Full Text of HB1886 94th General Assembly
HB1886 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 HB1886
Introduced 2/14/2005, by Rep. Michael J. Madigan - Barbara Flynn Currie - Daniel J. Burke SYNOPSIS AS INTRODUCED: |
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815 ILCS 710/6 |
from Ch. 121 1/2, par. 756 |
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Amends the Motor Vehicle Franchise Act. Makes a technical change in a Section
concerning warranty agreements.
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A BILL FOR
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HB1886 |
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LRB094 02914 LCB 32915 b |
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| AN ACT concerning business.
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| Be it enacted by the People of the State of Illinois, | 3 |
| represented in the General Assembly:
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| Section 5. The Motor Vehicle Franchise Act is amended by | 5 |
| changing Section 6 as follows:
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| (815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
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| Sec. 6. Warranty agreements; claims; approval; payment; | 8 |
| written
disapproval.
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| (a) Every manufacturer, distributor, wholesaler, | 10 |
| distributor branch
or division, factory branch or division, or | 11 |
| wholesale branch or division
shall properly fulfill any | 12 |
| warranty agreement and
and adequately and fairly
compensate | 13 |
| each of its motor vehicle dealers for labor and parts. | 14 |
| (b) In no event shall such compensation fail to include | 15 |
| reasonable
compensation for diagnostic work, as well as repair | 16 |
| service, labor, and
parts. Time allowances for the diagnosis | 17 |
| and performance of warranty
work and service shall be
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| reasonable and adequate for the work to be performed. In the | 19 |
| determination
of what constitutes reasonable compensation | 20 |
| under this Section, the principal
factor to be given | 21 |
| consideration shall be the prevailing wage rates being
paid by | 22 |
| the dealer in the relevant market area in which the motor | 23 |
| vehicle
dealer is doing business, and in no event shall such | 24 |
| compensation of a motor
vehicle dealer for warranty service be | 25 |
| less than the rates charged by such
dealer for like service to | 26 |
| retail customers for nonwarranty service and
repairs. The | 27 |
| franchiser shall reimburse the franchisee for any parts
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| provided in satisfaction of a warranty at the prevailing retail | 29 |
| price charged
by that dealer for the same parts when not | 30 |
| provided in satisfaction of a
warranty; provided that such | 31 |
| motor vehicle franchisee's prevailing retail price
is not | 32 |
| unreasonable when compared with that of the holders of motor |
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| vehicle
franchises from the same motor vehicle franchiser for | 2 |
| identical merchandise
in the geographic area in which the motor | 3 |
| vehicle franchisee is engaged in
business. All claims, either | 4 |
| original or resubmitted, made by motor vehicle
dealers | 5 |
| hereunder and under Section 5 for such labor and parts shall be | 6 |
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approved or disapproved within 30 days following their | 7 |
| submission. All
approved claims shall be paid within 30 days | 8 |
| following their approval. The
motor vehicle dealer who submits | 9 |
| a claim which is disapproved shall be notified
in writing of | 10 |
| the disapproval within the same period, and each such notice
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| shall state the specific grounds upon which the disapproval is | 12 |
| based. The
motor vehicle dealer shall be permitted to correct | 13 |
| and resubmit such
disapproved claims within 30 days of receipt | 14 |
| of disapproval. Any claims not
specifically disapproved in | 15 |
| writing within 30 days from their submission shall
be deemed | 16 |
| approved and payment shall follow within 30 days. The | 17 |
| manufacturer
or franchiser shall have the right to require | 18 |
| reasonable documentation for
claims and to audit such claims | 19 |
| within a one year period from the date the
claim was paid or | 20 |
| credit issued by the manufacturer or franchiser, and to
charge | 21 |
| back any false or unsubstantiated claims. The audit and charge | 22 |
| back
provisions of this Section also apply to all other | 23 |
| incentive and reimbursement
programs for a period of 18 months | 24 |
| after the date of the transactions that are
subject to audit by | 25 |
| the franchiser. However, the manufacturer retains the
right to | 26 |
| charge back any fraudulent claim if the manufacturer | 27 |
| establishes in
a court of competent jurisdiction in this State | 28 |
| that the claim is fraudulent.
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| (c) The motor vehicle franchiser shall not, by agreement, | 30 |
| by restrictions
upon reimbursement, or otherwise, restrict the | 31 |
| nature and extent of services to
be rendered or parts to be | 32 |
| provided so that such restriction prevents the motor
vehicle | 33 |
| franchisee from satisfying the warranty by rendering services | 34 |
| in a good
and workmanlike manner and providing parts which are | 35 |
| required in accordance
with generally accepted standards. Any | 36 |
| such restriction shall constitute a
prohibited practice.
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| (d) For the purposes of this Section, the "prevailing | 2 |
| retail price
charged by that dealer for the same parts" means | 3 |
| the price paid by
the motor vehicle franchisee for parts, | 4 |
| including all shipping and other
charges, multiplied by the sum | 5 |
| of 1.0 and the franchisee's average percentage
markup over the | 6 |
| price paid by the motor vehicle franchisee for parts purchased
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| by the motor vehicle franchisee from the motor vehicle | 8 |
| franchiser and sold at
retail. The motor vehicle franchisee may | 9 |
| establish average percentage markup
under this Section by | 10 |
| submitting to the motor vehicle franchiser 100 sequential
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| customer paid service repair orders or 90 days of customer paid | 12 |
| service repair
orders, whichever is less, covering repairs made | 13 |
| no more than 180 days before
the submission, and declaring what | 14 |
| the average percentage markup is. The
average percentage markup | 15 |
| so declared shall go into effect 30 days following
the | 16 |
| declaration, subject to audit of the submitted repair orders by | 17 |
| the motor
vehicle franchiser and adjustment of the average | 18 |
| percentage markup based on
that audit. Any audit must be | 19 |
| conducted within 30 days following the
declaration. Only retail | 20 |
| sales not involving warranty repairs, parts covered
by | 21 |
| subsection (e) of this Section, or parts supplied for routine | 22 |
| vehicle
maintenance, shall be considered in calculating | 23 |
| average percentage markup. No
motor vehicle franchiser shall | 24 |
| require a motor vehicle franchisee to establish
average | 25 |
| percentage markup by a methodology, or by requiring | 26 |
| information, that
is unduly burdensome or time consuming to | 27 |
| provide, including, but not limited
to, part by part or | 28 |
| transaction by transaction calculations. A motor vehicle
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| franchisee shall not request a change in the average percentage | 30 |
| markup more
than twice in one calendar year.
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| (e) If a motor vehicle franchiser supplies a part or parts | 32 |
| for use in a
repair rendered under a warranty other than by | 33 |
| sale of that part or parts to
the motor vehicle franchisee, the | 34 |
| motor vehicle franchisee shall be entitled to
compensation | 35 |
| equivalent to the motor vehicle franchisee's average | 36 |
| percentage
markup on the part or parts, as if the part or parts |
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| had been sold to the motor
vehicle franchisee by the motor | 2 |
| vehicle franchiser. The requirements of this
subsection (e) | 3 |
| shall not apply to entire engine assemblies and entire
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| transmission
assemblies. In the case of those assemblies, the | 5 |
| motor vehicle franchiser
shall reimburse the motor vehicle | 6 |
| franchisee in the amount of 30% of what the
motor vehicle | 7 |
| franchisee would have paid the motor vehicle franchiser for the
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| assembly if the assembly had not been supplied by the | 9 |
| franchiser other than by
the sale of that assembly to the motor | 10 |
| vehicle franchisee.
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| (f) The obligations imposed on motor vehicle franchisers by | 12 |
| this Section
shall apply to any parent, subsidiary, affiliate, | 13 |
| or agent of the motor vehicle
franchiser, any person under | 14 |
| common ownership or control, any employee of the
motor vehicle | 15 |
| franchiser, and any person holding 1% or more of the shares of
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| any class of securities or other ownership interest in the | 17 |
| motor vehicle
franchiser, if a warranty or service or repair | 18 |
| plan is issued by that person
instead of or in addition to one | 19 |
| issued by the motor vehicle franchiser.
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| (g) (1) Any motor vehicle franchiser and at least a | 21 |
| majority of its
Illinois franchisees of the same line make may | 22 |
| agree in an express written
contract citing this Section upon a | 23 |
| uniform warranty reimbursement policy used
by contracting | 24 |
| franchisees to perform warranty repairs. The policy shall only
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| involve either reimbursement for parts used in warranty repairs | 26 |
| or the use
of a Uniform Time Standards Manual, or both. | 27 |
| Reimbursement for parts under the
agreement shall be used | 28 |
| instead of the franchisees' "prevailing retail price
charged by | 29 |
| that dealer for the same parts" as defined in this Section to
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| calculate compensation due from the franchiser for parts used | 31 |
| in warranty
repairs. This Section does not authorize a | 32 |
| franchiser and its Illinois
franchisees to establish a uniform | 33 |
| hourly labor reimbursement.
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| Each franchiser shall only have one such agreement with | 35 |
| each line make.
Any such agreement shall:
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| (A) Establish a uniform parts reimbursement rate. The |
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| uniform parts
reimbursement rate shall be greater than the | 2 |
| franchiser's nationally
established
parts reimbursement | 3 |
| rate in effect at the time the first such agreement becomes
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| effective; however, any subsequent agreement shall result | 5 |
| in a uniform
reimbursement rate that is greater or equal to | 6 |
| the rate set forth in the
immediately prior agreement.
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| (B) Apply to all warranty repair orders written during | 8 |
| the period that
the agreement is effective.
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| (C) Be available, during the period it is effective, to | 10 |
| any motor
vehicle franchisee of the same line make at any | 11 |
| time and on the same terms.
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| (D) Be for a term not to exceed 3 years so long as any | 13 |
| party to the
agreement may terminate the agreement upon the | 14 |
| annual anniversary of the
agreement and with 30 days' prior | 15 |
| written notice; however, the agreement shall
remain in | 16 |
| effect for the term of the agreement regardless of the | 17 |
| number of
dealers of the same line make that may terminate | 18 |
| the agreement.
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| (2) A franchiser that enters into an agreement with its | 20 |
| franchisees
pursuant to paragraph (1) of this subsection (g) | 21 |
| may seek to recover its costs
from only those franchisees that | 22 |
| are receiving their "prevailing retail price
charged by that | 23 |
| dealer" under subsections (a) through (f) of this Section,
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| subject to the following requirements:
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| (A) "costs" means the difference between the uniform | 26 |
| reimbursement rate
set forth in an agreement entered into | 27 |
| pursuant to paragraph (1) of this
subsection (g) and the | 28 |
| "prevailing retail price charged by that dealer"
received | 29 |
| by those franchisees of the same line make;
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| (B) the costs shall be recovered only by increasing the | 31 |
| invoice price on
new vehicles received by those | 32 |
| franchisees; and
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| (C) price increases imposed for the purpose of | 34 |
| recovering costs imposed
by this Section may vary from time | 35 |
| to time and from model to model, but shall
apply uniformly | 36 |
| to all franchisees of the same line make in the State of
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| Illinois that have requested reimbursement for warranty | 2 |
| repairs at their
"prevailing retail price charged by that | 3 |
| dealer", except that a franchiser may
make an exception for | 4 |
| vehicles that are titled in the name of a consumer in
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| another state.
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| (3) If a franchiser contracts with its Illinois dealers | 7 |
| pursuant to
paragraph (1) of this subsection (g), the | 8 |
| franchiser shall certify under oath
to the Motor Vehicle Review | 9 |
| Board that a majority of the franchisees of that
line make did | 10 |
| agree to such an agreement and file a sample copy of the
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| agreement. On an annual basis, each franchiser shall certify | 12 |
| under oath to
the Motor Vehicle Review Board that the | 13 |
| reimbursement costs it recovers under
paragraph (2) of this | 14 |
| subsection (g) do not exceed the amounts authorized by
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| paragraph (2) of this subsection (g). The franchiser shall | 16 |
| maintain for a
period of 3 years a file that contains the | 17 |
| information upon which its
certification is based.
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| (4) If a franchiser and its franchisees do not enter into | 19 |
| an agreement
pursuant to paragraph (1) of this subsection (g), | 20 |
| and for any matter that is
not the subject of an agreement, | 21 |
| this subsection (g) shall have no effect
whatsoever.
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| (5) For purposes of this subsection (g), a Uniform Time | 23 |
| Standard Manual
is a document created by a franchiser that | 24 |
| establishes the time allowances for
the diagnosis and | 25 |
| performance of warranty work and service. The allowances
shall | 26 |
| be reasonable and adequate for the work and service to be | 27 |
| performed.
Each franchiser shall have a reasonable and fair | 28 |
| process that allows a
franchisee to request a modification or | 29 |
| adjustment of a standard or standards
included in such a | 30 |
| manual.
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| (Source: P.A. 91-485, eff. 1-1-00; 92-498, eff. 12-12-01; | 32 |
| 92-651, eff.
7-11-02.)
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