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 3299
Senate Bill 827
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.
Prohibits manufacturer, distributor or importer from selling or
leasing motor vehicles to retail customers in Oregon. Prohibits
manufacturer, distributor or importer from owning business that
sells or leases motor vehicles to retail customers in Oregon.
Creates exceptions.
A BILL FOR AN ACT
Relating to motor vehicle franchises; amending ORS 650.120 and
650.130.
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) 'Qualified vendor' means a person with a contract or
agreement to sell goods or services to a manufacturer,
distributor or importer. + }
{ - (11) - } { + (12) + } '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 - } { + paragraph + } (a), (b)
or (c) of this subsection.
{ - (12) - } { + (13) + } '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 - }
{ + 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 dealer 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 or operates or controls for no more than
two years; and
(iii) While the manufacturer, distributor or importer maintains
an ownership interest in or 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 an ownership interest in, operates or controls,
directly or indirectly, a business that is a dealer in this state
and another person has an ownership interest in, operates or
controls the business and that other person is a franchisee that:
(i) Manages the day-to-day operations and business of the
dealer;
(ii) Has made a significant capital investment in the dealer
that is subject to loss; and
(iii) Operates the dealer under a franchise through which the
person will within 15 years acquire full ownership interest in
the dealer 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 dealer in this state that sells motor vehicles with a gross
vehicle weight rating of 8,500 pounds or more.
(b) A manufacturer has an ownership interest in, operates or
controls, directly or indirectly, a business that is a dealer 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 owns, directly or indirectly, no more than
45 percent of the ownership interest in the dealer;
(B) When the manufacturer acquires an ownership interest in the
dealer, the distance from the dealership to a dealership 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
this section and ORS 650.150;
(D) The manufacturer's franchises authorize a dealer of the
single line-make to operate as many dealerships within a defined
geographic area as the dealer and manufacturer agree; and
(E) On January 1, 2000:
(i) There were no more than four dealers in this state of the
manufacturer's single line-make in the state; 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 Oregon except
to a franchisee of the manufacturer, distributor or importer. It
is not a violation of this subsection if a manufacturer,
distributor or importer sells or leases a motor vehicle to:
(a) An employee or retired employee, or a 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. + }
{ - (11) - } { + (13) + } 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. This subsection
does not apply to warranty repairs and services provided for
commercial or government fleets.
{ - (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.
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