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Public Act 099-0844 |
SB0140 Enrolled | LRB099 03415 JLS 23423 b |
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AN ACT concerning business.
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Be it enacted by the People of the State of Illinois, |
represented in the General Assembly:
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Section 5. The Motor Vehicle Franchise Act is amended by |
changing Section 4 as follows:
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(815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
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Sec. 4. Unfair competition and practices.
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(a) The unfair methods of competition and unfair and |
deceptive acts or
practices listed in this Section are hereby |
declared to be unlawful. In
construing the provisions of this |
Section, the courts may be guided by the
interpretations of the |
Federal Trade Commission Act (15 U.S.C. 45 et
seq.), as from |
time to time amended.
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(b) It shall be deemed a violation for any manufacturer, |
factory branch,
factory representative, distributor or |
wholesaler, distributor branch,
distributor representative or |
motor vehicle dealer to engage in any action
with respect to a |
franchise which is arbitrary, in bad faith or
unconscionable |
and which causes damage to any of the parties or to the public.
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(c) It shall be deemed a violation for a manufacturer, a |
distributor,
a wholesaler, a distributor branch or division, a |
factory branch or division,
or a wholesale branch or division, |
or officer, agent or other representative
thereof, to coerce, |
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or attempt to coerce, any motor vehicle dealer:
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(1) to accept, buy or order any motor vehicle or |
vehicles, appliances,
equipment, parts or accessories |
therefor, or any other commodity or commodities
or service |
or services which such motor vehicle dealer has not |
voluntarily
ordered or requested except items required by |
applicable local, state or
federal law; or to require a |
motor vehicle dealer to accept, buy, order or
purchase such |
items in order to obtain any motor vehicle or vehicles or |
any
other commodity or commodities which have been ordered |
or requested by such
motor vehicle dealer;
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(2) to order or accept delivery of any motor vehicle |
with special
features, appliances, accessories or |
equipment not included in the list
price of the motor |
vehicles as publicly advertised by the manufacturer
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thereof, except items required by applicable law; or
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(3) to order for anyone any parts, accessories, |
equipment, machinery,
tools, appliances or any commodity |
whatsoever, except items required by
applicable law.
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(d) It shall be deemed a violation for a manufacturer, a |
distributor,
a wholesaler, a distributor branch or division, or |
officer, agent or other
representative thereof:
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(1) to adopt, change, establish or implement a plan or |
system for the
allocation and distribution of new motor |
vehicles to motor vehicle dealers
which is arbitrary or |
capricious or to modify an existing plan so as to cause
the |
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same to be arbitrary or capricious;
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(2) to fail or refuse to advise or disclose to any |
motor vehicle dealer
having a franchise or selling |
agreement, upon written request therefor,
the basis upon |
which new motor vehicles of the same line make are |
allocated
or distributed to motor vehicle dealers in the |
State and the basis upon
which the current allocation or |
distribution is being made or will be made
to such motor |
vehicle dealer;
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(3) to refuse to deliver in reasonable quantities and |
within a reasonable
time after receipt of dealer's order, |
to any motor vehicle dealer having
a franchise or selling |
agreement for the retail sale of new motor vehicles
sold or |
distributed by such manufacturer, distributor, wholesaler, |
distributor
branch or division, factory branch or division |
or wholesale branch or division,
any such motor vehicles as |
are covered by such franchise or selling agreement
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specifically publicly advertised in the State by such |
manufacturer,
distributor, wholesaler, distributor branch |
or division, factory branch or
division, or wholesale |
branch or division to be available for immediate
delivery. |
However, the failure to deliver any motor vehicle shall not |
be
considered a violation of this Act if such failure is |
due to an act of God,
a work stoppage or delay due to a |
strike or labor difficulty, a shortage
of materials, a lack |
of manufacturing capacity, a freight embargo or other
cause |
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over which the manufacturer, distributor, or wholesaler, |
or any agent
thereof has no control;
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(4) to coerce, or attempt to coerce, any motor vehicle |
dealer to enter
into any agreement with such manufacturer, |
distributor, wholesaler, distributor
branch or division, |
factory branch or division, or wholesale branch or
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division, or officer, agent or other representative |
thereof, or to do any
other act prejudicial to the dealer |
by threatening to reduce his allocation
of motor vehicles |
or cancel any franchise or any selling agreement existing
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between such manufacturer, distributor, wholesaler, |
distributor branch or
division, or factory branch or |
division, or wholesale branch or division,
and the dealer. |
However, notice in good faith to any motor vehicle dealer
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of the dealer's violation of any terms or provisions of |
such franchise or
selling agreement or of any law or |
regulation applicable to the conduct of
a motor vehicle |
dealer shall not constitute a violation of this Act;
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(5) to require a franchisee to participate in an |
advertising campaign
or contest or any promotional |
campaign, or to purchase or lease any promotional
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materials, training materials, show room or other display |
decorations or
materials at the expense of the franchisee;
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(6) to cancel or terminate the franchise or selling |
agreement of a
motor vehicle dealer without good cause and |
without giving notice as
hereinafter provided; to fail or |
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refuse to extend the franchise or selling
agreement of a |
motor vehicle dealer upon its expiration without good cause
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and without giving notice as hereinafter provided; or, to |
offer a renewal,
replacement or succeeding franchise or |
selling agreement containing terms
and provisions the |
effect of which is to substantially change or modify the
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sales and service obligations or capital requirements of |
the motor vehicle
dealer arbitrarily and without good cause |
and without giving notice as
hereinafter provided |
notwithstanding any term or provision of a franchise
or |
selling agreement.
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(A) If a manufacturer, distributor, wholesaler, |
distributor branch or
division, factory branch or |
division or wholesale branch or division intends
to |
cancel or terminate a franchise or selling agreement or |
intends not to
extend or renew a franchise or selling |
agreement on its expiration, it shall
send a letter by |
certified mail, return
receipt requested, to the |
affected
franchisee at least
60 days before the |
effective date of the
proposed action, or not later |
than 10 days before the proposed action when the
reason |
for the action is based upon either of the following:
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(i) the
business operations of the franchisee |
have been abandoned or
the franchisee has failed to |
conduct customary sales and service operations
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during customary business hours for at least 7
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consecutive business
days unless such closing is |
due to an act of God, strike or labor
difficulty or |
other cause over which the franchisee has no |
control; or
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(ii) the conviction of or plea of nolo
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contendere by the motor
vehicle dealer or any |
operator thereof in a court of competent |
jurisdiction
to an offense punishable by |
imprisonment for more than two years.
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Each notice of proposed action shall include a |
detailed statement
setting forth the specific grounds |
for the proposed cancellation, termination,
or refusal |
to extend or renew and shall state that the dealer has
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only 30 days from receipt of
the notice to file with |
the Motor Vehicle Review Board a written protest
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against the proposed action.
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(B) If a manufacturer, distributor, wholesaler, |
distributor branch or
division, factory branch or |
division or wholesale branch or division intends
to |
change substantially or modify the sales and service |
obligations or
capital requirements of a motor vehicle |
dealer as a condition to extending
or renewing the |
existing franchise or selling agreement of such motor
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vehicle dealer, it shall
send a letter by certified |
mail, return receipt requested, to the affected
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franchisee at
least 60
days
before the date of |
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expiration of the franchise or selling agreement. Each
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notice of proposed action shall include a detailed |
statement setting forth
the specific grounds for the |
proposed action
and shall state that the dealer has |
only 30 days from receipt of
the notice to file with |
the Motor Vehicle Review Board a written protest
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against the proposed action.
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(C) Within 30 days from receipt of the notice under
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subparagraphs (A) and (B),
the franchisee may file with |
the Board a written
protest against the proposed |
action.
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When the protest has been timely filed, the Board |
shall enter an
order,
fixing a date (within 60 days of |
the date of the order), time,
and place of a hearing on |
the protest required under Sections 12 and 29
of this |
Act, and send by certified mail, return receipt |
requested, a copy of
the order to the manufacturer that |
filed the notice of intention of the
proposed action |
and to the protesting dealer or franchisee.
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The manufacturer shall have the burden of proof to |
establish that good
cause exists to cancel or |
terminate, or fail to extend or renew the franchise
or
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selling agreement of a motor vehicle dealer or |
franchisee, and to change
substantially or modify the |
sales and service obligations or capital
requirements |
of a motor vehicle dealer as a condition to extending |
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or renewing
the existing franchise or selling |
agreement. The determination whether good
cause exists |
to cancel, terminate, or refuse to renew or extend the |
franchise
or selling agreement, or to change or modify |
the obligations of the dealer as a
condition to offer |
renewal, replacement, or succession shall be made
by |
the Board under subsection (d) of Section 12 of this |
Act.
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(D) Notwithstanding the terms, conditions, or |
provisions of a
franchise
or selling agreement, the |
following shall not constitute good cause for
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cancelling or terminating or failing to extend or renew |
the franchise or
selling agreement: (i) the change of |
ownership or executive management of the
franchisee's |
dealership; or (ii)
the
fact that the franchisee or |
owner of an interest in the franchise owns, has
an |
investment in, participates in the management of, or |
holds a license for
the sale of the same or any other |
line make of new motor vehicles.
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(E) The manufacturer may not cancel or terminate, |
or fail to extend or
renew a franchise or selling |
agreement or change or modify the obligations of
the |
franchisee as a condition to offering a renewal, |
replacement, or succeeding
franchise or selling |
agreement before the hearing process is concluded as
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prescribed by this Act, and thereafter, if the Board |
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determines that the
manufacturer has failed to meet its |
burden of proof and that good cause does
not exist to |
allow the proposed action;
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(7) notwithstanding the terms of any franchise |
agreement, to fail to
indemnify and hold harmless its |
franchised dealers against any judgment
or settlement for |
damages, including, but not limited to, court costs, expert
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witness fees, reasonable attorneys' fees of the new motor |
vehicle
dealer, and other expenses incurred in the |
litigation, so long as such fees
and costs are reasonable,
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arising out
of complaints, claims or lawsuits including, |
but not limited to, strict
liability, negligence, |
misrepresentation, warranty (express or implied),
or |
recision of the sale as defined in Section 2-608 of the |
Uniform Commercial
Code, to the extent that the judgment or |
settlement relates to the alleged
defective or negligent |
manufacture, assembly or design of new motor vehicles,
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parts or accessories or other functions by the |
manufacturer, beyond the
control of the dealer; provided |
that, in order to provide an adequate
defense, the |
manufacturer receives notice of the filing of a complaint, |
claim,
or lawsuit within 60 days after the filing;
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(8) to require or otherwise coerce a motor vehicle |
dealer to underutilize the motor vehicle dealer's |
facilities by requiring or otherwise coercing the motor |
vehicle dealer to exclude or remove from the motor vehicle |
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dealer's facilities operations for selling or servicing of |
any vehicles for which the motor vehicle dealer has a |
franchise agreement with another manufacturer, |
distributor, wholesaler, distribution branch or division, |
or officer, agent, or other representative thereof; |
provided, however, that, in light of all existing |
circumstances, (i) the motor vehicle dealer maintains a |
reasonable line of credit for each make or line of new |
motor vehicle, (ii) the new motor vehicle dealer remains in |
compliance with any reasonable facilities requirements of |
the manufacturer, (iii) no change is made in the principal |
management of the new motor vehicle dealer, and (iv) the |
addition of the make or line of new motor vehicles would be |
reasonable. The reasonable facilities requirement set |
forth in item (ii) of subsection (d)(8) shall not include |
any requirement that a franchisee establish or maintain |
exclusive facilities, personnel, or display space. Any |
decision by a motor vehicle dealer to sell additional makes |
or lines at the motor vehicle dealer's facility shall be |
presumed to be reasonable, and the manufacturer shall have |
the burden to overcome that presumption. A motor vehicle |
dealer must provide a written notification of its intent to |
add a make or line of new motor vehicles to the |
manufacturer. If the manufacturer does not respond to the |
motor vehicle dealer, in writing, objecting to the addition |
of the make or line within 60 days after the date that the |
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motor vehicle dealer sends the written notification, then |
the manufacturer shall be deemed to have approved the |
addition of the make or line; or |
(9) to use or consider the performance of a motor |
vehicle dealer relating to the sale of the manufacturer's, |
distributor's, or wholesaler's vehicles or the motor |
vehicle dealer's ability to satisfy any minimum sales or |
market share quota or responsibility relating to the sale |
of the manufacturer's, distributor's, or wholesaler's new |
vehicles in determining: |
(A) the motor vehicle dealer's eligibility to |
purchase program, certified, or other used motor |
vehicles from the manufacturer, distributor, or |
wholesaler; |
(B) the volume, type, or model of program, |
certified, or other used motor vehicles that a motor |
vehicle dealer is eligible to purchase from the |
manufacturer, distributor, or wholesaler; |
(C) the price of any program, certified, or other |
used motor vehicle that the dealer is eligible to |
purchase from the manufacturer, distributor, or |
wholesaler; or |
(D) the availability or amount of any discount, |
credit, rebate, or sales incentive that the dealer is |
eligible to receive from the manufacturer, |
distributor, or wholesaler for the purchase of any |
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program, certified, or other used motor vehicle |
offered for sale by the manufacturer, distributor, or |
wholesaler. |
(e) It shall be deemed a violation for a manufacturer, a |
distributor,
a wholesaler, a distributor branch or division or |
officer, agent or other
representative thereof:
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(1) to resort to or use any false or misleading |
advertisement in
connection with his business as such |
manufacturer, distributor, wholesaler,
distributor branch |
or division or officer, agent or other representative
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thereof;
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(2) to offer to sell or lease, or to sell or lease, any |
new motor vehicle
to any motor vehicle dealer at a lower |
actual price therefor than the actual
price offered to any |
other motor vehicle dealer for the same model vehicle
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similarly equipped or to utilize any device including, but |
not limited to,
sales promotion plans or programs which |
result in such lesser actual
price or fail to make |
available to any motor vehicle dealer any
preferential |
pricing, incentive, rebate, finance rate, or low interest |
loan
program offered to competing motor vehicle dealers in |
other contiguous states.
However, the provisions of this |
paragraph shall not apply to sales
to a motor vehicle |
dealer for resale to any unit of the United States
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Government, the State or any of its political subdivisions;
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(3) to offer to sell or lease, or to sell or lease, any |
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new motor vehicle
to any person, except a wholesaler, |
distributor or manufacturer's employees
at a lower actual |
price therefor than the actual price offered and charged
to |
a motor vehicle dealer for the same model vehicle similarly |
equipped or
to utilize any device which results in such |
lesser actual price. However,
the provisions of this |
paragraph shall not apply to sales to a motor
vehicle |
dealer for resale to any unit of the United States |
Government, the
State or any of its political subdivisions;
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(4) to prevent or attempt to prevent by contract or |
otherwise any motor
vehicle dealer or franchisee from |
changing the executive management control
of the motor
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vehicle dealer or franchisee unless the franchiser, having |
the burden of
proof, proves that such change of executive |
management will result in executive
management control by a |
person or persons who are not of good moral character
or |
who do not meet the franchiser's existing and, with |
consideration given
to the volume of sales and service of |
the dealership, uniformly applied
minimum business |
experience standards in the market area. However where
the |
manufacturer rejects a proposed change in executive |
management
control, the manufacturer shall give written |
notice of his reasons to the
dealer within 60 days of |
notice to the manufacturer by the dealer of
the proposed |
change. If the manufacturer does not send a letter to the
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franchisee by certified mail, return receipt requested, |
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within 60 days from
receipt by
the manufacturer of the |
proposed change, then the change of the
executive |
management control of the franchisee shall be deemed
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accepted as proposed by the franchisee, and the |
manufacturer shall give
immediate
effect to such change;
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(5) to prevent or attempt to prevent by contract or |
otherwise any motor
vehicle dealer from establishing or |
changing the capital structure of his
dealership or the |
means by or through which he finances the operation |
thereof;
provided the dealer meets any reasonable capital |
standards agreed to between
the dealer and the |
manufacturer, distributor or wholesaler, who may require
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that the sources, method and manner by which the dealer |
finances or intends
to finance its operation, equipment or |
facilities be fully disclosed;
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(6) to refuse to give effect to or prevent or attempt |
to prevent by
contract or otherwise any motor vehicle |
dealer or any officer, partner or
stockholder of any motor |
vehicle dealer from selling or transferring any
part of the |
interest of any of them to any other person or persons or |
party
or parties unless such sale or transfer is to a |
transferee who would
not otherwise qualify for a new motor |
vehicle dealers license under "The
Illinois Vehicle Code" |
or unless the franchiser, having the burden of proof,
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proves that such sale or transfer is to a person or party |
who is not of
good moral character or does not meet the |
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franchiser's existing and reasonable
capital standards |
and, with consideration given to the volume of sales and
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service of the dealership, uniformly applied minimum |
business experience
standards in the market area.
However, |
nothing herein shall be construed to prevent a
franchiser |
from implementing affirmative action programs providing |
business
opportunities for minorities or from complying |
with applicable federal,
State or local law:
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(A) If the manufacturer intends to refuse to |
approve the sale or
transfer of all or a part of the |
interest, then it shall, within 60 days from
receipt of |
the completed application forms generally utilized by |
a manufacturer
to conduct its review and a copy of all |
agreements regarding the proposed
transfer, send a |
letter by certified mail, return receipt requested, |
advising
the franchisee of any refusal to approve the |
sale or transfer of all or part of
the interest
and |
shall state that the dealer only has 30 days from the |
receipt of the
notice to file with the Motor Vehicle |
Review Board a written protest against
the proposed |
action.
The
notice shall set forth specific criteria |
used to evaluate the prospective
transferee and the |
grounds for refusing to approve the sale or transfer to
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that transferee. Within 30 days from the franchisee's |
receipt of the
manufacturer's notice, the
franchisee |
may file
with the Board a written protest against the |
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proposed action.
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When a protest has been timely filed, the Board |
shall enter an
order, fixing the date (within 60 days |
of the date of such
order), time, and place of a |
hearing on the protest, required under
Sections 12 and |
29 of this Act, and send by certified mail, return |
receipt
requested, a copy of the order to the |
manufacturer that filed notice of
intention of the |
proposed action and to the protesting franchisee.
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The manufacturer shall have the burden of proof to |
establish that good
cause exists to refuse to approve |
the sale or transfer to the transferee. The
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determination whether good cause exists to refuse to |
approve the sale or
transfer shall be made by the Board |
under subdivisions (6)(B).
The manufacturer shall not |
refuse to approve the sale or transfer
by
a dealer or |
an officer, partner, or stockholder of a franchise or |
any part
of the interest to any person or persons |
before the hearing process is
concluded as prescribed |
by this Act, and thereafter if the Board determines
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that the manufacturer has failed to meet its burden of |
proof and that good
cause does not exist to refuse to |
approve the sale or transfer to the
transferee.
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(B) Good cause to refuse to approve such sale or |
transfer under this
Section is established when such |
sale or transfer is to a transferee who would
not |
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otherwise qualify for a new motor vehicle dealers |
license under "The
Illinois Vehicle Code" or such sale |
or transfer is to a person or party who is
not of good |
moral character or does not meet the franchiser's |
existing and
reasonable capital standards and, with |
consideration given to the volume of
sales and service |
of the dealership, uniformly applied minimum business
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experience standards in the market area.
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(7) to obtain money, goods, services, anything of |
value, or any other
benefit from any other person with whom |
the motor vehicle dealer does business,
on account of or in |
relation to the transactions between the dealer and
the |
other person as compensation, except for services actually |
rendered,
unless such benefit is promptly accounted for and |
transmitted to the motor
vehicle dealer;
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(8) to grant an additional franchise in the relevant |
market area of an
existing franchise of the same line make |
or to relocate an existing motor
vehicle dealership within |
or into a relevant market area of an existing
franchise of |
the same line make.
However, if the manufacturer wishes to
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grant such an additional franchise to an independent person |
in a bona fide
relationship in which such person is |
prepared to make a significant
investment subject to loss |
in such a dealership, or if the manufacturer
wishes to |
relocate an existing motor vehicle dealership, then the
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manufacturer shall send a letter
by certified mail, return |
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receipt requested, to each existing dealer or dealers
of |
the same line make whose relevant
market area includes the |
proposed location of the additional or relocated
franchise |
at least
60 days before the manufacturer grants an |
additional franchise or relocates an
existing franchise of |
the same line make within or into the relevant market
area |
of an existing
franchisee of the same line make. Each |
notice shall set forth the specific
grounds for the |
proposed grant of an additional or relocation of an |
existing
franchise and shall state that the dealer has only |
30 days from the date of receipt of the notice to file with |
the Motor Vehicle Review Board a written protest against |
the proposed action. Unless the parties agree upon the |
grant or establishment of the
additional or relocated |
franchise within 30 days from the date the
notice was
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received by the existing franchisee of the same line make |
or any person
entitled to receive such notice, the |
franchisee or other person may file
with the Board a |
written protest against the grant or establishment of the
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proposed additional or relocated franchise.
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When a protest has been timely filed, the Board shall |
enter an order
fixing a date (within 60 days of the date of |
the order), time,
and place of a hearing on the protest, |
required under Sections 12 and 29
of this Act, and send by |
certified or registered mail, return receipt
requested, a |
copy of the order to the manufacturer that filed the notice |
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of
intention to grant or establish the proposed additional |
or relocated
franchise and to the protesting dealer or |
dealers of the same line make
whose
relevant market area |
includes the proposed location of the additional or
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relocated franchise.
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When more than one protest is filed against the grant |
or establishment of
the
additional or relocated franchise |
of the same line make, the Board may
consolidate the |
hearings to expedite disposition of the matter. The
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manufacturer shall have the burden of proof to establish |
that good cause
exists to allow the grant or establishment |
of the additional or relocated
franchise. The manufacturer |
may not grant or establish the additional
franchise or |
relocate the existing franchise before the hearing process |
is
concluded as prescribed by this Act, and thereafter if |
the Board determines
that the manufacturer has failed to |
meet its burden of proof and that good
cause does not exist |
to allow the grant or establishment of the additional
|
franchise or relocation of the existing franchise.
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The determination whether good cause exists for |
allowing the grant or
establishment of an additional |
franchise or relocated existing franchise,
shall be made by |
the Board under subsection (c) of Section 12 of this Act.
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If the manufacturer seeks to enter
into a contract, |
agreement or other arrangement with any person,
|
establishing any additional motor vehicle dealership or |
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other facility,
limited to the sale of factory repurchase |
vehicles or late model vehicles,
then the manufacturer |
shall follow the notice procedures set forth in this
|
Section and the
determination whether good cause exists for |
allowing the proposed agreement
shall be made by the Board |
under subsection (c) of Section 12, with the
manufacturer |
having
the burden of proof.
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A. (Blank).
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B. For the purposes of this Section, appointment of |
a successor motor
vehicle dealer at the same location |
as its predecessor, or within 2 miles
of such location,
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or the relocation of an existing dealer or franchise |
within 2 miles of
the relocating dealer's or |
franchisee's existing location,
shall not be construed |
as a grant, establishment or the
entering into of an |
additional franchise or selling agreement, or a
|
relocation of an existing franchise. The reopening
of a |
motor vehicle dealership that has not been in operation |
for 18 months
or more shall be deemed the grant of an |
additional franchise or selling
agreement.
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C. This Section does not apply to the relocation of |
an existing
dealership or franchise in a county having |
a population of more than
300,000 persons when the new |
location is within the dealer's current
relevant |
market area, provided the new location is more than 7 |
miles from
the nearest dealer of the same line make. |
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This Section does not apply to
the relocation of an |
existing dealership or franchise in a county having a
|
population of less than 300,000 persons when the new |
location is within the
dealer's current relevant |
market area, provided the new location is more
than 12 |
miles from the nearest dealer of the same line make. A |
dealer that would be farther away
from the new location |
of an existing dealership or
franchise of the same line |
make after a relocation may not
file a written protest |
against the relocation with the
Motor Vehicle Review |
Board.
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D. Nothing in this Section shall be construed to |
prevent a
franchiser from implementing affirmative |
action programs providing business
opportunities for |
minorities or from complying with applicable federal,
|
State or local law;
|
(9) to require a motor vehicle dealer to assent to a |
release, assignment,
novation, waiver or estoppel which |
would relieve any person from liability
imposed by this |
Act;
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(10) to prevent or refuse to give effect to the |
succession to the
ownership or management control of a |
dealership by any legatee under the
will of a dealer or to |
an heir under the laws of descent and distribution
of this |
State unless the franchisee has designated a successor to |
the ownership
or management control under the succession |
|
provisions of the franchise.
Unless the
franchiser, having |
the burden of proof, proves that the successor
is a person |
who is not of good moral character or does not meet the
|
franchiser's existing and reasonable capital standards |
and, with consideration
given to the volume of sales and |
service of the dealership, uniformly applied
minimum |
business experience standards in the market area, any |
designated
successor of a dealer or franchisee may succeed |
to the ownership or management
control of a dealership |
under the existing franchise if:
|
(i) The designated successor gives the |
franchiser written notice by
certified mail, |
return receipt requested, of his or her intention |
to succeed to
the ownership of the dealer within 60 |
days of the dealer's death or incapacity;
and
|
(ii) The designated successor agrees to be |
bound by all the terms
and
conditions of the |
existing franchise.
|
Notwithstanding the foregoing, in the event the motor |
vehicle dealer or
franchisee and manufacturer have duly |
executed an agreement concerning
succession rights prior |
to the dealer's death or incapacitation, the agreement
|
shall be observed.
|
(A) If the franchiser intends to refuse to honor |
the successor to the
ownership of a deceased or |
incapacitated dealer or franchisee under an
existing |
|
franchise agreement, the franchiser shall send a |
letter by certified
mail, return receipt requested, to |
the
designated successor within
60 days
from receipt of |
a proposal advising of its intent to refuse to honor |
the
succession and to discontinue the existing |
franchise agreement
and shall state that the |
designated successor only has 30 days from the
receipt |
of the notice to file with the Motor Vehicle Review |
Board a written
protest against the proposed action.
|
The notice shall set forth the
specific grounds for the |
refusal to honor the succession and discontinue the
|
existing franchise agreement.
|
If notice of refusal is not timely served upon the |
designated
successor,
the franchise agreement shall |
continue in effect subject to termination only as
|
otherwise permitted by paragraph (6) of subsection (d) |
of Section 4 of this
Act.
|
Within 30 days from the date the notice was |
received by the
designated
successor or any other |
person entitled to notice, the designee or other
person |
may file with the Board a written protest against the |
proposed action.
|
When a protest has been timely filed, the Board |
shall enter an
order,
fixing a date (within 60 days of |
the date of the order), time,
and place of a hearing on |
the protest, required under Sections 12 and 29
of this |
|
Act, and send by certified mail, return receipt |
requested, a copy of
the order to the franchiser that |
filed the notice of intention of the
proposed action |
and to the protesting designee or such other person.
|
The manufacturer shall have the burden of proof to |
establish that good
cause exists to refuse to honor the |
succession and discontinue the existing
franchise |
agreement. The determination whether good cause exists |
to refuse to
honor the succession shall be made by the |
Board under subdivision (B) of this
paragraph (10). The |
manufacturer shall not refuse to honor the succession |
or
discontinue the existing franchise agreement before |
the hearing process is
concluded as prescribed by this |
Act, and thereafter if the Board determines
that it has |
failed to meet its burden of proof and that good cause |
does not
exist to refuse to honor the succession and |
discontinue the existing
franchise agreement.
|
(B) No manufacturer shall impose any conditions |
upon honoring the
succession and continuing the |
existing franchise agreement with the designated
|
successor other than that the franchisee has |
designated a successor to the
ownership or management |
control under the succession provisions of the
|
franchise, or that the designated successor is of good |
moral character or meets
the reasonable capital |
standards and, with consideration given to the volume |
|
of
sales and service of the dealership, uniformly |
applied minimum business
experience standards in the |
market area;
|
(11) to prevent or refuse to approve a proposal to |
establish a successor
franchise at a location previously |
approved by the franchiser when submitted
with the |
voluntary termination by the existing franchisee unless |
the successor
franchisee would not otherwise qualify for a |
new motor vehicle dealer's
license under the Illinois |
Vehicle Code or unless the franchiser, having
the burden of |
proof, proves that such proposed successor is not of good
|
moral character or does not meet the franchiser's existing |
and reasonable
capital standards and, with consideration |
given to the volume of sales and
service of the dealership, |
uniformly applied minimum business experience
standards in |
the market area. However, when such a rejection
of a |
proposal is made, the manufacturer shall give written |
notice of its
reasons to the franchisee within 60 days of |
receipt by the manufacturer
of the proposal. However, |
nothing herein shall be construed
to prevent a franchiser |
from implementing affirmative action programs providing
|
business opportunities for minorities, or from complying |
with applicable
federal, State or local law;
|
(12) to prevent or refuse to grant a franchise to a |
person because such
person owns, has investment in or |
participates in the management of or holds
a franchise for |
|
the sale of another make or line of motor vehicles within
7 |
miles of the proposed franchise location in a county having |
a population
of more than 300,000 persons, or within 12 |
miles of the proposed franchise
location in a county having |
a population of less than 300,000
persons; or
|
(13) to prevent or attempt to prevent any new motor |
vehicle dealer
from establishing any additional motor |
vehicle dealership or other facility
limited to the sale of |
factory repurchase vehicles or late model vehicles
or |
otherwise offering for sale factory repurchase vehicles of |
the same line
make at an existing franchise by failing to |
make
available any contract, agreement or other |
arrangement which is made
available or otherwise offered to |
any person.
|
(f) It is deemed a violation for a manufacturer, a |
distributor, a wholesaler
wholesale ,
a distributor
branch or |
division, a factory branch or division, or a wholesale branch |
or
division, or
officer, agent, broker, shareholder, except a |
shareholder of 1% or less of the
outstanding
shares of any |
class of securities of a manufacturer, distributor, or |
wholesaler
which is a
publicly traded corporation, or other |
representative, directly or indirectly,
to own or
operate a |
place of business as a motor vehicle franchisee or motor |
vehicle
financing
affiliate, except that, this subsection |
shall not prohibit : |
(1) the ownership or
operation of a
place of business |
|
by a manufacturer, distributor, or wholesaler for a period,
|
not to exceed
18 months, during the transition from one |
motor vehicle franchisee to another;
or |
(2) the
investment in a motor vehicle franchisee by a |
manufacturer, distributor, or
wholesaler if
the investment |
is for the sole purpose of enabling a partner or |
shareholder in
that motor
vehicle franchisee to acquire an |
interest in that motor vehicle franchisee and
that partner
|
or shareholder is not otherwise employed by or associated |
with the
manufacturer,
distributor, or wholesaler and |
would not otherwise have the requisite capital
investment
|
funds to invest in the motor vehicle franchisee, and has |
the right to purchase
the entire
equity interest of the |
manufacturer, distributor, or wholesaler in the motor
|
vehicle
franchisee within a reasonable period of time not |
to exceed 5 years ; or .
|
(3) the ownership or operation of a place of business |
by a manufacturer that manufactures only diesel engines for |
installation in trucks having a gross vehicle weight rating |
of more than 16,000 pounds that are required to be |
registered under the Illinois Vehicle Code, provided that: |
(A) the manufacturer does not otherwise |
manufacture, distribute, or sell motor vehicles as |
defined under Section 1-217 of the Illinois Vehicle |
Code; |
(B) the manufacturer owned a place of business and |
|
it was in operation as of January 1, 2016; |
(C) the manufacturer complies with all obligations |
owed to dealers that are not owned, operated, or |
controlled by the manufacturer, including, but not |
limited to those obligations arising pursuant to |
Section 6; |
(D) to further avoid any acts or practices, the |
effect of which may be to lessen or eliminate |
competition, the manufacturer provides to dealers on |
substantially equal terms access to all support for |
completing repairs, including, but not limited to, |
parts and assemblies, training, and technical service |
bulletins, and other information concerning repairs |
that the manufacturer provides to facilities that are |
owned, operated, or controlled by the manufacturer; |
and |
(E) the manufacturer does not require that |
warranty repair work be performed by a |
manufacturer-owned repair facility and the |
manufacturer provides any dealer that has an agreement |
with the manufacturer to sell and perform warranty |
repairs on the manufacturer's engines the opportunity |
to perform warranty repairs on those engines, |
regardless of whether the dealer sold the truck into |
which the engine was installed. |
(g) Notwithstanding the terms, provisions, or conditions |
|
of any agreement or
waiver, it shall be deemed a violation for |
a manufacturer, a distributor,
a wholesaler, a distributor |
branch or division, a factory branch or division,
or a |
wholesale branch or division, or officer, agent or other |
representative
thereof, to directly or indirectly condition |
the awarding of a franchise to a
prospective new motor vehicle |
dealer, the addition of a line make or
franchise to an existing |
dealer, the renewal of a franchise of an existing
dealer, the |
approval of the relocation of an existing dealer's facility, or |
the
approval of the sale or transfer of the ownership of a |
franchise on the
willingness of a dealer, proposed new dealer, |
or owner of an interest in the
dealership facility to enter |
into a site control agreement or exclusive use
agreement unless |
separate and reasonable consideration was offered and accepted |
for that agreement. |
For purposes of this subsection (g), the terms "site |
control
agreement" and "exclusive use agreement" include any |
agreement that has
the effect of either (i) requiring that the |
dealer establish or maintain
exclusive dealership facilities; |
or (ii) restricting the ability of the dealer, or
the ability |
of the dealer's lessor in the event the dealership facility is |
being
leased, to transfer, sell, lease, or change the use of |
the dealership premises,
whether by sublease, lease, |
collateral pledge of lease, or other similar agreement. "Site |
control agreement" and "exclusive use agreement" also include a |
manufacturer restricting the ability of a dealer to transfer, |
|
sell, or lease the dealership premises by right of first |
refusal to purchase or lease, option to purchase, or option to |
lease if the transfer, sale, or lease of the dealership |
premises is to a person who is an immediate family member of |
the dealer. For the purposes of this subsection (g), "immediate |
family member" means a spouse, parent, son, daughter, |
son-in-law, daughter-in-law, brother, and sister. |
If a manufacturer exercises any right of first refusal to |
purchase or lease or option to purchase or lease with regard to |
a transfer, sale, or lease of the dealership premises to a |
person who is not an immediate family member of the dealer, |
then (1) within 60 days from the receipt of the completed |
application forms generally utilized by a manufacturer to |
conduct its review and a copy of all agreements regarding the |
proposed transfer, the manufacturer must notify the dealer of |
its intent to exercise the right of first refusal to purchase |
or lease or option to purchase or lease and (2) the exercise of |
the right of first refusal to purchase or lease or option to |
purchase or lease must result in the dealer receiving |
consideration, terms, and conditions that either are the same |
as or greater than that which they have contracted to receive |
in connection with the proposed transfer, sale, or lease of the |
dealership premises. |
Any provision
contained in any agreement entered into on or |
after the effective date of this amendatory Act of the 96th |
General Assembly that is inconsistent with the provisions of |
|
this subsection (g) shall be
voidable at the election of the |
affected dealer, prospective dealer, or owner
of an interest in |
the dealership facility. |
(h) For purposes of this subsection: |
"Successor manufacturer" means any motor vehicle |
manufacturer that, on or after January 1, 2009, acquires, |
succeeds to, or
assumes any part of the business of another |
manufacturer, referred to as the
"predecessor manufacturer", |
as the result of any of the following: |
(i) A change in ownership, operation, or control of the |
predecessor
manufacturer by sale or transfer of assets, |
corporate stock or other
equity interest, assignment, |
merger, consolidation, combination, joint
venture, |
redemption, court-approved sale, operation of law or
|
otherwise. |
(ii) The termination, suspension, or cessation of a |
part or all of the
business operations of the predecessor |
manufacturer. |
(iii) The discontinuance of the sale of the product |
line. |
(iv) A change in distribution system by the predecessor |
manufacturer,
whether through a change in distributor or |
the predecessor
manufacturer's decision to cease |
conducting business through a
distributor altogether. |
"Former Franchisee" means a new motor vehicle dealer that |
has entered into a franchise with a predecessor manufacturer |
|
and that has either: |
(i) entered into a termination agreement or deferred |
termination
agreement with a predecessor or successor |
manufacturer related to
such franchise; or |
(ii) has had such franchise canceled, terminated, |
nonrenewed,
noncontinued, rejected, nonassumed, or |
otherwise ended. |
For a period of 3 years from: (i) the date that a successor |
manufacturer acquires, succeeds to, or assumes any part of the |
business of a predecessor manufacturer; (ii) the last day that |
a former franchisee is authorized to remain in business as a |
franchised dealer with respect to a particular franchise under |
a termination agreement or deferred termination agreement with |
a predecessor or successor manufacturer; (iii) the last day |
that a former franchisee that was cancelled, terminated, |
nonrenewed, noncontinued, rejected, nonassumed, or otherwise |
ended by a predecessor or successor manufacturer is authorized |
to remain in business as a franchised dealer with respect to a |
particular franchise; or (iv) the effective date of this |
amendatory Act of the 96th General Assembly, whichever is |
latest, it shall be unlawful for such successor manufacturer to |
enter into a same line make franchise with any
person or to |
permit the relocation of any existing same line
make franchise, |
for a line make of the predecessor manufacturer that would be |
located or
relocated within the relevant market area of a |
former franchisee who owned or leased a
dealership facility in |
|
that relevant market area without first offering the additional |
or relocated
franchise to the former franchisee, or the |
designated successor of such former franchisee in the
event the |
former franchisee is deceased or a person with a disability, at |
no cost and without any requirements or
restrictions other than |
those imposed generally on the manufacturer's other |
franchisees at that
time, unless one of the following applies: |
(1) As a result of the former franchisee's |
cancellation, termination,
noncontinuance, or nonrenewal |
of the franchise, the predecessor
manufacturer had |
consolidated the line make with another of its line makes
|
for which the predecessor manufacturer had a franchisee |
with a then-existing
dealership facility located within |
that relevant market area. |
(2) The successor manufacturer has paid the former |
franchisee, or the
designated successor of such former |
franchisee in the event the former
franchisee is deceased |
or a person with a disability, the fair market value of the |
former
franchisee's franchise on (i) the date the |
franchisor announces the action which results in the |
termination, cancellation, or nonrenewal; or (ii) the date |
the action which results in termination, cancellation, or |
nonrenewal first became general knowledge; or (iii) the day |
12 months prior to the date on which the notice of |
termination, cancellation, or nonrenewal is issued, |
whichever amount is higher. Payment is due within 90 days |
|
of the effective date of the termination, cancellation, or |
nonrenewal. If the termination, cancellation, or |
nonrenewal is due to a manufacturer's change in |
distributors, the manufacturer may avoid paying fair |
market value to the dealer if the new distributor or the |
manufacturer offers the dealer a franchise agreement with |
terms acceptable to the dealer. |
(3) The successor manufacturer proves that it would |
have had good cause to terminate the franchise agreement of |
the former franchisee, or the successor of the former |
franchisee under item (e)(10) in the event that the former |
franchisee is deceased or a person with a disability. The |
determination of whether the successor manufacturer would |
have had good cause to terminate the franchise agreement of |
the former franchisee, or the successor of the former |
franchisee, shall be made by the Board under subsection (d) |
of Section 12. A successor manufacturer that seeks to |
assert that it would have had good cause to terminate a |
former franchisee, or the successor of the former |
franchisee, must file a petition seeking a hearing on this |
issue before the Board and shall have the burden of proving |
that it would have had good cause to terminate the former |
franchisee or the successor of the former franchisee. No |
successor dealer, other than the former franchisee, may be |
appointed or franchised by the successor manufacturer |
within the relevant market area of the former franchisee |
|
until the Board has held a hearing and rendered a |
determination on the issue of whether the successor |
manufacturer would have had good cause to terminate the |
former franchisee. |
In the event that a successor manufacturer attempts to |
enter into a same line make franchise with any person or to |
permit the relocation of any existing line make franchise under |
this subsection (h) at a location that is within the relevant |
market area of 2 or more former franchisees, then the successor |
manufacturer may not offer it to any person other than one of |
those former franchisees unless the successor manufacturer can |
prove that at least one of the 3 exceptions in items (1), (2), |
and (3) of this subsection (h) applies to each of those former |
franchisees. |
(Source: P.A. 99-143, eff. 7-27-15.)
|
Section 99. Effective date. This Act takes effect upon |
becoming law. |