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To amend sections 4517.52, 4517.54, 4517.55, | 1 |
4517.57, and 4517.59 and to enact section | 2 |
4517.541 of the Revised Code relative to the | 3 |
termination of franchises and prohibited acts | 4 |
under the Motor Vehicle Dealers Law. | 5 |
Section 1. That sections 4517.52, 4517.54, 4517.55, 4517.57, | 6 |
and 4517.59 be amended and section 4517.541 of the Revised Code | 7 |
be enacted to read as follows: | 8 |
Sec. 4517.52. (A) Each franchisor shall fulfill warranty and | 9 |
recall obligations of repairing and servicing motor vehicles, | 10 |
including all parts and components manufactured for installation | 11 |
in any motor vehicle. | 12 |
(B) Each franchisor shall compensate each of its franchisees | 13 |
for labor and parts used to fulfill warranty and recall | 14 |
obligations of repair and servicing at rates not less than the | 15 |
rates charged by the franchisee to its retail customers for like | 16 |
service and parts for nonwarranty work. | 17 |
(C) A franchisor shall not otherwise recover its costs for | 18 |
reimbursing a franchisee for parts and labor pursuant to this | 19 |
section. | 20 |
Sec. 4517.54. (A) Notwithstanding the terms, provisions, or | 21 |
conditions of an existing franchise, no franchisor shall | 22 |
terminate, cancel, or fail to continue or renew a franchise | 23 |
except for good cause. This section governs any action or intent | 24 |
to terminate, cancel, discontinue, or not renew a franchise | 25 |
whether the franchise was entered into prior to or after the | 26 |
effective date of this amendment. | 27 |
(B) | 28 |
the Revised Code, each franchisor proposing to terminate, cancel, | 29 |
discontinue, or not renew a franchise shall send written notice by | 30 |
certified mail of the proposed action to the franchisee at such | 31 |
time as may be necessary to ensure that the notice is received no | 32 |
later than
| 33 |
date of the proposed action, or
no later than | 34 |
before the effective date of the proposed action when the proposed | 35 |
action is based upon any of the following: | 36 |
(1) Insolvency of the franchisee, or filing of any petition | 37 |
by or against the franchisee under any bankruptcy or receivership | 38 |
law; | 39 |
(2) Any unlawful business practice after written warning | 40 |
thereof; | 41 |
(3) The franchisee has ceased business operations. | 42 |
Each notice shall set forth the specific grounds for the | 43 |
proposed termination or refusal to continue or renew. | 44 |
(C) Prior to the effective date of the proposed action, a | 45 |
franchisee receiving written notice from a franchisor proposing to | 46 |
terminate, cancel, discontinue, or not renew a franchise may file | 47 |
a protest with the board against the franchisor's proposed action. | 48 |
When such a protest has been filed, the board shall inform the | 49 |
franchisor that a timely protest has been filed and that a hearing | 50 |
is required pursuant to section 4517.57 of the Revised Code. | 51 |
(D) A franchisor shall not terminate, cancel, discontinue, or | 52 |
fail to renew a franchise before the holding of a hearing on any | 53 |
protest filed under this section, or after the hearing, if the | 54 |
board determines that good cause does not exist to terminate, | 55 |
cancel, discontinue, or not renew the franchise. | 56 |
Sec. 4517.541. (A) Each franchisor proposing to terminate, | 57 |
cancel, discontinue, or not renew a franchise based upon any of | 58 |
the following shall send written notice by certified mail of the | 59 |
proposed action to the franchisee at such time as may be necessary | 60 |
to ensure that the notice is received not later than twelve months | 61 |
before the effective date of the proposed action, unless | 62 |
prohibited by law or regulation: | 63 |
(1) As a result of any change in ownership, operation, or | 64 |
control of all or any part of the business of the manufacturer, | 65 |
factory branch, distributor, or distributor branch, whether by | 66 |
sale or transfer of assets, corporate stock or other equity | 67 |
interest, assignment, merger, consolidation, combination, joint | 68 |
venture, redemption, operation of law, or otherwise; | 69 |
(2) The termination, suspension, or cessation of a part or | 70 |
all of the business operations of the manufacturer, factory | 71 |
branch, distributor, or distributor branch; | 72 |
(3) Discontinuance of the sale of a product line, series, | 73 |
brand or class of vehicles or a change in distribution system by | 74 |
the manufacturer, whether through a change in distributors or the | 75 |
manufacturer's decision to cease conducting business through a | 76 |
distributor altogether. | 77 |
(B) Each notice described in division (A) of this section | 78 |
shall set forth the specific grounds for the proposed termination, | 79 |
cancellation, or refusal to continue or renew. If the | 80 |
manufacturer fails to provide notice at least twelve months | 81 |
before the effective date of the proposed action, the | 82 |
manufacturer shall pay liquidated damages equal to the value of | 83 |
the franchise as of the date notice was required by this section. | 84 |
(C) Except as provided in division (C)(6)(c) of this section, | 85 |
upon the termination, cancellation, discontinuance, or nonrenewal | 86 |
of any franchise by the franchisor pursuant to this section, or | 87 |
upon a voluntary termination by a franchisee, the manufacturer | 88 |
shall pay fair and reasonable compensation to the new motor | 89 |
vehicle dealer for at least the following: | 90 |
(1) New motor vehicle inventory, regardless of model year, | 91 |
that has been acquired from the manufacturer or in trade from | 92 |
another motor vehicle dealer, determined as follows: | 93 |
(a) For each vehicle driven five hundred miles or less, the | 94 |
net cost; | 95 |
(b) For each vehicle driven more than five hundred miles, | 96 |
whichever of the following that applies: | 97 |
(i) Unless division (C)(1)(b)(ii) of this section applies, | 98 |
the net cost reduced by the net discount value of each vehicle; | 99 |
(ii) If the vehicle cannot be reduced by the net discount | 100 |
value, the net cost of the vehicle. | 101 |
(2) Unused, undamaged, and unsold supplies and parts | 102 |
purchased from the manufacturer or a source recommended or | 103 |
approved by the franchisor, at the new motor vehicle dealer's net | 104 |
acquisition cost, provided such supplies and parts are currently | 105 |
offered for sale by the manufacturer or distributor in its current | 106 |
parts catalogs and are in salable condition; | 107 |
(3) Equipment, signs, and furnishings that have not been | 108 |
altered or damaged and that have been required by the manufacturer | 109 |
or distributor to be purchased by the new motor vehicle dealer | 110 |
from the manufacturer or distributor, or their approved sources as | 111 |
follows: | 112 |
(a) The manufacturer shall purchase from the new motor | 113 |
vehicle dealer each undamaged sign at a fair market price, if the | 114 |
sign bears a common name, trade name, or trademark of the | 115 |
manufacturer; the manufacturer required that the dealer acquire | 116 |
the sign; and the sign was acquired by the dealer from the grantor | 117 |
or from a source approved by the manufacturer. | 118 |
(b) The manufacturer shall purchase from the new motor | 119 |
vehicle dealer at a fair market price poles or other hardware used | 120 |
to erect a sign if the manufacturer required that the sign be free | 121 |
standing and not include a trademark or trade name other than that | 122 |
of the manufacturer. | 123 |
(c) Fair market price under division (C)(3) of this section | 124 |
is rebuttably presumed to be equal to the new motor vehicle | 125 |
dealer's original cost, reduced by one-tenth of the original cost | 126 |
for each year of ownership. | 127 |
(4) Special tools that have not been altered or damaged and | 128 |
that the manufacturer or distributor required the new motor | 129 |
vehicle dealer to purchase from the manufacturer or distributor, | 130 |
or their approved sources, at whichever of the following value | 131 |
applies: | 132 |
(a) The new motor vehicle dealer's net acquisition cost, if | 133 |
the item was acquired in the twelve months immediately preceding | 134 |
the effective date of the termination, cancellation, | 135 |
discontinuance, nonrenewal, or voluntary termination; | 136 |
(b) The greater of the fair market value or seventy-five per | 137 |
cent of the new motor vehicle dealer's net acquisition cost, if | 138 |
the item was acquired more than twelve but less than twenty-four | 139 |
months immediately preceding the effective date of the | 140 |
termination, cancellation, discontinuance, nonrenewal, or | 141 |
voluntary termination; | 142 |
(c) The greater of the fair market value or fifty per cent of | 143 |
the new motor vehicle dealer's net acquisition cost, if the item | 144 |
was acquired twenty-four or more but less than thirty-six months | 145 |
immediately preceding the effective date of the termination, | 146 |
cancellation, discontinuance, nonrenewal, or voluntary | 147 |
termination; | 148 |
(d) The greater of the fair market value or twenty-five per | 149 |
cent of the new motor vehicle dealer's net acquisition cost, if | 150 |
the item was acquired thirty-six or more but less than sixty | 151 |
months immediately preceding the effective date of the | 152 |
termination, cancellation, discontinuance, nonrenewal, or | 153 |
voluntary termination; | 154 |
(e) Fair market value, if the item was acquired sixty or more | 155 |
months immediately preceding the effective date of the | 156 |
termination, cancellation, discontinuance, nonrenewal, or | 157 |
voluntary termination. | 158 |
(5) The new motor vehicle dealer's cost of handling, packing, | 159 |
loading, and transporting an item described in divisions (C)(1) to | 160 |
(4) of this section for return to the franchisor; | 161 |
(6)(a) Subject to divisions (C)(6)(b) and (c) of this | 162 |
section, fair market value of the franchise that is at least | 163 |
equivalent to the highest fair market value of the franchise on | 164 |
the following dates: | 165 |
(i) The date the manufacturer announces the action that | 166 |
results in termination, cancellation, discontinuance, nonrenewal, | 167 |
or voluntary termination; | 168 |
(ii) The date the action that results in termination, | 169 |
cancellation, discontinuance, nonrenewal, or voluntary termination | 170 |
first became general knowledge; | 171 |
(iii) The day twelve months prior to the date on which the | 172 |
notice of termination, cancellation, discontinuance, or nonrenewal | 173 |
is issued; | 174 |
(iv) The date the franchisee provides the franchisor with | 175 |
written notice of the voluntary termination. | 176 |
(b) If the termination, cancellation, discontinuance, or | 177 |
nonrenewal is due to a manufacturer's change in distributors, the | 178 |
manufacturer may avoid paying fair market value to the dealer if | 179 |
the new distributor or the manufacturer offers the dealer a | 180 |
franchise agreement with terms acceptable to the dealer. | 181 |
(c) The manufacturer is not required to pay fair market value | 182 |
of the franchise if the termination, discontinuance, nonrenewal, | 183 |
or cancellation of the franchise agreement is the result of the | 184 |
voluntary act of the new motor vehicle dealer. Notwithstanding | 185 |
the terms of any contract or agreement, any dealer's termination | 186 |
or resignation shall not be deemed to be voluntary if that | 187 |
termination or resignation occurred under the manufacturer's | 188 |
threat of termination, cancellation, discontinuance, or | 189 |
nonrenewal of the franchise. | 190 |
(D) The manufacturer shall pay the fair and reasonable | 191 |
compensation for the items described in division (C) of this | 192 |
section within thirty days after the effective date of | 193 |
termination, cancellation, discontinuance, nonrenewal, or | 194 |
voluntary termination, provided the new motor vehicle dealer | 195 |
will thereafter be able to present clear title to the property | 196 |
within a reasonable period of time. The manufacturer shall pay or | 197 |
reimburse the dealer for any costs of storing, insuring, and | 198 |
floor planning any of the property described in division (C) of | 199 |
this section from the effective date of termination until the | 200 |
date the property is transported, in addition to transportation | 201 |
charges associated with the manufacturer's repurchase | 202 |
obligations. The manufacturer shall not charge the dealer any | 203 |
handling, restocking, or other similar costs or fees associated | 204 |
with items repurchased by the manufacturer under division (C) of | 205 |
this section. | 206 |
(E) Dealership facilities assistance shall be paid as | 207 |
follows: | 208 |
(1) If the new motor vehicle dealer is leasing the dealership | 209 |
facilities from the manufacturer or a subsidiary thereof, the | 210 |
manufacturer or subsidiary shall forgive any future lease | 211 |
obligations. | 212 |
(2) Subject to division (E)(4) of this section, if the new | 213 |
motor vehicle dealer is leasing the dealership facilities from a | 214 |
lessor other than the manufacturer, the manufacturer shall pay the | 215 |
new motor vehicle dealer a sum equivalent to the rent for the | 216 |
unexpired term of the lease or two years' rent, whichever is | 217 |
less, or such longer term as is provided in the franchise | 218 |
agreement between the dealer and manufacturer. | 219 |
(3) Subject to division (E)(4) of this section, if the new | 220 |
motor vehicle dealer owns the dealership facilities, the | 221 |
manufacturer shall pay the new motor vehicle dealer a sum | 222 |
equivalent to the reasonable rental value of the dealership | 223 |
facilities for two years. | 224 |
(4) In order to be entitled to facilities assistance from the | 225 |
manufacturer as provided in divisions (E)(2) and (3) of this | 226 |
section, the new motor vehicle dealer shall mitigate damages by | 227 |
listing the dealership facilities for lease or sublease with a | 228 |
licensed real estate agent or retail industry broker within | 229 |
thirty days after the effective date of the termination of the | 230 |
franchise and thereafter by reasonably cooperating with the real | 231 |
estate agent or retail industry broker in the performance of the | 232 |
agent's or broker's duties. If the dealer is able to lease or | 233 |
sublease the dealership facilities, the dealer shall pay the | 234 |
manufacturer the net revenue received from the mitigation up to | 235 |
the total amount of facilities assistance that the dealer has | 236 |
received from the manufacturer pursuant to division (E)(2) or (3) | 237 |
of this section. | 238 |
(5) If the termination relates to fewer than all of the | 239 |
franchises operated by the new motor vehicle dealer at a single | 240 |
location, the amount of facilities assistance that the | 241 |
manufacturer is required to pay the dealer under division (E) of | 242 |
this section shall be based on the proportion of gross revenue | 243 |
received from the sale and lease of new vehicles by the dealer and | 244 |
from the dealer's parts and service operations during the three | 245 |
years immediately preceding the effective date of the termination, | 246 |
or any shorter period that the dealer may have held these | 247 |
franchises, of the line-makes being terminated, in relation to the | 248 |
gross revenue received from the sale and lease of all line-makes | 249 |
of new vehicles by the dealer and from the total of the dealer's | 250 |
and parts and service operations from this location during the | 251 |
same three-year period. | 252 |
(6) The manufacturer shall pay the dealership facilities | 253 |
assistance under division (E) of this section within thirty days | 254 |
after the effective date of termination, cancellation, | 255 |
discontinuance, or nonrenewal. | 256 |
(7) The manufacturer is not required to pay dealership | 257 |
facilities assistance if the termination, discontinuance, | 258 |
nonrenewal, or cancellation of the franchise agreement is the | 259 |
result of the voluntary act of the new motor vehicle dealer. | 260 |
Notwithstanding the terms of any contract or agreement, any | 261 |
dealer's termination or resignation shall not be deemed to be | 262 |
voluntary if that termination or resignation occurred under the | 263 |
manufacturer's threat of termination, cancellation, | 264 |
discontinuance, or nonrenewal of the franchise. | 265 |
(F) A franchise shall continue in full force and operation | 266 |
notwithstanding a change, in whole or in part, of an established | 267 |
plan of distribution or system of distribution of the motor | 268 |
vehicles offered for sale under the franchise. The appointment of | 269 |
a new manufacturer, factory branch, distributor, or distributor | 270 |
branch for motor vehicles offered for sale under the franchise | 271 |
agreement shall be considered to be a change of an established | 272 |
plan of distribution or system of distribution. | 273 |
(G) Disputes arising between a manufacturer or distributor | 274 |
and a new motor vehicle dealer under this section shall be | 275 |
resolved by a court of competent jurisdiction and not by the motor | 276 |
vehicle dealers board. | 277 |
(H) Nothing in this section shall be construed as prohibiting | 278 |
a manufacturer or distributor from changing, adding or deleting | 279 |
models, specifications, model names, numbers or identifying marks, | 280 |
or similar characteristics of the new vehicles it markets, | 281 |
provided that the change, addition, or deletion does not result in | 282 |
the termination or discontinuance of a distinct series, line, | 283 |
brand, or class of new vehicle. | 284 |
(I) As used in this section: | 285 |
(1) "Discontinuation of a product line, series, brand, or | 286 |
class" includes a reduction in products manufactured or made | 287 |
available for sale through a new motor vehicle that results in a | 288 |
substantial impairment of the viability of the franchise. | 289 |
(2) "Net cost" means the franchised dealer cost for a new and | 290 |
unsold motor vehicle in a dealer's inventory plus any charges by | 291 |
the manufacturer or distributor for destination, distribution, or | 292 |
delivery, and taxes, less all allowances paid or credited to the | 293 |
franchised dealer by the manufacturer or distributor, and less an | 294 |
amount equal to the diminution in wholesale value caused by | 295 |
damages to the new motor vehicle before the motor vehicle dealer | 296 |
delivers the new motor vehicle to the manufacturer. | 297 |
(3) "Net discount value" is the net cost multiplied by the | 298 |
total mileage, exclusive of mileage placed on the motor vehicle | 299 |
before it was delivered to a dealer, divided by one hundred | 300 |
thousand. | 301 |
(4) "Product line" is a line-make produced by a manufacturer. | 302 |
Sec. 4517.55. (A) In determining whether good cause has been | 303 |
established by the franchisor for terminating, cancelling, or | 304 |
failing to continue or renew a franchise, the motor vehicle | 305 |
dealers board shall take into consideration the existing | 306 |
circumstances, including, but not limited to: | 307 |
(1) The amount of retail sales transacted by the franchisee | 308 |
during a five-year period immediately preceding such notice as | 309 |
compared to the business available to the franchisee; | 310 |
(2) The investment necessarily made and obligations incurred | 311 |
by the franchisee to perform its part of the franchise; | 312 |
(3) The permanency of the franchisee's investment; | 313 |
(4) Whether it is injurious or beneficial to the public | 314 |
interest for the franchise to be modified or replaced, or the | 315 |
business of the franchisee disrupted; | 316 |
(5) Whether the franchisee has adequate motor vehicle sales | 317 |
and service facilities, equipment, vehicle parts, and qualified | 318 |
service personnel to reasonably provide for the needs of the | 319 |
consumers for the motor vehicles handled by the franchisee, and is | 320 |
rendering adequate service to the public; | 321 |
(6) Whether the franchisee fails to fulfill the warranty | 322 |
obligations of the franchisor required to be performed by the | 323 |
franchisee; | 324 |
(7) The extent and materiality of the franchisee's failure to | 325 |
comply with the terms of the franchise and the reasonableness and | 326 |
fairness of the franchise terms; | 327 |
(8) Whether the owners of the new motor vehicle dealer had | 328 |
actual knowledge of the facts and circumstances upon which | 329 |
termination is based; | 330 |
(9) Whether the proposed termination constitutes | 331 |
discriminatory enforcement of the franchise agreement. | 332 |
(B) Notwithstanding the terms, conditions, or provisions of | 333 |
any franchise or waiver, the following do not constitute | 334 |
sufficient good cause for terminating, cancelling, or failing to | 335 |
continue or renew a franchise: | 336 |
(1) Refusal by the franchisee to purchase or accept delivery | 337 |
of any new motor vehicle, parts, accessories, or any other | 338 |
commodity or service not ordered by the franchisee; | 339 |
(2) The fact that the franchisee or the owner of any interest | 340 |
therein, owns, has an investment in, participates in the | 341 |
management of, or holds a license for the sale of the same or any | 342 |
other line-make of new motor vehicle; | 343 |
(3) The sale, transfer, or issuance of any equity or | 344 |
debenture issue, or the transfer or issuance of any security or | 345 |
shares of stock in a new motor vehicle dealer to any person, | 346 |
whenever the sale, issuance, or transfer does not result in a | 347 |
change in the controlling ownership of the dealership; | 348 |
(4) A change by the franchisee in the administrative or | 349 |
executive management of the dealership; | 350 |
(5) Failure of the franchisee to achieve any unreasonable or | 351 |
discriminatory performance criteria; | 352 |
(6) A loss of trust by the franchisor absent circumstances or | 353 |
facts that would be a material breach of the franchise agreement | 354 |
and that material breach is known and ratified by the owners of | 355 |
the new motor vehicle dealer; | 356 |
(7) A change, in whole or in part, of an established plan of | 357 |
distribution or system of distribution of the motor vehicles | 358 |
offered for sale under the franchise. The appointment of a new | 359 |
manufacturer, factory branch, distributor, or distributor branch | 360 |
for motor vehicles offered for sale under the franchise agreement | 361 |
shall be considered to be a change of an established plan or | 362 |
system of distribution. | 363 |
(8) A change in ownership, operation, or control of all or | 364 |
any part of the business of the manufacturer, factory branch, | 365 |
distributor, or distributor branch whether by sale or transfer of | 366 |
assets, corporate stock or other equity interest, assignment, | 367 |
merger, consolidation, combination, joint venture, redemption, | 368 |
operation of law or otherwise; | 369 |
(9) The termination, suspension, or cessation of a part or | 370 |
all of the business operations of the manufacturer, factory | 371 |
branch, distributor, or distributor branch; | 372 |
(10) Discontinuance of the sale of the product line or a | 373 |
change in distribution system by the manufacturer whether through | 374 |
a change in distributors or the manufacturer's decision to cease | 375 |
conducting business through a distributor altogether; | 376 |
(11) The failure of a franchisee to maintain a motor vehicle | 377 |
floor plan line of credit, unless the franchisee fails to maintain | 378 |
a floor plan line of credit for one hundred twenty days or longer; | 379 |
(12) The export of new motor vehicles to a foreign country, | 380 |
absent evidence that the dealer had actual knowledge that the | 381 |
vehicle was purchased for export. There shall be a rebuttable | 382 |
presumption that a dealer does not have actual knowledge that a | 383 |
vehicle was purchased for export if the vehicle is titled in the | 384 |
United States. | 385 |
Sec. 4517.57. (A) Upon receiving a notice of protest | 386 |
pursuant to section 4517.50, 4517.53, 4517.54, or 4517.56 of the | 387 |
Revised Code, the motor vehicle dealers board shall set a time, | 388 |
which shall be within one hundred eighty days of such order, and | 389 |
place of hearing and send by certified mail a copy of the order to | 390 |
the franchisor, the protesting franchisee or dealer organization, | 391 |
and all individuals and groups that have requested notification by | 392 |
the board of protests to and decisions of the board. Subject to | 393 |
sections 119.01 to 119.13 of the Revised Code, the board shall | 394 |
designate an attorney at law as a hearing officer, who shall hear | 395 |
and consider the oral and documented evidence introduced by the | 396 |
parties and other interested
individuals and groups, and issue | 397 |
findings and recommendations to the board within thirty days | 398 |
following the close of the hearing. | 399 |
(B) The parties may engage in discovery, prior to the | 400 |
hearing, in accordance with the Rules of Civil Procedure. The | 401 |
hearing examiner may continue the hearing date, beyond one hundred | 402 |
eighty days of the board's order, by agreement of the parties, or | 403 |
upon a finding of good cause, including but not limited to the | 404 |
failure of either party to allow relevant discovery. | 405 |
(C) In any hearing on a protest filed pursuant to section | 406 |
4517.50, 4517.53, 4517.54, or 4517.56 of the Revised Code, the | 407 |
franchisor shall have the burden of going forward and of | 408 |
persuasion to establish that there is good cause for the | 409 |
franchisor: to establish or relocate an additional motor vehicle | 410 |
dealer; to terminate, cancel, discontinue, or not renew a | 411 |
franchise; to fail or refuse to approve a sale or transfer of all | 412 |
or a controlling interest in a franchise; or that recall | 413 |
reimbursement schedules or formulas or the schedules of | 414 |
compensation are reasonable. | 415 |
(D) Only the public members of the board and the hearing | 416 |
officer designated by the board shall participate in, deliberate | 417 |
on, hear, consider, or decide any matter filed pursuant to section | 418 |
4517.50, 4517.53, 4517.54, or 4517.56 of the Revised Code. The | 419 |
public members shall act by majority vote. | 420 |
(E) In any hearing filed under section 4517.50, 4517.53, | 421 |
4517.54, or 4517.56 of the Revised Code, the hearing officer shall | 422 |
permit the parties of cross examination. | 423 |
(F) In any hearing on a protest filed pursuant to section | 424 |
4517.54 of the Revised Code, the board shall hear evidence | 425 |
concerning only the grounds set forth in the franchisor's written | 426 |
notice proposing to terminate, cancel, discontinue, or not renew | 427 |
the franchise sent in accordance with that section. | 428 |
In any hearing or appeal relating to a protest filed pursuant | 429 |
to section 4517.54 of the Revised Code, the board or court shall | 430 |
prohibit the franchisor from offering evidence concerning any | 431 |
grounds not set forth in the notice proposing to terminate, | 432 |
cancel, discontinue, or not renew the franchise sent in | 433 |
accordance with that section. | 434 |
Sec. 4517.59. (A) Notwithstanding the terms, provisions, or | 435 |
conditions of any agreement, franchise, or waiver, no franchisor | 436 |
shall: | 437 |
| 438 |
provisions, or conditions of a franchise or in terminating, | 439 |
canceling, or failing to renew a franchise, fail to act in good | 440 |
faith; | 441 |
| 442 |
executive management, provided such personnel satisfy reasonable | 443 |
and objective standards formulated and objectively applied by the | 444 |
franchisor; | 445 |
| 446 |
the transfer of any securities in a dealership, or in any way | 447 |
prevent or attempt to prevent the transfer, sale, or issuance of | 448 |
shares of stock or debentures to any person, if the basic | 449 |
financial requirements of the franchisor have been equalled at the | 450 |
time of the execution of the franchise agreement and continued in | 451 |
effect, and if the sale, transfer, or issuance does not have the | 452 |
effect of accomplishing a sale of a controlling interest in the | 453 |
dealership; | 454 |
| 455 |
failing to renew or extend a lease of premises where the fee or | 456 |
right of possession is in the absolute control of the franchisor | 457 |
and the franchisee upon request or demand of the franchisor fails | 458 |
to expand its facilities, increase sales personnel, purchase more | 459 |
parts or accept programs for sales and operation of the | 460 |
franchisee's business, when such demand is not reasonable, fair, | 461 |
and equitable under all circumstances, or tends to depreciate the | 462 |
franchisee's equity; | 463 |
| 464 |
vehicles, or render any service normally performed and required of | 465 |
franchisees
under the franchise agreement with the franchisor, | 466 |
467 | |
indirectly, or in combination with or through any person, | 468 |
subsidiary, or affiliated entity, except that this division does | 469 |
not apply to a sale, lease, or rental to, or service performed | 470 |
for, an agency of federal, state, or local government | 471 |
division (A)(5) of this section shall prohibit a franchisor from | 472 |
operating a dealership for a time limited to that which is | 473 |
required to wind up all transactions in instances in which a | 474 |
franchisee has been terminated or voluntarily relinquishes its | 475 |
franchise. | 476 |
| 477 |
delivery of any motor vehicle, parts, accessories, or any other | 478 |
commodities connected therewith which are not ordered by said | 479 |
franchisee; nor withhold or delay delivery of motor vehicles out | 480 |
of the ordinary course of business; nor discriminate against any | 481 |
franchisee in the allocation or through the withholding from | 482 |
delivery of certain models of motor vehicles ordered by a | 483 |
franchisee out of the ordinary course of business; nor unfairly | 484 |
change or amend unilaterally a franchisee's allotment of motor | 485 |
vehicles or quota | 486 |
penetration without reasonable cause; nor coerce a franchisee by | 487 |
any means to participate or contribute to any local or national | 488 |
advertising fund; nor employ any coercive techniques for any other | 489 |
purposes such as obtaining franchisee participation in contests, | 490 |
"giveaways," or other sales devices; | 491 |
| 492 |
threatening to award an additional franchise or agreement to | 493 |
another person for the sale of its same product in the same area | 494 |
of influence for the purposes of compelling such franchisee to | 495 |
yield to demands of the franchisor for increased sales of the | 496 |
franchisor's products, parts, expansion of facilities and | 497 |
improvement of operations inconsistent with good business | 498 |
practices of the franchisee; | 499 |
| 500 |
line-make franchisees all motor vehicles, motor vehicle parts, or | 501 |
other products manufactured for that line-make at the same price, | 502 |
including discounts, rebates, incentives, or other payments or | 503 |
allowances affecting the net price. A franchisor has not made a | 504 |
motor vehicle, motor vehicle part, or other product available to | 505 |
all line-make franchisees if the franchisor does any of the | 506 |
following: | 507 |
(a) Requires a franchisee to remodel, renovate, or | 508 |
recondition the dealer's existing dealership facilities as a | 509 |
prerequisite to receiving the model, part, or product. As used in | 510 |
division (A)(8) of this section, "remodel, renovate, and | 511 |
recondition" includes the requirement that a franchisee purchase | 512 |
or lease unreasonably expensive advertising or promotional | 513 |
displays or other similar materials. | 514 |
(b) Requires a franchisee to pay an additional fee to receive | 515 |
any model, part, or product within a franchisor's line-make; | 516 |
(c) Requires a franchisee to accept additional inventory to | 517 |
receive any model, part, or product within a franchisor's | 518 |
line-make. | 519 |
(9) Fail to either return a part to the franchisee, at the | 520 |
franchisor's expense, or reimburse the franchisee for the | 521 |
franchisee's cost of the part where a franchisor does not approve | 522 |
a franchisee's claim for a defective part; | 523 |
| 524 |
claim submitted by a franchisee within forty-five days after | 525 |
receipt from the franchisee. If a claim is not approved, the | 526 |
franchisor shall immediately so notify in writing the franchisee | 527 |
who submitted the claim and shall include in the notice the | 528 |
specific grounds upon which the disapproval is based. | 529 |
| 530 |
approval by the franchisor of any claim by a franchisee for labor | 531 |
and parts made under | 532 |
section 4517.53 of the Revised Code. Any failure of a franchisor | 533 |
to act on or pay a claim within the time limits specified by this | 534 |
section that results from causes beyond the franchisor's | 535 |
reasonable control does not constitute a violation of this | 536 |
section. | 537 |
| 538 |
because the franchisee fails to submit or resubmit the claim | 539 |
within a period of less than six months from the date on which the | 540 |
service was rendered or parts supplied; | 541 |
| 542 |
or entity for labor and parts used to fulfill warranty and recall | 543 |
work; | 544 |
(14) Directly sell, distribute, or otherwise make available | 545 |
to any nonfranchised individual or entity any original equipment | 546 |
manufacturer motor vehicle parts, accessories, or other | 547 |
commodities that would otherwise be sold by a franchised dealer; | 548 |
(15) Refuse to disclose to any new motor vehicle dealer who | 549 |
handles the same line-make, the manner and mode of distribution of | 550 |
that line-make, the allocation by segment of that line-make, and | 551 |
the number of units allocated by that line-make to other same | 552 |
line-make dealers within the same county and all contiguous | 553 |
counties for the previous five years; | 554 |
| 555 |
against any new motor vehicle dealer including discriminating | 556 |
against a franchisee, as compared to a same line-make franchisee, | 557 |
with regard to motor vehicle allocation, motor vehicle sales | 558 |
expectations, motor vehicle market penetration, motor vehicle | 559 |
planning volume requirements, customer service satisfaction | 560 |
requirements, dealership facility requirements, or dealer | 561 |
capitalization requirements; | 562 |
| 563 |
conjunction with the franchise of another line-make of new motor | 564 |
vehicles at the same address and in the same dealership facility | 565 |
building; | 566 |
(18) Prohibit a franchisee from operating a franchise of the | 567 |
same line-make of new motor vehicles at two or more locations | 568 |
regardless of whether the markets served by the locations are | 569 |
contiguous; | 570 |
(19) Use any financial services company or leasing company | 571 |
owned in whole or part or controlled by the manufacturer or | 572 |
distributor to accomplish what would otherwise be illegal conduct | 573 |
on the part of the manufacturer or distributor pursuant to this | 574 |
section. This section does not limit the right of the financial | 575 |
services or leasing company to otherwise engage in regular | 576 |
financial services or leasing business practices. | 577 |
(20) Initiate a charge back without an audit or perform an | 578 |
audit to confirm a warranty repair, sales incentive, or rebate | 579 |
more than six months after the date of the repair or purchase, | 580 |
provided that these limitations shall not be effective in the case | 581 |
of a fraudulent claim; | 582 |
(21) Refuse to pay a franchisee for sales incentives, service | 583 |
incentives, rebates, or other forms of incentive compensation, | 584 |
reduce the amount to be paid to the dealer, or charge a dealer | 585 |
back subsequent to the payment of the claim unless it can be shown | 586 |
that any of the following apply: | 587 |
(a) The claim was false or fraudulent. | 588 |
(b) The repairs were not properly made or were unnecessary to | 589 |
correct the defective condition. | 590 |
(c) The dealer failed to reasonably substantiate the claim in | 591 |
accordance with the written requirements of the manufacturer in | 592 |
effect at the time the claim arose. | 593 |
(d) The dealer, with intent to do so, sold a new motor | 594 |
vehicle for export to a foreign country. There shall exist a | 595 |
rebuttable presumption that a dealer does not intend to export a | 596 |
vehicle to a foreign country if the motor vehicle is titled in the | 597 |
United States. | 598 |
No refusal to pay sales incentives, service incentives, | 599 |
rebates, or other forms of incentive compensation, no reduction in | 600 |
the amount to be paid to the dealer, and no charge back subsequent | 601 |
to the payment of a claim may be made until the dealer has had | 602 |
notice and an opportunity to participate in all franchisor | 603 |
internal appeal processes as well as all available legal | 604 |
processes. If a charge back is the subject of adjudication, | 605 |
internal appeal, mediation, or arbitration, no charge back shall | 606 |
be made until, in the case of an adjudication or legal action, a | 607 |
final appealable order has been issued. | 608 |
No otherwise valid reimbursement claims shall be denied, | 609 |
delayed, or restricted once properly submitted within | 610 |
manufacturers' submission guidelines unless the denial, delay, or | 611 |
restriction is the direct result of a material defect in the claim | 612 |
that affects the claim's validity. At the time submitted, the | 613 |
claim shall act as an immediate automatic credit against future | 614 |
billings. Clerical errors or omissions or a different level of | 615 |
technician technical certification or the dealer's failure to | 616 |
subscribe to any manufacturer's computerized training programs are | 617 |
not material defects. Any ambiguity or inconsistency in submission | 618 |
guidelines shall be construed against the drafter. Any failure by | 619 |
a dealer to exercise its rights to reimbursement under this | 620 |
section does not create a waiver of these rights. Any unreasonable | 621 |
denial, delay, or restriction of a valid reimbursement claim | 622 |
shall subject the manufacturer to interest in accordance with | 623 |
division (A) of section 1343.03 of the Revised Code until paid. | 624 |
(22) Prevent, attempt to prevent, prohibit, coerce, or | 625 |
attempt to coerce, any new motor vehicle dealer from charging any | 626 |
consumer any fee allowed to be charged by the dealer under Ohio | 627 |
law; | 628 |
(23) Require, coerce, or attempt to coerce any new motor | 629 |
vehicle dealer in this state to change the capital structure of | 630 |
the new motor vehicle dealer or the means by or through which the | 631 |
new motor vehicle dealer finances the operation of the dealership | 632 |
provided that: | 633 |
(a) The new motor vehicle dealer at all times shall meet any | 634 |
reasonable capital standards determined by the manufacturer in | 635 |
accordance with uniformly applied criteria. | 636 |
(b) No change in the capital structure shall cause a change | 637 |
in the principal management or have the effect of a sale of the | 638 |
franchise without the consent of the manufacturer or distributor, | 639 |
and further provided that the manufacturer or distributor shall | 640 |
not unreasonably withhold consent. | 641 |
(24) Require, coerce, or attempt to coerce any new motor | 642 |
vehicle dealer in this state to change location of the dealership, | 643 |
or to make any substantial alterations to the dealership premises | 644 |
or facilities, when to do so would be unreasonable, or without | 645 |
written assurance of a sufficient supply of new motor vehicles so | 646 |
as to justify the location change or alterations, in light of the | 647 |
current market and economic conditions; | 648 |
(25) Require or request a franchisee to waive any | 649 |
requirements of this section. | 650 |
(B) No franchisor shall release to a third party any | 651 |
information concerning the dealership or any information regarding | 652 |
the dealership's customers that has been provided by the | 653 |
franchisee to the franchisor, unless agreed to by both parties or | 654 |
unless required by law. | 655 |
(C) No franchise agreement shall require the franchisee to | 656 |
pay the attorney fees of a franchisor, waive any remedy or defense | 657 |
available to the franchisee, or waive any other provisions of this | 658 |
chapter. In addition, no franchisor shall restrict a franchisee | 659 |
from filing a legal action in a particular forum otherwise | 660 |
available under federal or state law. | 661 |
(D) This section applies to any franchise whether entered | 662 |
into prior to or after the effective date of this amendment. | 663 |
Section 2. That existing sections 4517.52, 4517.54, | 664 |
4517.55, 4517.57, and 4517.59 of the Revised Code are hereby | 665 |
repealed. | 666 |