HB4628 Enrolled LRB096 14542 KTG 29374 b

1     AN ACT concerning business.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Motor Vehicle Franchise Act is amended by
5 changing Section 4 as follows:
 
6     (815 ILCS 710/4)  (from Ch. 121 1/2, par. 754)
7     Sec. 4. Unfair competition and practices.
8     (a) The unfair methods of competition and unfair and
9 deceptive acts or practices listed in this Section are hereby
10 declared to be unlawful. In construing the provisions of this
11 Section, the courts may be guided by the interpretations of the
12 Federal Trade Commission Act (15 U.S.C. 45 et seq.), as from
13 time to time amended.
14     (b) It shall be deemed a violation for any manufacturer,
15 factory branch, factory representative, distributor or
16 wholesaler, distributor branch, distributor representative or
17 motor vehicle dealer to engage in any action with respect to a
18 franchise which is arbitrary, in bad faith or unconscionable
19 and which causes damage to any of the parties or to the public.
20     (c) It shall be deemed a violation for a manufacturer, a
21 distributor, a wholesaler, a distributor branch or division, a
22 factory branch or division, or a wholesale branch or division,
23 or officer, agent or other representative thereof, to coerce,

 

 

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1 or attempt to coerce, any motor vehicle dealer:
2         (1) to accept, buy or order any motor vehicle or
3     vehicles, appliances, equipment, parts or accessories
4     therefor, or any other commodity or commodities or service
5     or services which such motor vehicle dealer has not
6     voluntarily ordered or requested except items required by
7     applicable local, state or federal law; or to require a
8     motor vehicle dealer to accept, buy, order or purchase such
9     items in order to obtain any motor vehicle or vehicles or
10     any other commodity or commodities which have been ordered
11     or requested by such motor vehicle dealer;
12         (2) to order or accept delivery of any motor vehicle
13     with special features, appliances, accessories or
14     equipment not included in the list price of the motor
15     vehicles as publicly advertised by the manufacturer
16     thereof, except items required by applicable law; or
17         (3) to order for anyone any parts, accessories,
18     equipment, machinery, tools, appliances or any commodity
19     whatsoever, except items required by applicable law.
20     (d) It shall be deemed a violation for a manufacturer, a
21 distributor, a wholesaler, a distributor branch or division, or
22 officer, agent or other representative thereof:
23         (1) to adopt, change, establish or implement a plan or
24     system for the allocation and distribution of new motor
25     vehicles to motor vehicle dealers which is arbitrary or
26     capricious or to modify an existing plan so as to cause the

 

 

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1     same to be arbitrary or capricious;
2         (2) to fail or refuse to advise or disclose to any
3     motor vehicle dealer having a franchise or selling
4     agreement, upon written request therefor, the basis upon
5     which new motor vehicles of the same line make are
6     allocated or distributed to motor vehicle dealers in the
7     State and the basis upon which the current allocation or
8     distribution is being made or will be made to such motor
9     vehicle dealer;
10         (3) to refuse to deliver in reasonable quantities and
11     within a reasonable time after receipt of dealer's order,
12     to any motor vehicle dealer having a franchise or selling
13     agreement for the retail sale of new motor vehicles sold or
14     distributed by such manufacturer, distributor, wholesaler,
15     distributor branch or division, factory branch or division
16     or wholesale branch or division, any such motor vehicles as
17     are covered by such franchise or selling agreement
18     specifically publicly advertised in the State by such
19     manufacturer, distributor, wholesaler, distributor branch
20     or division, factory branch or division, or wholesale
21     branch or division to be available for immediate delivery.
22     However, the failure to deliver any motor vehicle shall not
23     be considered a violation of this Act if such failure is
24     due to an act of God, a work stoppage or delay due to a
25     strike or labor difficulty, a shortage of materials, a lack
26     of manufacturing capacity, a freight embargo or other cause

 

 

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1     over which the manufacturer, distributor, or wholesaler,
2     or any agent thereof has no control;
3         (4) to coerce, or attempt to coerce, any motor vehicle
4     dealer to enter into any agreement with such manufacturer,
5     distributor, wholesaler, distributor branch or division,
6     factory branch or division, or wholesale branch or
7     division, or officer, agent or other representative
8     thereof, or to do any other act prejudicial to the dealer
9     by threatening to reduce his allocation of motor vehicles
10     or cancel any franchise or any selling agreement existing
11     between such manufacturer, distributor, wholesaler,
12     distributor branch or division, or factory branch or
13     division, or wholesale branch or division, and the dealer.
14     However, notice in good faith to any motor vehicle dealer
15     of the dealer's violation of any terms or provisions of
16     such franchise or selling agreement or of any law or
17     regulation applicable to the conduct of a motor vehicle
18     dealer shall not constitute a violation of this Act;
19         (5) to require a franchisee to participate in an
20     advertising campaign or contest or any promotional
21     campaign, or to purchase or lease any promotional
22     materials, training materials, show room or other display
23     decorations or materials at the expense of the franchisee;
24         (6) to cancel or terminate the franchise or selling
25     agreement of a motor vehicle dealer without good cause and
26     without giving notice as hereinafter provided; to fail or

 

 

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1     refuse to extend the franchise or selling agreement of a
2     motor vehicle dealer upon its expiration without good cause
3     and without giving notice as hereinafter provided; or, to
4     offer a renewal, replacement or succeeding franchise or
5     selling agreement containing terms and provisions the
6     effect of which is to substantially change or modify the
7     sales and service obligations or capital requirements of
8     the motor vehicle dealer arbitrarily and without good cause
9     and without giving notice as hereinafter provided
10     notwithstanding any term or provision of a franchise or
11     selling agreement.
12             (A) If a manufacturer, distributor, wholesaler,
13         distributor branch or division, factory branch or
14         division or wholesale branch or division intends to
15         cancel or terminate a franchise or selling agreement or
16         intends not to extend or renew a franchise or selling
17         agreement on its expiration, it shall send a letter by
18         certified mail, return receipt requested, to the
19         affected franchisee at least 60 days before the
20         effective date of the proposed action, or not later
21         than 10 days before the proposed action when the reason
22         for the action is based upon either of the following:
23                 (i) the business operations of the franchisee
24             have been abandoned or the franchisee has failed to
25             conduct customary sales and service operations
26             during customary business hours for at least 7

 

 

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1             consecutive business days unless such closing is
2             due to an act of God, strike or labor difficulty or
3             other cause over which the franchisee has no
4             control; or
5                 (ii) the conviction of or plea of nolo
6             contendere by the motor vehicle dealer or any
7             operator thereof in a court of competent
8             jurisdiction to an offense punishable by
9             imprisonment for more than two years.
10             Each notice of proposed action shall include a
11         detailed statement setting forth the specific grounds
12         for the proposed cancellation, termination, or refusal
13         to extend or renew and shall state that the dealer has
14         only 30 days from receipt of the notice to file with
15         the Motor Vehicle Review Board a written protest
16         against the proposed action.
17             (B) If a manufacturer, distributor, wholesaler,
18         distributor branch or division, factory branch or
19         division or wholesale branch or division intends to
20         change substantially or modify the sales and service
21         obligations or capital requirements of a motor vehicle
22         dealer as a condition to extending or renewing the
23         existing franchise or selling agreement of such motor
24         vehicle dealer, it shall send a letter by certified
25         mail, return receipt requested, to the affected
26         franchisee at least 60 days before the date of

 

 

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1         expiration of the franchise or selling agreement. Each
2         notice of proposed action shall include a detailed
3         statement setting forth the specific grounds for the
4         proposed action and shall state that the dealer has
5         only 30 days from receipt of the notice to file with
6         the Motor Vehicle Review Board a written protest
7         against the proposed action.
8             (C) Within 30 days from receipt of the notice under
9         subparagraphs (A) and (B), the franchisee may file with
10         the Board a written protest against the proposed
11         action.
12             When the protest has been timely filed, the Board
13         shall enter an order, fixing a date (within 60 days of
14         the date of the order), time, and place of a hearing on
15         the protest required under Sections 12 and 29 of this
16         Act, and send by certified mail, return receipt
17         requested, a copy of the order to the manufacturer that
18         filed the notice of intention of the proposed action
19         and to the protesting dealer or franchisee.
20             The manufacturer shall have the burden of proof to
21         establish that good cause exists to cancel or
22         terminate, or fail to extend or renew the franchise or
23         selling agreement of a motor vehicle dealer or
24         franchisee, and to change substantially or modify the
25         sales and service obligations or capital requirements
26         of a motor vehicle dealer as a condition to extending

 

 

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1         or renewing the existing franchise or selling
2         agreement. The determination whether good cause exists
3         to cancel, terminate, or refuse to renew or extend the
4         franchise or selling agreement, or to change or modify
5         the obligations of the dealer as a condition to offer
6         renewal, replacement, or succession shall be made by
7         the Board under subsection (d) of Section 12 of this
8         Act.
9             (D) Notwithstanding the terms, conditions, or
10         provisions of a franchise or selling agreement, the
11         following shall not constitute good cause for
12         cancelling or terminating or failing to extend or renew
13         the franchise or selling agreement: (i) the change of
14         ownership or executive management of the franchisee's
15         dealership; or (ii) the fact that the franchisee or
16         owner of an interest in the franchise owns, has an
17         investment in, participates in the management of, or
18         holds a license for the sale of the same or any other
19         line make of new motor vehicles.
20             (E) The manufacturer may not cancel or terminate,
21         or fail to extend or renew a franchise or selling
22         agreement or change or modify the obligations of the
23         franchisee as a condition to offering a renewal,
24         replacement, or succeeding franchise or selling
25         agreement before the hearing process is concluded as
26         prescribed by this Act, and thereafter, if the Board

 

 

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1         determines that the manufacturer has failed to meet its
2         burden of proof and that good cause does not exist to
3         allow the proposed action;
4         (7) notwithstanding the terms of any franchise
5     agreement, to fail to indemnify and hold harmless its
6     franchised dealers against any judgment or settlement for
7     damages, including, but not limited to, court costs, expert
8     witness fees, reasonable attorneys' fees of the new motor
9     vehicle dealer, and other expenses incurred in the
10     litigation, so long as such fees and costs are reasonable,
11     arising out of complaints, claims or lawsuits including,
12     but not limited to, strict liability, negligence,
13     misrepresentation, warranty (express or implied), or
14     recision of the sale as defined in Section 2-608 of the
15     Uniform Commercial Code, to the extent that the judgment or
16     settlement relates to the alleged defective or negligent
17     manufacture, assembly or design of new motor vehicles,
18     parts or accessories or other functions by the
19     manufacturer, beyond the control of the dealer; provided
20     that, in order to provide an adequate defense, the
21     manufacturer receives notice of the filing of a complaint,
22     claim, or lawsuit within 60 days after the filing;
23         (8) to require or otherwise coerce a motor vehicle
24     dealer to underutilize the motor vehicle dealer's
25     facilities by requiring or otherwise coercing the motor
26     vehicle dealer to exclude or remove from the motor vehicle

 

 

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1     dealer's facilities operations for selling or servicing of
2     any vehicles for which the motor vehicle dealer has a
3     franchise agreement with another manufacturer,
4     distributor, wholesaler, distribution branch or division,
5     or officer, agent, or other representative thereof;
6     provided, however, that, in light of all existing
7     circumstances, (i) the motor vehicle dealer maintains a
8     reasonable line of credit for each make or line of new
9     motor vehicle, (ii) the new motor vehicle dealer remains in
10     compliance with any reasonable facilities requirements of
11     the manufacturer, (iii) no change is made in the principal
12     management of the new motor vehicle dealer, and (iv) the
13     addition of the make or line of new motor vehicles would be
14     reasonable. The reasonable facilities requirement set
15     forth in item (ii) of subsection (d)(8) shall not include
16     any requirement that a franchisee establish or maintain
17     exclusive facilities, personnel, or display space. Any
18     decision by a motor vehicle dealer to sell additional makes
19     or lines at the motor vehicle dealer's facility shall be
20     presumed to be reasonable, and the manufacturer shall have
21     the burden to overcome that presumption. A motor vehicle
22     dealer must provide a written notification of its intent to
23     add a make or line of new motor vehicles to the
24     manufacturer. If the manufacturer does not respond to the
25     motor vehicle dealer, in writing, objecting to the addition
26     of the make or line within 60 days after the date that the

 

 

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1     motor vehicle dealer sends the written notification, then
2     the manufacturer shall be deemed to have approved the
3     addition of the make or line; or
4         (9) to use or consider the performance of a motor
5     vehicle dealer relating to the sale of the manufacturer's,
6     distributor's, or wholesaler's vehicles or the motor
7     vehicle dealer's ability to satisfy any minimum sales or
8     market share quota or responsibility relating to the sale
9     of the manufacturer's, distributor's, or wholesaler's new
10     vehicles in determining:
11             (A) the motor vehicle dealer's eligibility to
12         purchase program, certified, or other used motor
13         vehicles from the manufacturer, distributor, or
14         wholesaler;
15             (B) the volume, type, or model of program,
16         certified, or other used motor vehicles that a motor
17         vehicle dealer is eligible to purchase from the
18         manufacturer, distributor, or wholesaler;
19             (C) the price of any program, certified, or other
20         used motor vehicle that the dealer is eligible to
21         purchase from the manufacturer, distributor, or
22         wholesaler; or
23             (D) the availability or amount of any discount,
24         credit, rebate, or sales incentive that the dealer is
25         eligible to receive from the manufacturer,
26         distributor, or wholesaler for the purchase of any

 

 

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1         program, certified, or other used motor vehicle
2         offered for sale by the manufacturer, distributor, or
3         wholesaler.
4     (e) It shall be deemed a violation for a manufacturer, a
5 distributor, a wholesaler, a distributor branch or division or
6 officer, agent or other representative thereof:
7         (1) to resort to or use any false or misleading
8     advertisement in connection with his business as such
9     manufacturer, distributor, wholesaler, distributor branch
10     or division or officer, agent or other representative
11     thereof;
12         (2) to offer to sell or lease, or to sell or lease, any
13     new motor vehicle to any motor vehicle dealer at a lower
14     actual price therefor than the actual price offered to any
15     other motor vehicle dealer for the same model vehicle
16     similarly equipped or to utilize any device including, but
17     not limited to, sales promotion plans or programs which
18     result in such lesser actual price or fail to make
19     available to any motor vehicle dealer any preferential
20     pricing, incentive, rebate, finance rate, or low interest
21     loan program offered to competing motor vehicle dealers in
22     other contiguous states. However, the provisions of this
23     paragraph shall not apply to sales to a motor vehicle
24     dealer for resale to any unit of the United States
25     Government, the State or any of its political subdivisions;
26         (3) to offer to sell or lease, or to sell or lease, any

 

 

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1     new motor vehicle to any person, except a wholesaler,
2     distributor or manufacturer's employees at a lower actual
3     price therefor than the actual price offered and charged to
4     a motor vehicle dealer for the same model vehicle similarly
5     equipped or to utilize any device which results in such
6     lesser actual price. However, the provisions of this
7     paragraph shall not apply to sales to a motor vehicle
8     dealer for resale to any unit of the United States
9     Government, the State or any of its political subdivisions;
10         (4) to prevent or attempt to prevent by contract or
11     otherwise any motor vehicle dealer or franchisee from
12     changing the executive management control of the motor
13     vehicle dealer or franchisee unless the franchiser, having
14     the burden of proof, proves that such change of executive
15     management will result in executive management control by a
16     person or persons who are not of good moral character or
17     who do not meet the franchiser's existing and, with
18     consideration given to the volume of sales and service of
19     the dealership, uniformly applied minimum business
20     experience standards in the market area. However where the
21     manufacturer rejects a proposed change in executive
22     management control, the manufacturer shall give written
23     notice of his reasons to the dealer within 60 days of
24     notice to the manufacturer by the dealer of the proposed
25     change. If the manufacturer does not send a letter to the
26     franchisee by certified mail, return receipt requested,

 

 

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1     within 60 days from receipt by the manufacturer of the
2     proposed change, then the change of the executive
3     management control of the franchisee shall be deemed
4     accepted as proposed by the franchisee, and the
5     manufacturer shall give immediate effect to such change;
6         (5) to prevent or attempt to prevent by contract or
7     otherwise any motor vehicle dealer from establishing or
8     changing the capital structure of his dealership or the
9     means by or through which he finances the operation
10     thereof; provided the dealer meets any reasonable capital
11     standards agreed to between the dealer and the
12     manufacturer, distributor or wholesaler, who may require
13     that the sources, method and manner by which the dealer
14     finances or intends to finance its operation, equipment or
15     facilities be fully disclosed;
16         (6) to refuse to give effect to or prevent or attempt
17     to prevent by contract or otherwise any motor vehicle
18     dealer or any officer, partner or stockholder of any motor
19     vehicle dealer from selling or transferring any part of the
20     interest of any of them to any other person or persons or
21     party or parties unless such sale or transfer is to a
22     transferee who would not otherwise qualify for a new motor
23     vehicle dealers license under "The Illinois Vehicle Code"
24     or unless the franchiser, having the burden of proof,
25     proves that such sale or transfer is to a person or party
26     who is not of good moral character or does not meet the

 

 

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1     franchiser's existing and reasonable capital standards
2     and, with consideration given to the volume of sales and
3     service of the dealership, uniformly applied minimum
4     business experience standards in the market area. However,
5     nothing herein shall be construed to prevent a franchiser
6     from implementing affirmative action programs providing
7     business opportunities for minorities or from complying
8     with applicable federal, State or local law:
9             (A) If the manufacturer intends to refuse to
10         approve the sale or transfer of all or a part of the
11         interest, then it shall, within 60 days from receipt of
12         the completed application forms generally utilized by
13         a manufacturer to conduct its review and a copy of all
14         agreements regarding the proposed transfer, send a
15         letter by certified mail, return receipt requested,
16         advising the franchisee of any refusal to approve the
17         sale or transfer of all or part of the interest and
18         shall state that the dealer only has 30 days from the
19         receipt of the notice to file with the Motor Vehicle
20         Review Board a written protest against the proposed
21         action. The notice shall set forth specific criteria
22         used to evaluate the prospective transferee and the
23         grounds for refusing to approve the sale or transfer to
24         that transferee. Within 30 days from the franchisee's
25         receipt of the manufacturer's notice, the franchisee
26         may file with the Board a written protest against the

 

 

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1         proposed action.
2             When a protest has been timely filed, the Board
3         shall enter an order, fixing the date (within 60 days
4         of the date of such order), time, and place of a
5         hearing on the protest, required under Sections 12 and
6         29 of this Act, and send by certified mail, return
7         receipt requested, a copy of the order to the
8         manufacturer that filed notice of intention of the
9         proposed action and to the protesting franchisee.
10             The manufacturer shall have the burden of proof to
11         establish that good cause exists to refuse to approve
12         the sale or transfer to the transferee. The
13         determination whether good cause exists to refuse to
14         approve the sale or transfer shall be made by the Board
15         under subdivisions (6)(B). The manufacturer shall not
16         refuse to approve the sale or transfer by a dealer or
17         an officer, partner, or stockholder of a franchise or
18         any part of the interest to any person or persons
19         before the hearing process is concluded as prescribed
20         by this Act, and thereafter if the Board determines
21         that the manufacturer has failed to meet its burden of
22         proof and that good cause does not exist to refuse to
23         approve the sale or transfer to the transferee.
24             (B) Good cause to refuse to approve such sale or
25         transfer under this Section is established when such
26         sale or transfer is to a transferee who would not

 

 

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1         otherwise qualify for a new motor vehicle dealers
2         license under "The Illinois Vehicle Code" or such sale
3         or transfer is to a person or party who is not of good
4         moral character or does not meet the franchiser's
5         existing and reasonable capital standards and, with
6         consideration given to the volume of sales and service
7         of the dealership, uniformly applied minimum business
8         experience standards in the market area.
9         (7) to obtain money, goods, services, anything of
10     value, or any other benefit from any other person with whom
11     the motor vehicle dealer does business, on account of or in
12     relation to the transactions between the dealer and the
13     other person as compensation, except for services actually
14     rendered, unless such benefit is promptly accounted for and
15     transmitted to the motor vehicle dealer;
16         (8) to grant an additional franchise in the relevant
17     market area of an existing franchise of the same line make
18     or to relocate an existing motor vehicle dealership within
19     or into a relevant market area of an existing franchise of
20     the same line make. However, if the manufacturer wishes to
21     grant such an additional franchise to an independent person
22     in a bona fide relationship in which such person is
23     prepared to make a significant investment subject to loss
24     in such a dealership, or if the manufacturer wishes to
25     relocate an existing motor vehicle dealership, then the
26     manufacturer shall send a letter by certified mail, return

 

 

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1     receipt requested, to each existing dealer or dealers of
2     the same line make whose relevant market area includes the
3     proposed location of the additional or relocated franchise
4     at least 60 days before the manufacturer grants an
5     additional franchise or relocates an existing franchise of
6     the same line make within or into the relevant market area
7     of an existing franchisee of the same line make. Each
8     notice shall set forth the specific grounds for the
9     proposed grant of an additional or relocation of an
10     existing franchise and shall state that the dealer has only
11     30 days from the date of receipt of the notice to file with
12     the Motor Vehicle Review Board a written protest against
13     the proposed action. Unless the parties agree upon the
14     grant or establishment of the additional or relocated
15     franchise within 30 days from the date the notice was
16     received by the existing franchisee of the same line make
17     or any person entitled to receive such notice, the
18     franchisee or other person may file with the Board a
19     written protest against the grant or establishment of the
20     proposed additional or relocated franchise.
21         When a protest has been timely filed, the Board shall
22     enter an order fixing a date (within 60 days of the date of
23     the order), time, and place of a hearing on the protest,
24     required under Sections 12 and 29 of this Act, and send by
25     certified or registered mail, return receipt requested, a
26     copy of the order to the manufacturer that filed the notice

 

 

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1     of intention to grant or establish the proposed additional
2     or relocated franchise and to the protesting dealer or
3     dealers of the same line make whose relevant market area
4     includes the proposed location of the additional or
5     relocated franchise.
6         When more than one protest is filed against the grant
7     or establishment of the additional or relocated franchise
8     of the same line make, the Board may consolidate the
9     hearings to expedite disposition of the matter. The
10     manufacturer shall have the burden of proof to establish
11     that good cause exists to allow the grant or establishment
12     of the additional or relocated franchise. The manufacturer
13     may not grant or establish the additional franchise or
14     relocate the existing franchise before the hearing process
15     is concluded as prescribed by this Act, and thereafter if
16     the Board determines that the manufacturer has failed to
17     meet its burden of proof and that good cause does not exist
18     to allow the grant or establishment of the additional
19     franchise or relocation of the existing franchise.
20         The determination whether good cause exists for
21     allowing the grant or establishment of an additional
22     franchise or relocated existing franchise, shall be made by
23     the Board under subsection (c) of Section 12 of this Act.
24     If the manufacturer seeks to enter into a contract,
25     agreement or other arrangement with any person,
26     establishing any additional motor vehicle dealership or

 

 

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1     other facility, limited to the sale of factory repurchase
2     vehicles or late model vehicles, then the manufacturer
3     shall follow the notice procedures set forth in this
4     Section and the determination whether good cause exists for
5     allowing the proposed agreement shall be made by the Board
6     under subsection (c) of Section 12, with the manufacturer
7     having the burden of proof.
8             A. (Blank).
9             B. For the purposes of this Section, appointment of
10         a successor motor vehicle dealer at the same location
11         as its predecessor, or within 2 miles of such location,
12         or the relocation of an existing dealer or franchise
13         within 2 miles of the relocating dealer's or
14         franchisee's existing location, shall not be construed
15         as a grant, establishment or the entering into of an
16         additional franchise or selling agreement, or a
17         relocation of an existing franchise. The reopening of a
18         motor vehicle dealership that has not been in operation
19         for 18 months or more shall be deemed the grant of an
20         additional franchise or selling agreement.
21             C. This Section does not apply to the relocation of
22         an existing dealership or franchise in a county having
23         a population of more than 300,000 persons when the new
24         location is within the dealer's current relevant
25         market area, provided the new location is more than 7
26         miles from the nearest dealer of the same line make.

 

 

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1         This Section does not apply to the relocation of an
2         existing dealership or franchise in a county having a
3         population of less than 300,000 persons when the new
4         location is within the dealer's current relevant
5         market area, provided the new location is more than 12
6         miles from the nearest dealer of the same line make. A
7         dealer that would be farther away from the new location
8         of an existing dealership or franchise of the same line
9         make after a relocation may not file a written protest
10         against the relocation with the Motor Vehicle Review
11         Board.
12             D. Nothing in this Section shall be construed to
13         prevent a franchiser from implementing affirmative
14         action programs providing business opportunities for
15         minorities or from complying with applicable federal,
16         State or local law;
17         (9) to require a motor vehicle dealer to assent to a
18     release, assignment, novation, waiver or estoppel which
19     would relieve any person from liability imposed by this
20     Act;
21         (10) to prevent or refuse to give effect to the
22     succession to the ownership or management control of a
23     dealership by any legatee under the will of a dealer or to
24     an heir under the laws of descent and distribution of this
25     State unless the franchisee has designated a successor to
26     the ownership or management control under the succession

 

 

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1     provisions of the franchise. Unless the franchiser, having
2     the burden of proof, proves that the successor is a person
3     who is not of good moral character or does not meet the
4     franchiser's existing and reasonable capital standards
5     and, with consideration given to the volume of sales and
6     service of the dealership, uniformly applied minimum
7     business experience standards in the market area, any
8     designated successor of a dealer or franchisee may succeed
9     to the ownership or management control of a dealership
10     under the existing franchise if:
11                 (i) The designated successor gives the
12             franchiser written notice by certified mail,
13             return receipt requested, of his or her intention
14             to succeed to the ownership of the dealer within 60
15             days of the dealer's death or incapacity; and
16                 (ii) The designated successor agrees to be
17             bound by all the terms and conditions of the
18             existing franchise.
19         Notwithstanding the foregoing, in the event the motor
20     vehicle dealer or franchisee and manufacturer have duly
21     executed an agreement concerning succession rights prior
22     to the dealer's death or incapacitation, the agreement
23     shall be observed.
24             (A) If the franchiser intends to refuse to honor
25         the successor to the ownership of a deceased or
26         incapacitated dealer or franchisee under an existing

 

 

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1         franchise agreement, the franchiser shall send a
2         letter by certified mail, return receipt requested, to
3         the designated successor within 60 days from receipt of
4         a proposal advising of its intent to refuse to honor
5         the succession and to discontinue the existing
6         franchise agreement and shall state that the
7         designated successor only has 30 days from the receipt
8         of the notice to file with the Motor Vehicle Review
9         Board a written protest against the proposed action.
10         The notice shall set forth the specific grounds for the
11         refusal to honor the succession and discontinue the
12         existing franchise agreement.
13             If notice of refusal is not timely served upon the
14         designated successor, the franchise agreement shall
15         continue in effect subject to termination only as
16         otherwise permitted by paragraph (6) of subsection (d)
17         of Section 4 of this Act.
18             Within 30 days from the date the notice was
19         received by the designated successor or any other
20         person entitled to notice, the designee or other person
21         may file with the Board a written protest against the
22         proposed action.
23             When a protest has been timely filed, the Board
24         shall enter an order, fixing a date (within 60 days of
25         the date of the order), time, and place of a hearing on
26         the protest, required under Sections 12 and 29 of this

 

 

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1         Act, and send by certified mail, return receipt
2         requested, a copy of the order to the franchiser that
3         filed the notice of intention of the proposed action
4         and to the protesting designee or such other person.
5             The manufacturer shall have the burden of proof to
6         establish that good cause exists to refuse to honor the
7         succession and discontinue the existing franchise
8         agreement. The determination whether good cause exists
9         to refuse to honor the succession shall be made by the
10         Board under subdivision (B) of this paragraph (10). The
11         manufacturer shall not refuse to honor the succession
12         or discontinue the existing franchise agreement before
13         the hearing process is concluded as prescribed by this
14         Act, and thereafter if the Board determines that it has
15         failed to meet its burden of proof and that good cause
16         does not exist to refuse to honor the succession and
17         discontinue the existing franchise agreement.
18             (B) No manufacturer shall impose any conditions
19         upon honoring the succession and continuing the
20         existing franchise agreement with the designated
21         successor other than that the franchisee has
22         designated a successor to the ownership or management
23         control under the succession provisions of the
24         franchise, or that the designated successor is of good
25         moral character or meets the reasonable capital
26         standards and, with consideration given to the volume

 

 

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1         of sales and service of the dealership, uniformly
2         applied minimum business experience standards in the
3         market area;
4         (11) to prevent or refuse to approve a proposal to
5     establish a successor franchise at a location previously
6     approved by the franchiser when submitted with the
7     voluntary termination by the existing franchisee unless
8     the successor franchisee would not otherwise qualify for a
9     new motor vehicle dealer's license under the Illinois
10     Vehicle Code or unless the franchiser, having the burden of
11     proof, proves that such proposed successor is not of good
12     moral character or does not meet the franchiser's existing
13     and reasonable capital standards and, with consideration
14     given to the volume of sales and service of the dealership,
15     uniformly applied minimum business experience standards in
16     the market area. However, when such a rejection of a
17     proposal is made, the manufacturer shall give written
18     notice of its reasons to the franchisee within 60 days of
19     receipt by the manufacturer of the proposal. However,
20     nothing herein shall be construed to prevent a franchiser
21     from implementing affirmative action programs providing
22     business opportunities for minorities, or from complying
23     with applicable federal, State or local law;
24         (12) to prevent or refuse to grant a franchise to a
25     person because such person owns, has investment in or
26     participates in the management of or holds a franchise for

 

 

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1     the sale of another make or line of motor vehicles within 7
2     miles of the proposed franchise location in a county having
3     a population of more than 300,000 persons, or within 12
4     miles of the proposed franchise location in a county having
5     a population of less than 300,000 persons; or
6         (13) to prevent or attempt to prevent any new motor
7     vehicle dealer from establishing any additional motor
8     vehicle dealership or other facility limited to the sale of
9     factory repurchase vehicles or late model vehicles or
10     otherwise offering for sale factory repurchase vehicles of
11     the same line make at an existing franchise by failing to
12     make available any contract, agreement or other
13     arrangement which is made available or otherwise offered to
14     any person.
15     (f) It is deemed a violation for a manufacturer, a
16 distributor, a wholesale, a distributor branch or division, a
17 factory branch or division, or a wholesale branch or division,
18 or officer, agent, broker, shareholder, except a shareholder of
19 1% or less of the outstanding shares of any class of securities
20 of a manufacturer, distributor, or wholesaler which is a
21 publicly traded corporation, or other representative, directly
22 or indirectly, to own or operate a place of business as a motor
23 vehicle franchisee or motor vehicle financing affiliate,
24 except that, this subsection shall not prohibit the ownership
25 or operation of a place of business by a manufacturer,
26 distributor, or wholesaler for a period, not to exceed 18

 

 

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1 months, during the transition from one motor vehicle franchisee
2 to another; or the investment in a motor vehicle franchisee by
3 a manufacturer, distributor, or wholesaler if the investment is
4 for the sole purpose of enabling a partner or shareholder in
5 that motor vehicle franchisee to acquire an interest in that
6 motor vehicle franchisee and that partner or shareholder is not
7 otherwise employed by or associated with the manufacturer,
8 distributor, or wholesaler and would not otherwise have the
9 requisite capital investment funds to invest in the motor
10 vehicle franchisee, and has the right to purchase the entire
11 equity interest of the manufacturer, distributor, or
12 wholesaler in the motor vehicle franchisee within a reasonable
13 period of time not to exceed 5 years.
14     (g) Notwithstanding the terms, provisions, or conditions
15 of any agreement or waiver, it shall be deemed a violation for
16 a manufacturer, a distributor, a wholesaler, a distributor
17 branch or division, a factory branch or division, or a
18 wholesale branch or division, or officer, agent or other
19 representative thereof, to directly or indirectly condition
20 the awarding of a franchise to a prospective new motor vehicle
21 dealer, the addition of a line make or franchise to an existing
22 dealer, the renewal of a franchise of an existing dealer, the
23 approval of the relocation of an existing dealer's facility, or
24 the approval of the sale or transfer of the ownership of a
25 franchise on the willingness of a dealer, proposed new dealer,
26 or owner of an interest in the dealership facility to enter

 

 

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1 into a site control agreement or exclusive use agreement unless
2 separate and reasonable consideration was offered and accepted
3 for that agreement.
4     For purposes of this subsection (g), the terms "site
5 control agreement" and "exclusive use agreement" include any
6 agreement that has the effect of either (i) requiring that the
7 dealer establish or maintain exclusive dealership facilities;
8 or (ii) restricting the ability of the dealer, or the ability
9 of the dealer's lessor in the event the dealership facility is
10 being leased, to transfer, sell, lease, or change the use of
11 the dealership premises, whether by sublease, lease,
12 collateral pledge of lease, or other similar agreement. "Site
13 control agreement" and "exclusive use agreement" also include a
14 manufacturer restricting the ability of a dealer to transfer,
15 sell, or lease the dealership premises by right of first
16 refusal to purchase or lease, option to purchase, or option to
17 lease if the transfer, sale, or lease of the dealership
18 premises is to a person who is an immediate family member of
19 the dealer. For the purposes of this subsection (g), "immediate
20 family member" means a spouse, parent, son, daughter,
21 son-in-law, daughter-in-law, brother, and sister.
22     If a manufacturer exercises any right of first refusal to
23 purchase or lease or option to purchase or lease with regard to
24 a transfer, sale, or lease of the dealership premises to a
25 person who is not an immediate family member of the dealer,
26 then (1) within 60 days from the receipt of the completed

 

 

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1 application forms generally utilized by a manufacturer to
2 conduct its review and a copy of all agreements regarding the
3 proposed transfer, the manufacturer must notify the dealer of
4 its intent to exercise the right of first refusal to purchase
5 or lease or option to purchase or lease and (2) the exercise of
6 the right of first refusal to purchase or lease or option to
7 purchase or lease must result in the dealer receiving
8 consideration, terms, and conditions that either are the same
9 as or greater than that which they have contracted to receive
10 in connection with the proposed transfer, sale, or lease of the
11 dealership premises.
12     Any provision contained in any agreement entered into on or
13 after the effective date of this amendatory Act of the 96th
14 General Assembly that is inconsistent with the provisions of
15 this subsection (g) shall be voidable at the election of the
16 affected dealer, prospective dealer, or owner of an interest in
17 the dealership facility.
18     (h) For purposes of this subsection:
19     "Successor manufacturer" means any motor vehicle
20 manufacturer that, on or after January 1, 2009, acquires,
21 succeeds to, or assumes any part of the business of another
22 manufacturer, referred to as the "predecessor manufacturer",
23 as the result of any of the following:
24         (i) A change in ownership, operation, or control of the
25     predecessor manufacturer by sale or transfer of assets,
26     corporate stock or other equity interest, assignment,

 

 

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1     merger, consolidation, combination, joint venture,
2     redemption, court-approved sale, operation of law or
3     otherwise.
4         (ii) The termination, suspension, or cessation of a
5     part or all of the business operations of the predecessor
6     manufacturer.
7         (iii) The discontinuance of the sale of the product
8     line.
9         (iv) A change in distribution system by the predecessor
10     manufacturer, whether through a change in distributor or
11     the predecessor manufacturer's decision to cease
12     conducting business through a distributor altogether.
13     "Former Franchisee" means a new motor vehicle dealer that
14 has entered into a franchise with a predecessor manufacturer
15 and that has either:
16         (i) entered into a termination agreement or deferred
17     termination agreement with a predecessor or successor
18     manufacturer related to such franchise; or
19         (ii) has had such franchise canceled, terminated,
20     nonrenewed, noncontinued, rejected, nonassumed, or
21     otherwise ended.
22     For a period of 3 years from: (i) the date that a successor
23 manufacturer acquires, succeeds to, or assumes any part of the
24 business of a predecessor manufacturer; (ii) the last day that
25 a former franchisee is authorized to remain in business as a
26 franchised dealer with respect to a particular franchise under

 

 

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1 a termination agreement or deferred termination agreement with
2 a predecessor or successor manufacturer; (iii) the last day
3 that a former franchisee that was cancelled, terminated,
4 nonrenewed, noncontinued, rejected, nonassumed, or otherwise
5 ended by a predecessor or successor manufacturer is authorized
6 to remain in business as a franchised dealer with respect to a
7 particular franchise; or (iv) the effective date of this
8 amendatory Act of the 96th General Assembly, whichever is
9 latest, it shall be unlawful for such successor manufacturer to
10 enter into a same line make franchise with any person or to
11 permit the relocation of any existing same line make franchise,
12 for a line make of the predecessor manufacturer that would be
13 located or relocated within the relevant market area of a
14 former franchisee who owned or leased a dealership facility in
15 that relevant market area without first offering the additional
16 or relocated franchise to the former franchisee, or the
17 designated successor of such former franchisee in the event the
18 former franchisee is deceased or disabled, at no cost and
19 without any requirements or restrictions other than those
20 imposed generally on the manufacturer's other franchisees at
21 that time, unless one of the following applies:
22         (1) As a result of the former franchisee's
23     cancellation, termination, noncontinuance, or nonrenewal
24     of the franchise, the predecessor manufacturer had
25     consolidated the line make with another of its line makes
26     for which the predecessor manufacturer had a franchisee

 

 

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1     with a then-existing dealership facility located within
2     that relevant market area.
3         (2) The successor manufacturer has paid the former
4     franchisee, or the designated successor of such former
5     franchisee in the event the former franchisee is deceased
6     or disabled, the fair market value of the former
7     franchisee's franchise on (i) the date the franchisor
8     announces the action which results in the termination,
9     cancellation, or nonrenewal; or (ii) the date the action
10     which results in termination, cancellation, or nonrenewal
11     first became general knowledge; or (iii) the day 12 months
12     prior to the date on which the notice of termination,
13     cancellation, or nonrenewal is issued, whichever amount is
14     higher. Payment is due within 90 days of the effective date
15     of the termination, cancellation, or nonrenewal. If the
16     termination, cancellation, or nonrenewal is due to a
17     manufacturer's change in distributors, the manufacturer
18     may avoid paying fair market value to the dealer if the new
19     distributor or the manufacturer offers the dealer a
20     franchise agreement with terms acceptable to the dealer.
21         (3) The successor manufacturer proves that it would
22     have had good cause to terminate the franchise agreement of
23     the former franchisee, or the successor of the former
24     franchisee under item (e)(10) in the event that the former
25     franchisee is deceased or disabled. The determination of
26     whether the successor manufacturer would have had good

 

 

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1     cause to terminate the franchise agreement of the former
2     franchisee, or the successor of the former franchisee,
3     shall be made by the Board under subsection (d) of Section
4     12. A successor manufacturer that seeks to assert that it
5     would have had good cause to terminate a former franchisee,
6     or the successor of the former franchisee, must file a
7     petition seeking a hearing on this issue before the Board
8     and shall have the burden of proving that it would have had
9     good cause to terminate the former franchisee or the
10     successor of the former franchisee. No successor dealer,
11     other than the former franchisee, may be appointed or
12     franchised by the successor manufacturer within the
13     relevant market area of the former franchisee until the
14     Board has held a hearing and rendered a determination on
15     the issue of whether the successor manufacturer would have
16     had good cause to terminate the former franchisee.
17     In the event that a successor manufacturer attempts to
18 enter into a same line make franchise with any person or to
19 permit the relocation of any existing line make franchise under
20 this subsection (h) at a location that is within the relevant
21 market area of 2 or more former franchisees, then the successor
22 manufacturer may not offer it to any person other than one of
23 those former franchisees unless the successor manufacturer can
24 prove that at least one of the 3 exceptions in items (1), (2),
25 and (3) of this subsection (h) applies to each of those former
26 franchisees.

 

 

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1 (Source: P.A. 96-11, eff. 5-22-09.)
 
2     Section 99. Effective date. This Act takes effect upon
3 becoming law.