Section 407.826

Title XXVI TRADE AND COMMERCE

Chapter 407

Effective - 28 Aug 2017, 2 histories   

  407.826.  New motor vehicle dealership, restrictions on operation of or ownership by a franchisor. — 1.  (1)  A franchisor shall be prohibited from owning or operating a new motor vehicle dealership in this state.  It is not a violation of this section for a franchisor to own or operate a new motor vehicle dealership:

  (a)  For a temporary period of not more than twenty-four months if the dealership is for sale at a reasonable price and on reasonable terms and conditions to an independent qualified buyer.  On showing by a franchisor of good cause, the time limit set forth above may be extended for an additional period of up to twelve months; or

  (b)  In a bona fide relationship with an independent person (i) who is required to make a significant investment in the new motor vehicle dealership subject to loss and (ii) operates the dealership and can reasonably expect to acquire full ownership of the dealership within a reasonable time and under reasonable terms and conditions.

  (2)  Nothing in this section shall be deemed to prohibit a franchisor from owning a minority interest in an entity that owns motor vehicle dealerships of the same line-make manufactured and franchised by the factory, provided that all of the following conditions are met at the time of acquisition and continue to be met during the time the entity maintains ownership:

  (a)  The interest owned by the factory in said entity shall not exceed forty-five percent of the total ownership;

  (b)  Any dealership in which the entity owns an interest shall be no less than nine miles of any unaffiliated new motor vehicle dealership trading in the same line-make of vehicle;

  (c)  All of the licensed dealerships for the sale of such factory's new motor vehicle in the state trade exclusively in the factory's line-make;

  (d)  During any period in which the entity has such ownership interest, the factory shall have no more than four franchise agreements governing such line-make with dealers licensed to do business in this state;

  (e)  All the factory's franchise agreements confer rights on the franchisee of the line-make to develop and operate, within a defined geographic territory or area, as many dealership facilities as the franchisee and factory shall agree are appropriate;

  (f)  At the time the entity first acquires an ownership interest, not fewer than seventy-five percent of the franchisees of the line-make within this state own and operate two or more dealership facilities in the geographic territory or area covered by the franchise agreement with the factory;

  (g)  As of January 1, 2001, there were no more than ten dealerships of such line-make licensed as a new motor vehicle dealer in this state; and

  (h)  Prior to August 28, 2001, the factory has been continuously engaged, at least since July 1, 1998, in the retail sale of motor vehicles of its own line-make through direct or indirect ownership of dealerships in at least five states.

  2.  A franchisor shall not sell new motor vehicles directly to any retail consumer except through a franchisee for the line-make that includes the new motor vehicle unless such consumer is an employee of the franchisor, or is a not-for-profit organization or an agency of the federal, state or local governments.  This subsection shall not preclude a franchisor from providing information to consumers for the purpose of marketing or facilitating the sale of a new motor vehicle or from establishing programs to sell or offer to sell new motor vehicles through participating franchisees.  This subsection shall not apply to a franchisor who does not manufacture, distribute, or sell motor vehicles as defined in section 301.010, but who does manufacture engines for any such motor vehicle with a gross vehicle rating of more than sixteen thousand pounds that is registered for operation on the public highways of this state under chapter 301, provided the franchisor:

  (1)  Is not otherwise a manufacturer of motor vehicles, as defined in section 407.815, and is not owned or controlled by such a manufacturer;

  (2)  Owned, operated, or controlled a facility in this state as of January 1, 2016, to sell or provide warranty service to engines that it manufactured;

  (3)  Does not own, operate, or control more than seven facilities in this state which sell or provide warranty service for engines it manufactures; and

  (4)  Provides its franchisees or dealers with access to support for completing repairs substantially equal to the support the manufacturer provides to facilities owned, operated, or controlled by it, including but not limited to parts and assemblies, training and technical bulletins, and other information concerning installation and repairs for its engines.

  3.  The remedies and relief available pursuant to section 407.835 shall apply to this section.

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(L. 2001 H.B. 575, A.L. 2017 S.B. 329)