State of Illinois
92nd General Assembly
Legislation

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[ Introduced ][ House Amendment 001 ]


92_HB0856eng

 
HB0856 Engrossed                               LRB9205447WHcs

 1        AN ACT concerning business transactions.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section 5.  The Motor Vehicle Franchise Act is amended by
 5    changing Section 6 as follows:

 6        (815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
 7        Sec.  6.  Warranty agreements; claims; approval; payment;
 8    written disapproval.
 9        (a)  Every   manufacturer,    distributor,    wholesaler,
10    distributor  branch  or division, factory branch or division,
11    or wholesale branch or division shall  properly  fulfill  any
12    warranty  agreement and adequately and fairly compensate each
13    of its motor vehicle dealers for labor and parts.
14        (b)  In no event shall  the  such  compensation  fail  to
15    include  reasonable compensation for diagnostic work, as well
16    as repair service, labor, and parts. Time allowances for  the
17    diagnosis  and performance of warranty work and service shall
18    be reasonable and adequate for the work to be  performed.  In
19    the determination of what constitutes reasonable compensation
20    under   this  Section,  the  principal  factor  to  be  given
21    consideration shall be the prevailing wage rates  being  paid
22    by  the dealer in the relevant market area in which the motor
23    vehicle dealer is doing business, and in no event shall  such
24    compensation  of  a motor vehicle dealer for warranty service
25    be less than the  rates  charged  by  such  dealer  for  like
26    service  to  retail  customers  for  nonwarranty  service and
27    repairs. The franchiser shall reimburse  the  franchisee  for
28    any  parts  provided  in  satisfaction  of  a warranty at the
29    prevailing retail price charged by that dealer for  the  same
30    parts  when  not  provided  in  satisfaction  of  a warranty;
31    provided that  such  motor  vehicle  franchisee's  prevailing
 
HB0856 Engrossed            -2-                LRB9205447WHcs
 1    retail  price  is not unreasonable when compared with that of
 2    the holders of motor vehicle franchises from the  same  motor
 3    vehicle   franchiser   for   identical   merchandise  in  the
 4    geographic area in which  the  motor  vehicle  franchisee  is
 5    engaged   in   business.   All  claims,  either  original  or
 6    resubmitted, made by  motor  vehicle  dealers  hereunder  and
 7    under  Section  5  for  such  labor and parts shall be either
 8    approved  or  disapproved  within  30  days  following  their
 9    submission.  All approved claims shall be paid within 30 days
10    following their  approval.   The  motor  vehicle  dealer  who
11    submits  a  claim  which  is disapproved shall be notified in
12    writing of the disapproval within the same period,  and  each
13    such  notice  shall state the specific grounds upon which the
14    disapproval is based.  The  motor  vehicle  dealer  shall  be
15    permitted  to  correct  and  resubmit such disapproved claims
16    within 30 days of receipt  of  disapproval.  Any  claims  not
17    specifically disapproved in writing within 30 days from their
18    submission  shall be deemed approved and payment shall follow
19    within 30 days. The manufacturer or franchiser shall have the
20    right to require reasonable documentation for claims  and  to
21    audit  such claims within a one year period from the date the
22    claim was paid  or  credit  issued  by  the  manufacturer  or
23    franchiser,  and  to charge back any false or unsubstantiated
24    claims. The audit and charge back provisions of this  Section
25    also  apply to all other incentive and reimbursement programs
26    for a period of 18 months after the date of the  transactions
27    that  are  subject  to  audit by the franchiser. However, the
28    manufacturer retains the right to charge back any  fraudulent
29    claim if the manufacturer establishes in a court of competent
30    jurisdiction in this State that the claim is fraudulent.
31        (c)  The   motor   vehicle   franchiser   shall  not,  by
32    agreement, by restrictions upon reimbursement, or  otherwise,
33    restrict  the nature and extent of services to be rendered or
34    parts to be provided so that such  restriction  prevents  the
 
HB0856 Engrossed            -3-                LRB9205447WHcs
 1    motor  vehicle  franchisee  from  satisfying  the warranty by
 2    rendering services in  a  good  and  workmanlike  manner  and
 3    providing   parts  which  are  required  in  accordance  with
 4    generally accepted standards.   Any  such  restriction  shall
 5    constitute a prohibited practice.
 6        (d)  For  the  purposes  of this Section, the "prevailing
 7    retail price charged by that dealer for the same parts" means
 8    the price paid by the motor  vehicle  franchisee  for  parts,
 9    including  all  shipping and other charges, multiplied by the
10    sum of 1.0 and the  franchisee's  average  percentage  markup
11    over the price paid by the motor vehicle franchisee for parts
12    purchased  by  the  motor  vehicle  franchisee from the motor
13    vehicle franchiser and sold at  retail.   The  motor  vehicle
14    franchisee may establish average percentage markup under this
15    Section  by  submitting  to  the motor vehicle franchiser 100
16    sequential customer paid service repair orders or 90 days  of
17    customer  paid  service  repair  orders,  whichever  is less,
18    covering repairs made  no  more  than  180  days  before  the
19    submission,  and declaring what the average percentage markup
20    is.  The average percentage markup so declared shall go  into
21    effect 30 days following the declaration, subject to audit of
22    the  submitted  repair orders by the motor vehicle franchiser
23    and adjustment of the average percentage markup based on that
24    audit.  Any audit must be conducted within 30 days  following
25    the  declaration.   Only  retail sales not involving warranty
26    repairs, parts covered by subsection (e) of this Section,  or
27    parts  supplied  for  routine  vehicle  maintenance, shall be
28    considered in  calculating  average  percentage  markup.   No
29    motor  vehicle  franchiser  shall  require  a  motor  vehicle
30    franchisee  to  establish  average  percentage  markup  by  a
31    methodology,  or  by  requiring  information,  that is unduly
32    burdensome or time consuming to provide, including,  but  not
33    limited  to,  part  by  part  or  transaction  by transaction
34    calculations.  A motor vehicle franchisee shall not request a
 
HB0856 Engrossed            -4-                LRB9205447WHcs
 1    change in the average percentage markup more  than  twice  in
 2    one calendar year.
 3        (e)  If  a  motor  vehicle  franchiser supplies a part or
 4    parts for use in a repair rendered  under  a  warranty  other
 5    than  by  sale  of  that  part  or parts to the motor vehicle
 6    franchisee, the motor vehicle franchisee shall be entitled to
 7    compensation equivalent to  the  motor  vehicle  franchisee's
 8    average  percentage  markup  on  the part or parts, as if the
 9    part or parts had been sold to the motor  vehicle  franchisee
10    by  the  motor  vehicle franchiser.  The requirements of this
11    subsection (e) shall not apply to  entire  engine  assemblies
12    and  entire  transmission  assemblies.   In the case of those
13    assemblies, the motor vehicle franchiser shall reimburse  the
14    motor  vehicle  franchisee  in  the amount of 30% of what the
15    motor vehicle franchisee would have paid  the  motor  vehicle
16    franchiser  for  the  assembly  if  the assembly had not been
17    supplied by the franchiser other than by  the  sale  of  that
18    assembly to the motor vehicle franchisee.
19        (f)  The obligations imposed on motor vehicle franchisers
20    by  this  Section  shall  apply  to  any  parent, subsidiary,
21    affiliate, or agent of  the  motor  vehicle  franchiser,  any
22    person under common ownership or control, any employee of the
23    motor  vehicle  franchiser, and any person holding 1% or more
24    of the shares of any class of securities or  other  ownership
25    interest  in  the  motor vehicle franchiser, if a warranty or
26    service or repair plan is issued by that person instead of or
27    in addition to one issued by the motor vehicle franchiser.
28    (Source: P.A. 91-485, eff. 1-1-00.)

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