Dealer Franchise Law Change

MONTANA’S AUTOMOBILE FRANCHISE LAW HAS CHANGED
The Montana Automobile Dealers Association is pleased to announced HB 567, a major revision of Montana’s Automobile Franchise Law, has become law and is effective immediately. This is the first major revision of the franchise law in over 10 years. MADA would like to thank all the dealers whose time and efforts in preparing the bill and testifying were critical in its passage. MADA particularly thanks Representative Jon Sonju for all his hard work in getting this bill passed.

Montana’s revised automobile dealer franchise law now provides:

- Claims for warranty and incentives must be paid within 30 days.

- Manufacturers may not deny claims for warranty or incentives based solely on a dealers incidental failure to comply with administrative technicalities.

- There is a rebuttable presumption a dealer does not know a vehicle would be shipped out of country if that vehicle was purchased in person at a dealership and licensed in the US.

- Manufacturers are prohibited from limiting allocation, charging back, withholding payments, preventing a dealer from participating in a program based on an out of country sale, if the customer was present and the dealer could not have reasonably known the vehicle would be shipped to another country. See rebuttable presumption above.

- Manufacturers may not seek to impose a sur-charge to recover any of its costs, including warranty reimbursement and incentives.

- Dealers have 60 days to resubmit a claim if the claim was denied for a dealer’s incidental failure to comply with administrative technicalities.

- A dealers has 90 days after the expiration of an incentive program, or longer if provided by the service and sales agreement, to submit a claim for payment on incentives.
Manufacturer has one year from payment of a claim, or one year from the end of a program to charge back a dealer or audit a dealers records.

- If a line make is terminated the manufacturer must pay the dealership the actual loss or highest fair market value on the following dates: date of termination, one year prior to date of termination, one day prior to termination announcement.

- If manufacturer changes distributors, the new distributer must use the existing dealer network.

- Good cause for termination was amended to permit the department to consider the dealers sales in relation to the market, not just the amount of business conducted; the department may also consider the reasonableness of the manufacturer terms and the parties’ relative bargaining power in determining good cause for termination.

- When an objection is made to a termination proposal the manufacturer may not enter into a new franchise agreement with anyone until exhaustion of all appellate remedies.

- A manufacturer may not terminate for failure of a dealer to change locations, make substantial alterations to dealership premises or facilities, or change the number or amount of franchises.

- A manufacturer may not terminate a franchise based on a desire for market penetration.

- Expands the manufacturer prohibitions to a purchaser of a new motor vehicle dealership as well as the existing dealer.

- Prohibits a manufacturer from requiring exclusive facilities to keep a dealership or participation in any program, discount, credit, rebate or incentive program.

- Prohibits a manufacturer from asking a dealer or new purchaser to refrain from participation in investment of other like makes as long as the dealer has a reasonable line of credit for each franchise and is in compliance with facilities requirements. Facility requirements may not include exclusive facilities for each line make.

- Prohibits a manufacturer from considering a dealers performance relating to the sale of new motor vehicles or ability to satisfy any minimum sales or market share quota in determining eligibility to purchase program, certified or other used vehicles; to determine the volume, type, or model of program, certified, or other used motor vehicles the dealer is eligible to purchase; the price or prices of any program, certified, or other used motor vehicles that the dealer is eligible to purchase; or the availability or amount of any discount, credit, rebate, or sales incentive that the new motor vehicle dealer is eligible to receive for the purchase of any program, certified, or other used motor vehicles.

- Expands the penalties of treble damages and attorney fees for violations of franchise law to new purchasers of dealerships.

-IS EFFECTIVE IMMEDIATELY

A link to the bill is at http://data.opi.mt.gov/bills/2009/billpdf/HB0567.pdf