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91_HB4016
LRB9111054DHmb
1 AN ACT to amend the Motor Vehicle Franchise Act by
2 changing Section 4.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Motor Vehicle Franchise Act is amended by
6 changing Section 4 as follows:
7 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
8 Sec. 4. Unfair competition and practices.
9 (a) The unfair methods of competition and unfair and
10 deceptive acts or practices listed in this Section are hereby
11 declared to be unlawful. In construing the provisions of this
12 Section, the courts may be guided by the interpretations of
13 the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
14 from time to time amended.
15 (b) It shall be deemed a violation for any manufacturer,
16 factory branch, factory representative, distributor or
17 wholesaler, distributor branch, distributor representative or
18 motor vehicle dealer to engage in any action with respect to
19 a franchise which is arbitrary, in bad faith or
20 unconscionable and which causes damage to any of the parties
21 or to the public.
22 (c) It shall be deemed a violation for a manufacturer, a
23 distributor, a wholesaler, a distributor branch or division,
24 a factory branch or division, or a wholesale branch or
25 division, or officer, agent or other representative thereof,
26 to coerce, or attempt to coerce, any motor vehicle dealer:
27 (1) to accept, buy or order any motor vehicle or
28 vehicles, appliances, equipment, parts or accessories
29 therefor, or any other commodity or commodities or
30 service or services which such motor vehicle dealer has
31 not voluntarily ordered or requested except items
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1 required by applicable local, state or federal law; or to
2 require a motor vehicle dealer to accept, buy, order or
3 purchase such items in order to obtain any motor vehicle
4 or vehicles or any other commodity or commodities which
5 have been ordered or requested by such motor vehicle
6 dealer;
7 (2) to order or accept delivery of any motor
8 vehicle with special features, appliances, accessories or
9 equipment not included in the list price of the motor
10 vehicles as publicly advertised by the manufacturer
11 thereof, except items required by applicable law; or
12 (3) to order for anyone any parts, accessories,
13 equipment, machinery, tools, appliances or any commodity
14 whatsoever, except items required by applicable law.
15 (d) It shall be deemed a violation for a manufacturer, a
16 distributor, a wholesaler, a distributor branch or division,
17 or officer, agent or other representative thereof:
18 (1) to adopt, change, establish or implement a plan
19 or system for the allocation and distribution of new
20 motor vehicles to motor vehicle dealers which is
21 arbitrary or capricious or to modify an existing plan so
22 as to cause the same to be arbitrary or capricious;
23 (2) to fail or refuse to advise or disclose to any
24 motor vehicle dealer having a franchise or selling
25 agreement, upon written request therefor, the basis upon
26 which new motor vehicles of the same line make are
27 allocated or distributed to motor vehicle dealers in the
28 State and the basis upon which the current allocation or
29 distribution is being made or will be made to such motor
30 vehicle dealer;
31 (3) to refuse to deliver in reasonable quantities
32 and within a reasonable time after receipt of dealer's
33 order, to any motor vehicle dealer having a franchise or
34 selling agreement for the retail sale of new motor
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1 vehicles sold or distributed by such manufacturer,
2 distributor, wholesaler, distributor branch or division,
3 factory branch or division or wholesale branch or
4 division, any such motor vehicles as are covered by such
5 franchise or selling agreement specifically publicly
6 advertised in the State by such manufacturer,
7 distributor, wholesaler, distributor branch or division,
8 factory branch or division, or wholesale branch or
9 division to be available for immediate delivery.
10 However, the failure to deliver any motor vehicle shall
11 not be considered a violation of this Act if such failure
12 is due to an act of God, a work stoppage or delay due to
13 a strike or labor difficulty, a shortage of materials, a
14 lack of manufacturing capacity, a freight embargo or
15 other cause over which the manufacturer, distributor, or
16 wholesaler, or any agent thereof has no control;
17 (4) to coerce, or attempt to coerce, any motor
18 vehicle dealer to enter into any agreement with such
19 manufacturer, distributor, wholesaler, distributor branch
20 or division, factory branch or division, or wholesale
21 branch or division, or officer, agent or other
22 representative thereof, or to do any other act
23 prejudicial to the dealer by threatening to reduce his
24 allocation of motor vehicles or cancel any franchise or
25 any selling agreement existing between such manufacturer,
26 distributor, wholesaler, distributor branch or division,
27 or factory branch or division, or wholesale branch or
28 division, and the dealer. However, notice in good faith
29 to any motor vehicle dealer of the dealer's violation of
30 any terms or provisions of such franchise or selling
31 agreement or of any law or regulation applicable to the
32 conduct of a motor vehicle dealer shall not constitute a
33 violation of this Act;
34 (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
5 franchisee;
6 (6) to cancel or terminate the franchise or selling
7 agreement of a motor vehicle dealer without good cause
8 and without giving notice as hereinafter provided; to
9 fail or refuse to extend the franchise or selling
10 agreement of a motor vehicle dealer upon its expiration
11 without good cause and without giving notice as
12 hereinafter provided; or, to offer a renewal, replacement
13 or succeeding franchise or selling agreement containing
14 terms and provisions the effect of which is to
15 substantially change or modify the sales and service
16 obligations or capital requirements of the motor vehicle
17 dealer arbitrarily and without good cause and without
18 giving notice as hereinafter provided notwithstanding any
19 term or provision of a franchise or selling agreement.
20 (A) If a manufacturer, distributor,
21 wholesaler, distributor branch or division, factory
22 branch or division or wholesale branch or division
23 intends to cancel or terminate a franchise or
24 selling agreement or intends not to extend or renew
25 a franchise or selling agreement on its expiration,
26 it shall send a letter by certified mail, return
27 receipt requested, to the affected franchisee at
28 least 60 days before the effective date of the
29 proposed action, or not later than 10 days before
30 the proposed action when the reason for the action
31 is based upon either of the following:
32 (i) the business operations of the
33 franchisee have been abandoned or the
34 franchisee has failed to conduct customary
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1 sales and service operations during customary
2 business hours for at least 7 consecutive
3 business days unless such closing is due to an
4 act of God, strike or labor difficulty or other
5 cause over which the franchisee has no control;
6 or
7 (ii) the conviction of or plea of nolo
8 contendere by the motor vehicle dealer or any
9 operator thereof in a court of competent
10 jurisdiction to an offense punishable by
11 imprisonment for more than two years.
12 Each notice of proposed action shall include a
13 detailed statement setting forth the specific
14 grounds for the proposed cancellation, termination,
15 or refusal to extend or renew and shall state that
16 the dealer has only 30 days from receipt of the
17 notice to file with the Motor Vehicle Review Board a
18 written protest against the proposed action.
19 (B) If a manufacturer, distributor,
20 wholesaler, distributor branch or division, factory
21 branch or division or wholesale branch or division
22 intends to change substantially or modify the sales
23 and service obligations or capital requirements of a
24 motor vehicle dealer as a condition to extending or
25 renewing the existing franchise or selling agreement
26 of such motor vehicle dealer, it shall send a letter
27 by certified mail, return receipt requested, to the
28 affected franchisee at least 60 days before the
29 date of expiration of the franchise or selling
30 agreement. Each notice of proposed action shall
31 include a detailed statement setting forth the
32 specific grounds for the proposed action and shall
33 state that the dealer has only 30 days from receipt
34 of the notice to file with the Motor Vehicle Review
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1 Board a written protest against the proposed action.
2 (C) Within 30 days from receipt of the notice
3 under subparagraphs (A) and (B), the franchisee may
4 file with the Board a written protest against the
5 proposed action.
6 When the protest has been timely filed, the
7 Board shall enter an order, fixing a date (within 60
8 days of the date of the order), time, and place of a
9 hearing on the protest required under Sections 12
10 and 29 of this Act, and send by certified mail,
11 return receipt requested, a copy of the order to the
12 manufacturer that filed the notice of intention of
13 the proposed action and to the protesting dealer or
14 franchisee.
15 The manufacturer shall have the burden of proof
16 to establish that good cause exists to cancel or
17 terminate, or fail to extend or renew the franchise
18 or selling agreement of a motor vehicle dealer or
19 franchisee, and to change substantially or modify
20 the sales and service obligations or capital
21 requirements of a motor vehicle dealer as a
22 condition to extending or renewing the existing
23 franchise or selling agreement. The determination
24 whether good cause exists to cancel, terminate, or
25 refuse to renew or extend the franchise or selling
26 agreement, or to change or modify the obligations of
27 the dealer as a condition to offer renewal,
28 replacement, or succession shall be made by the
29 Board under subsection (d) of Section 12 of this
30 Act.
31 (D) Notwithstanding the terms, conditions, or
32 provisions of a franchise or selling agreement, the
33 following shall not constitute good cause for
34 cancelling or terminating or failing to extend or
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1 renew the franchise or selling agreement: (i) the
2 change of ownership or executive management of the
3 franchisee's dealership; or (ii) the fact that the
4 franchisee or owner of an interest in the franchise
5 owns, has an investment in, participates in the
6 management of, or holds a license for the sale of
7 the same or any other line make of new motor
8 vehicles.
9 Good cause shall exist to cancel, terminate or
10 fail to offer a renewal or replacement franchise or
11 selling agreement to all franchisees of a line make
12 if the manufacturer permanently discontinues the
13 manufacture or assembly of motor vehicles of such
14 line make.
15 (E) The manufacturer may not cancel or
16 terminate, or fail to extend or renew a franchise or
17 selling agreement or change or modify the
18 obligations of the franchisee as a condition to
19 offering a renewal, replacement, or succeeding
20 franchise or selling agreement before the hearing
21 process is concluded as prescribed by this Act, and
22 thereafter, if the Board determines that the
23 manufacturer has failed to meet its burden of proof
24 and that good cause does not exist to allow the
25 proposed action; or
26 (7) notwithstanding the terms of any franchise
27 agreement, to fail to indemnify and hold harmless its
28 franchised dealers against any judgment or settlement for
29 damages, including, but not limited to, court costs,
30 expert witness fees, reasonable attorneys' fees of the
31 new motor vehicle dealer, and other expenses incurred in
32 the litigation, so long as such fees and costs are
33 reasonable, arising out of complaints, claims or lawsuits
34 including, but not limited to, strict liability,
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1 negligence, misrepresentation, warranty (express or
2 implied), or recision of the sale as defined in Section
3 2-608 of the Uniform Commercial Code, to the extent that
4 the judgment or settlement relates to the alleged
5 defective or negligent manufacture, assembly or design of
6 new motor vehicles, parts or accessories or other
7 functions by the manufacturer, beyond the control of the
8 dealer; provided that, in order to provide an adequate
9 defense, the manufacturer receives notice of the filing
10 of a complaint, claim, or lawsuit within 60 days after
11 the filing.
12 (e) It shall be deemed a violation for a manufacturer, a
13 distributor, a wholesaler, a distributor branch or division
14 or officer, agent or other representative thereof:
15 (1) to resort to or use any false or misleading
16 advertisement in connection with his business as such
17 manufacturer, distributor, wholesaler, distributor branch
18 or division or officer, agent or other representative
19 thereof;
20 (2) to offer to sell or lease, or to sell or lease,
21 any new motor vehicle to any motor vehicle dealer at a
22 lower actual price therefor than the actual price offered
23 to any other motor vehicle dealer for the same model
24 vehicle similarly equipped or to utilize any device
25 including, but not limited to, sales promotion plans or
26 programs which result in such lesser actual price or
27 fail to make available to any motor vehicle dealer any
28 preferential pricing, incentive, rebate, finance rate, or
29 low interest loan program offered to competing motor
30 vehicle dealers in other contiguous states. However, the
31 provisions of this paragraph shall not apply to sales to
32 a motor vehicle dealer for resale to any unit of the
33 United States Government, the State or any of its
34 political subdivisions;
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1 (3) to offer to sell or lease, or to sell or lease,
2 any new motor vehicle to any person, except a wholesaler,
3 distributor or manufacturer's employees at a lower actual
4 price therefor than the actual price offered and charged
5 to a motor vehicle dealer for the same model vehicle
6 similarly equipped or to utilize any device which results
7 in such lesser actual price. However, the provisions of
8 this paragraph shall not apply to sales to a motor
9 vehicle dealer for resale to any unit of the United
10 States Government, the State or any of its political
11 subdivisions;
12 (4) to prevent or attempt to prevent by contract or
13 otherwise any motor vehicle dealer or franchisee from
14 changing the executive management control of the motor
15 vehicle dealer or franchisee unless the franchiser,
16 having the burden of proof, proves that such change of
17 executive management will result in executive management
18 control by a person or persons who are not of good moral
19 character or who do not meet the franchiser's existing
20 and, with consideration given to the volume of sales and
21 service of the dealership, uniformly applied minimum
22 business experience standards in the market area. However
23 where the manufacturer rejects a proposed change in
24 executive management control, the manufacturer shall give
25 written notice of his reasons to the dealer within 60
26 days of notice to the manufacturer by the dealer of the
27 proposed change. If the manufacturer does not send a
28 letter to the franchisee by certified mail, return
29 receipt requested, within 60 days from receipt by the
30 manufacturer of the proposed change, then the change of
31 the executive management control of the franchisee shall
32 be deemed accepted as proposed by the franchisee, and the
33 manufacturer shall give immediate effect to such change;
34 (5) to prevent or attempt to prevent by contract or
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1 otherwise any motor vehicle dealer from establishing or
2 changing the capital structure of his dealership or the
3 means by or through which he finances the operation
4 thereof; provided the dealer meets any reasonable capital
5 standards agreed to between the dealer and the
6 manufacturer, distributor or wholesaler, who may require
7 that the sources, method and manner by which the dealer
8 finances or intends to finance its operation, equipment
9 or facilities be fully disclosed;
10 (6) to refuse to give effect to or prevent or
11 attempt to prevent by contract or otherwise any motor
12 vehicle dealer or any officer, partner or stockholder of
13 any motor vehicle dealer from selling or transferring any
14 part of the interest of any of them to any other person
15 or persons or party or parties unless such sale or
16 transfer is to a transferee who would not otherwise
17 qualify for a new motor vehicle dealers license under
18 "The Illinois Vehicle Code" or unless the franchiser,
19 having the burden of proof, proves that such sale or
20 transfer is to a person or party who is not of good moral
21 character or does not meet the franchiser's existing and
22 reasonable capital standards and, with consideration
23 given to the volume of sales and service of the
24 dealership, uniformly applied minimum business experience
25 standards in the market area. However, nothing herein
26 shall be construed to prevent a franchiser from
27 implementing affirmative action programs providing
28 business opportunities for minorities or from complying
29 with applicable federal, State or local law:
30 (A) If the manufacturer intends to refuse to
31 approve the sale or transfer of all or a part of the
32 interest, then it shall, within 60 days from receipt
33 of the completed application forms generally
34 utilized by a manufacturer to conduct its review and
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1 a copy of all agreements regarding the proposed
2 transfer, send a letter by certified mail, return
3 receipt requested, advising the franchisee of any
4 refusal to approve the sale or transfer of all or
5 part of the interest and shall state that the dealer
6 only has 30 days from the receipt of the notice to
7 file with the Motor Vehicle Review Board a written
8 protest against the proposed action. The notice
9 shall set forth specific criteria used to evaluate
10 the prospective transferee and the grounds for
11 refusing to approve the sale or transfer to that
12 transferee. Within 30 days from the franchisee's
13 receipt of the manufacturer's notice, the franchisee
14 may file with the Board a written protest against
15 the proposed action.
16 When a protest has been timely filed, the Board
17 shall enter an order, fixing the date (within 60
18 days of the date of such order), time, and place of
19 a hearing on the protest, required under Sections 12
20 and 29 of this Act, and send by certified mail,
21 return receipt requested, a copy of the order to the
22 manufacturer that filed notice of intention of the
23 proposed action and to the protesting franchisee.
24 The manufacturer shall have the burden of proof
25 to establish that good cause exists to refuse to
26 approve the sale or transfer to the transferee. The
27 determination whether good cause exists to refuse to
28 approve the sale or transfer shall be made by the
29 Board under subdivisions (6)(B). The manufacturer
30 shall not refuse to approve the sale or transfer by
31 a dealer or an officer, partner, or stockholder of a
32 franchise or any part of the interest to any person
33 or persons before the hearing process is concluded
34 as prescribed by this Act, and thereafter if the
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1 Board determines that the manufacturer has failed to
2 meet its burden of proof and that good cause does
3 not exist to refuse to approve the sale or transfer
4 to the transferee.
5 (B) Good cause to refuse to approve such sale
6 or transfer under this Section is established when
7 such sale or transfer is to a transferee who would
8 not otherwise qualify for a new motor vehicle
9 dealers license under "The Illinois Vehicle Code" or
10 such sale or transfer is to a person or party who is
11 not of good moral character or does not meet the
12 franchiser's existing and reasonable capital
13 standards and, with consideration given to the
14 volume of sales and service of the dealership,
15 uniformly applied minimum business experience
16 standards in the market area.
17 (7) to obtain money, goods, services, anything of
18 value, or any other benefit from any other person with
19 whom the motor vehicle dealer does business, on account
20 of or in relation to the transactions between the dealer
21 and the other person as compensation, except for services
22 actually rendered, unless such benefit is promptly
23 accounted for and transmitted to the motor vehicle
24 dealer;
25 (8) to grant an additional franchise in the
26 relevant market area of an existing franchise of the same
27 line make or to relocate an existing motor vehicle
28 dealership within or into a relevant market area of an
29 existing franchise of the same line make. However, if the
30 manufacturer wishes to grant such an additional franchise
31 to an independent person in a bona fide relationship in
32 which such person is prepared to make a significant
33 investment subject to loss in such a dealership, or if
34 the manufacturer wishes to relocate an existing motor
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1 vehicle dealership, then the manufacturer shall send a
2 letter by certified mail, return receipt requested, to
3 each existing dealer or dealers of the same line make
4 whose relevant market area includes the proposed location
5 of the additional or relocated franchise at least 60 days
6 before the manufacturer grants an additional franchise or
7 relocates an existing franchise of the same line make
8 within or into the relevant market area of an existing
9 franchisee of the same line make. Each notice shall set
10 forth the specific grounds for the proposed grant of an
11 additional or relocation of an existing franchise.
12 Unless the parties agree upon the grant or establishment
13 of the additional or relocated franchise within 30 days
14 from the date the notice was received by the existing
15 franchisee of the same line make or any person entitled
16 to receive such notice, the franchisee or other person
17 may file with the Board a written protest against the
18 grant or establishment of the proposed additional or
19 relocated franchise and shall state that the dealer only
20 has 30 days from the receipt of the notice to file with
21 the Motor Vehicle Review Board a written protest against
22 the proposed action.
23 When a protest has been timely filed, the Board
24 shall enter an order fixing a date (within 60 days of the
25 date of the order), time, and place of a hearing on the
26 protest, required under Sections 12 and 29 of this Act,
27 and send by certified or registered mail, return receipt
28 requested, a copy of the order to the manufacturer that
29 filed the notice of intention to grant or establish the
30 proposed additional or relocated franchise and to the
31 protesting dealer or dealers of the same line make whose
32 relevant market area includes the proposed location of
33 the additional or relocated franchise.
34 When more than one protest is filed against the
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1 grant or establishment of the additional or relocated
2 franchise of the same line make, the Board may
3 consolidate the hearings to expedite disposition of the
4 matter. The manufacturer shall have the burden of proof
5 to establish that good cause exists to allow the grant or
6 establishment of the additional or relocated franchise.
7 The manufacturer may not grant or establish the
8 additional franchise or relocate the existing franchise
9 before the hearing process is concluded as prescribed by
10 this Act, and thereafter if the Board determines that the
11 manufacturer has failed to meet its burden of proof and
12 that good cause does not exist to allow the grant or
13 establishment of the additional franchise or relocation
14 of the existing franchise.
15 The determination whether good cause exists for
16 allowing the grant or establishment of an additional
17 franchise or relocated existing franchise, shall be made
18 by the Board under subsection (c) of Section 12 of this
19 Act. If the manufacturer seeks to enter into a contract,
20 agreement or other arrangement with any person,
21 establishing any additional motor vehicle dealership or
22 other facility, limited to the sale of factory repurchase
23 vehicles or late model vehicles, then the manufacturer
24 shall follow the notice procedures set forth in this
25 Section and the determination whether good cause exists
26 for allowing the proposed agreement shall be made by the
27 Board under subsection (c) of Section 12, with the
28 manufacturer having the burden of proof.
29 A. (Blank).
30 B. For the purposes of this Section,
31 appointment of a successor motor vehicle dealer at
32 the same location as its predecessor, or within 2
33 miles of such location, or the relocation of an
34 existing dealer or franchise within 2 miles of the
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1 relocating dealer's or franchisee's existing
2 location, shall not be construed as a grant,
3 establishment or the entering into of an additional
4 franchise or selling agreement, or a relocation of
5 an existing franchise. The reopening of a motor
6 vehicle dealership that has not been in operation
7 for 18 months or more shall be deemed the grant of
8 an additional franchise or selling agreement.
9 C. This Section does not apply to the
10 relocation of an existing dealership or franchise in
11 a county having a population of more than 300,000
12 persons when the new location is within the dealer's
13 current relevant market area, provided the new
14 location is more than 7 miles from the nearest
15 dealer of the same line make or is further away from
16 the nearest dealer of the same line make. This
17 Section does not apply to the relocation of an
18 existing dealership or franchise in a county having
19 a population of less than 300,000 persons when the
20 new location is within the dealer's current relevant
21 market area, provided the new location is more than
22 12 miles from the nearest dealer of the same line
23 make or is further away from the nearest dealer of
24 the same line make.
25 D. Nothing in this Section shall be construed
26 to prevent a franchiser from implementing
27 affirmative action programs providing business
28 opportunities for minorities or from complying with
29 applicable federal, State or local law;
30 (9) to require a motor vehicle dealer to assent to
31 a release, assignment, novation, waiver or estoppel which
32 would relieve any person from liability imposed by this
33 Act;
34 (10) to prevent or refuse to give effect to the
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1 succession to the ownership or management control of a
2 dealership by any legatee under the will of a dealer or
3 to an heir under the laws of descent and distribution of
4 this State unless the franchisee has designated a
5 successor to the ownership or management control under
6 the succession provisions of the franchise. Unless the
7 franchiser, having the burden of proof, proves that the
8 successor is a person who is not of good moral character
9 or does not meet the franchiser's existing and reasonable
10 capital standards and, with consideration given to the
11 volume of sales and service of the dealership, uniformly
12 applied minimum business experience standards in the
13 market area, any designated successor of a dealer or
14 franchisee may succeed to the ownership or management
15 control of a dealership under the existing franchise if:
16 (i) The designated successor gives the
17 franchiser written notice by certified mail,
18 return receipt requested, of his or her
19 intention to succeed to the ownership of the
20 dealer within 60 days of the dealer's death or
21 incapacity; and
22 (ii) The designated successor agrees to
23 be bound by all the terms and conditions of the
24 existing franchise.
25 Notwithstanding the foregoing, in the event the
26 motor vehicle dealer or franchisee and manufacturer have
27 duly executed an agreement concerning succession rights
28 prior to the dealer's death or incapacitation, the
29 agreement shall be observed.
30 (A) If the franchiser intends to refuse to
31 honor the successor to the ownership of a deceased
32 or incapacitated dealer or franchisee under an
33 existing franchise agreement, the franchiser shall
34 send a letter by certified mail, return receipt
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1 requested, to the designated successor within 60
2 days from receipt of a proposal advising of its
3 intent to refuse to honor the succession and to
4 discontinue the existing franchise agreement and
5 shall state that the designated successor only has
6 30 days from the receipt of the notice to file with
7 the Motor Vehicle Review Board a written protest
8 against the proposed action. The notice shall set
9 forth the specific grounds for the refusal to honor
10 the succession and discontinue the existing
11 franchise agreement.
12 If notice of refusal is not timely served upon
13 the designated successor, the franchise agreement
14 shall continue in effect subject to termination only
15 as otherwise permitted by paragraph (6) of
16 subsection (d) of Section 4 of this Act.
17 Within 30 days from the date the notice was
18 received by the designated successor or any other
19 person entitled to notice, the designee or other
20 person may file with the Board a written protest
21 against the proposed action.
22 When a protest has been timely filed, the Board
23 shall enter an order, fixing a date (within 60 days
24 of the date of the order), time, and place of a
25 hearing on the protest, required under Sections 12
26 and 29 of this Act, and send by certified mail,
27 return receipt requested, a copy of the order to the
28 franchiser that filed the notice of intention of the
29 proposed action and to the protesting designee or
30 such other person.
31 The manufacturer shall have the burden of proof
32 to establish that good cause exists to refuse to
33 honor the succession and discontinue the existing
34 franchise agreement. The determination whether good
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1 cause exists to refuse to honor the succession shall
2 be made by the Board under subdivision (B) of this
3 paragraph (10). The manufacturer shall not refuse
4 to honor the succession or discontinue the existing
5 franchise agreement before the hearing process is
6 concluded as prescribed by this Act, and thereafter
7 if the Board determines that it has failed to meet
8 its burden of proof and that good cause does not
9 exist to refuse to honor the succession and
10 discontinue the existing franchise agreement.
11 (B) No manufacturer shall impose any
12 conditions upon honoring the succession and
13 continuing the existing franchise agreement with the
14 designated successor other than that the franchisee
15 has designated a successor to the ownership or
16 management control under the succession provisions
17 of the franchise, or that the designated successor
18 is of good moral character or meets the reasonable
19 capital standards and, with consideration given to
20 the volume of sales and service of the dealership,
21 uniformly applied minimum business experience
22 standards in the market area;
23 (11) to prevent or refuse to approve a proposal to
24 establish a successor franchise at a location previously
25 approved by the franchiser when submitted with the
26 voluntary termination by the existing franchisee unless
27 the successor franchisee would not otherwise qualify for
28 a new motor vehicle dealer's license under the Illinois
29 Vehicle Code or unless the franchiser, having the burden
30 of proof, proves that such proposed successor is not of
31 good moral character or does not meet the franchiser's
32 existing and reasonable capital standards and, with
33 consideration given to the volume of sales and service of
34 the dealership, uniformly applied minimum business
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1 experience standards in the market area. However, when
2 such a rejection of a proposal is made, the manufacturer
3 shall give written notice of its reasons to the
4 franchisee within 60 days of receipt by the manufacturer
5 of the proposal. However, nothing herein shall be
6 construed to prevent a franchiser from implementing
7 affirmative action programs providing business
8 opportunities for minorities, or from complying with
9 applicable federal, State or local law;
10 (12) to prevent or refuse to grant a franchise to a
11 person because such person owns, has investment in or
12 participates in the management of or holds a franchise
13 for the sale of another make or line of motor vehicles
14 within 7 miles of the proposed franchise location in a
15 county having a population of more than 300,000 persons,
16 or within 12 miles of the proposed franchise location in
17 a county having a population of less than 300,000
18 persons; or
19 (13) to prevent or attempt to prevent any new motor
20 vehicle dealer from establishing any additional motor
21 vehicle dealership or other facility limited to the sale
22 of factory repurchase vehicles or late model vehicles or
23 otherwise offering for sale factory repurchase vehicles
24 of the same line make at an existing franchise by failing
25 to make available any contract, agreement or other
26 arrangement which is made available or otherwise offered
27 to any person.
28 (f) It is deemed a violation for a manufacturer, a
29 distributor, a wholesale, a distributor branch or division, a
30 factory branch or division, or a wholesale branch or
31 division, or officer, agent, broker, shareholder, except a
32 shareholder of 1% or less of the outstanding shares of any
33 class of securities of a manufacturer, distributor, or
34 wholesaler which is a publicly traded corporation, or other
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1 representative, directly or indirectly, to own or operate a
2 place of business as a motor vehicle franchisee or motor
3 vehicle financing affiliate, except that, this subsection
4 shall not prohibit the ownership or operation of a place of
5 business by a manufacturer, distributor, or wholesaler for a
6 period, not to exceed 18 months, during the transition from
7 one motor vehicle franchisee to another; or the investment in
8 a motor vehicle franchisee by a manufacturer, distributor, or
9 wholesaler if the investment is for the sole purpose of
10 enabling a partner or shareholder in that motor vehicle
11 franchisee to acquire an interest in that motor vehicle
12 franchisee and that partner or shareholder is not otherwise
13 employed by or associated with the manufacturer, distributor,
14 or wholesaler and would not otherwise have the requisite
15 capital investment funds to invest in the motor vehicle
16 franchisee, and has the right to purchase the entire equity
17 interest of the manufacturer, distributor, or wholesaler in
18 the motor vehicle franchisee within a reasonable period of
19 time not to exceed 5 years.
20 (Source: P.A. 90-655, eff. 7-30-98; 91-415, eff. 1-1-00;
21 91-485, eff. 1-1-00; revised 10-19-99.)