GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2011
S 2
SENATE BILL 438
Commerce Committee Substitute Adopted 6/2/11
Short Title: Clarify Motor Vehicle Licensing Law. |
(Public) |
|
Sponsors: |
|
|
Referred to: |
|
|
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, 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 or any manufacturer, factory branch, distributor, or distributor branch may elect to file a petition before the Commissioner for resolution of any dispute that may arise with respect to any of the rights or obligations of the dealer or of the manufacturer, factory branch, distributor, or distributor branch 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 or a manufacturer, factory branch, distributor, or distributor branch pursuant to this section shall not preclude the party filing the petition 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 total more than five thousand dollars ($5,000),
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 total more than five thousand dollars ($5,000). 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 has 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, or the use of an existing facility 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 dealership or change in the
use of the facility may only be premised upon the factual and legal bases
specifically referenced in this subdivision.subdivision or
G.S. 20-305(11), as it relates to change in the use of a facility. A
manufacturer's notice of objection which is based upon factual or legal issues
that are not specifically referenced in this subdivision or
G.S. 20-305(11) with respect to a change in the use of an existing
facility 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.relocation or change in the use of an existing
facility. 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 18 months 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 any
sales objectives which a manufacturer, factory branch, distributor, or
distributor branch shall establishes for any of its franchised
dealers in this State must be reasonable, and every manufacturer, factory
branch, distributor, or distributor branch must allocate its products within
this State 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
does all of the following:
a. Provides each of its franchised dealers in this State an adequate supply of vehicles by series, product line, and model in a fair, reasonable, and equitable manner based on each dealer's historical selling pattern and reasonable sales standards as compared to other same line-make dealers in the State.
b. Allocates an adequate supply of vehicles to each dealer by series, product line, and model for the dealer to achieve the performance standards established by the manufacturer and distributor.
c. Is fair and equitable to all of its franchised dealers in this State.
d. 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 makes available to any dealer in this State and advertises in the State as being available for purchase.
e. 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 willful or malicious 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 purchase,
lease, erect, or relocate 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. 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."
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:
…
(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 seven years at a cost of more than five hundred thousand dollars ($500,000) and the change in location or alteration was made at the written request of the manufacturer, factory branch, distributor, or distributor branch. This subdivision shall not apply to improvements required by the manufacturer which are solely necessary to conform to applicable laws and regulations for safety or health reasons or to accommodate the reasonable and necessary sales and service requirements based on the technology of a motor vehicle offered for sale by the dealer.
(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 and labor 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 parts markup rate and the average labor rate shall both 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 and labor with the practices of other franchised dealers who are selling competing line-makes of vehicles within the dealer's market. The retail rate and the average labor rate shall go into effect 30 days following the manufacturer's approval, but in no event later than 60 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 such audit, but in no event later than 60 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) 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.
(a3) 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.
(a4) 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.
…
(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 after 15 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 60 days of it becoming eligible under this subsection. For purposes of this subsection, an "automated ordering system" shall be a computerized system required by the manufacturer 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) 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, unless all of the following conditions are satisfied: (i) the customer information requested relates solely to the specific program requirements or goals associated with such manufacturer's or distributor's own vehicle makes and does not require that the dealer provide general customer information or other information related to the dealer; (ii) such requirement is lawful and would also not require the dealer to allow any customer the right to opt out under the federal Gramm-Leach-Bliley Act, 15 U.S.C., Subchapter I, § 1608, et seq.; and (iii) the dealer is not required to allow the manufacturer or distributor or any third party to have direct access to the dealer's computer system, but the dealer is instead permitted to provide the same dealer, consumer, or customer data or information specified by the manufacturer or distributor by timely obtaining and pushing or otherwise furnishing the required data in a widely accepted file format such as comma delimited in accordance with subsection (h) of this section. 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 use in accordance with the law, such customer information related solely to such manufacturer's or distributor's own vehicle makes to the extent necessary to do any of the following:
(1) Satisfy any safety or recall notice obligations.
(2) Complete the sale and delivery of a new motor vehicle to a customer.
(3) Validate and pay customer or dealer incentives.
(4) Submit to the manufacturer, factory branch, distributor, or distributor branch claims for any services supplied by the dealer for any claim for warranty parts or repairs.
At the request of a manufacturer or distributor or of a third party acting on behalf of a manufacturer or distributor, a dealer may only be required to provide customer information related solely to such manufacturer's or distributor's own vehicle makes for reasonable marketing purposes, market research, consumer surveys, market analysis, and dealership performance analysis, but the dealer is only required to provide such customer information to the extent lawfully permissible; to the extent the requested information relates solely to specific program requirements or goals associated with such manufacturer's or distributor's own vehicle makes and does not require the dealer to provide general customer information or other information related to the dealer; and to the extent the requested information can be provided without requiring that the dealer allow any customer the right to opt out under the federal Gramm-Leach-Bliley Act, 15 U.S.C., Subchapter I, § 6801, et seq.
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 specific third parties to whom any North Carolina dealer
management computer system data obtained from the dealer has actually
been provided within the 12-month period ending November 1 of the prior
year. The list shall further describe the scope and specific fields 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 actually being provided on
November 1 of each year and to whom said data has actually been provided
in the preceding 12 months and describe the scope and specific fields 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.
…
(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
that is owned or leased by the dealer, 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 or customer, shall
constitute a security breach.
…
(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 manufacturer, factory branch, distributor, distributor branch, or 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. The dealer may instead provide the same dealer, consumer, or customer data or information specified by the requesting party by timely obtaining and pushing or otherwise furnishing the requested data to the requesting party in a widely accepted file format such as comma delimited; provided that, when a dealer would otherwise be required to provide direct access to its computer system under the terms of a consent, authorization, release, novation, franchise, or other contract or agreement, a dealer that elects to provide data or information through other means may be charged a reasonable initial set-up fee and a reasonable processing fee based on the actual incremental costs incurred by the party requesting the data for establishing and implementing the process for the dealer. 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 manufacturer, factory branch, distributor, distributor branch, or 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 to the extent caused by the access, storage, maintenance, use, sharing, disclosure, or retention of such dealer's consumer or customer data or other information by the manufacturer, factory branch, distributor, distributor branch, dealer management computer system vendor, or third party acting on behalf of or through such manufacturer, factory branch, distributor, distributor branch, or dealer management computer system vendor."
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. Section 6 of this act becomes effective January 1, 2014. The remainder of the act is effective when it becomes law.