforementioned manufacturer, in the
39 relevant market area. A manufacturer shall not, however, be deemed to be
40 competing when operating a dealership either temporarily for a reasonable
41 period, or in a retail operation which is for sale to any qualified inde-
42 pendent person at a fair and reasonable price, or in a relationship in
43 which an independent person has made a significant investment subject to
44 loss in the dealership and can reasonably expect to acquire full ownership
45 of that dealership on reasonable terms and conditions.
46 (h) Unfairly discriminate among its dealers with respect to warranty
48 (i) Unreasonably withhold consent to the sale, transfer, or exchange of
49 the franchise to a qualified buyer capable of being licensed as a dealer
50 in this state.
51 (j) Fail to respond in writing to a request for consent as specified in
52 subsection (i) of this section within sixty (60) days of receipt of a
53 written request on the forms, if any, generally utilized by the manufac-
54 turer or distributor for those purposes and containing the required infor-
55 mation. Failure to respond shall be deemed to be consent to the request.
1 (k) Prevent or attempt to prevent, by contract or otherwise, any dealer
2 from changing the executive management control of the dealership unless
3 the manufacturer, having the burden of proof, can show that the change of
4 executive management will result in executive management or control by a
5 person or persons who are not of good moral character or who do not meet
6 reasonable, preexisting and, with consideration given to the volume of
7 sales and service of the dealership, uniformly applied minimum business
8 experience standards. Where the manufacturer rejects a proposed change in
9 executive management control, the manufacturer shall give written notice
10 of his reasons to the dealer within sixty (60) days of notice to the manu-
11 facturer by the dealer of the proposed change; otherwise, the change in
12 the executive management of the dealership shall be presumptively consid-
13 ered approved.
14 (l) Terminate, cancel or fail to renew any franchise solely because of
15 the death or incapacity of an owner who is not listed in the franchise as
16 one on whose expertise and abilities the manufacturer relied in the grant-
17 ing of the franchise.
18 (m) Prevent or attempt to prevent the dealer, by written instrument or
19 otherwise, from either receiving the fair market value of the dealership
20 in a sale transaction, or from transferring the dealership to a spouse or
21 legal heir, as specified in this chapter.
22 (n) Engage in any predatory practice or discrimination against any
24 (o) Resort to or to use any false or misleading advertisement in the con-
25 ducting of his business as a manufacturer or distributor in this state.
26 (p) Make any false or misleading statement, either directly or through
27 any agent or employee, in order to induce any dealer to enter into any
28 agreement or franchise, or to take any action which is prejudicial to that
29 dealer or his business.
30 (q) Require or coerce dealers to participate in local or national adver-
31 tising campaigns or contests or to require or coerce dealers to purchase
32 promotional or display materials.
33 ( 45) It is unlawful for any manufacturer or any officer, agent or repre-
34 sentative to coerce, or attempt to coerce, any dealer in this state to sell,
35 assign or transfer any retail installment sales contract, obtained by the
36 dealer in connection with the sale by him in this state of new vehicles, manu-
37 factured or sold by the manufacturer, to a specified finance company or class
38 of such companies, or to any other specified person, by any of the acts or
39 means set forth, namely by:
40 (a) Any statement, suggestion, promise or threat that the manufacturer
41 will, in any manner, benefit or injure the dealer, whether the statement,
42 suggestion, threat or promise is express or implied or made directly or
44 (b) Any act that will benefit or injure the dealer;
45 (c) Any contract, or any express or implied offer of contract, made
46 directly or indirectly to a dealer for handling new vehicles, on the con-
47 dition that the dealer sell, assign or transfer his retail installment
48 sales contract in this state to a specified finance company or class of
49 such companies, or to any other specified person; or
50 (d) Any express or implied statement or representation made directly or
51 indirectly that the dealer is under any obligation whatsoever to sell,
52 assign or transfer any of his retail sales contracts, in this state, on
53 new vehicles manufactured or sold by that manufacturer to a finance com-
54 pany or class of companies, or other specified person, because of any
55 relationship or affiliation between the manufacturer and a finance company
1 or companies, or a specified person or persons.
2 Any statement, threats, promises, acts, contracts or offers of contracts,
3 when the effect may be to lessen or eliminate competition or tend to create a
4 monopoly, are declared unfair trade practices and unfair methods of competi-
5 tion, against the policy of this state, and are unlawful.
6 ( 56) It is unlawful for any manufacturer or agent or employee of a manu-
7 facturer to use a written instrument, agreement, or waiver to attempt to nul-
8 lify any of the provisions of this section, and such agreement, written
9 instrument or waiver shall be null and void.
10 ( 67) It shall be unlawful, directly or indirectly, to impose unreasonable
11 restrictions on the dealer relative to the sale, transfer, right to renew,
12 termination discipline, noncompetition covenants, site control (whether by
13 sublease, collateral pledge of lease, or otherwise), right of first refusal to
14 purchase, option to purchase, compliance with subjective standards and asser-
15 tion of legal or equitable rights.
16 ( 78) The provisions of this chapter shall apply to all written franchise
17 agreements between a manufacturer and a dealer, including the franchise offer-
18 ing, the franchise agreement, sales of goods, services or advertising, leases
19 or mortgages of real or personal property, promises to pay, security inter-
20 ests, pledges, insurance contract, advertising contract, construction or
21 installation contract, servicing contracts and all other agreements where the
22 manufacturer has any direct or indirect interest.
23 SECTION 2. This act shall be in full force and effect on and after July
24 1, 2000.
STATEMENT OF PURPOSE
Relating to automobile dealers and manufacturers, this
legislation requires that all sales of newmotor vehicles
to Idaho customers must be made through a licensed Idaho
dealer. Idaho law provides protections through the dealer
franchise laws and consumer protection laws that may not
be available in transactions that are not made through a
licensed dealer. This legislation, by requiring that all
sales of new vehicles must be made through a licensed dealer,
assures that all Idaho state law protections apply to all
purchases of new vehicles.
In 1998, franchised automobile dealers had total new automobile
sales of $1.196 billion, that resulted in the receipt of $6
million in sales tax by the State cf Idaho. By assuring that
the sales tax on new vehicles continues to be collected by a
dealer, this legislation provides for the continued convenient
and cost effective collection of the tax. There is no fiscal
impact on local government as a result of this legislation.
CONTACT: Mike Brassey
Idaho Automobile Dealers Association