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§4097. Manufacturer violations


Published: 2015

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The Vermont Statutes Online



Title

09

:
Commerce and Trade






Chapter

108

:
MOTOR VEHICLE MANUFACTURERS, DISTRIBUTORS, AND DEALERS FRANCHISING











 

§

4097. Manufacturer violations

It shall be a

violation of this chapter for any manufacturer defined under this chapter:

(1) To delay,

refuse, or fail to deliver new motor vehicles or new motor vehicle parts or

accessories in a reasonable time, and in reasonable quantity relative to the

new motor vehicle dealer's facilities and sales potential in the new motor

vehicle dealer's relevant market area, after acceptance of an order from a new

motor vehicle dealer having a franchise for the retail sale of any new motor

vehicle sold or distributed by the manufacturer, any new motor vehicle, parts

or accessories to new vehicles as are covered by such franchise, if such

vehicle, parts, accessories are publicly advertised as being available for

delivery or actually being delivered. This subdivision is not violated,

however, if failure is caused by acts or causes beyond the control of the

manufacturer.

(2) To refuse to

disclose to any new motor vehicle dealer, handling the same line-make, the

manner and mode of distribution of that line-make within the State.

(3) To obtain

money, goods, service, or any other benefit from any other person with whom the

new motor vehicle dealer does business, on account of, or in relation to, the

transaction between the new motor vehicle dealer and such other person, other

than for compensation for services rendered, unless such benefit is promptly

accounted for, and transmitted to, the new motor vehicle dealer.

(4) To increase

prices of new motor vehicles which the new motor vehicle dealer had ordered for

private retail consumers prior to the new motor vehicle dealer's receipt of the

written official price increase notification. A sales contract signed by a

private retail consumer shall constitute evidence of each such order provided that

the vehicle is in fact delivered to that consumer. In the event of manufacturer

price reductions or cash rebates paid to the new motor vehicle dealer, the

amount of any reduction or rebate received by a new motor vehicle dealer shall

be passed on to the private retail consumer by the new motor vehicle dealer.

Price reductions shall apply to all vehicles in the dealer's inventory which

were subject to the price reduction. Price differences applicable to a new

model or series shall not be considered a price increase or price decrease.

Price changes caused by either the addition to a motor vehicle of required or

optional equipment; or revaluation of the United States dollar, in the case of

foreign-make vehicles or components; or an increase in transportation charges

due to increased rates imposed by common carriers shall not be subject to the

provisions of this subdivision.

(5) To offer any

refunds or other types of inducements to any person for the purchase of new

motor vehicles of a certain line or make to be sold to the State or any

political subdivision thereof without making the same offer available upon

request to all other new motor vehicle dealers in the same line-make within the

State.

(6) To release

to any outside party, except under subpoena or as otherwise required by law or

in an administrative, judicial, or arbitration proceeding involving the

manufacturer or new motor vehicle dealer, any business, financial, or personal

information which may be from time-to-time provided by the new motor vehicle dealer

to the manufacturer, without the express written consent of the new motor

vehicle dealer.

(7) To deny any

new motor vehicle dealer the right of free association with any other new motor

vehicle dealer for any lawful purpose.

(8) To compete

with a new motor vehicle dealer in the same line-make operating under an

agreement or franchise from the aforementioned manufacturer in the relevant

market area. A manufacturer shall not, however, be deemed to be competing when

operating a dealership either temporarily for a reasonable period, or in a bona

fide retail operation which is for sale to any qualified independent person at

a fair and reasonable price, or in a bona fide relationship in which an

independent person has made a significant investment subject to loss in the

dealership and can reasonably expect to acquire full ownership of the

dealership on reasonable terms and conditions.

(9) To unfairly

discriminate among its new motor vehicle dealers with respect to warranty

reimbursement.

(10) To

unreasonably withhold consent to a change in executive management or the sale,

transfer, or exchange of the franchise to a qualified buyer capable of being

licensed as a new motor vehicle dealer in this State. If a new motor vehicle

dealer desires to make a change in its executive management or ownership or to

sell its principal assets, the new motor vehicle dealer will give the

franchisor written notice of the proposed change or sale. The franchisor shall

not arbitrarily refuse to agree to such proposed change or sale and may not

disapprove or withhold approval of such change or sale unless the franchisor

can prove that:

(A) its decision

is not arbitrary; and

(B) the new

management, owner, or transferee is unfit or unqualified to be a dealer based

on the franchisor's prior written, reasonable, objective standards or

qualifications which directly relate to the prospective transferee's business

experience, moral character, and financial qualifications.

(11) To fail to

respond in writing to a request for consent as specified in subdivision (10) of

this section within 60 days of receipt of a written request on the forms, if

any, generally utilized by the manufacturer or distributor for such purposes

and containing the information required therein. Such failure to respond shall

be deemed to be consent to the request.

(12) To unfairly

prevent a new motor vehicle dealer from receiving fair and reasonable

compensation for the value of the new motor vehicle dealership.

(13) To engage

in any predatory practice or in any action or failure to act with respect to a

new motor vehicle dealer if the action or failure to act is arbitrary, in bad

faith, or discriminatory compared to similarly situated new motor vehicle

dealers.

(14) To

terminate any franchise solely because of the death or incapacity of an owner

who is not listed in the franchise as one on whose expertise and abilities the

manufacturer relied in the granting of the franchise.

(15) To require

a motor vehicle franchisee to agree to a term or condition in a franchise, or

in any lease related to the operation of the franchise or agreement ancillary

or collateral to a franchise, as a condition to the offer, grant, or renewal of

the franchise, lease, or agreement, that:

(A) requires the

motor vehicle franchisee to waive trial by jury in actions involving the motor

vehicle franchisor;

(B) specifies

the jurisdictions, venues, or tribunals in which disputes arising with respect

to the franchise, lease, or agreement shall or shall not be submitted for

resolution or otherwise prohibits a motor vehicle franchisee from bringing an

action in a particular forum otherwise available under the law of this State;

(C) requires

that disputes between the motor vehicle franchisor and motor vehicle franchisee

be submitted to arbitration or to any other binding alternate dispute

resolution procedure; provided, however, that any franchise, lease, or

agreement may authorize the submission of a dispute to arbitration or to

binding alternate dispute resolution if the motor vehicle franchisor and motor

vehicle franchisee voluntarily agree to submit the dispute to arbitration or

binding alternate dispute resolution at the time the dispute arises;

(D) provides

that in any administrative or judicial proceeding arising from any dispute with

respect to the agreements in this section that the franchisor shall be entitled

to recover its costs, reasonable attorney's fees, and other expenses of

litigation from the franchisee; or

(E) grants the

manufacturer an option to purchase the franchise, or real estate, or business

assets of the franchisee.

(16) To impose

unreasonable standards of performance or unreasonable facilities, financial,

operating, or other requirements upon a motor vehicle franchisee.

(17) To fail or

refuse to sell or offer to sell to all motor vehicle franchisees of a

line-make, all models manufactured for that line-make, or to require a motor

vehicle franchisee to do any of the following as a prerequisite to receiving a

model or series of vehicles: requiring the dealer to pay any extra fee;

requiring a dealer to execute a separate franchise agreement, purchase

unreasonable advertising displays or other materials, or relocate, expand,

improve, remodel, renovate, recondition, or alter the dealer's existing

facilities; or requiring the dealer to provide exclusive facilities. However, a

manufacturer may require reasonable improvements to the existing facility that

are necessary to accommodate special or unique features of a specific model or

line. The failure to deliver any such motor vehicle, however, shall not be

considered a violation of this section if the failure is due to a lack of

manufacturing capacity or to a strike or labor difficulty, a shortage of

materials, a freight embargo, or other cause over which the franchisor has no

control. This subdivision shall not apply to a manufacturer of a motor home.

(18) To prevent

or attempt to prevent any new motor vehicle dealer or any officer, partner, or

stockholder of any new motor vehicle dealer from transferring any part of the

interest of any of them to any other person; provided, however, that no dealer,

officer, partner, or stockholder shall have the right to sell, transfer, or

assign the franchise or power of management or control without the consent of

the manufacturer or distributor unless such consent is unreasonably withheld.

Failure to respond within 60 days of receipt of a written request and

applicable manufacturer application forms and related reasonable information

customarily required for consent to a sale, transfer, or assignment shall be

deemed consent to the request. Within 20 days of receipt of notice from the

dealer, the manufacturer shall provide the dealer with a copy of all

application forms and all other required reasonable information necessary to

evaluate the dealer's request.

(19) To provide

any term or condition in any lease or other agreement ancillary or collateral

to a franchise, which term or condition directly or indirectly violates this

title.

(20) To use a

promotional program or device or an incentive, payment, or other benefit,

whether paid at the time of sale of the new motor vehicle to the dealer or

later, that results in the sale of or offer to sell a new motor vehicle at a

lower price, including the price for vehicle transportation, than the price at

which the same model similarly equipped is offered or is available to another

dealer in the State during a similar time period. This subdivision shall not

prohibit a promotional or incentive program that is available functionally and

equally to competing dealers of the same line-make in the State.

(21)(A) To vary

the price charged to any of its franchised new motor vehicle dealers located in

this State for new motor vehicles based on:

(i) the dealer's

purchase of new facilities, supplies, tools, equipment, or other merchandise

from the manufacturer;

(ii) the

dealer's relocation, remodeling, repair, or renovation of existing dealerships

or construction of a new facility;

(iii) the

dealer's participation in training programs sponsored, endorsed, or recommended

by the manufacturer;

(iv) whether or

not the dealer offers for sale more than one line-make of new motor vehicle in

the same dealership facility;

(v) the dealer's

sales penetration, sales volume, or level of sales or customer service

satisfaction;

(vi) the

dealer's purchase of advertising materials, signage, nondiagnostic computer

hardware or software, communications devices, or furnishings; or

(vii) the

dealer's participation in used motor vehicle inspection or certification

programs sponsored or endorsed by the manufacturer.

(B) The price of

the vehicle, for purposes of this subdivision (21), shall include the

manufacturer's use of rebates, credits, or other consideration that has the

effect of causing a variance in the price of new motor vehicles offered to its

franchised dealers located in the State.

(22) To modify a

franchise during the term of the franchise or upon its renewal if the

modification substantially and adversely affects the new motor vehicle dealer's

rights, obligations, investment, or return on investment without giving 60

days' written notice of the proposed modification to the new motor vehicle

dealer unless the modification is required by law, court order, or the Board.

Within the 60-day notice period, the new motor vehicle dealer may file with the

Board and serve notice upon the manufacturer a protest requesting a

determination of whether there is good cause for permitting the proposed

modification. Multiple protests pertaining to the same proposed modification

shall be consolidated for hearing. The proposed modification shall not take

effect pending the determination of the matter. The manufacturer shall have the

burden of establishing good cause for the proposed modification. In determining

whether there is good cause for permitting a proposed modification, the Board

shall consider any relevant factors, including:

(A) the reasons

for the proposed modification;

(B) whether the

proposed modification is applied to or affects all new motor vehicle dealers in

a nondiscriminatory manner;

(C) whether the

proposed modification will have a substantial and adverse effect upon the new

motor vehicle dealer's investment or return on investment;

(D) whether the

proposed modification is in the public interest;

(E) whether the

proposed modification is necessary to the orderly and profitable distribution

of products by the manufacturer; and

(F) whether the

proposed modification is offset by other modifications beneficial to the new

motor vehicle dealer.

(23) To engage

in any action which is arbitrary, in bad faith, or unconscionable.

(24) To change

the relevant market area set forth in the franchise agreement without good

cause. For purposes of this subdivision, good cause shall include changes in

the dealer's registration pattern, demographics, customer convenience, and

geographic barriers. (Added 1981, No. 157 (Adj. Sess.), § 1, eff. April 14,

1982; amended 1989, No. 84, § 2; 2009, No. 57, § 1, eff. June 1, 2009.)