SS/SCS/HB 575 - This act revises the franchise statutes.

MOTOR VEHICLE FRANCHISE PRACTICES ACT - Restrictions are placed on establishing or relocating a new motor vehicle dealer within the relevant market area where the same line make is already present. "Relevant market area" is defined as an area within a six mile radius of the intended site in counties with a population greater than 100,000 and within a ten mile radius in counties with a population less than 100,000. Procedures in matters before the Administrative Hearing Commission are revised. If franchisor actions require "good cause" those actions must be put on hold if the Administrative Hearing Commission determines good cause does not exist. The franchisee may seek enforcement of this decision in Circuit Court of Cole County.

The ability of the franchisor to request additional information and documents from a potential buyer or transferee of a dealership is clarified. This act also prohibits franchisors from requiring franchisees to cancel or refrain from acquiring a franchise in another line make of vehicle. Franchisors are also prohibited from refusing to sell franchisees every motor vehicle in a particular line make.

This act will prohibit franchisors from owning or operating new motor vehicle dealerships in this state except under certain circumstances. Franchisors are also prohibited from selling new motor vehicles directly to consumers in most circumstances.

This act will require franchisors to provide their franchisees with specific information regarding warranty service, including a schedule of compensation for warranty service. Franchisors are required to compensate franchisees for warranty service and claims for labor and parts must be paid within 30 days after approval. Claims will be deemed approved if not specifically disapproved within 30 days after receipt by the franchisor. Approved claims may not be charged back unless the franchisor can prove the claim fraudulent or unsubstantiated. In any event charge backs may not occur more than two years after payment of the claim. Franchisees must also be compensated for franchisor-sponsored sales or service promotion events. Claims must be approved within 30 days and paid within 10 days after approval.

This portion of the act is identical to SB 400.

RECREATIONAL VEHICLE FRANCHISE PRACTICES - Recreational motor vehicle manufacturers and dealers will continue to be bound by the terms of the Motor Vehicle Franchise Practices Act until August 1, 2002. Thereafter, they will be bound by separate provisions relating to recreational vehicles.

All manufacturers and dealers must have a written agreement. Manufacturers must designate in writing the area of sales responsibility for dealers. Sales must be in accordance with published prices, charges and terms of sale. Manufacturers may not terminate a dealer agreement without good cause and good cause is defined in the act. Grounds for and procedures for termination of a dealer are established. If an agreement is terminated the manufacturer is obligated to repurchase certain items. Procedures for a change in ownership by the dealer are established. Dealers shall have the right to designate, in writing, a member of their family as a successor for the dealership in the event the dealer is not able to continue. Conditions for warranty work are specified. Notwithstanding any agreement certain actions are prohibited. The act includes provisions for the operation of company owned stores in very limited circumstances.
CINDY KADLEC