Full Text of SB0140 99th General Assembly
SB0140ham002 99TH GENERAL ASSEMBLY | Rep. Dan Brady Filed: 5/16/2016
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| 1 | | AMENDMENT TO SENATE BILL 140
| 2 | | AMENDMENT NO. ______. Amend Senate Bill 140 by replacing | 3 | | everything after the enacting clause with the following:
| 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 |
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| 1 | | motor vehicle dealer to engage in any action
with respect to a | 2 | | franchise which is arbitrary, in bad faith or
unconscionable | 3 | | and which causes damage to any of the parties or to the public.
| 4 | | (c) It shall be deemed a violation for a manufacturer, a | 5 | | distributor,
a wholesaler, a distributor branch or division, a | 6 | | factory branch or division,
or a wholesale branch or division, | 7 | | or officer, agent or other representative
thereof, to coerce, | 8 | | or attempt to coerce, any motor vehicle dealer:
| 9 | | (1) to accept, buy or order any motor vehicle or | 10 | | vehicles, appliances,
equipment, parts or accessories | 11 | | therefor, or any other commodity or commodities
or service | 12 | | or services which such motor vehicle dealer has not | 13 | | voluntarily
ordered or requested except items required by | 14 | | applicable local, state or
federal law; or to require a | 15 | | motor vehicle dealer to accept, buy, order or
purchase such | 16 | | items in order to obtain any motor vehicle or vehicles or | 17 | | any
other commodity or commodities which have been ordered | 18 | | or requested by such
motor vehicle dealer;
| 19 | | (2) to order or accept delivery of any motor vehicle | 20 | | with special
features, appliances, accessories or | 21 | | equipment not included in the list
price of the motor | 22 | | vehicles as publicly advertised by the manufacturer
| 23 | | thereof, except items required by applicable law; or
| 24 | | (3) to order for anyone any parts, accessories, | 25 | | equipment, machinery,
tools, appliances or any commodity | 26 | | whatsoever, except items required by
applicable law.
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| 1 | | (d) It shall be deemed a violation for a manufacturer, a | 2 | | distributor,
a wholesaler, a distributor branch or division, or | 3 | | officer, agent or other
representative thereof:
| 4 | | (1) to adopt, change, establish or implement a plan or | 5 | | system for the
allocation and distribution of new motor | 6 | | vehicles to motor vehicle dealers
which is arbitrary or | 7 | | capricious or to modify an existing plan so as to cause
the | 8 | | same to be arbitrary or capricious;
| 9 | | (2) to fail or refuse to advise or disclose to any | 10 | | motor vehicle dealer
having a franchise or selling | 11 | | agreement, upon written request therefor,
the basis upon | 12 | | which new motor vehicles of the same line make are | 13 | | allocated
or distributed to motor vehicle dealers in the | 14 | | State and the basis upon
which the current allocation or | 15 | | distribution is being made or will be made
to such motor | 16 | | vehicle dealer;
| 17 | | (3) to refuse to deliver in reasonable quantities and | 18 | | within a reasonable
time after receipt of dealer's order, | 19 | | to any motor vehicle dealer having
a franchise or selling | 20 | | agreement for the retail sale of new motor vehicles
sold or | 21 | | distributed by such manufacturer, distributor, wholesaler, | 22 | | distributor
branch or division, factory branch or division | 23 | | or wholesale branch or division,
any such motor vehicles as | 24 | | are covered by such franchise or selling agreement
| 25 | | specifically publicly advertised in the State by such | 26 | | manufacturer,
distributor, wholesaler, distributor branch |
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| 1 | | or division, factory branch or
division, or wholesale | 2 | | branch or division to be available for immediate
delivery. | 3 | | However, the failure to deliver any motor vehicle shall not | 4 | | be
considered a violation of this Act if such failure is | 5 | | due to an act of God,
a work stoppage or delay due to a | 6 | | strike or labor difficulty, a shortage
of materials, a lack | 7 | | of manufacturing capacity, a freight embargo or other
cause | 8 | | over which the manufacturer, distributor, or wholesaler, | 9 | | or any agent
thereof has no control;
| 10 | | (4) to coerce, or attempt to coerce, any motor vehicle | 11 | | dealer to enter
into any agreement with such manufacturer, | 12 | | distributor, wholesaler, distributor
branch or division, | 13 | | factory branch or division, or wholesale branch or
| 14 | | division, or officer, agent or other representative | 15 | | thereof, or to do any
other act prejudicial to the dealer | 16 | | by threatening to reduce his allocation
of motor vehicles | 17 | | or cancel any franchise or any selling agreement existing
| 18 | | between such manufacturer, distributor, wholesaler, | 19 | | distributor branch or
division, or factory branch or | 20 | | division, or wholesale branch or division,
and the dealer. | 21 | | However, notice in good faith to any motor vehicle dealer
| 22 | | of the dealer's violation of any terms or provisions of | 23 | | such franchise or
selling agreement or of any law or | 24 | | regulation applicable to the conduct of
a motor vehicle | 25 | | dealer shall not constitute a violation of this Act;
| 26 | | (5) to require a franchisee to participate in an |
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| 1 | | advertising campaign
or contest or any promotional | 2 | | campaign, or to purchase or lease any promotional
| 3 | | materials, training materials, show room or other display | 4 | | decorations or
materials at the expense of the franchisee;
| 5 | | (6) to cancel or terminate the franchise or selling | 6 | | agreement of a
motor vehicle dealer without good cause and | 7 | | without giving notice as
hereinafter provided; to fail or | 8 | | refuse to extend the franchise or selling
agreement of a | 9 | | motor vehicle dealer upon its expiration without good cause
| 10 | | and without giving notice as hereinafter provided; or, to | 11 | | offer a renewal,
replacement or succeeding franchise or | 12 | | selling agreement containing terms
and provisions the | 13 | | effect of which is to substantially change or modify the
| 14 | | sales and service obligations or capital requirements of | 15 | | the motor vehicle
dealer arbitrarily and without good cause | 16 | | and without giving notice as
hereinafter provided | 17 | | notwithstanding any term or provision of a franchise
or | 18 | | selling agreement.
| 19 | | (A) If a manufacturer, distributor, wholesaler, | 20 | | distributor branch or
division, factory branch or | 21 | | division or wholesale branch or division intends
to | 22 | | cancel or terminate a franchise or selling agreement or | 23 | | intends not to
extend or renew a franchise or selling | 24 | | agreement on its expiration, it shall
send a letter by | 25 | | certified mail, return
receipt requested, to the | 26 | | affected
franchisee at least
60 days before the |
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| 1 | | effective date of the
proposed action, or not later | 2 | | than 10 days before the proposed action when the
reason | 3 | | for the action is based upon either of the following:
| 4 | | (i) the
business operations of the franchisee | 5 | | have been abandoned or
the franchisee has failed to | 6 | | conduct customary sales and service operations
| 7 | | during customary business hours for at least 7
| 8 | | consecutive business
days unless such closing is | 9 | | due to an act of God, strike or labor
difficulty or | 10 | | other cause over which the franchisee has no | 11 | | control; or
| 12 | | (ii) the conviction of or plea of nolo
| 13 | | contendere by the motor
vehicle dealer or any | 14 | | operator thereof in a court of competent | 15 | | jurisdiction
to an offense punishable by | 16 | | imprisonment for more than two years.
| 17 | | Each notice of proposed action shall include a | 18 | | detailed statement
setting forth the specific grounds | 19 | | for the proposed cancellation, termination,
or refusal | 20 | | to extend or renew and shall state that the dealer has
| 21 | | only 30 days from receipt of
the notice to file with | 22 | | the Motor Vehicle Review Board a written protest
| 23 | | against the proposed action.
| 24 | | (B) If a manufacturer, distributor, wholesaler, | 25 | | distributor branch or
division, factory branch or | 26 | | division or wholesale branch or division intends
to |
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| 1 | | change substantially or modify the sales and service | 2 | | obligations or
capital requirements of a motor vehicle | 3 | | dealer as a condition to extending
or renewing the | 4 | | existing franchise or selling agreement of such motor
| 5 | | vehicle dealer, it shall
send a letter by certified | 6 | | mail, return receipt requested, to the affected
| 7 | | franchisee at
least 60
days
before the date of | 8 | | expiration of the franchise or selling agreement. Each
| 9 | | notice of proposed action shall include a detailed | 10 | | statement setting forth
the specific grounds for the | 11 | | proposed action
and shall state that the dealer has | 12 | | only 30 days from receipt of
the notice to file with | 13 | | the Motor Vehicle Review Board a written protest
| 14 | | against the proposed action.
| 15 | | (C) Within 30 days from receipt of the notice under
| 16 | | subparagraphs (A) and (B),
the franchisee may file with | 17 | | the Board a written
protest against the proposed | 18 | | action.
| 19 | | When the protest has been timely filed, the Board | 20 | | shall enter an
order,
fixing a date (within 60 days of | 21 | | the date of the order), time,
and place of a hearing on | 22 | | the protest required under Sections 12 and 29
of this | 23 | | Act, and send by certified mail, return receipt | 24 | | requested, a copy of
the order to the manufacturer that | 25 | | filed the notice of intention of the
proposed action | 26 | | and to the protesting dealer or franchisee.
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| 1 | | The manufacturer shall have the burden of proof to | 2 | | establish that good
cause exists to cancel or | 3 | | terminate, or fail to extend or renew the franchise
or
| 4 | | selling agreement of a motor vehicle dealer or | 5 | | franchisee, and to change
substantially or modify the | 6 | | sales and service obligations or capital
requirements | 7 | | of a motor vehicle dealer as a condition to extending | 8 | | or renewing
the existing franchise or selling | 9 | | agreement. The determination whether good
cause exists | 10 | | to cancel, terminate, or refuse to renew or extend the | 11 | | franchise
or selling agreement, or to change or modify | 12 | | the obligations of the dealer as a
condition to offer | 13 | | renewal, replacement, or succession shall be made
by | 14 | | the Board under subsection (d) of Section 12 of this | 15 | | Act.
| 16 | | (D) Notwithstanding the terms, conditions, or | 17 | | provisions of a
franchise
or selling agreement, the | 18 | | following shall not constitute good cause for
| 19 | | cancelling or terminating or failing to extend or renew | 20 | | the franchise or
selling agreement: (i) the change of | 21 | | ownership or executive management of the
franchisee's | 22 | | dealership; or (ii)
the
fact that the franchisee or | 23 | | owner of an interest in the franchise owns, has
an | 24 | | investment in, participates in the management of, or | 25 | | holds a license for
the sale of the same or any other | 26 | | line make of new motor vehicles.
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| 1 | | (E) The manufacturer may not cancel or terminate, | 2 | | or fail to extend or
renew a franchise or selling | 3 | | agreement or change or modify the obligations of
the | 4 | | franchisee as a condition to offering a renewal, | 5 | | replacement, or succeeding
franchise or selling | 6 | | agreement before the hearing process is concluded as
| 7 | | prescribed by this Act, and thereafter, if the Board | 8 | | determines that the
manufacturer has failed to meet its | 9 | | burden of proof and that good cause does
not exist to | 10 | | allow the proposed action;
| 11 | | (7) notwithstanding the terms of any franchise | 12 | | agreement, to fail to
indemnify and hold harmless its | 13 | | franchised dealers against any judgment
or settlement for | 14 | | damages, including, but not limited to, court costs, expert
| 15 | | witness fees, reasonable attorneys' fees of the new motor | 16 | | vehicle
dealer, and other expenses incurred in the | 17 | | litigation, so long as such fees
and costs are reasonable,
| 18 | | arising out
of complaints, claims or lawsuits including, | 19 | | but not limited to, strict
liability, negligence, | 20 | | misrepresentation, warranty (express or implied),
or | 21 | | recision of the sale as defined in Section 2-608 of the | 22 | | Uniform Commercial
Code, to the extent that the judgment or | 23 | | settlement relates to the alleged
defective or negligent | 24 | | manufacture, assembly or design of new motor vehicles,
| 25 | | parts or accessories or other functions by the | 26 | | manufacturer, beyond the
control of the dealer; provided |
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| 1 | | that, in order to provide an adequate
defense, the | 2 | | manufacturer receives notice of the filing of a complaint, | 3 | | claim,
or lawsuit within 60 days after the filing;
| 4 | | (8) to require or otherwise coerce a motor vehicle | 5 | | dealer to underutilize the motor vehicle dealer's | 6 | | facilities by requiring or otherwise coercing the motor | 7 | | vehicle dealer to exclude or remove from the motor vehicle | 8 | | dealer's facilities operations for selling or servicing of | 9 | | any vehicles for which the motor vehicle dealer has a | 10 | | franchise agreement with another manufacturer, | 11 | | distributor, wholesaler, distribution branch or division, | 12 | | or officer, agent, or other representative thereof; | 13 | | provided, however, that, in light of all existing | 14 | | circumstances, (i) the motor vehicle dealer maintains a | 15 | | reasonable line of credit for each make or line of new | 16 | | motor vehicle, (ii) the new motor vehicle dealer remains in | 17 | | compliance with any reasonable facilities requirements of | 18 | | the manufacturer, (iii) no change is made in the principal | 19 | | management of the new motor vehicle dealer, and (iv) the | 20 | | addition of the make or line of new motor vehicles would be | 21 | | reasonable. The reasonable facilities requirement set | 22 | | forth in item (ii) of subsection (d)(8) shall not include | 23 | | any requirement that a franchisee establish or maintain | 24 | | exclusive facilities, personnel, or display space. Any | 25 | | decision by a motor vehicle dealer to sell additional makes | 26 | | or lines at the motor vehicle dealer's facility shall be |
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| 1 | | presumed to be reasonable, and the manufacturer shall have | 2 | | the burden to overcome that presumption. A motor vehicle | 3 | | dealer must provide a written notification of its intent to | 4 | | add a make or line of new motor vehicles to the | 5 | | manufacturer. If the manufacturer does not respond to the | 6 | | motor vehicle dealer, in writing, objecting to the addition | 7 | | of the make or line within 60 days after the date that the | 8 | | motor vehicle dealer sends the written notification, then | 9 | | the manufacturer shall be deemed to have approved the | 10 | | addition of the make or line; or | 11 | | (9) to use or consider the performance of a motor | 12 | | vehicle dealer relating to the sale of the manufacturer's, | 13 | | distributor's, or wholesaler's vehicles or the motor | 14 | | vehicle dealer's ability to satisfy any minimum sales or | 15 | | market share quota or responsibility relating to the sale | 16 | | of the manufacturer's, distributor's, or wholesaler's new | 17 | | vehicles in determining: | 18 | | (A) the motor vehicle dealer's eligibility to | 19 | | purchase program, certified, or other used motor | 20 | | vehicles from the manufacturer, distributor, or | 21 | | wholesaler; | 22 | | (B) the volume, type, or model of program, | 23 | | certified, or other used motor vehicles that a motor | 24 | | vehicle dealer is eligible to purchase from the | 25 | | manufacturer, distributor, or wholesaler; | 26 | | (C) the price of any program, certified, or other |
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| 1 | | used motor vehicle that the dealer is eligible to | 2 | | purchase from the manufacturer, distributor, or | 3 | | wholesaler; or | 4 | | (D) the availability or amount of any discount, | 5 | | credit, rebate, or sales incentive that the dealer is | 6 | | eligible to receive from the manufacturer, | 7 | | distributor, or wholesaler for the purchase of any | 8 | | program, certified, or other used motor vehicle | 9 | | offered for sale by the manufacturer, distributor, or | 10 | | wholesaler. | 11 | | (e) It shall be deemed a violation for a manufacturer, a | 12 | | distributor,
a wholesaler, a distributor branch or division or | 13 | | officer, agent or other
representative thereof:
| 14 | | (1) to resort to or use any false or misleading | 15 | | advertisement in
connection with his business as such | 16 | | manufacturer, distributor, wholesaler,
distributor branch | 17 | | or division or officer, agent or other representative
| 18 | | thereof;
| 19 | | (2) to offer to sell or lease, or to sell or lease, any | 20 | | new motor vehicle
to any motor vehicle dealer at a lower | 21 | | actual price therefor than the actual
price offered to any | 22 | | other motor vehicle dealer for the same model vehicle
| 23 | | similarly equipped or to utilize any device including, but | 24 | | not limited to,
sales promotion plans or programs which | 25 | | result in such lesser actual
price or fail to make | 26 | | available to any motor vehicle dealer any
preferential |
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| 1 | | pricing, incentive, rebate, finance rate, or low interest | 2 | | loan
program offered to competing motor vehicle dealers in | 3 | | other contiguous states.
However, the provisions of this | 4 | | paragraph shall not apply to sales
to a motor vehicle | 5 | | dealer for resale to any unit of the United States
| 6 | | Government, the State or any of its political subdivisions;
| 7 | | (3) to offer to sell or lease, or to sell or lease, any | 8 | | new motor vehicle
to any person, except a wholesaler, | 9 | | distributor or manufacturer's employees
at a lower actual | 10 | | price therefor than the actual price offered and charged
to | 11 | | a motor vehicle dealer for the same model vehicle similarly | 12 | | equipped or
to utilize any device which results in such | 13 | | lesser actual price. However,
the provisions of this | 14 | | paragraph shall not apply to sales to a motor
vehicle | 15 | | dealer for resale to any unit of the United States | 16 | | Government, the
State or any of its political subdivisions;
| 17 | | (4) to prevent or attempt to prevent by contract or | 18 | | otherwise any motor
vehicle dealer or franchisee from | 19 | | changing the executive management control
of the motor
| 20 | | vehicle dealer or franchisee unless the franchiser, having | 21 | | the burden of
proof, proves that such change of executive | 22 | | management will result in executive
management control by a | 23 | | person or persons who are not of good moral character
or | 24 | | who do not meet the franchiser's existing and, with | 25 | | consideration given
to the volume of sales and service of | 26 | | the dealership, uniformly applied
minimum business |
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| 1 | | experience standards in the market area. However where
the | 2 | | manufacturer rejects a proposed change in executive | 3 | | management
control, the manufacturer shall give written | 4 | | notice of his reasons to the
dealer within 60 days of | 5 | | notice to the manufacturer by the dealer of
the proposed | 6 | | change. If the manufacturer does not send a letter to the
| 7 | | franchisee by certified mail, return receipt requested, | 8 | | within 60 days from
receipt by
the manufacturer of the | 9 | | proposed change, then the change of the
executive | 10 | | management control of the franchisee shall be deemed
| 11 | | accepted as proposed by the franchisee, and the | 12 | | manufacturer shall give
immediate
effect to such change;
| 13 | | (5) to prevent or attempt to prevent by contract or | 14 | | otherwise any motor
vehicle dealer from establishing or | 15 | | changing the capital structure of his
dealership or the | 16 | | means by or through which he finances the operation | 17 | | thereof;
provided the dealer meets any reasonable capital | 18 | | standards agreed to between
the dealer and the | 19 | | manufacturer, distributor or wholesaler, who may require
| 20 | | that the sources, method and manner by which the dealer | 21 | | finances or intends
to finance its operation, equipment or | 22 | | facilities be fully disclosed;
| 23 | | (6) to refuse to give effect to or prevent or attempt | 24 | | to prevent by
contract or otherwise any motor vehicle | 25 | | dealer or any officer, partner or
stockholder of any motor | 26 | | vehicle dealer from selling or transferring any
part of the |
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| 1 | | interest of any of them to any other person or persons or | 2 | | party
or parties unless such sale or transfer is to a | 3 | | transferee who would
not otherwise qualify for a new motor | 4 | | vehicle dealers license under "The
Illinois Vehicle Code" | 5 | | or unless the franchiser, having the burden of proof,
| 6 | | proves that such sale or transfer is to a person or party | 7 | | who is not of
good moral character or does not meet the | 8 | | franchiser's existing and reasonable
capital standards | 9 | | and, with consideration given to the volume of sales and
| 10 | | service of the dealership, uniformly applied minimum | 11 | | business experience
standards in the market area.
However, | 12 | | nothing herein shall be construed to prevent a
franchiser | 13 | | from implementing affirmative action programs providing | 14 | | business
opportunities for minorities or from complying | 15 | | with applicable federal,
State or local law:
| 16 | | (A) If the manufacturer intends to refuse to | 17 | | approve the sale or
transfer of all or a part of the | 18 | | interest, then it shall, within 60 days from
receipt of | 19 | | the completed application forms generally utilized by | 20 | | a manufacturer
to conduct its review and a copy of all | 21 | | agreements regarding the proposed
transfer, send a | 22 | | letter by certified mail, return receipt requested, | 23 | | advising
the franchisee of any refusal to approve the | 24 | | sale or transfer of all or part of
the interest
and | 25 | | shall state that the dealer only has 30 days from the | 26 | | receipt of the
notice to file with the Motor Vehicle |
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| 1 | | Review Board a written protest against
the proposed | 2 | | action.
The
notice shall set forth specific criteria | 3 | | used to evaluate the prospective
transferee and the | 4 | | grounds for refusing to approve the sale or transfer to
| 5 | | that transferee. Within 30 days from the franchisee's | 6 | | receipt of the
manufacturer's notice, the
franchisee | 7 | | may file
with the Board a written protest against the | 8 | | proposed action.
| 9 | | When a protest has been timely filed, the Board | 10 | | shall enter an
order, fixing the date (within 60 days | 11 | | of the date of such
order), time, and place of a | 12 | | hearing on the protest, required under
Sections 12 and | 13 | | 29 of this Act, and send by certified mail, return | 14 | | receipt
requested, a copy of the order to the | 15 | | manufacturer that filed notice of
intention of the | 16 | | proposed action and to the protesting franchisee.
| 17 | | The manufacturer shall have the burden of proof to | 18 | | establish that good
cause exists to refuse to approve | 19 | | the sale or transfer to the transferee. The
| 20 | | determination whether good cause exists to refuse to | 21 | | approve the sale or
transfer shall be made by the Board | 22 | | under subdivisions (6)(B).
The manufacturer shall not | 23 | | refuse to approve the sale or transfer
by
a dealer or | 24 | | an officer, partner, or stockholder of a franchise or | 25 | | any part
of the interest to any person or persons | 26 | | before the hearing process is
concluded as prescribed |
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| 1 | | by this Act, and thereafter if the Board determines
| 2 | | that the manufacturer has failed to meet its burden of | 3 | | proof and that good
cause does not exist to refuse to | 4 | | approve the sale or transfer to the
transferee.
| 5 | | (B) Good cause to refuse to approve such sale or | 6 | | transfer under this
Section is established when such | 7 | | sale or transfer is to a transferee who would
not | 8 | | otherwise qualify for a new motor vehicle dealers | 9 | | license under "The
Illinois Vehicle Code" or such sale | 10 | | or transfer is to a person or party who is
not of good | 11 | | moral character or does not meet the franchiser's | 12 | | existing and
reasonable capital standards and, with | 13 | | consideration given to the volume of
sales and service | 14 | | of the dealership, uniformly applied minimum business
| 15 | | experience standards in the market area.
| 16 | | (7) to obtain money, goods, services, anything of | 17 | | value, or any other
benefit from any other person with whom | 18 | | the motor vehicle dealer does business,
on account of or in | 19 | | relation to the transactions between the dealer and
the | 20 | | other person as compensation, except for services actually | 21 | | rendered,
unless such benefit is promptly accounted for and | 22 | | transmitted to the motor
vehicle dealer;
| 23 | | (8) to grant an additional franchise in the relevant | 24 | | market area of an
existing franchise of the same line make | 25 | | or to relocate an existing motor
vehicle dealership within | 26 | | or into a relevant market area of an existing
franchise of |
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| 1 | | the same line make.
However, if the manufacturer wishes to
| 2 | | grant such an additional franchise to an independent person | 3 | | in a bona fide
relationship in which such person is | 4 | | prepared to make a significant
investment subject to loss | 5 | | in such a dealership, or if the manufacturer
wishes to | 6 | | relocate an existing motor vehicle dealership, then the
| 7 | | manufacturer shall send a letter
by certified mail, return | 8 | | receipt requested, to each existing dealer or dealers
of | 9 | | the same line make whose relevant
market area includes the | 10 | | proposed location of the additional or relocated
franchise | 11 | | at least
60 days before the manufacturer grants an | 12 | | additional franchise or relocates an
existing franchise of | 13 | | the same line make within or into the relevant market
area | 14 | | of an existing
franchisee of the same line make. Each | 15 | | notice shall set forth the specific
grounds for the | 16 | | proposed grant of an additional or relocation of an | 17 | | existing
franchise and shall state that the dealer has only | 18 | | 30 days from the date of receipt of the notice to file with | 19 | | the Motor Vehicle Review Board a written protest against | 20 | | the proposed action. Unless the parties agree upon the | 21 | | grant or establishment of the
additional or relocated | 22 | | franchise within 30 days from the date the
notice was
| 23 | | received by the existing franchisee of the same line make | 24 | | or any person
entitled to receive such notice, the | 25 | | franchisee or other person may file
with the Board a | 26 | | written protest against the grant or establishment of the
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| 1 | | proposed additional or relocated franchise.
| 2 | | When a protest has been timely filed, the Board shall | 3 | | enter an order
fixing a date (within 60 days of the date of | 4 | | the order), time,
and place of a hearing on the protest, | 5 | | required under Sections 12 and 29
of this Act, and send by | 6 | | certified or registered mail, return receipt
requested, a | 7 | | copy of the order to the manufacturer that filed the notice | 8 | | of
intention to grant or establish the proposed additional | 9 | | or relocated
franchise and to the protesting dealer or | 10 | | dealers of the same line make
whose
relevant market area | 11 | | includes the proposed location of the additional or
| 12 | | relocated franchise.
| 13 | | When more than one protest is filed against the grant | 14 | | or establishment of
the
additional or relocated franchise | 15 | | of the same line make, the Board may
consolidate the | 16 | | hearings to expedite disposition of the matter. The
| 17 | | manufacturer shall have the burden of proof to establish | 18 | | that good cause
exists to allow the grant or establishment | 19 | | of the additional or relocated
franchise. The manufacturer | 20 | | may not grant or establish the additional
franchise or | 21 | | relocate the existing franchise before the hearing process | 22 | | is
concluded as prescribed by this Act, and thereafter if | 23 | | the Board determines
that the manufacturer has failed to | 24 | | meet its burden of proof and that good
cause does not exist | 25 | | to allow the grant or establishment of the additional
| 26 | | franchise or relocation of the existing franchise.
|
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| 1 | | The determination whether good cause exists for | 2 | | allowing the grant or
establishment of an additional | 3 | | franchise or relocated existing franchise,
shall be made by | 4 | | the Board under subsection (c) of Section 12 of this Act.
| 5 | | If the manufacturer seeks to enter
into a contract, | 6 | | agreement or other arrangement with any person,
| 7 | | establishing any additional motor vehicle dealership or | 8 | | other facility,
limited to the sale of factory repurchase | 9 | | vehicles or late model vehicles,
then the manufacturer | 10 | | shall follow the notice procedures set forth in this
| 11 | | Section and the
determination whether good cause exists for | 12 | | allowing the proposed agreement
shall be made by the Board | 13 | | under subsection (c) of Section 12, with the
manufacturer | 14 | | having
the burden of proof.
| 15 | | A. (Blank).
| 16 | | B. For the purposes of this Section, appointment of | 17 | | a successor motor
vehicle dealer at the same location | 18 | | as its predecessor, or within 2 miles
of such location,
| 19 | | or the relocation of an existing dealer or franchise | 20 | | within 2 miles of
the relocating dealer's or | 21 | | franchisee's existing location,
shall not be construed | 22 | | as a grant, establishment or the
entering into of an | 23 | | additional franchise or selling agreement, or a
| 24 | | relocation of an existing franchise. The reopening
of a | 25 | | motor vehicle dealership that has not been in operation | 26 | | for 18 months
or more shall be deemed the grant of an |
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| 1 | | additional franchise or selling
agreement.
| 2 | | C. This Section does not apply to the relocation of | 3 | | an existing
dealership or franchise in a county having | 4 | | a population of more than
300,000 persons when the new | 5 | | location is within the dealer's current
relevant | 6 | | market area, provided the new location is more than 7 | 7 | | miles from
the nearest dealer of the same line make. | 8 | | This Section does not apply to
the relocation of an | 9 | | existing dealership or franchise in a county having a
| 10 | | population of less than 300,000 persons when the new | 11 | | location is within the
dealer's current relevant | 12 | | market area, provided the new location is more
than 12 | 13 | | miles from the nearest dealer of the same line make. A | 14 | | dealer that would be farther away
from the new location | 15 | | of an existing dealership or
franchise of the same line | 16 | | make after a relocation may not
file a written protest | 17 | | against the relocation with the
Motor Vehicle Review | 18 | | Board.
| 19 | | D. Nothing in this Section shall be construed to | 20 | | prevent a
franchiser from implementing affirmative | 21 | | action programs providing business
opportunities for | 22 | | minorities or from complying with applicable federal,
| 23 | | State or local law;
| 24 | | (9) to require a motor vehicle dealer to assent to a | 25 | | release, assignment,
novation, waiver or estoppel which | 26 | | would relieve any person from liability
imposed by this |
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| 1 | | Act;
| 2 | | (10) to prevent or refuse to give effect to the | 3 | | succession to the
ownership or management control of a | 4 | | dealership by any legatee under the
will of a dealer or to | 5 | | an heir under the laws of descent and distribution
of this | 6 | | State unless the franchisee has designated a successor to | 7 | | the ownership
or management control under the succession | 8 | | provisions of the franchise.
Unless the
franchiser, having | 9 | | the burden of proof, proves that the successor
is a person | 10 | | who is not of good moral character or does not meet the
| 11 | | franchiser's existing and reasonable capital standards | 12 | | and, with consideration
given to the volume of sales and | 13 | | service of the dealership, uniformly applied
minimum | 14 | | business experience standards in the market area, any | 15 | | designated
successor of a dealer or franchisee may succeed | 16 | | to the ownership or management
control of a dealership | 17 | | under the existing franchise if:
| 18 | | (i) The designated successor gives the | 19 | | franchiser written notice by
certified mail, | 20 | | return receipt requested, of his or her intention | 21 | | to succeed to
the ownership of the dealer within 60 | 22 | | days of the dealer's death or incapacity;
and
| 23 | | (ii) The designated successor agrees to be | 24 | | bound by all the terms
and
conditions of the | 25 | | existing franchise.
| 26 | | Notwithstanding the foregoing, in the event the motor |
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| 1 | | vehicle dealer or
franchisee and manufacturer have duly | 2 | | executed an agreement concerning
succession rights prior | 3 | | to the dealer's death or incapacitation, the agreement
| 4 | | shall be observed.
| 5 | | (A) If the franchiser intends to refuse to honor | 6 | | the successor to the
ownership of a deceased or | 7 | | incapacitated dealer or franchisee under an
existing | 8 | | franchise agreement, the franchiser shall send a | 9 | | letter by certified
mail, return receipt requested, to | 10 | | the
designated successor within
60 days
from receipt of | 11 | | a proposal advising of its intent to refuse to honor | 12 | | the
succession and to discontinue the existing | 13 | | franchise agreement
and shall state that the | 14 | | designated successor only has 30 days from the
receipt | 15 | | of the notice to file with the Motor Vehicle Review | 16 | | Board a written
protest against the proposed action.
| 17 | | The notice shall set forth the
specific grounds for the | 18 | | refusal to honor the succession and discontinue the
| 19 | | existing franchise agreement.
| 20 | | If notice of refusal is not timely served upon the | 21 | | designated
successor,
the franchise agreement shall | 22 | | continue in effect subject to termination only as
| 23 | | otherwise permitted by paragraph (6) of subsection (d) | 24 | | of Section 4 of this
Act.
| 25 | | Within 30 days from the date the notice was | 26 | | received by the
designated
successor or any other |
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| 1 | | person entitled to notice, the designee or other
person | 2 | | may file with the Board a written protest against the | 3 | | proposed action.
| 4 | | When a protest has been timely filed, the Board | 5 | | shall enter an
order,
fixing a date (within 60 days of | 6 | | the date of the order), time,
and place of a hearing on | 7 | | the protest, required under Sections 12 and 29
of this | 8 | | Act, and send by certified mail, return receipt | 9 | | requested, a copy of
the order to the franchiser that | 10 | | filed the notice of intention of the
proposed action | 11 | | and to the protesting designee or such other person.
| 12 | | The manufacturer shall have the burden of proof to | 13 | | establish that good
cause exists to refuse to honor the | 14 | | succession and discontinue the existing
franchise | 15 | | agreement. The determination whether good cause exists | 16 | | to refuse to
honor the succession shall be made by the | 17 | | Board under subdivision (B) of this
paragraph (10). The | 18 | | manufacturer shall not refuse to honor the succession | 19 | | or
discontinue the existing franchise agreement before | 20 | | the hearing process is
concluded as prescribed by this | 21 | | Act, and thereafter if the Board determines
that it has | 22 | | failed to meet its burden of proof and that good cause | 23 | | does not
exist to refuse to honor the succession and | 24 | | discontinue the existing
franchise agreement.
| 25 | | (B) No manufacturer shall impose any conditions | 26 | | upon honoring the
succession and continuing the |
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| 1 | | existing franchise agreement with the designated
| 2 | | successor other than that the franchisee has | 3 | | designated a successor to the
ownership or management | 4 | | control under the succession provisions of the
| 5 | | franchise, or that the designated successor is of good | 6 | | moral character or meets
the reasonable capital | 7 | | standards and, with consideration given to the volume | 8 | | of
sales and service of the dealership, uniformly | 9 | | applied minimum business
experience standards in the | 10 | | market area;
| 11 | | (11) to prevent or refuse to approve a proposal to | 12 | | establish a successor
franchise at a location previously | 13 | | approved by the franchiser when submitted
with the | 14 | | voluntary termination by the existing franchisee unless | 15 | | the successor
franchisee would not otherwise qualify for a | 16 | | new motor vehicle dealer's
license under the Illinois | 17 | | Vehicle Code or unless the franchiser, having
the burden of | 18 | | proof, proves that such proposed successor is not of good
| 19 | | moral character or does not meet the franchiser's existing | 20 | | and reasonable
capital standards and, with consideration | 21 | | given to the volume of sales and
service of the dealership, | 22 | | uniformly applied minimum business experience
standards in | 23 | | the market area. However, when such a rejection
of a | 24 | | proposal is made, the manufacturer shall give written | 25 | | notice of its
reasons to the franchisee within 60 days of | 26 | | receipt by the manufacturer
of the proposal. However, |
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| 1 | | nothing herein shall be construed
to prevent a franchiser | 2 | | from implementing affirmative action programs providing
| 3 | | business opportunities for minorities, or from complying | 4 | | with applicable
federal, State or local law;
| 5 | | (12) to prevent or refuse to grant a franchise to a | 6 | | person because such
person owns, has investment in or | 7 | | participates in the management of or holds
a franchise for | 8 | | the sale of another make or line of motor vehicles within
7 | 9 | | miles of the proposed franchise location in a county having | 10 | | a population
of more than 300,000 persons, or within 12 | 11 | | miles of the proposed franchise
location in a county having | 12 | | a population of less than 300,000
persons; or
| 13 | | (13) to prevent or attempt to prevent any new motor | 14 | | vehicle dealer
from establishing any additional motor | 15 | | vehicle dealership or other facility
limited to the sale of | 16 | | factory repurchase vehicles or late model vehicles
or | 17 | | otherwise offering for sale factory repurchase vehicles of | 18 | | the same line
make at an existing franchise by failing to | 19 | | make
available any contract, agreement or other | 20 | | arrangement which is made
available or otherwise offered to | 21 | | any person.
| 22 | | (f) It is deemed a violation for a manufacturer, a | 23 | | distributor, a wholesaler
wholesale ,
a distributor
branch or | 24 | | division, a factory branch or division, or a wholesale branch | 25 | | or
division, or
officer, agent, broker, shareholder, except a | 26 | | shareholder of 1% or less of the
outstanding
shares of any |
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| 1 | | class of securities of a manufacturer, distributor, or | 2 | | wholesaler
which is a
publicly traded corporation, or other | 3 | | representative, directly or indirectly,
to own or
operate a | 4 | | place of business as a motor vehicle franchisee or motor | 5 | | vehicle
financing
affiliate, except that, this subsection | 6 | | shall not prohibit : | 7 | | (1) the ownership or
operation of a
place of business | 8 | | by a manufacturer, distributor, or wholesaler for a period,
| 9 | | not to exceed
18 months, during the transition from one | 10 | | motor vehicle franchisee to another;
or | 11 | | (2) the
investment in a motor vehicle franchisee by a | 12 | | manufacturer, distributor, or
wholesaler if
the investment | 13 | | is for the sole purpose of enabling a partner or | 14 | | shareholder in
that motor
vehicle franchisee to acquire an | 15 | | interest in that motor vehicle franchisee and
that partner
| 16 | | or shareholder is not otherwise employed by or associated | 17 | | with the
manufacturer,
distributor, or wholesaler and | 18 | | would not otherwise have the requisite capital
investment
| 19 | | funds to invest in the motor vehicle franchisee, and has | 20 | | the right to purchase
the entire
equity interest of the | 21 | | manufacturer, distributor, or wholesaler in the motor
| 22 | | vehicle
franchisee within a reasonable period of time not | 23 | | to exceed 5 years ; or .
| 24 | | (3) the ownership or operation of a place of business | 25 | | by a manufacturer that manufactures only diesel engines for | 26 | | installation in trucks having a gross vehicle weight rating |
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| 1 | | of more than 16,000 pounds that are required to be | 2 | | registered under the Illinois Vehicle Code, provided that: | 3 | | (A) the manufacturer does not otherwise | 4 | | manufacture, distribute, or sell motor vehicles as | 5 | | defined under Section 1-217 of the Illinois Vehicle | 6 | | Code; | 7 | | (B) the manufacturer owned a place of business and | 8 | | it was in operation as of January 1, 2016; | 9 | | (C) the manufacturer complies with all obligations | 10 | | owed to dealers that are not owned, operated, or | 11 | | controlled by the manufacturer, including, but not | 12 | | limited to those obligations arising pursuant to | 13 | | Section 6; | 14 | | (D) to further avoid any acts or practices, the | 15 | | effect of which may be to lessen or eliminate | 16 | | competition, the manufacturer provides to dealers on | 17 | | substantially equal terms access to all support for | 18 | | completing repairs, including, but not limited to, | 19 | | parts and assemblies, training, and technical service | 20 | | bulletins, and other information concerning repairs | 21 | | that the manufacturer provides to facilities that are | 22 | | owned, operated, or controlled by the manufacturer; | 23 | | and | 24 | | (E) the manufacturer does not require that | 25 | | warranty repair work be performed by a | 26 | | manufacturer-owned repair facility and the |
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| 1 | | manufacturer provides any dealer that has an agreement | 2 | | with the manufacturer to sell and perform warranty | 3 | | repairs on the manufacturer's engines the opportunity | 4 | | to perform warranty repairs on those engines, | 5 | | regardless of whether the dealer sold the truck into | 6 | | which the engine was installed. | 7 | | (g) Notwithstanding the terms, provisions, or conditions | 8 | | of any agreement or
waiver, it shall be deemed a violation for | 9 | | a manufacturer, a distributor,
a wholesaler, a distributor | 10 | | branch or division, a factory branch or division,
or a | 11 | | wholesale branch or division, or officer, agent or other | 12 | | representative
thereof, to directly or indirectly condition | 13 | | the awarding of a franchise to a
prospective new motor vehicle | 14 | | dealer, the addition of a line make or
franchise to an existing | 15 | | dealer, the renewal of a franchise of an existing
dealer, the | 16 | | approval of the relocation of an existing dealer's facility, or | 17 | | the
approval of the sale or transfer of the ownership of a | 18 | | franchise on the
willingness of a dealer, proposed new dealer, | 19 | | or owner of an interest in the
dealership facility to enter | 20 | | into a site control agreement or exclusive use
agreement unless | 21 | | separate and reasonable consideration was offered and accepted | 22 | | for that agreement. | 23 | | For purposes of this subsection (g), the terms "site | 24 | | control
agreement" and "exclusive use agreement" include any | 25 | | agreement that has
the effect of either (i) requiring that the | 26 | | dealer establish or maintain
exclusive dealership facilities; |
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| 1 | | or (ii) restricting the ability of the dealer, or
the ability | 2 | | of the dealer's lessor in the event the dealership facility is | 3 | | being
leased, to transfer, sell, lease, or change the use of | 4 | | the dealership premises,
whether by sublease, lease, | 5 | | collateral pledge of lease, or other similar agreement. "Site | 6 | | control agreement" and "exclusive use agreement" also include a | 7 | | manufacturer restricting the ability of a dealer to transfer, | 8 | | sell, or lease the dealership premises by right of first | 9 | | refusal to purchase or lease, option to purchase, or option to | 10 | | lease if the transfer, sale, or lease of the dealership | 11 | | premises is to a person who is an immediate family member of | 12 | | the dealer. For the purposes of this subsection (g), "immediate | 13 | | family member" means a spouse, parent, son, daughter, | 14 | | son-in-law, daughter-in-law, brother, and sister. | 15 | | If a manufacturer exercises any right of first refusal to | 16 | | purchase or lease or option to purchase or lease with regard to | 17 | | a transfer, sale, or lease of the dealership premises to a | 18 | | person who is not an immediate family member of the dealer, | 19 | | then (1) within 60 days from the receipt of the completed | 20 | | application forms generally utilized by a manufacturer to | 21 | | conduct its review and a copy of all agreements regarding the | 22 | | proposed transfer, the manufacturer must notify the dealer of | 23 | | its intent to exercise the right of first refusal to purchase | 24 | | or lease or option to purchase or lease and (2) the exercise of | 25 | | the right of first refusal to purchase or lease or option to | 26 | | purchase or lease must result in the dealer receiving |
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| 1 | | consideration, terms, and conditions that either are the same | 2 | | as or greater than that which they have contracted to receive | 3 | | in connection with the proposed transfer, sale, or lease of the | 4 | | dealership premises. | 5 | | Any provision
contained in any agreement entered into on or | 6 | | after the effective date of this amendatory Act of the 96th | 7 | | General Assembly that is inconsistent with the provisions of | 8 | | this subsection (g) shall be
voidable at the election of the | 9 | | affected dealer, prospective dealer, or owner
of an interest in | 10 | | the dealership facility. | 11 | | (h) For purposes of this subsection: | 12 | | "Successor manufacturer" means any motor vehicle | 13 | | manufacturer that, on or after January 1, 2009, acquires, | 14 | | succeeds to, or
assumes any part of the business of another | 15 | | manufacturer, referred to as the
"predecessor manufacturer", | 16 | | as the result of any of the following: | 17 | | (i) A change in ownership, operation, or control of the | 18 | | predecessor
manufacturer by sale or transfer of assets, | 19 | | corporate stock or other
equity interest, assignment, | 20 | | merger, consolidation, combination, joint
venture, | 21 | | redemption, court-approved sale, operation of law or
| 22 | | otherwise. | 23 | | (ii) The termination, suspension, or cessation of a | 24 | | part or all of the
business operations of the predecessor | 25 | | manufacturer. | 26 | | (iii) The discontinuance of the sale of the product |
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| 1 | | line. | 2 | | (iv) A change in distribution system by the predecessor | 3 | | manufacturer,
whether through a change in distributor or | 4 | | the predecessor
manufacturer's decision to cease | 5 | | conducting business through a
distributor altogether. | 6 | | "Former Franchisee" means a new motor vehicle dealer that | 7 | | has entered into a franchise with a predecessor manufacturer | 8 | | and that has either: | 9 | | (i) entered into a termination agreement or deferred | 10 | | termination
agreement with a predecessor or successor | 11 | | manufacturer related to
such franchise; or | 12 | | (ii) has had such franchise canceled, terminated, | 13 | | nonrenewed,
noncontinued, rejected, nonassumed, or | 14 | | otherwise ended. | 15 | | For a period of 3 years from: (i) the date that a successor | 16 | | manufacturer acquires, succeeds to, or assumes any part of the | 17 | | business of a predecessor manufacturer; (ii) the last day that | 18 | | a former franchisee is authorized to remain in business as a | 19 | | franchised dealer with respect to a particular franchise under | 20 | | a termination agreement or deferred termination agreement with | 21 | | a predecessor or successor manufacturer; (iii) the last day | 22 | | that a former franchisee that was cancelled, terminated, | 23 | | nonrenewed, noncontinued, rejected, nonassumed, or otherwise | 24 | | ended by a predecessor or successor manufacturer is authorized | 25 | | to remain in business as a franchised dealer with respect to a | 26 | | particular franchise; or (iv) the effective date of this |
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| 1 | | amendatory Act of the 96th General Assembly, whichever is | 2 | | latest, it shall be unlawful for such successor manufacturer to | 3 | | enter into a same line make franchise with any
person or to | 4 | | permit the relocation of any existing same line
make franchise, | 5 | | for a line make of the predecessor manufacturer that would be | 6 | | located or
relocated within the relevant market area of a | 7 | | former franchisee who owned or leased a
dealership facility in | 8 | | that relevant market area without first offering the additional | 9 | | or relocated
franchise to the former franchisee, or the | 10 | | designated successor of such former franchisee in the
event the | 11 | | former franchisee is deceased or a person with a disability, at | 12 | | no cost and without any requirements or
restrictions other than | 13 | | those imposed generally on the manufacturer's other | 14 | | franchisees at that
time, unless one of the following applies: | 15 | | (1) As a result of the former franchisee's | 16 | | cancellation, termination,
noncontinuance, or nonrenewal | 17 | | of the franchise, the predecessor
manufacturer had | 18 | | consolidated the line make with another of its line makes
| 19 | | for which the predecessor manufacturer had a franchisee | 20 | | with a then-existing
dealership facility located within | 21 | | that relevant market area. | 22 | | (2) The successor manufacturer has paid the former | 23 | | franchisee, or the
designated successor of such former | 24 | | franchisee in the event the former
franchisee is deceased | 25 | | or a person with a disability, the fair market value of the | 26 | | former
franchisee's franchise on (i) the date the |
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| 1 | | franchisor announces the action which results in the | 2 | | termination, cancellation, or nonrenewal; or (ii) the date | 3 | | the action which results in termination, cancellation, or | 4 | | nonrenewal first became general knowledge; or (iii) the day | 5 | | 12 months prior to the date on which the notice of | 6 | | termination, cancellation, or nonrenewal is issued, | 7 | | whichever amount is higher. Payment is due within 90 days | 8 | | of the effective date of the termination, cancellation, or | 9 | | nonrenewal. If the termination, cancellation, or | 10 | | nonrenewal is due to a manufacturer's change in | 11 | | distributors, the manufacturer may avoid paying fair | 12 | | market value to the dealer if the new distributor or the | 13 | | manufacturer offers the dealer a franchise agreement with | 14 | | terms acceptable to the dealer. | 15 | | (3) The successor manufacturer proves that it would | 16 | | have had good cause to terminate the franchise agreement of | 17 | | the former franchisee, or the successor of the former | 18 | | franchisee under item (e)(10) in the event that the former | 19 | | franchisee is deceased or a person with a disability. The | 20 | | determination of whether the successor manufacturer would | 21 | | have had good cause to terminate the franchise agreement of | 22 | | the former franchisee, or the successor of the former | 23 | | franchisee, shall be made by the Board under subsection (d) | 24 | | of Section 12. A successor manufacturer that seeks to | 25 | | assert that it would have had good cause to terminate a | 26 | | former franchisee, or the successor of the former |
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| 1 | | franchisee, must file a petition seeking a hearing on this | 2 | | issue before the Board and shall have the burden of proving | 3 | | that it would have had good cause to terminate the former | 4 | | franchisee or the successor of the former franchisee. No | 5 | | successor dealer, other than the former franchisee, may be | 6 | | appointed or franchised by the successor manufacturer | 7 | | within the relevant market area of the former franchisee | 8 | | until the Board has held a hearing and rendered a | 9 | | determination on the issue of whether the successor | 10 | | manufacturer would have had good cause to terminate the | 11 | | former franchisee. | 12 | | In the event that a successor manufacturer attempts to | 13 | | enter into a same line make franchise with any person or to | 14 | | permit the relocation of any existing line make franchise under | 15 | | this subsection (h) at a location that is within the relevant | 16 | | market area of 2 or more former franchisees, then the successor | 17 | | manufacturer may not offer it to any person other than one of | 18 | | those former franchisees unless the successor manufacturer can | 19 | | prove that at least one of the 3 exceptions in items (1), (2), | 20 | | and (3) of this subsection (h) applies to each of those former | 21 | | franchisees. | 22 | | (Source: P.A. 99-143, eff. 7-27-15.)
| 23 | | Section 99. Effective date. This Act takes effect upon | 24 | | becoming law.".
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