71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
Senate Bill 826
Sponsored by COMMITTEE ON BUSINESS, LABOR, AND ECONOMIC
DEVELOPMENT (at the request of Oregon Automobile Dealers
Association)
CHAPTER ................
AN ACT
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
Enrolled Senate Bill 826 (SB 826-A) Page 1
(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 - }
Enrolled Senate Bill 826 (SB 826-A) Page 2
{ - (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
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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
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(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. + }
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{ - (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; + }
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(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.
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Enrolled Senate Bill 826 (SB 826-A) Page 7
Passed by Senate March 27, 2001
Repassed by Senate May 17, 2001
...........................................................
Secretary of Senate
...........................................................
President of Senate
Passed by House May 15, 2001
...........................................................
Speaker of House
Enrolled Senate Bill 826 (SB 826-A) Page 8
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled Senate Bill 826 (SB 826-A) Page 9