71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2212
Senate Bill 826
Sponsored by COMMITTEE ON BUSINESS, LABOR, AND ECONOMIC
DEVELOPMENT (at the request of Oregon Automobile Dealers
Association)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Applies motor vehicle dealership laws, including dealer's
rights to compensation upon termination of franchise, to
manufacturers, distributors and importers of motor vehicles with
gross vehicle weight rating of 8,500 pounds or more. Exempts
manufacturers, distributors and importers of motor vehicles with
gross vehicle weight rating of 8,500 pounds or more from
prohibition against warranty repairs by other than franchisee.
A BILL FOR AN ACT
Relating to motor vehicle franchises; 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) '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) 'Franchisee' means a dealer to whom a franchise is granted.
(6) 'Franchisor' means a manufacturer, distributor or importer
who grants a franchise to a dealer.
(7) { - (a) - } '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) - } '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) '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) '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) '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.
(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 controls a
business that is a dealer in this state.
(11) { + (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) + } This subsection does not apply to { + :
(A) + } Warranty repairs and services provided for commercial
or government fleets.
{ + (B) Manufacturers, distributors and importers that
manufacture, distribute or import only motor vehicles with a
gross vehicle weight rating of 8,500 pounds or more. + }
(12) 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
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 has not been materially altered, 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
under 8,500 pounds, + } 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 purchased directly from the
manufacturer, distributor or importer within two years 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.
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