SCS/HS/HB 1603 - This act makes several changes to the relationship of dealers and manufacturers within the motor vehicle franchise law. The applicability of the vehicle franchise law is expanded to include watercraft.

RELEVANT MARKET AREA - This act establishes protections for a dealer's relevant market area (RMA). RMA is defined as either a 12 or 20 mile radius depending on whether the population of the county is over or under 300,000. Any dealer can follow an administrative complaint process when the factory wants to establish or move another dealership within his or her area (407.817). The AHC uses a list of factors to weigh the benefits of the proposed dealership. The AHC must find 7 of the 10 factors in favor of adding a dealership before it can approve.

WARRANTY REIMBURSEMENT - This act also requires the manufacturer to compensate the dealership for parts used in warranty repairs or in warranty defects within 30 days (407.825.1(17)). Audits by manufacturers for warranty compensation shall not be done more than 12 months after a claim (407.825.1(18)). Manufacturers can only deny reimbursement for warranty work and incentives based on their written guidelines (407.825.1(19)).

DUALING - Dealers may not be restricted from selling multiple line-makes of cars if certain standards are met, and may not be required to be exclusive to selling one brand. This is also known as "dualing" and "exclusivity" (407.825.1(20)).

FACTORY STORES - Section 407.923 prohibits, unless otherwise prescribed in law, the ownership of a dealership by a manufacturer. Ownership would be currently allowed in two circumstances: temporary holding while the dealership is for sale; and assisting a person who is economically disadvantaged in buying a dealership. This section would also prohibit "factory financing", where a consumer borrows from a subsidiary of the manufacturer. Certain manufacturers and rental car companies are exempted from the factory store prohibitions.

ADMINISTRATIVE PROCESS Expands time limits for the process within the Administrative Hearing Commission (AHC). A party seeking relief may file an application for a hearing, and the AHC may set a filing fee equal to the filing fee in circuit court. The AHC will then enter an order fixing a date, time and place for a hearing on the record to all parties (407.822.1). The act places a hold on any franchisor action requiring "good cause" when the action is protested by a franchisee, and the administrative law judge determines that good cause does not exist. This act allows parties to obtain discovery in the same manner as other civil actions. Appeals are provided for, and jurisdiction is Cole County.

This act also requires that new cases filed to enforce an administrative finding in circuit court be held in abeyance if the underlying judgment is on appeal (407.822.2).

MISCELLANEOUS - This act also clarifies, in section 407.822.4(2), that manufacturers must approve or deny the sale of a dealership within 60 days.

RV's are exempted from the RMA, warranty reimbursement, dualing and factory store provisions of the act.

The portions of this act pertaining to motor vehicles are similar to SS/SCS/SB 826 from 2000.

REPURCHASE OF FARM MACHINERY - The act changes the law relating to the repurchase of farm machinery upon termination of the dealer contract. The definition of farm machinery is expanded to include industrial maintenance and construction equipment as well as outdoor power equipment used for landscaping and grounds maintenance.

Current law does not extend this same repurchase requirement to repair parts with limited storage life, repair parts in undamaged packages, and single parts priced as a set of two or more items. This act includes such items for repurchase for all of the dealerships listed above.

This portion of the act is the same as SCS/SB 799 (2000).
OTTO FAJEN

SA 1 - FACTORY STORE PROHIBITIONS SHALL NOT PRECLUDE FACTORIES FROM AUCTIONING REPOSSESSED VEHICLES TO DEALERS, PROVIDING CAPITAL LOANS, LINES OF CREDIT AND MORTGAGE LOANS OR PROVIDING FINANCING THROUGH DEALERS.

SA 2 - EXCLUDES PONTOON BOATS FROM VEHICLE FRANCHISE PRACTICE REGULATION UNDER THIS ACT.

SA 8 - WHEN FACTORY ENTERS INTO A RELATIONSHIP WITH ECONOMICALLY DISADVANTAGED PERSON WHO INVESTS IN A FRANCHISE, THE INITIAL INVESTMENT OF 10 PERCENT OF THE PRICE OF THE FRANCHISE MAY BE AN ENCUMBERED INVESTMENT

SA 9 - WHEN FACTORY ENTERS INTO A RELATIONSHIP WITH ECONOMICALLY DISADVANTAGED PERSON, INITIAL INVESTMENT AND ACQUISITION PERIOD MAY BE EXPANDED FOR GOOD CAUSE, AND GOOD CAUSE NEED NOT BE SHOWN UPON LICENSURE IN THIS STATE.

SS- CONTAINS ONLY FACTORY STORE RESTRICTIONS SIMILAR TO THOSE IN THE SCS. THE SS PROHIBITS THE OWNERSHIP OF A DEALERSHIP OR WARRANTY REPAIR SHOP BY A MANUFACTURER. OWNERSHIP WOULD BE CURRENTLY ALLOWED IN TWO CIRCUMSTANCES: TEMPORARY HOLDING WHILE THE DEALERSHIP IS FOR SALE; AND ASSISTING A PERSON WHO IS ECONOMICALLY DISADVANTAGED IN BUYING A DEALERSHIP. MINORITY INTEREST OWNERSHIP IS PERMITTED IF CERTAIN CRITERIA ARE MET. THE SS PROHIBITS DIRECT SALES FROM MANUFACTURERS TO RETAIL CUSTOMERS, WITH CERTAIN EXCEPTIONS. CERTAIN MANUFACTURERS ARE EXEMPTED FROM THE FACTORY STORE PROHIBITIONS.