Chapter 216 Oregon Laws 2001
AN ACT
SB 826
Relating to motor vehicle
franchises; creating new provisions; and amending ORS 650.120, 650.130 and
650.145.
Be It Enacted by the People of the State of Oregon:
SECTION 1.
ORS 650.120 is amended to read:
650.120. For the purposes of ORS 650.120 to 650.170:
(1) “Dealer” means any person who has been issued a vehicle
dealer certificate under ORS 822.020 and pursuant to a franchise from a
manufacturer, distributor or importer engages in buying, selling, leasing or
exchanging new motor vehicles.
(2) “Dealership” means the location from which a dealer
buys, sells, leases, trades, stores, takes on consignment or in any other
manner deals in new motor vehicles.
(3)[(a)]
“Distributor” means a person who sells or distributes motor vehicles to motor
vehicle dealers.
[(b) “Distributor”
does not include a person who sells or distributes only motor vehicles with a
gross vehicle weight rating of 8,500 pounds or more.]
(4) “Fleet owner”
means a person in this state who at one time buys or leases for use in a
business:
(a) 15 or more motor
vehicles with a gross vehicle weight rating of less than 8,500 pounds; or
(b) 50 or more vehicles
with a gross vehicle weight rating of 8,500 pounds or more.
[(4)] (5) “Franchise” means a contract or
agreement under which:
(a) The franchisee is granted the right to sell, lease and
exchange new motor vehicles manufactured, distributed or imported by the
franchisor;
(b) The franchise is an independent business operating as a
component of a distribution or marketing system prescribed in substantial part
by the franchisor;
(c) The franchisee’s business is substantially associated
with the trademark, trade name, commercial symbol or advertisements designating
the franchisor or the products distributed by the franchisor;
(d) The franchisee’s business is substantially reliant on
the franchisor for a continued supply of motor vehicles, parts and accessories;
(e) The franchisee is granted the right to perform warranty
repairs authorized by the franchisor; and
(f) The franchisee is granted the right to sell, install
and exchange parts, equipment and accessories manufactured, distributed or
imported by the franchisor for use in or on motor vehicles.
[(5)] (6) “Franchisee” means a dealer to whom
a franchise is granted.
[(6)] (7) “Franchisor” means a manufacturer,
distributor or importer who grants a franchise to a dealer.
[(7)(a)] (8) “Importer” means a person who
transports or arranges for the transportation of any foreign manufactured new
motor vehicle into the United States for sale in this state.
[(b) “Importer” does
not include a person who transports or arranges for the transportation of any
foreign manufactured new motor vehicle with a gross vehicle weight rating of
8,500 pounds or more into the United States for sale in this state.]
[(8)(a)] (9) “Manufacturer” means a person who
manufactures or assembles motor vehicles or who manufactures or installs on
previously assembled truck chassis special bodies or equipment, other than
motor homes, that when installed forms an integral part of the motor vehicle
and constitutes a major manufacturing alteration and which completed unit is
owned by the manufacturer.
[(b) “Manufacturer”
does not include a person who manufactures only motor vehicles with a gross
vehicle weight rating of 8,500 pounds or more.]
[(9)] (10) “Manufacturer’s suggested retail
price” means the retail price of the new motor vehicle suggested by the
manufacturer, including the retail delivered price suggested by the
manufacturer for each accessory or item of optional equipment physically
attached to the new motor vehicle at the time of delivery to the dealer that is
not included within the retail price suggested by the manufacturer for the new
motor vehicle without the accessory or optional equipment.
[(10)] (11) “Motor home” means a motor vehicle
that is designed to provide temporary living quarters and is built into an
integral part of, or is permanently attached to, a self-propelled motor vehicle
chassis or van. The vehicle must contain permanently installed independent life
support systems and provide at least four of the following facilities:
(a) Cooking;
(b) Refrigeration or ice box;
(c) Self-contained toilet;
(d) Heating or air conditioning;
(e) A potable water supply system including a faucet and
sink; or
(f) A separate 110-120 volt electrical power supply or
liquid petroleum gas supply.
[(11) “Relevant
market area” means a circular area around an existing dealership of:]
[(a) Not less than a
10-mile radius from the dealership site;]
[(b) Not less than a
15-mile radius from the dealership site if the population is less than 250,000
within a 10-mile radius from an existing dealership and 150,000 or more within
a 15-mile radius from an existing dealership;]
[(c) Not less than a
20-mile radius from the dealership site if the population is less than 150,000
within a 15-mile radius from an existing dealership; or]
[(d) The area of
sales and service responsibility determined under the franchise agreement if
the area is larger than the area provided for in paragraphs (a), (b) or (c) of
this subsection.]
(12) “Qualified
vendor” means a person with a contract or agreement to sell goods or services
to a manufacturer, distributor or importer.
(13) “Relevant market
area” means:
(a) For a dealer
primarily of motor vehicles with a gross vehicle weight rating of less than
8,500 pounds, a circular area around an existing dealership of:
(A) Not less than a
10-mile radius from the dealership site;
(B) Not less than a
15-mile radius from the dealership site if the population is less than 250,000
within a 10-mile radius from the existing dealership and 150,000 or more within
a 15-mile radius from the existing dealership;
(C) Not less than a
20-mile radius from the dealership site if the population is less than 150,000
within a 15-mile radius from the existing dealership; or
(D) The area of sales
and service responsibility determined under the franchise agreement if the area
is larger than the areas provided for in this paragraph.
(b) For a dealer
primarily of motor vehicles with a gross vehicle weight rating of 8,500 pounds
or more, a circular area around an existing dealership of:
(A) Not less than a
25-mile radius from the dealership site; or
(B) The area of sales
and service responsibility determined under the franchise agreement if the area
is larger than the area provided for in subparagraph (A) of this paragraph.
[(12)] (14) “Replacement dealer” means any
person who, at a dealership where the former dealer was franchised by the same
manufacturer, distributor or importer, has been issued a vehicle dealer
certificate under ORS 822.020 and pursuant to a franchise from a manufacturer,
distributor or importer engages in buying, selling, leasing or exchanging new
motor vehicles.
SECTION 2.
ORS 650.130 is amended to read:
650.130. Notwithstanding the terms of any franchise or
other agreement, it shall be unlawful for any manufacturer, distributor or
importer to:
(1) Require or attempt to require a dealer to accept
delivery of any motor vehicle, part, accessory or any other commodity not
voluntarily ordered by the dealer. This subsection shall not apply to recall
safety and emissions campaign parts not voluntarily ordered by the dealer or
any vehicle features, parts, accessories or other components mandated by
federal, state or local law.
(2) Coerce or attempt to coerce a dealer to enter any
agreement or sales promotion program by threatening to cancel the franchise of
the dealer.
(3) Refuse or fail to deliver, within a reasonable time and
in a reasonable quantity, any new motor vehicle, part or accessory covered by
the franchise if the vehicle, part or accessory is advertised as being
available for delivery or is being delivered to another dealer. This subsection
is not violated, however, if a failure to deliver is the result of a cause
beyond the control of the manufacturer, distributor or importer.
(4) Prevent or attempt to prevent a dealer from making
reasonable changes in the capital structure of a dealership or the means by
which the dealership is financed, provided that the dealer meets any reasonable
capital requirement of the manufacturer, distributor or importer.
(5) Unreasonably refuse to compensate the dealer for work
or services performed and expenses incurred in accordance with the dealer’s
delivery, preparation and warranty obligations under the terms of a franchise
or agreement.
(6) Coerce or attempt to coerce a dealer to participate
monetarily in any advertising campaign or contest, or purchase any promotional
materials, display devices or display decorations or materials at the expense
of the dealer.
(7) Establish a maximum price a dealer may charge for motor
vehicles with a gross vehicle weight
rating of less than 8,500 pounds.
(8) Initiate an audit to determine the validity of paid
claims for dealer compensation or any charge-backs for warranty parts or
service compensation more than one year following the date of payment. Parties
shall cooperate to ensure that permitted audits are concluded within 90 days of
initiation.
(9) Initiate an audit to determine the validity of paid
claims for dealer compensation or any charge-backs for consumer or dealer
incentives more than two years following the date of payment. Parties shall
cooperate to ensure that permitted audits are concluded within 90 days of
initiation.
(10) Unfairly compete with a dealer in any matters governed
by the franchise including, but not limited to, the sale or allocation of
vehicles or other franchisor products, or the execution of dealer programs or
benefits. This subsection applies if the manufacturer, distributor or importer
[owns or] has an ownership interest in, operates or controls, directly or indirectly, a business
that is a dealer in this state.
(11) Have an
ownership interest in, operate or control, directly or indirectly, a business
that sells or leases a motor vehicle to a person in Oregon except to a
franchisee of the manufacturer, distributor or importer. It is not a violation
of this subsection if:
(a) A manufacturer,
distributor or importer:
(A) Has an ownership
interest in, operates or controls, directly or indirectly, a business that is a
dealership in this state and is a business that:
(i) A franchisee owned,
operated or controlled before the manufacturer, distributor or importer
acquired the ownership interest in or began to operate or control the business;
(ii) The manufacturer,
distributor or importer maintains an ownership interest in, operates or
controls for no more than two years; and
(iii) While the
manufacturer, distributor or importer maintains an ownership interest in,
operates or controls the business, the manufacturer, distributor or importer
offers the business for sale to any qualified independent person at a fair and
reasonable price.
(B) Has a part ownership
interest in, operates or controls, directly or indirectly, a business that is a
dealership in this state and another person:
(i) Manages the
day-to-day operations and business of the dealership;
(ii) Has made, or is
obligated to make within 12 months, a significant capital investment in the
dealership that is subject to loss;
(iii) Has an ownership
interest in the dealership; and
(iv) Operates the
dealership under a franchise through which the person will within 15 years
acquire full ownership of the dealership under reasonable terms and conditions.
(C) As of January 1,
2000, had an ownership interest in, operated or controlled, directly or
indirectly, a business that is a dealership in this state that sells motor
vehicles with a gross vehicle weight rating of 8,500 pounds or more.
(D) Has an ownership
interest in, operates or controls, directly or indirectly, a business that is a
dealership in this state, the primary business of which is the leasing or
renting of motor vehicles for a period of 12 months or less.
(b) A manufacturer has a
part ownership interest in, operates or controls, directly or indirectly, a
business that is a dealership in this state that buys, sells, leases, trades,
stores, takes on consignment or in any other manner deals exclusively in a single
line-make of the manufacturer and:
(A) The manufacturer
has, directly or indirectly, no more than 45 percent of the ownership interest
in the dealership;
(B) When the
manufacturer acquires an ownership interest in the dealership, the distance
from the manufacturer’s dealership to the dealership of a dealer that buys,
sells, leases, trades, stores, takes on consignment or in any other manner
deals in the single line-make of the manufacturer and in which the manufacturer
has no ownership interest is not less than 15 miles;
(C) The manufacturer
complies with the area restrictions in ORS 650.120 and 650.150;
(D) The manufacturer’s
franchises authorize a dealer of the single line-make of the manufacturer to
operate as many dealerships within a defined geographic area as the dealer and
manufacturer agree on; and
(E) On January 1, 2000:
(i) There were no more
than four dealers in the state of the manufacturer’s single line-make; and
(ii) Of the dealers in
this state of the manufacturer’s single line-make, at least one was a
franchisee that owned and operated at least two dealerships within the
geographic area authorized by franchises with the manufacturer.
(12) Sell or lease a
motor vehicle to a person in this state other than to a business described in
subsection (11) of this section or to a franchisee of the manufacturer,
distributor or importer. It is not a violation of this subsection if:
(a) The manufacturer,
distributor or importer sells or leases a motor vehicle to:
(A) An employee, retired
employee or family member of an employee or retired employee of the
manufacturer, distributor or importer;
(B) A driver training
program;
(C) A nonprofit
corporation;
(D) A qualified vendor;
(E) A public agency as
defined in ORS 537.515;
(F) A current retail
lessee;
(G) A fleet owner;
(H) A business acting as
a vehicle dealer under ORS chapter 822 that sells motor vehicles only to other
vehicle dealers; or
(I) The customers of a
business acting as a vehicle dealer under ORS chapter 822 that sells motor
vehicles only to other vehicle dealers.
(b) The sale or lease is
by a business in this state, the primary business of which is the leasing or
renting of motor vehicles for a period of 12 months or less.
[(11)] (13)(a) Own, operate or control a
business or enter into any contract, agreement or other written instrument
permitting a person that is not a dealer to be compensated by the manufacturer,
distributor or importer for performing warranty repairs and services if the
business is located within a dealer’s relevant market area.
(b) Paragraph (a) of
this subsection does not apply to:
(A) Warranty repairs and
services performed on motor vehicles
with a gross vehicle weight rating of less than 8,500 pounds provided for
commercial or government fleets[.]; or
(B) Warranty repairs and
services performed on motor vehicles with a gross vehicle weight rating of
8,500 pounds or more if, after the effective date of this 2001 Act, a
manufacturer, distributor or importer of only motor vehicles with a gross
vehicle weight rating of 8,500 pounds or more has:
(i) Obtained written
permission from the dealers in the relevant market area to perform the repairs
or services; or
(ii) Authorized the
repairs or services to be performed by a person who owns or leases the motor
vehicles for use in the person’s business.
[(12)] (14) Terminate, cancel, fail to renew
or fail to approve the sale, transfer or assignment of any franchise agreement
because the dealer owns, has an investment in, participates in the management
of or holds a franchise agreement with another manufacturer, distributor or
importer at a different dealership site, or has franchises with more than one
manufacturer, distributor or importer sharing the same dealership site,
facilities, personnel or display space before October 23, 1999.
SECTION 3.
ORS 650.145 is amended to read:
650.145. (1) Upon the termination, cancellation, nonrenewal
or discontinuance of any franchise, the dealer shall be allowed fair and
reasonable compensation by the manufacturer, distributor or importer for the
following:
(a) All new current model year motor vehicle inventory with a gross vehicle weight rating of less
than 8,500 pounds purchased from the manufacturer, distributor or importer,
which has not been materially altered, substantially damaged or driven for more
than 300 miles;
(b) All new motor vehicle inventory [not of the current model year which] that has not been materially altered[,] or substantially
damaged [or driven for more than 300
miles], provided that the [noncurrent model] vehicles:
(A) If motor vehicles
with a gross vehicle weight rating of less than 8,500 pounds, were not driven for more than 300 miles, were purchased directly from
the manufacturer, distributor or importer within 120 days of the effective date
of the termination, cancellation, nonrenewal or discontinuance and were either
paid for or drafted on the dealer’s financing source; or
(B) If motor vehicles
with a gross vehicle weight rating of 8,500 pounds or more, were not driven
more than 4,000 miles, were purchased directly from the manufacturer,
distributor or importer within one year of the effective date of the
termination, cancellation, nonrenewal or discontinuance and were either paid
for or drafted on the dealer’s financing source;
(c) Supplies and parts inventory purchased from the
manufacturer, distributor or importer and listed in the manufacturer’s,
distributor’s or importer’s current parts catalog;
(d) Equipment, furnishings and signs purchased from the
manufacturer, distributor or importer and required by the manufacturer,
distributor or importer which have not been materially altered, or
substantially damaged or depreciated over 50 percent of the original value; and
(e) Special tools purchased from the manufacturer, distributor
or importer within three years of the date of termination, cancellation,
nonrenewal or discontinuance and required by the manufacturer which have not
been materially altered, or substantially damaged or depreciated over 50
percent of the original value.
(2) “Fair and reasonable compensation” shall be the amount
originally paid by the dealer minus any incentive payments, model close-out
allowances or any other programs applicable to the vehicles.
(3) Nothing in this section is intended to modify the
manufacturer’s, distributor’s or importer’s contractual right of setoff.
(4) Upon the termination, cancellation, nonrenewal or
discontinuance of a franchise, the manufacturer, distributor or importer shall
also pay to the dealer a sum equal to the current, fair rental value of the
dealer’s established place of business for a period of one year from the
effective date of termination, cancellation, nonrenewal or discontinuance or
the remaining period of any lease, whichever is less.
(5) Subsection (4) of this section shall apply only to the
extent that the dealer’s established place of business is used for performance
of sales and service obligations under the manufacturer’s, distributor’s or
importer’s franchise agreement.
(6) In the event that termination is by the dealer, the
payment required by subsection (4) of this section is not required.
(7) This section shall not relieve a new motor vehicle
dealer, lessor or other owner of an established place of business from the
obligation of mitigating damages.
SECTION 4.
The amendments to ORS 650.120, 650.130
and 650.145 by sections 1, 2 and 3 of this 2001 Act apply to conduct occurring
on or after the effective date of this 2001 Act.
Approved by the Governor May
29, 2001
Filed in the office of
Secretary of State May 30, 2001
Effective date January 1,
2002
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