GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2011
S 1
SENATE BILL 438
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Short Title: Clarify Motor Vehicle Licensing Law. |
(Public) |
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Sponsors: |
Senators Apodaca; Allran, Atwater, Brock, East, Jenkins, Tillman, and Vaughan. |
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Referred to: |
Commerce. |
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March 29, 2011
A BILL TO BE ENTITLED
AN ACT to CLARIFY Motor VEHICLE DEALERS AND MANUFACTURERS LICENSING LAW.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 20-288(a1) reads as rewritten:
"(a1) A used motor vehicle dealer may obtain a license by filing an application, as prescribed in subsection (a) of this section, and providing the following:
(1) The required fee.
(2) Proof that the
applicant, within the last 12 months, has completed a 12-hour licensing course
approved by the Division if the applicant is seeking an initial license and a
six-hour course approved by the Division if the applicant is seeking a renewal
license. The requirements of this subdivision do not apply to a used motor
vehicle dealer the primary business of which is the sale of salvage vehicles on
behalf of insurers or to a manufactured home dealer licensed under
G.S. 143-143.11 who complies with the continuing education requirements of
G.S. 143-143.11B. The requirement of this subdivision does not apply to
persons age 62 or older as of July 1, 2002, who are seeking a renewal license.
This subdivision also does not apply to an applicant who holds a license as a
new motor vehicle dealer as defined in G.S. 20-286(13) and operates
from an established showroom one mile or less from the established showroom for
which the applicant seeks a used motor vehicle dealer license. An applicant who
also holds a license as a new motor vehicle dealer may designate a
representative to complete the licensing course required by this subdivision.
(3) If the applicant is an individual, proof that the applicant is at least 18 years of age and proof that all salespersons employed by the dealer are at least 18 years of age.
(4) The application for a dealer license plate."
SECTION 2. G.S. 20-288 is amended by adding a new subsection to read:
"(b1) The Division shall require in such license application and each application for renewal of license a certification that the applicant is familiar with the North Carolina Motor Vehicle Dealers and Manufacturers Licensing Law and with other North Carolina laws governing the conduct and operation of the business for which the license or license renewal is sought and that the applicant shall comply with the provisions of these laws, with the provisions of Article 12 of Chapter 20 of the General Statues of North Carolina, and with other lawful regulations of the Division."
SECTION 3. G.S. 20-301 is amended by adding a new subsection to read:
"(g) Notwithstanding any other statute, regulation or rule, or the existence of a pending legal or administrative proceeding in any other forum, any franchised new motor vehicle dealer may elect to file a petition before the Commissioner for resolution of any dispute that may arise with respect to any of the dealer's rights or obligations related to a franchise or franchise-related form agreement. The Commissioner shall have the authority to apply principles of law, equity, and good faith in determining such matters. The filing of a petition by a dealer pursuant to this section shall not preclude the dealer from pursuing any other form of recourse it may have, either before the Commissioner or in another form, including any damages and injunctive relief. The Commissioner shall have the authority to receive and evaluate the facts in the matter of controversy and render a decision by entering an order which shall thereafter become binding and enforceable with respect to the parties, subject to the right of review of the decision in a court of competent jurisdiction pursuant to Chapter 150B of the General Statues."
SECTION 4. G.S. 20-301.1(a) reads as rewritten:
"(a) Notwithstanding
the terms of any contract, franchise, novation, or agreement, it shall be
unlawful for any manufacturer, factory branch, distributor, or distributor
branch to charge or assess one of its franchised motor vehicle dealers located
in this State, or to charge or debit the account of the franchised motor
vehicle dealer for merchandise, tools, or equipment, or other charges
or amounts which individually or collectively total more than two
hundred fifty dollars ($250.00), other than the published cost of new motor
vehicles, and merchandise, tools, or equipment specifically ordered by the
franchised motor vehicle dealer, unless the franchised motor vehicle dealer
receives a detailed itemized description of the nature and amount of each
charge in writing at least 10 days prior to the date the charge or account
debit is to become effective or due. For purposes of this subsection, the
prior written notice is required for pursuant to this
subsection includes, but is not limited to, all charges or debits to a dealer's
account for the following charges or debits: advertising or
advertising materials; advertising or showroom displays; customer informational
materials; computer or communications hardware or software; special tools;
equipment; dealership operation guides; Internet programs; and any additional
charges or surcharges made or proposed for merchandise, tools, or equipment
previously charged to the dealer. dealer; and any other charges or
amounts which individually or collectively total more than two hundred fifty
dollars ($250.00). If the franchised new motor vehicle dealer disputes all or
any portion of an actual or proposed charge or debit to the dealer's account,
the dealer may proceed as provided in G.S. 20-301(b) and
G.S. 20-308.1. Upon the filing of a petition pursuant to
G.S. 20-301(b) or a civil action pursuant to G.S. 20-308.1, the
affected manufacturer, factory branch, distributor, or distributor branch shall
not require payment from the dealer, or debit or charge the dealer's account,
unless and until a final judgment supporting the payment or charge had been
rendered by the Commissioner or court."
SECTION 5. G.S. 20-305(4) reads as rewritten:
"(4) Notwithstanding the terms of any franchise agreement, to prevent or refuse to approve the sale or transfer of the ownership of a dealership by the sale of the business, stock transfer, or otherwise, or the transfer, sale or assignment of a dealer franchise, or a change in the executive management or principal operator of the dealership, change in use of an existing facility to provide for the sales or service of one or more additional line-makes of new motor vehicles, or relocation of the dealership to another site within the dealership's relevant market area, if the Commissioner has determined, if requested in writing by the dealer within 30 days after receipt of an objection to the proposed transfer, sale, assignment, relocation, or change, and after a hearing on the matter, that the failure to permit or honor the transfer, sale, assignment, relocation, or change is unreasonable under the circumstances. No franchise may be transferred, sold, assigned, relocated, or the executive management or principal operators changed, unless the franchisor has been given at least 30 days' prior written notice as to the proposed transferee's name and address, financial ability, and qualifications of the proposed transferee, a copy of the purchase agreement between the dealership and the proposed transferee, the identity and qualifications of the persons proposed to be involved in executive management or as principal operators, and the location and site plans of any proposed relocation or change in use of a dealership facility. The franchisor shall send the dealership and the proposed transferee notice of objection, by registered or certified mail, return receipt requested, to the proposed transfer, sale, assignment, relocation, or change within 30 days after receipt of notice from the dealer, as provided in this section. The notice of objection shall state in detail all factual and legal bases for the objection on the part of the franchisor to the proposed transfer, sale, assignment, relocation, or change that is specifically referenced in this subdivision. An objection to a proposed transfer, sale, assignment, relocation, or change in the executive management or principal operator of the dealership may only be premised upon the factual and legal bases specifically referenced in this subdivision. A manufacturer's notice of objection which is based upon factual or legal issues that are not specifically referenced in this subdivision as being issues upon which the Commissioner shall base his determination shall not be effective to preserve the franchisor's right to object to the proposed transfer sale, assignment, relocation, or change, provided the dealership or proposed transferee has submitted written notice, as required above, as to the proposed transferee's name and address, financial ability, and qualifications of the proposed transferee, a copy of the purchase agreement between the dealership and the proposed transferee, the identity and qualifications of the persons proposed to be involved in the executive management or as principal operators, and the location and site plans of any proposed relocation. Failure by the franchisor to send notice of objection within 30 days shall constitute waiver by the franchisor of any right to object to the proposed transfer, sale, assignment, relocation, or change. If the franchisor requires additional information to complete its review, the franchisor shall notify the dealership within 15 days after receipt of the proposed transferee's name and address, financial ability, and qualifications, a copy of the purchase agreement between the dealership and the proposed transferee, the identity and qualifications of the persons proposed to be involved in executive management or as principal operators, and the location and site plans of any proposed relocation or change in use of the dealership facility. If the franchisor fails to request additional information from the dealer or proposed transferee within 15 days of receipt of this initial information, the 30-day time period within which the franchisor may provide notice of objection shall be deemed to run from the initial receipt date. Otherwise, the 30-day time period within which the franchisor may provide notice of objection shall run from the date the franchisor has received the supplemental information requested from the dealer or proposed transferee; provided, however, that failure by the franchisor to send notice of objection within 60 days of the franchisor's receipt of the initial information from the dealer shall constitute waiver by the franchisor of any right to object to the proposed transfer, sale, assignment, relocation, or change. With respect to a proposed transfer of ownership, sale, or assignment, the sole issue for determination by the Commissioner and the sole issue upon which the Commissioner shall hear or consider evidence is whether, by reason of lack of good moral character, lack of general business experience, or lack of financial ability, the proposed transferee is unfit to own the dealership. For purposes of this subdivision, the refusal by the manufacturer to accept a proposed transferee who is of good moral character and who otherwise meets the written, reasonable, and uniformly applied business experience and financial requirements, if any, required by the manufacturer of owners of its franchised automobile dealerships is presumed to demonstrate the manufacturer's failure to prove that the proposed transferee is unfit to own the dealership. With respect to a proposed change in the executive management or principal operator of the dealership, the sole issue for determination by the Commissioner and the sole issue on which the Commissioner shall hear or consider evidence shall be whether, by reason of lack of training, lack of prior experience, poor past performance, or poor character, the proposed candidate for a position within the executive management or as principal operator of the dealership is unfit for the position. For purposes of this subdivision, the refusal by the manufacturer to accept a proposed candidate for executive management or as principal operator who is of good moral character and who otherwise meets the written, reasonable, and uniformly applied standards or qualifications, if any, of the manufacturer relating to the business experience and prior performance of executive management required by the manufacturers of its dealers is presumed to demonstrate the manufacturer's failure to prove the proposed candidate for executive management or as principal operator is unfit to serve the capacity. With respect to a proposed change in use of a dealership facility to provide for the sales or service of one or more additional line-makes of new motor vehicles, the sole issue for determination by the Commissioner is whether the new motor vehicle dealer has a reasonable line of credit for each make or line of motor vehicle and remains in compliance with any reasonable capital standards and facilities requirements of the manufacturer or distributor. The reasonable facilities requirements of the manufacturer or distributor shall not include any requirement that a new motor vehicle dealer establish or maintain exclusive facilities, personnel, or display space. With respect to a proposed relocation or other proposed change, the issue for determination by the Commissioner is whether the proposed relocation or other change is unreasonable under the circumstances. For purposes of this subdivision, the refusal by the manufacturer to agree to a proposed relocation which meets the written, reasonable, and uniformly applied standards or criteria, if any, of the manufacturer relating to dealer relocations is presumed to demonstrate that the manufacturer's failure to prove the proposed relocation is unreasonable under the circumstances. The manufacturer shall have the burden of proof before the Commissioner under this subdivision. It is unlawful for a manufacturer to, in any way, condition its approval of a proposed transfer, sale, assignment, change in the dealer's executive management, principal operator, or appointment of a designated successor, on the existing or proposed dealer's willingness to construct a new facility, renovate the existing facility, acquire or refrain from acquiring one or more line-makes of vehicles, separate or divest one or more line-makes of vehicle, or establish or maintain exclusive facilities, personnel, or display space. It is unlawful for a manufacturer to, in any way, condition its approval of a proposed relocation on the existing or proposed dealer's willingness to acquire or refrain from acquiring one or more line-makes of vehicles, separate or divest one or more line-makes of vehicle, or establish or maintain exclusive facilities, personnel, or display space. The opinion or determination of a franchisor that the continued existence of one of its franchised dealers situated in this State is not viable, or that the dealer holds or fails to hold licensing rights for the sale of other line-makes of vehicles in a manner consistent with the franchisor's existing or future distribution or marketing plans, shall not constitute a lawful basis for the franchisor to fail or refuse to approve a dealer's proposed change in use of a dealership facility or relocation: provided, however, that nothing contained in this subdivision shall be deemed to prevent or prohibit a franchisor from failing to approve a dealer's proposed relocation on grounds that the specific site or facility proposed by the dealer is otherwise unreasonable under the circumstances. Approval of a relocation pursuant to this subdivision shall not in itself constitute the franchisor's representation or assurance of the dealer's viability at that location."
SECTION 6. G.S. 20-305(6)d.3. reads as rewritten:
"3. In addition
to the other payments set forth in this section, if a termination,
cancellation, or nonrenewal is premised upon any of the occurrences set forth
in G.S. 20-305(6)c.1.IV., then the manufacturer or distributor shall be
liable to the dealer for an amount at least equivalent to the fair market value
of the franchise on (i) the date the franchisor announces the action which
results in termination, cancellation, or nonrenewal; or (ii) the date the
action which results in termination, cancellation, or nonrenewal first became
general knowledge; or (iii) the day 12 months 3 years prior to
the date on which the notice of termination, cancellation, or nonrenewal is
issued, whichever amount is higher. Payment is due not later than 90 days after
the manufacturer or distributor has received notice in writing from, or on
behalf of, the new motor vehicle dealer specifying the elements of compensation
requested by the dealer. If the termination, cancellation, or nonrenewal is due
to a manufacturer's change in distributors, the manufacturer may avoid paying
fair market value to the dealer if the new distributor or the manufacturer
offers the dealer a franchise agreement with terms acceptable to the
dealer."
SECTION 7. G.S. 20-305(14) reads as rewritten:
"(14) To delay, refuse, or fail to
deliver motor vehicles or motor vehicle parts or accessories in reasonable
quantities relative to the new motor vehicle dealer's facilities and sales
potential in the new motor vehicle dealer's market area as determined in
accordance with reasonably applied economic principles, or within a reasonable
time, after receipt of an order from a dealer having a franchise for the retail
sale of any new motor vehicle sold or distributed by the manufacturer or
distributor, any new vehicle, parts or accessories to new vehicles as are
covered by such franchise, and such vehicles, parts or accessories as are
publicly advertised as being available or actually being delivered. The
delivery to another dealer of a motor vehicle of the same model and similarly
equipped as the vehicle ordered by a motor vehicle dealer who has not received
delivery thereof, but who has placed his written order for the vehicle prior to
the order of the dealer receiving the vehicle, shall be evidence of a delayed
delivery of, or refusal to deliver, a new motor vehicle to a motor vehicle
dealer within a reasonable time, without cause. Except Additionally,
except as may be required by any consent decree of the Commissioner or
other order of the Commissioner or court of competent jurisdiction, each
manufacturer, factory branch, distributor, and distributor branch shall
allocate its products in a manner that provides each of its franchised
dealers in this State an adequate supply of vehicles by series, product line,
and model to achieve the manufacturer's minimum sales requirements, planning
volume, or sales objectives and that is fair and equitable to all of its
franchised dealers in this State. Additionally, each manufacturer shall make
available to each of its franchised dealers in this State a minimum of one of
each vehicle series, model, or product line that the manufacturer advertises
nationally as being available for purchase. A manufacturer shall not unfairly
discriminate among its franchised dealers in this allocation process.that:
a. Provides each of its franchised dealers in this State an adequate supply of vehicles by series, product line, and model to achieve the manufacturer's minimum sales requirements, planning volume, or sales objectives.
b. Is based on each dealer's specific allocation needs and historical selling patterns, and which provides each of its franchised dealers in this State an adequate supply of vehicles by series, product line, and model to remain economically viable.
c. Does not discriminate against a dealer because the dealer fails to relocate, update, or renovate the dealer's existing dealership facility.
d. Is fair and equitable to all of its franchised dealers in this State.
e. Makes available to each of its franchised dealers in this State a minimum of one of each vehicle series, model, or product line that the manufacturer advertises nationally as being available for purchase.
f. Does not unfairly discriminate among its franchised dealers in its allocation process.
This subsection is not violated,
however, if such failure is caused solely by acts or causes beyond
the control of the manufacturer, distributor, factory branch, or factory
representative the occurrence of temporary international, national, or
regional product shortages resulting from natural disasters, unavailability of
parts, labor strikes, product recalls, and other factors and events beyond the
control of the manufacturer that temporarily reduce a manufacturer's product
supply. The maintenance, creation, or alteration of a vehicle allocation
process or formula by a manufacturer, factory branch, distributor, or
distributor branch that is in any part designed or intended to force or coerce
a dealer in this State to close or sell the dealer's franchise, cause the dealer
financial distress, or to relocate, update, or renovate the dealer's existing
dealership facility, shall constitute an unfair and deceptive trade practice
under G.S. 75-1.1.
SECTION 8. G.S. 20-305(39) reads as rewritten:
"(39) Notwithstanding the terms, provisions, or conditions of any agreement, franchise, novation, waiver, or other written instrument, to require, coerce, or attempt to coerce any of its franchised motor vehicle dealers in this State to purchase or lease one or more signs displaying the name of the manufacturer or franchised motor vehicle dealer upon unreasonable or onerous terms or conditions or if installation of the additional signage would violate local signage or zoning laws to which the franchised motor vehicle dealer is subject. For purposes of this subdivision, if a dealer has purchased or leased such a sign within the previous 10 years, the requirement of a manufacturer or distributor that the dealer replace the sign or purchase or lease an additional sign shall be deemed unreasonable and onerous. Any term, provision, or condition of any agreement, franchise, waiver, novation, or any other written instrument which is in violation of this subdivision shall be deemed null and void and without force and effect. Any requirement by a manufacturer or distributor that a new motor vehicle dealer purchase or lease a sign in violation of this subdivision as a condition to the dealer's participation in any incentive program or contest, for a customer or dealer to receive any incentive payments otherwise earned under an incentive program or contest, for the dealer to obtain customer leads, or for the dealer to receive any other benefits, rights, merchandise, or services which the dealer would otherwise be entitled to obtain under the franchise or any other contract or agreement, or which shall customarily be provided to dealers, shall be deemed null and void and without force and effect."
SECTION 9. G.S. 20-305 is amended by adding two new subdivisions to read:
"§ 20-305. Coercing dealer to accept commodities not ordered; threatening to cancel franchise; preventing transfer of ownership; granting additional franchises; terminating franchises without good cause; preventing family succession.
It shall be unlawful for any manufacturer, factory branch, distributor, or distributor branch, or any field representative, officer, agent, or any representative whatsoever of any of them:
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(43) To require, coerce, or attempt to coerce any new motor vehicle dealer in this State to change location of the dealership, or to make any substantial alterations to the dealership premises or facilities, if the dealer has changed the location of the dealership or made substantial alterations to the dealership premises or facilities within the preceding 10 years at a cost of more than one hundred thousand dollars ($100,000) and the change in location or alteration was made at the request of or with the approval of the manufacturer, factory branch, distributor, or distributor branch.
(44) Notwithstanding the terms, provisions, or conditions of any agreement, franchise, novation, waiver, or other written instrument, to require, coerce, or attempt to coerce any of its franchised motor vehicle dealers in this State to change the principal operator, general manager, or any other manager or supervisor employed by the dealer. Any term, provision, or condition of any agreement, franchise, waiver, novation, or any other written instrument that is inconsistent with this subdivision shall be deemed null and void and without force and effect."
SECTION 10. G.S. 20-305.1 reads as rewritten:
"§ 20-305.1. Automobile dealer warranty obligations.
(a) Each motor vehicle manufacturer, factory branch, distributor or distributor branch, shall specify in writing to each of its motor vehicle dealers licensed in this State the dealer's obligations for preparation, delivery and warranty service on its products, the schedule of compensation to be paid such dealers for parts, work, and service in connection with warranty service, and the time allowances for the performance of such work and service. In no event shall such schedule of compensation fail to include reasonable compensation for diagnostic work and associated administrative requirements as well as repair service and labor. Time allowances for the performance of warranty work and service shall be reasonable and adequate for the work to be performed. The compensation which must be paid under this section must be reasonable, provided, however, that under no circumstances may the reasonable compensation under this section be in an amount less than the dealer's current retail labor rate and the amount charged to retail customers for the manufacturer's or distributor's original parts for nonwarranty work of like kind, provided such amount is competitive with other franchised dealers within the dealer's market.
(a1) The retail rate customarily charged by the dealer for parts may be established at the election of the dealer by the dealer submitting to the manufacturer or distributor 100 sequential nonwarranty customer-paid service repair orders which contain warranty-like parts, or 60 consecutive days of nonwarranty customer-paid service repair orders which contain warranty-like parts, whichever is less, covering repairs made no more than 180 days before the submission and declaring the average percentage markup. The average of the markup rate shall be presumed to be fair and reasonable, however, a manufacturer or distributor may, not later than 30 days after submission, rebut that presumption by reasonably substantiating that the rate is unfair and unreasonable in light of the practices of all other franchised motor vehicle dealers in the dealer's market offering the same line-make vehicles. In the event there are no other franchised dealers offering the same line-make of vehicle in the dealer's market, the manufacturer or distributor may compare the dealer's rate for parts with the practices of other franchised dealers who are selling competing line-makes of vehicles within the dealer's market. The retail rate shall go into effect 30 days following the declaration, subject to audit of the submitted repair orders by the manufacturer or distributor and a rebuttal of the declared rate as described above. If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the average percentage markup based on that rebuttal not later than 30 days after submission. If the dealer does not agree with the proposed average percentage markup, the dealer may file a protest with the Commissioner not later than 30 days after receipt of that proposal by the manufacturer or distributor. If such a protest is filed, the Commissioner shall inform the manufacturer or distributor that a timely protest has been filed and that a hearing will be held on such protest. In any hearing held pursuant to this subsection, the manufacturer or distributor shall have the burden of proving by a preponderance of the evidence that the rate declared by the dealer was unfair and unreasonable as described in this subsection and that the proposed adjustment of the average percentage markup is fair and reasonable pursuant to the provisions of this subsection.
(a2) The retail rate customarily charged by the dealer for labor may be established at the election of the dealer by the dealer submitting to the manufacturer or distributor all nonwarranty customer-paid service repair orders covering repairs made during the month prior to the submission and dividing the amount of the dealer's total labor sales by the number of total labor hours that generated those sales. The average labor rate shall be presumed to be fair and reasonable, provided the manufacturer or distributor may, not later than 30 days after submission, rebut such presumption by reasonably substantiating that such rate is unfair and unreasonable in light of the practices of all other franchised motor vehicle dealers in the dealer's market offering the same line-make vehicles. In the event there are no other franchised dealers offering the same line-make of vehicle in the dealer's market, the manufacturer or distributor may compare the dealer's rate with the practices of other franchised dealers who are selling competing line-makes of vehicles within the dealer's market. The average labor rate shall go into effect 30 days following the declaration, subject to the audit of the submitted repair orders by the franchisor and a rebuttal of such declared rate. If the declared rate is rebutted, the manufacturer or distributor shall propose an adjustment of the average labor rate based in such rebuttal not later than 30 days after submission. If the dealer does not agree with the proposed average labor rate, the dealer may file a protest with the Commissioner not later than 30 days after receipt of that proposal by the manufacturer or distributor. If such a protest is filed, the Commissioner shall inform the manufacturer or distributor that a timely protest has been filed and that a hearing will be held on such protest. In any hearing held pursuant to this subsection, the manufacturer or distributor shall have the burden of proving by a preponderance of the evidence that the rate declared by the dealer was unfair and unreasonable as described in this subsection and that the proposed adjustment of the average labor rate is fair and reasonable pursuant to the provisions of this subsection.
(a3) In calculating the retail rate customarily charged by the dealer for parts and labor, the following work shall not be included in the calculation:
(1) Repairs for manufacturer or distributor special events, specials, or promotional discounts for retail customer repairs;
(2) Parts sold at wholesale or at reduced or specially negotiated rates for insurance repairs;
(3) Engine assemblies and transmission assemblies;
(4) Routine maintenance not covered under warranty, such as fluids, filters, and belts not provided in the course of repairs;
(5) Nuts, bolts, fasteners, and similar items that do not have an individual part number;
(6) Tires; and
(7) Vehicle reconditioning.
(a4) If a manufacturer or distributor furnishes a part or component to a dealer, at no cost, to use in performing repairs under a recall, campaign service action, or warranty repair, the manufacturer or distributor shall compensate the dealer for the part or component in the same manner as warranty parts compensation under this section by compensating the dealer the average markup on the cost for the part or component as listed in the manufacturer's or distributor's price schedule less the cost for the part or component.
(a5) A manufacturer or distributor may not require a dealer to establish the retail rate customarily charged by the dealer for parts and labor by an unduly burdensome or time-consuming method or by requiring information that is unduly burdensome or time-consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction calculations.
(b) Notwithstanding
the terms of any franchise agreement, it is unlawful for any motor vehicle
manufacturer, factory branch, distributor, or distributor branch to fail to
perform any of its warranty obligations with respect to a motor vehicle, to
fail to fully compensate its motor vehicle dealers licensed in this State for
warranty parts other than parts used to repair the living facilities of
recreational vehicles, at the prevailing retail rate according to the factors
in subsection (a) of this section, or, in service in accordance with the
schedule of compensation provided the dealer pursuant to subsection (a) above,
or to otherwise recover all or any portion of its costs for compensating its
motor vehicle dealers licensed in this State for warranty parts and service
either by reduction in the amount due to the dealer, or by separate charge,
surcharge, or other imposition, and to fail to indemnify and hold harmless its
franchised dealers licensed in this State against any judgment for damages or
settlements agreed to by the manufacturer, including, but not limited to, court
costs and reasonable attorneys' fees of the motor vehicle dealer, arising out
of complaints, claims or lawsuits including, but not limited to, strict
liability, negligence, misrepresentation, express or implied warranty, or
recision or revocation of acceptance of the sale of a motor vehicle as defined
in G.S. 25-2-608, to the extent that the judgment or settlement relates to
the alleged defective negligent manufacture, assembly or design of new motor
vehicles, parts or accessories or other functions by the manufacturer, factory
branch, distributor or distributor branch, beyond the control of the dealer.
Any audit for warranty parts or service compensation shall only be for the 12
6-month period immediately following the date of the payment of the
claim by the manufacturer, factory branch, distributor, or distributor branch.
Any audit for sales incentives, service incentives, rebates, or other forms of
incentive compensation shall only be for the 12 6-month period
immediately following the date of the payment of the claim by the manufacturer,
factory branch, distributor, or distributor branch pursuant to a sales
incentives program, service incentives program, rebate program, or other form
of incentive compensation program. Provided, however, these limitations shall
not be effective in the case of fraudulent claims.
(b1) All claims made by motor vehicle dealers pursuant to this section for compensation for delivery, preparation, warranty and recall work including labor, parts, and other expenses, shall be paid by the manufacturer within 30 days after receipt of claim from the dealer. When any claim is disapproved, the dealer shall be notified in writing of the grounds for disapproval. Any claim not specifically disapproved in writing within 30 days after receipt shall be considered approved and payment is due immediately. No claim which has been approved and paid may be charged back to the dealer unless it can be shown that the claim was false or fraudulent, that the repairs were not properly made or were unnecessary to correct the defective condition, or the dealer failed to reasonably substantiate the claim either in accordance with the manufacturer's reasonable written procedures or by other reasonable means. A manufacturer or distributor shall not deny a claim or reduce the amount to be reimbursed to the dealer as long as the dealer has provided reasonably sufficient documentation that the dealer:
(1) Made a good faith attempt to perform the work in compliance with the written policies and procedures of the manufacturer; and
(2) Actually performed the work.
Notwithstanding the foregoing, a manufacturer shall not fail to fully compensate a dealer for warranty or recall work or make any chargeback to the dealer's account based on the dealer's failure to comply with the manufacturer's claim documentation procedure or procedures unless both of the following requirements have been met:
(1) The dealer has,
within the previous 12 6 months, failed to comply with the same
specific claim documentation procedure or procedures; and
(2) The manufacturer
has, within the previous 12 6 months, provided a written warning
to the dealer by certified United States mail, return receipt requested,
identifying the specific claim documentation procedure or procedures violated
by the dealer.
Nothing contained in this subdivision shall be deemed to prevent or prohibit a manufacturer from adopting or implementing a policy or procedure which provides or allows for the self-audit of dealers, provided, however, that if any such self-audit procedure contains provisions relating to claim documentation, such claim documentation policies or procedures shall be subject to the prohibitions and requirements contained in this subdivision. Notices sent by a manufacturer under a bona fide self-audit procedure shall be deemed sufficient notice to meet the requirements of this subsection provided that the dealer is given reasonable opportunity through self-audit to identify and correct any out-of-line procedures for a period of at least 60 days before the manufacturer conducts its own audit of the dealer warranty operations and procedures. A manufacturer may further not charge a dealer back subsequent to the payment of the claim unless a representative of the manufacturer has met in person at the dealership, or by telephone, with an officer or employee of the dealer designated by the dealer and explained in detail the basis for each of the proposed charge-backs and thereafter given the dealer's representative a reasonable opportunity at the meeting, or during the telephone call, to explain the dealer's position relating to each of the proposed charge-backs. In the event the dealer was selected for audit or review on the basis that some or all of the dealer's claims were viewed as excessive in comparison to average, mean, or aggregate data accumulated by the manufacturer, or in relation to claims submitted by a group of other franchisees of the manufacturer, the manufacturer shall, at or prior to the meeting or telephone call with the dealer's representative, provide the dealer with a written statement containing the basis or methodology upon which the dealer was selected for audit or review.
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(h) Notwithstanding the terms of any franchise agreement, it is unlawful for any motor vehicle manufacturer, factory branch, distributor, or distributor branch to deny a franchised new motor vehicle dealer the right to return any part or accessory that the dealer has not sold within 12 months where the part or accessory was not obtained through a specific order initiated by the franchised new motor vehicle dealer but instead was specified for, sold to, and shipped to the dealer pursuant to an automated ordering system, provided that such part or accessory is in the condition required for return to the manufacturer, factory branch, distributor, or distributor branch and the dealer returns the part within 90 days of it becoming eligible under this subsection. For purposes of this subsection, an "automated ordering system" shall be a computerized system that automatically specifies parts and accessories for sale and shipment to the dealer without specific order thereof initiated by the dealer. The manufacturer, factory branch, distributor, or distributor branch shall not charge a restocking or handling fee for any part or accessory being returned under this subsection."
SECTION 11. G.S. 20-305.7 reads as rewritten:
"§ 20-305.7. Protecting dealership data and consent to access dealership information.
(a) All of the data and other information collected by a new motor vehicle dealer from such dealer's customers and other consumers are the sole and exclusive property of the dealer. Except as expressly authorized in this section, no manufacturer, factory branch, distributor, or distributor branch shall require a new motor vehicle dealer to provide its customer lists, customer information, consumer contact information, transaction data, or service files. Any requirement by a manufacturer, factory branch, distributor, or distributor branch that a new motor vehicle dealer provide its customer lists, customer information, consumer contact information, transaction data, or service files as a condition to the dealer's participation in any incentive program or contest for a customer or dealer to receive any incentive payments otherwise earned under an incentive program or contest, for the dealer to obtain consumer or customer leads, or for the dealer to receive any other benefits, rights, merchandise, or services for which the dealer would otherwise be entitled to obtain under the franchise or any other contract or agreement, or which shall customarily be provided to dealers, shall be voidable at the option of the dealer. Nothing contained in this section shall limit the ability of the manufacturer, factory branch, distributor, or distributor branch to require that the dealer provide or to use in accordance with the law such customer information to the extent necessary to satisfy any safety or recall notice obligations, to complete the sale and delivery of a new motor vehicle to a customer, to validate and pay customer or dealer incentives, or for the submission to the manufacturer, factory branch, distributor, or distributor branch for any services supplied by the dealer for any claim for warranty parts or repairs. No manufacturer, factory branch, distributor, or distributor branch shall access or obtain dealer or customer data from or write dealer or customer data to a dealer management computer system utilized by a motor vehicle dealer located in this State, or require or coerce a motor vehicle dealer located in this State to utilize a particular dealer management computer system, unless the dealer management computer system allows the dealer to reasonably maintain the security, integrity, and confidentiality of the data maintained in the system. No manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of any manufacturer, factory branch, distributor, distributor branch, or dealer management computer system vendor shall prohibit a dealer from providing a means to regularly and continually monitor the specific data accessed from or written to the dealer's computer system and from complying with applicable State and federal laws and any rules or regulations promulgated thereunder. These provisions shall not be deemed to impose an obligation on a manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of any manufacturer, factory branch, distributor, distributor branch, or dealer management computer system vendor to provide such capability.
(b) No manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of any manufacturer, factory branch, distributor, distributor branch, or dealer management computer system vendor may access or utilize customer or prospect information maintained in a dealer management computer system utilized by a motor vehicle dealer located in this State for purposes of soliciting any such customer or prospect on behalf of, or directing such customer or prospect to, any other dealer. The limitations in this subsection do not apply to:
(1) A customer that requests a reference to another dealership;
(2) A customer that moves more than 60 miles away from the dealer whose data was accessed;
(3) Customer or prospect information that was provided to the dealer by the manufacturer, factory branch, distributor, or distributor branch; or
(4) Customer or prospect information obtained by the manufacturer, factory branch, distributor, or distributor branch where the dealer agrees to allow the manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of any manufacturer, factory branch, distributor, distributor branch, or dealer management computer system vendor the right to access and utilize the customer or prospect information maintained in the dealer's dealer management computer system for purposes of soliciting any customer or prospect of the dealer on behalf of, or directing such customer or prospect to, any other dealer in a separate, stand-alone written instrument dedicated solely to such authorization.
No manufacturer, factory branch, distributor, distributor
branch, dealer management computer system vendor, or any third party acting on
behalf of any manufacturer, factory branch, distributor, distributor branch, or
dealer management computer system vendor, may provide access to customer or
dealership information maintained in a dealer management computer system
utilized by a motor vehicle dealer located in this State, without first
obtaining the dealer's prior express written consent, revocable by the dealer
upon five business days written notice, to provide such access. Prior to
obtaining said consent and prior to entering into an initial contract or
renewal of a contract with a dealer located in this State, the manufacturer,
factory branch, distributor, distributor branch, dealer management computer
system vendor, or any third party acting on behalf of, or through any
manufacturer, factory branch, distributor, distributor branch, or dealer
management computer system vendor shall provide to the dealer a written list of
all third parties to whom any North Carolina dealer management computer system
data has been provided within the 12-month period ending November 1 of the
prior year. The list shall further describe the scope of the data provided. In
addition to the initial list, a dealer management computer system vendor or any
third party acting on behalf of, or through a dealer management computer system
vendor shall provide to the dealer an annual list of third parties to whom said
data is being provided on November 1 of each year and to whom said data has
been provided in the preceding 12 months and describe the scope of the data
provided. Such list shall be provided to the dealer by January 1 of each year.
Any dealer management computer system vendor's contract that directly relates
to the transfer or accessing of dealer or dealer customer information must
conspicuously state, "NOTICE TO DEALER: THIS AGREEMENT RELATES TO THE
TRANSFER AND ACCESSING OF CONFIDENTIAL INFORMATION AND CONSUMER RELATED
DATA". Such consent does not change any such person's obligations to
comply with the terms of this section and any additional State or federal laws
(and any rules or regulations promulgated thereunder) applicable to them with
respect to such access. In addition, no dealer management computer system
vendor may refuse to provide a dealer management computer system to a motor
vehicle dealer located in this State if the dealer refuses to provide any
consent under this subsection, except to the extent that consent is deemed
by the parties to be reasonably necessary in order for the vendor to provide
the system to the dealer.subsection.
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(f) The following definitions apply to this section:
(1) "Dealer
management computer system" - A computer hardware and software system
having dealer business process management modules that provide real time system,
including a dealer's use of Web applications, software, or hardware, whether
located at the dealership or provided at a remote location and that provides
access to customer records and transactions by a motor vehicle dealer located in
this State and that allow allows such motor vehicle dealer timely
information in order to sell vehicles, parts or services through such motor
vehicle dealership.
(2) "Dealer management computer system vendor" - A seller or reseller of dealer management computer systems (but only to the extent that such person is engaged in such activities).
(3) "Security
breach" - An incident of unauthorized access to and acquisition of records
or data containing dealership or dealership customer information where
unauthorized use of the dealership or dealership customer information has
occurred or is reasonably likely to occur or that creates a material risk of
harm to a dealership or a dealership's customer. Any incident of unauthorized
access to and acquisition of records or data containing dealership or
dealership customer informationinformation, or any incident of
disclosure of dealership customer information to one or more third parties
which shall not have been specifically authorized by the dealer, shall
constitute a security breach.
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(h) Notwithstanding any of the terms or provisions contained in this section or in any consent, authorization, release, novation, franchise, or other contract or agreement, whenever any manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of or through any dealer management computer system vendor requires that a new motor vehicle dealer provide any dealer, consumer, or customer data or information through direct access to a dealer's computer system, the dealer is not required to provide, and may not be required to consent to provide in any written agreement, such direct access to its computer system and may instead provide such dealer, consumer, or customer data or information as may be reasonably necessary either by timely obtaining and pushing the dealer, consumer, or customer data or information to the requesting party itself or by timely obtaining and providing the required data or other information through some other commercially reasonable medium or technology. Any term or provision contained in any consent, authorization, release, novation, franchise, or other contract or agreement which is inconsistent with any term or provision contained in this subsection shall be voidable at the option of the dealer.
(i) Notwithstanding the terms or conditions of any consent, authorization, release, novation, franchise, or other contract or agreement, every manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or any third party acting on behalf of or through any dealer management computer system vendor, having electronic access to consumer or customer data or other information in a computer system utilized by a new motor vehicle dealer, or who has otherwise been provided consumer or customer data or information by the dealer, shall fully indemnify and hold harmless any dealer from whom it has acquired such consumer or customer data or other information from all damages, costs, and expenses incurred by such dealer, including, but not limited to, judgments, settlements, fines, penalties, litigation costs, defense costs, court costs, and attorneys' fees arising out of complaints, claims, civil or administrative actions, and, to the fullest extent allowable under the law, governmental investigations and prosecutions related to the access, storage, maintenance, use, sharing, disclosure, or retention of such dealer's consumer or customer data or other information."
SECTION 12. The terms and provisions of this act shall be applicable to all current and future franchises and other agreements in existence between any new motor vehicle dealer located in this State and a manufacturer or distributor as of the effective date of this act.
SECTION 13. If any provision of this act or its application is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provisions or application, and to this end the provisions of this act are severable.
SECTION 14. This act is effective when it becomes law.