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| [ Engrossed ] | [ Enrolled ] | [ Senate Amendment 001 ] |
91_HB0520
LRB9102551SMdvA
1 AN ACT to amend the Motor Vehicle Franchise Act by
2 changing Sections 4, 5, 6, 13, and 29, and adding Section
3 7.1.
4 Be it enacted by the People of the State of Illinois,
5 represented in the General Assembly:
6 Section 5. The Motor Vehicle Franchise Act is amended by
7 changing Sections 4, 5, 6, 13, and 29, and adding Section 7.1
8 as follows:
9 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
10 Sec. 4. Unfair competition and practices.
11 (a) The unfair methods of competition and unfair and
12 deceptive acts or practices listed in this Section are hereby
13 declared to be unlawful. In construing the provisions of this
14 Section, the courts may be guided by the interpretations of
15 the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
16 from time to time amended.
17 (b) It shall be deemed a violation for any manufacturer,
18 factory branch, factory representative, distributor or
19 wholesaler, distributor branch, distributor representative or
20 motor vehicle dealer to engage in any action with respect to
21 a franchise which is arbitrary, in bad faith or
22 unconscionable and which causes damage to any of the parties
23 or to the public.
24 (c) It shall be deemed a violation for a manufacturer, a
25 distributor, a wholesaler, a distributor branch or division,
26 a factory branch or division, or a wholesale branch or
27 division, or officer, agent or other representative thereof,
28 to coerce, or attempt to coerce, any motor vehicle dealer:
29 (1) to accept, buy or order any motor vehicle or
30 vehicles, appliances, equipment, parts or accessories
31 therefor, or any other commodity or commodities or
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1 service or services which such motor vehicle dealer has
2 not voluntarily ordered or requested except items
3 required by applicable local, state or federal law; or to
4 require a motor vehicle dealer to accept, buy, order or
5 purchase such items in order to obtain any motor vehicle
6 or vehicles or any other commodity or commodities which
7 have been ordered or requested by such motor vehicle
8 dealer;
9 (2) to order or accept delivery of any motor
10 vehicle with special features, appliances, accessories or
11 equipment not included in the list price of the motor
12 vehicles as publicly advertised by the manufacturer
13 thereof, except items required by applicable law; or
14 (3) to order for anyone any parts, accessories,
15 equipment, machinery, tools, appliances or any commodity
16 whatsoever, except items required by applicable law.
17 (d) It shall be deemed a violation for a manufacturer, a
18 distributor, a wholesaler, a distributor branch or division,
19 or officer, agent or other representative thereof:
20 (1) to adopt, change, establish or implement a plan
21 or system for the allocation and distribution of new
22 motor vehicles to motor vehicle dealers which is
23 arbitrary or capricious or to modify an existing plan so
24 as to cause the same to be arbitrary or capricious;
25 (2) to fail or refuse to advise or disclose to any
26 motor vehicle dealer having a franchise or selling
27 agreement, upon written request therefor, the basis upon
28 which new motor vehicles of the same line make are
29 allocated or distributed to motor vehicle dealers in the
30 State and the basis upon which the current allocation or
31 distribution is being made or will be made to such motor
32 vehicle dealer, including but not limited to, a complete
33 breakdown by model, color, equipment and other items or
34 terms, a concise listing of dealerships, and an
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1 explanation of the derivation of the allocation system,
2 including its mathematical formula in a clear and
3 comprehensible form;
4 (3) to refuse to deliver in reasonable quantities
5 and within a reasonable time after receipt of dealer's
6 order, to any motor vehicle dealer having a franchise or
7 selling agreement for the retail sale of new motor
8 vehicles sold or distributed by such manufacturer,
9 distributor, wholesaler, distributor branch or division,
10 factory branch or division or wholesale branch or
11 division, any such motor vehicles as are covered by such
12 franchise or selling agreement specifically publicly
13 advertised in the State by such manufacturer,
14 distributor, wholesaler, distributor branch or division,
15 factory branch or division, or wholesale branch or
16 division to be available for immediate delivery.
17 However, the failure to deliver any motor vehicle shall
18 not be considered a violation of this Act if such failure
19 is due to an act of God, a work stoppage or delay due to
20 a strike or labor difficulty, a shortage of materials, a
21 lack of manufacturing capacity, a freight embargo or
22 other cause over which the manufacturer, distributor, or
23 wholesaler, or any agent thereof has no control;
24 (4) to coerce, or attempt to coerce, any motor
25 vehicle dealer to enter into any agreement with such
26 manufacturer, distributor, wholesaler, distributor branch
27 or division, factory branch or division, or wholesale
28 branch or division, or officer, agent or other
29 representative thereof, or to do any other act
30 prejudicial to the dealer by threatening to reduce his
31 allocation of motor vehicles or cancel any franchise or
32 any selling agreement existing between such manufacturer,
33 distributor, wholesaler, distributor branch or division,
34 or factory branch or division, or wholesale branch or
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1 division, and the dealer. However, notice in good faith
2 to any motor vehicle dealer of the dealer's violation of
3 any terms or provisions of such franchise or selling
4 agreement or of any law or regulation applicable to the
5 conduct of a motor vehicle dealer shall not constitute a
6 violation of this Act;
7 (5) to require a franchisee to participate in an
8 advertising campaign or contest or any promotional
9 campaign, or to purchase or lease any promotional
10 materials, training materials, show room or other display
11 decorations or materials at the expense of the
12 franchisee;
13 (6) to cancel or terminate the franchise or selling
14 agreement of a motor vehicle dealer without good cause
15 and without giving notice as hereinafter provided; to
16 fail or refuse to extend the franchise or selling
17 agreement of a motor vehicle dealer upon its expiration
18 without good cause and without giving notice as
19 hereinafter provided; or, to offer a renewal, replacement
20 or succeeding franchise or selling agreement containing
21 terms and provisions the effect of which is to
22 substantially change or modify the sales and service
23 obligations or capital requirements of the motor vehicle
24 dealer arbitrarily and without good cause and without
25 giving notice as hereinafter provided notwithstanding any
26 term or provision of a franchise or selling agreement.
27 (A) If a manufacturer, distributor,
28 wholesaler, distributor branch or division, factory
29 branch or division or wholesale branch or division
30 intends to cancel or terminate a franchise or
31 selling agreement or intends not to extend or renew
32 a franchise or selling agreement on its expiration,
33 it shall send a letter by certified mail, return
34 receipt requested, to the affected franchisee at
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1 least 60 days before the effective date of the
2 proposed action, or not later than 10 days before
3 the proposed action when the reason for the action
4 is based upon either of the following:
5 (i) the business operations of the
6 franchisee have been abandoned or the
7 franchisee has failed to conduct customary
8 sales and service operations during customary
9 business hours for at least 7 consecutive
10 business days unless such closing is due to an
11 act of God, strike or labor difficulty or other
12 cause over which the franchisee has no control;
13 or
14 (ii) the conviction of or plea of nolo
15 contendere by the motor vehicle dealer or any
16 operator thereof in a court of competent
17 jurisdiction to an offense punishable by
18 imprisonment for more than two years.
19 Each notice of proposed action shall include a
20 detailed statement setting forth the specific
21 grounds for the proposed cancellation, termination,
22 or refusal to extend or renew and shall notify the
23 dealer that the dealer has only 30 days from receipt
24 of the notice to file with the Motor Vehicle Review
25 Board a written protest against the proposed action.
26 (B) If a manufacturer, distributor,
27 wholesaler, distributor branch or division, factory
28 branch or division or wholesale branch or division
29 intends to change substantially or modify the sales
30 and service obligations or capital requirements of a
31 motor vehicle dealer as a condition to extending or
32 renewing the existing franchise or selling agreement
33 of such motor vehicle dealer, it shall send a letter
34 by certified mail, return receipt requested, to the
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1 affected franchisee at least 60 days before the
2 date of expiration of the franchise or selling
3 agreement. Each notice of proposed action shall
4 include a detailed statement setting forth the
5 specific grounds for the proposed action and shall
6 notify the dealer that the dealer has only 30 days
7 from receipt of the notice to file with the Motor
8 Vehicle Review Board a written protest against the
9 proposed action.
10 (C) Within 30 15 days from receipt of the
11 notice under subparagraphs (A) and (B), the
12 franchisee may file with the Board a written protest
13 against the proposed action.
14 When the protest has been timely filed, the
15 Board shall enter an order, fixing a date (within 60
16 days of the date of the order), time, and place of a
17 hearing on the protest required under Sections 12
18 and 29 of this Act, and send by certified mail,
19 return receipt requested, a copy of the order to the
20 manufacturer that filed the notice of intention of
21 the proposed action and to the protesting dealer or
22 franchisee.
23 The manufacturer shall have the burden of proof
24 to establish that good cause exists to cancel or
25 terminate, or fail to extend or renew the franchise
26 or selling agreement of a motor vehicle dealer or
27 franchisee, and to change substantially or modify
28 the sales and service obligations or capital
29 requirements of a motor vehicle dealer as a
30 condition to extending or renewing the existing
31 franchise or selling agreement. The determination
32 whether good cause exists to cancel, terminate, or
33 refuse to renew or extend the franchise or selling
34 agreement, or to change or modify the obligations of
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1 the dealer as a condition to offer renewal,
2 replacement, or succession shall be made by the
3 Board under subsection (d) of Section 12 of this
4 Act.
5 (D) Notwithstanding the terms, conditions, or
6 provisions of a franchise or selling agreement, the
7 following shall not constitute good cause for
8 cancelling or terminating or failing to extend or
9 renew the franchise or selling agreement: (i) the
10 change of ownership or executive management of the
11 franchisee's dealership; or (ii) the fact that the
12 franchisee or owner of an interest in the franchise
13 owns, has an investment in, participates in the
14 management of, or holds a license for the sale of
15 the same or any other line make of new motor
16 vehicles.
17 Good cause shall exist to cancel, terminate or
18 fail to offer a renewal or replacement franchise or
19 selling agreement to all franchisees of a line make
20 if the manufacturer permanently discontinues the
21 manufacture or assembly of motor vehicles of such
22 line make.
23 (E) The manufacturer may not cancel or
24 terminate, or fail to extend or renew a franchise or
25 selling agreement or change or modify the
26 obligations of the franchisee as a condition to
27 offering a renewal, replacement, or succeeding
28 franchise or selling agreement before the hearing
29 process is concluded as prescribed by this Act, and
30 thereafter, if the Board determines that the
31 manufacturer has failed to meet its burden of proof
32 and that good cause does not exist to allow the
33 proposed action; or
34 (7) notwithstanding the terms of any franchise
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1 agreement, to fail to indemnify and hold harmless its
2 franchised dealers against any judgment or settlement for
3 damages, including, but not limited to, court costs,
4 expert witness fees, and reasonable attorneys' fees of
5 the new motor vehicle dealer, and other expenses incurred
6 in the litigation, arising out of complaints, claims or
7 lawsuits including, but not limited to, strict liability,
8 negligence, misrepresentation, warranty (express or
9 implied), or recision of the sale as defined in Section
10 2-608 of the Uniform Commercial Code, to the extent that
11 the judgment or settlement relates to the alleged
12 defective or negligent manufacture, assembly or design of
13 new motor vehicles, parts or accessories or other
14 functions by the manufacturer, beyond the control of the
15 dealer.
16 (e) It shall be deemed a violation for a manufacturer, a
17 distributor, a wholesaler, a distributor branch or division
18 or officer, agent or other representative thereof:
19 (1) to resort to or use any false or misleading
20 advertisement in connection with his business as such
21 manufacturer, distributor, wholesaler, distributor branch
22 or division or officer, agent or other representative
23 thereof;
24 (2) to offer to sell or lease, or to sell or lease,
25 any new motor vehicle to any motor vehicle dealer at a
26 lower actual price therefor than the actual price offered
27 to any other motor vehicle dealer for the same model
28 vehicle similarly equipped or to utilize any device
29 including, but not limited to, sales promotion plans or
30 programs which result in such lesser actual price or
31 fail to make available to any motor vehicle dealer any
32 preferential pricing, incentive, rebate, finance rate, or
33 low interest loan program offered to competing motor
34 vehicle dealers in other contiguous states. However, the
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1 provisions of this paragraph shall not apply to sales to
2 a motor vehicle dealer for resale to any unit of the
3 United States Government, the State or any of its
4 political subdivisions;
5 (3) to offer to sell or lease, or to sell or lease,
6 any new motor vehicle to any person, except a wholesaler,
7 distributor or manufacturer's employees at a lower actual
8 price therefor than the actual price offered and charged
9 to a motor vehicle dealer for the same model vehicle
10 similarly equipped or to utilize any device which results
11 in such lesser actual price. However, the provisions of
12 this paragraph shall not apply to sales to a motor
13 vehicle dealer for resale to any unit of the United
14 States Government, the State or any of its political
15 subdivisions;
16 (4) to prevent or attempt to prevent by contract or
17 otherwise any motor vehicle dealer or franchisee from
18 changing the executive management control of the motor
19 vehicle dealer or franchisee unless the franchiser,
20 having the burden of proof, proves that such change of
21 executive management will result in executive management
22 control by a person or persons who are not of good moral
23 character or who do not meet the franchiser's existing
24 and, with consideration given to the volume of sales and
25 service of the dealership, uniformly applied minimum
26 business experience standards in the market area. However
27 where the manufacturer rejects a proposed change in
28 executive management control, the manufacturer shall give
29 written notice of his reasons to the dealer within 60
30 days of notice to the manufacturer by the dealer of the
31 proposed change. If the manufacturer does not send a
32 letter to the franchisee by certified mail, return
33 receipt requested, within 60 days from receipt by the
34 manufacturer of the proposed change, then the change of
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1 the executive management control of the franchisee shall
2 be deemed accepted as proposed by the franchisee, and the
3 manufacturer shall give immediate effect to such change;
4 (5) to prevent or attempt to prevent by contract or
5 otherwise any motor vehicle dealer from establishing or
6 changing the capital structure of his dealership or the
7 means by or through which he finances the operation
8 thereof; provided the dealer meets any reasonable capital
9 standards agreed to between the dealer and the
10 manufacturer, distributor or wholesaler, who may require
11 that the sources, method and manner by which the dealer
12 finances or intends to finance its operation, equipment
13 or facilities be fully disclosed;
14 (6) to refuse to give effect to or prevent or
15 attempt to prevent by contract or otherwise any motor
16 vehicle dealer or any officer, partner or stockholder of
17 any motor vehicle dealer from selling or transferring any
18 part of the interest of any of them to any other person
19 or persons or party or parties unless such sale or
20 transfer is to a transferee who would not otherwise
21 qualify for a new motor vehicle dealers license under
22 "The Illinois Vehicle Code" or unless the franchiser,
23 having the burden of proof, proves that such sale or
24 transfer is to a person or party who is not of good moral
25 character or does not meet the franchiser's existing and
26 reasonable capital standards and, with consideration
27 given to the volume of sales and service of the
28 dealership, uniformly applied minimum business experience
29 standards in the market area. However, nothing herein
30 shall be construed to prevent a franchiser from
31 implementing affirmative action programs providing
32 business opportunities for minorities or from complying
33 with applicable federal, State or local law:
34 (A) If the manufacturer intends to refuse to
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1 approve the sale or transfer of all or a part of the
2 interest, then it shall, within 60 days from receipt
3 of the completed application forms generally
4 utilized by a manufacturer to conduct its review and
5 a copy of all agreements regarding the proposed
6 transfer, send a letter by certified mail, return
7 receipt requested, advising the franchisee of any
8 refusal to approve the sale or transfer of all or
9 part of the interest and shall state that the dealer
10 only has 30 days from the receipt of the notice to
11 file with the Motor Vehicle Review Board a written
12 protest against the proposed action. The notice
13 shall set forth specific criteria used to evaluate
14 the prospective transferee and the grounds for
15 refusing to approve the sale or transfer to that
16 transferee. Within 30 15 days from the franchisee's
17 receipt of the manufacturer's notice, the franchisee
18 may file with the Board a written protest against
19 the proposed action.
20 When a protest has been timely filed, the Board
21 shall enter an order, fixing the date (within 60
22 days of the date of such order), time, and place of
23 a hearing on the protest, required under Sections 12
24 and 29 of this Act, and send by certified mail,
25 return receipt requested, a copy of the order to the
26 manufacturer that filed notice of intention of the
27 proposed action and to the protesting franchisee.
28 The manufacturer shall have the burden of proof
29 to establish that good cause exists to refuse to
30 approve the sale or transfer to the transferee. The
31 determination whether good cause exists to refuse to
32 approve the sale or transfer shall be made by the
33 Board under subdivisions (6)(B). The manufacturer
34 shall not refuse to approve the sale or transfer by
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1 a dealer or an officer, partner, or stockholder of a
2 franchise or any part of the interest to any person
3 or persons before the hearing process is concluded
4 as prescribed by this Act, and thereafter if the
5 Board determines that the manufacturer has failed to
6 meet its burden of proof and that good cause does
7 not exist to refuse to approve the sale or transfer
8 to the transferee.
9 (B) Good cause to refuse to approve such sale
10 or transfer under this Section is established when
11 such sale or transfer is to a transferee who would
12 not otherwise qualify for a new motor vehicle
13 dealers license under "The Illinois Vehicle Code" or
14 such sale or transfer is to a person or party who is
15 not of good moral character or does not meet the
16 franchiser's existing and reasonable capital
17 standards and, with consideration given to the
18 volume of sales and service of the dealership,
19 uniformly applied minimum business experience
20 standards in the market area.
21 (7) to obtain money, goods, services, anything of
22 value, or any other benefit from any other person with
23 whom the motor vehicle dealer does business, on account
24 of or in relation to the transactions between the dealer
25 and the other person as compensation, except for services
26 actually rendered, unless such benefit is promptly
27 accounted for and transmitted to the motor vehicle
28 dealer;
29 (8) to grant an additional franchise in the
30 relevant market area of an existing franchise of the same
31 line make or to relocate an existing motor vehicle
32 dealership within or into a relevant market area of an
33 existing franchise of the same line make. However, if the
34 manufacturer wishes to grant such an additional franchise
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1 to an independent person in a bona fide relationship in
2 which such person is prepared to make a significant
3 investment subject to loss in such a dealership, or if
4 the manufacturer wishes to relocate an existing motor
5 vehicle dealership, then the manufacturer shall send a
6 letter by certified mail, return receipt requested, to
7 each existing dealer or dealers of the same line make
8 whose relevant market area includes the proposed location
9 of the additional or relocated franchise at least 60 days
10 before the manufacturer grants an additional franchise or
11 relocates an existing franchise of the same line make
12 within or into the relevant market area of an existing
13 franchisee of the same line make. Each notice shall set
14 forth the specific grounds for the proposed grant of an
15 additional or relocation of an existing franchise.
16 Unless the parties agree upon the grant or establishment
17 of the additional or relocated franchise within 30 15
18 days from the date the notice was received by the
19 existing franchisee of the same line make or any person
20 entitled to receive such notice, the franchisee or other
21 person may file with the Board a written protest against
22 the grant or establishment of the proposed additional or
23 relocated franchise and shall state that the dealer only
24 has 30 days from the receipt of the notice to file with
25 the Motor Vehicle Review Board a written protest against
26 the proposed action.
27 When a protest has been timely filed, the Board
28 shall enter an order fixing a date (within 60 days of the
29 date of the order), time, and place of a hearing on the
30 protest, required under Sections 12 and 29 of this Act,
31 and send by certified or registered mail, return receipt
32 requested, a copy of the order to the manufacturer that
33 filed the notice of intention to grant or establish the
34 proposed additional or relocated franchise and to the
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1 protesting dealer or dealers of the same line make whose
2 relevant market area includes the proposed location of
3 the additional or relocated franchise.
4 When more than one protest is filed against the
5 grant or establishment of the additional or relocated
6 franchise of the same line make, the Board may
7 consolidate the hearings to expedite disposition of the
8 matter. The manufacturer shall have the burden of proof
9 to establish that good cause exists to allow the grant or
10 establishment of the additional or relocated franchise.
11 The manufacturer may not grant or establish the
12 additional franchise or relocate the existing franchise
13 before the hearing process is concluded as prescribed by
14 this Act, and thereafter if the Board determines that the
15 manufacturer has failed to meet its burden of proof and
16 that good cause does not exist to allow the grant or
17 establishment of the additional franchise or relocation
18 of the existing franchise.
19 The determination whether good cause exists for
20 allowing the grant or establishment of an additional
21 franchise or relocated existing franchise, shall be made
22 by the Board under subsection (c) of Section 12 of this
23 Act. If the manufacturer seeks to enter into a contract,
24 agreement or other arrangement with any person,
25 establishing any additional motor vehicle dealership or
26 other facility, limited to the sale of factory repurchase
27 vehicles or late model vehicles, then the manufacturer
28 shall follow the notice procedures set forth in this
29 Section and the determination whether good cause exists
30 for allowing the proposed agreement shall be made by the
31 Board under subsection (c) of Section 12, with the
32 manufacturer having the burden of proof.
33 A. (Blank).
34 B. For the purposes of this Section,
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1 appointment of a successor motor vehicle dealer at
2 the same location as its predecessor, or within 2
3 miles of such location, or the relocation of an
4 existing dealer or franchise within 2 miles of the
5 relocating dealer's or franchisee's existing
6 location, shall not be construed as a grant,
7 establishment or the entering into of an additional
8 franchise or selling agreement, or a relocation of
9 an existing franchise. The reopening of a motor
10 vehicle dealership that has not been in operation
11 for 18 months or more shall be deemed the grant of
12 an additional franchise or selling agreement.
13 C. This Section does not apply to the
14 relocation of an existing dealership or franchise in
15 a county having a population of more than 300,000
16 persons when the new location is within the dealer's
17 current relevant market area, provided the new
18 location is more than 7 miles from the nearest
19 dealer of the same line make or is further away from
20 the nearest dealer of the same line make. This
21 Section does not apply to the relocation of an
22 existing dealership or franchise in a county having
23 a population of less than 300,000 persons when the
24 new location is within the dealer's current relevant
25 market area, provided the new location is more than
26 12 miles from the nearest dealer of the same line
27 make or is further away from the nearest dealer of
28 the same line make.
29 D. Nothing in this Section shall be construed
30 to prevent a franchiser from implementing
31 affirmative action programs providing business
32 opportunities for minorities or from complying with
33 applicable federal, State or local law;
34 (9) to require a motor vehicle dealer to assent to
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1 a release, assignment, novation, waiver or estoppel which
2 would relieve any person from liability imposed by this
3 Act;
4 (10) to prevent or refuse to give effect to the
5 succession to the ownership or management control of a
6 dealership by any legatee under the will of a dealer or
7 to an heir under the laws of descent and distribution of
8 this State unless the franchisee has designated a
9 successor to the ownership or management control under
10 the succession provisions of the franchise. Unless the
11 franchiser, having the burden of proof, proves that the
12 successor is a person who is not of good moral character
13 or does not meet the franchiser's existing and reasonable
14 capital standards and, with consideration given to the
15 volume of sales and service of the dealership, uniformly
16 applied minimum business experience standards in the
17 market area, any designated successor of a dealer or
18 franchisee may succeed to the ownership or management
19 control of a dealership under the existing franchise if:
20 (i) The designated successor gives the
21 franchiser written notice by certified mail,
22 return receipt requested, of his or her
23 intention to succeed to the ownership of the
24 dealer within 60 days of the dealer's death or
25 incapacity; and
26 (ii) The designated successor agrees to
27 be bound by all the terms and conditions of the
28 existing franchise.
29 Notwithstanding the foregoing, in the event the
30 motor vehicle dealer or franchisee and manufacturer have
31 duly executed an agreement concerning succession rights
32 prior to the dealer's death or incapacitation, the
33 agreement shall be observed.
34 (A) If the franchiser intends to refuse to
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1 honor the successor to the ownership of a deceased
2 or incapacitated dealer or franchisee under an
3 existing franchise agreement, the franchiser shall
4 send a letter by certified mail, return receipt
5 requested, to the designated successor within 60
6 days from receipt of a proposal advising of its
7 intent to refuse to honor the succession and to
8 discontinue the existing franchise agreement and
9 shall state that the designated successor only has
10 30 days from the receipt of the notice to file with
11 the Motor Vehicle Review Board a written protest
12 against the proposed action. The notice shall set
13 forth the specific grounds for the refusal to honor
14 the succession and discontinue the existing
15 franchise agreement.
16 If notice of refusal is not timely served upon
17 the designated successor, the franchise agreement
18 shall continue in effect subject to termination only
19 as otherwise permitted by paragraph (6) of
20 subsection (d) of Section 4 of this Act.
21 Within 30 15 days from the date the notice was
22 received by the designated successor or any other
23 person entitled to notice, the designee or other
24 person may file with the Board a written protest
25 against the proposed action.
26 When a protest has been timely filed, the Board
27 shall enter an order, fixing a date (within 60 days
28 of the date of the order), time, and place of a
29 hearing on the protest, required under Sections 12
30 and 29 of this Act, and send by certified mail,
31 return receipt requested, a copy of the order to the
32 franchiser that filed the notice of intention of the
33 proposed action and to the protesting designee or
34 such other person.
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1 The manufacturer shall have the burden of proof
2 to establish that good cause exists to refuse to
3 honor the succession and discontinue the existing
4 franchise agreement. The determination whether good
5 cause exists to refuse to honor the succession shall
6 be made by the Board under subdivision (B) of this
7 paragraph (10). The manufacturer shall not refuse
8 to honor the succession or discontinue the existing
9 franchise agreement before the hearing process is
10 concluded as prescribed by this Act, and thereafter
11 if the Board determines that it has failed to meet
12 its burden of proof and that good cause does not
13 exist to refuse to honor the succession and
14 discontinue the existing franchise agreement.
15 (B) No manufacturer shall impose any
16 conditions upon honoring the succession and
17 continuing the existing franchise agreement with the
18 designated successor other than that the franchisee
19 has designated a successor to the ownership or
20 management control under the succession provisions
21 of the franchise, or that the designated successor
22 is of good moral character or meets the reasonable
23 capital standards and, with consideration given to
24 the volume of sales and service of the dealership,
25 uniformly applied minimum business experience
26 standards in the market area;
27 (11) to prevent or refuse to approve a proposal to
28 establish a successor franchise at a location previously
29 approved by the franchiser when submitted with the
30 voluntary termination by the existing franchisee unless
31 the successor franchisee would not otherwise qualify for
32 a new motor vehicle dealer's license under the Illinois
33 Vehicle Code or unless the franchiser, having the burden
34 of proof, proves that such proposed successor is not of
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1 good moral character or does not meet the franchiser's
2 existing and reasonable capital standards and, with
3 consideration given to the volume of sales and service of
4 the dealership, uniformly applied minimum business
5 experience standards in the market area. However, when
6 such a rejection of a proposal is made, the manufacturer
7 shall give written notice of its reasons to the
8 franchisee within 60 days of receipt by the manufacturer
9 of the proposal. However, nothing herein shall be
10 construed to prevent a franchiser from implementing
11 affirmative action programs providing business
12 opportunities for minorities, or from complying with
13 applicable federal, State or local law;
14 (12) to prevent or refuse to grant a franchise to a
15 person because such person owns, has investment in or
16 participates in the management of or holds a franchise
17 for the sale of another make or line of motor vehicles
18 within 7 miles of the proposed franchise location in a
19 county having a population of more than 300,000 persons,
20 or within 12 miles of the proposed franchise location in
21 a county having a population of less than 300,000
22 persons; or
23 (13) to prevent or attempt to prevent any new motor
24 vehicle dealer from establishing any additional motor
25 vehicle dealership or other facility limited to the sale
26 of factory repurchase vehicles or late model vehicles or
27 otherwise offering for sale factory repurchase vehicles
28 of the same line make at an existing franchise by failing
29 to make available any contract, agreement or other
30 arrangement which is made available or otherwise offered
31 to any person; or.
32 (14) to require a new motor vehicle dealer to
33 construct new facilities, remodel, renovate, or
34 recondition the dealer's existing facilities, or
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1 establish or maintain exclusive facilities, personnel, or
2 display space in order to receive any particular model or
3 series of vehicles manufactured or distributed by the
4 manufacturer for which the dealer has a valid franchise;
5 or
6 (15) to require a new motor vehicle dealer to
7 construct new facilities, establish or maintain exclusive
8 facilities, personnel, or display space, or remodel,
9 renovate, or recondition the dealer's existing facilities
10 if any of these requirements would be unreasonable in
11 light of economic conditions and would not otherwise be
12 justified by reasonable business considerations. The
13 manufacturer shall have the burden of proving whether the
14 requirements are reasonable.
15 (Source: P.A. 89-145, eff. 7-14-95; 90-655, eff. 7-30-98.)
16 (815 ILCS 710/5) (from Ch. 121 1/2, par. 755)
17 Sec. 5. Delivery and preparation obligations; damage
18 disclosures. Every manufacturer shall specify in writing to
19 the dealer the delivery and preparation obligations of its
20 motor vehicle dealers prior to delivery of new motor vehicles
21 to retail buyers. A copy of the delivery and preparation
22 obligations of its motor vehicle dealers and a schedule of
23 the compensation to be paid to its motor vehicle dealers for
24 the work and services they shall be required to perform in
25 connection with such delivery and preparation obligations
26 shall be presented to the dealer and the obligations
27 specified therein shall constitute any such dealer's only
28 predelivery obligations as between such dealer and such
29 manufacturer. The compensation as set forth on said schedule
30 shall be reasonable.
31 A manufacturer, factory branch, distributor, distributor
32 branch, or wholesaler of new motor vehicles sold or
33 transferred to a motor vehicle dealer in this State shall
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1 disclose to the motor vehicle dealer, in writing, before
2 delivery of a vehicle to the motor vehicle dealer all
3 in-transit, post-manufacture, or other damage to the vehicle
4 that was sustained or incurred by the motor vehicle at any
5 time after the manufacturing process was complete but before
6 delivery of the vehicle to the dealer. This disclosure is
7 not required when the cost to repair does not exceed 6% of
8 the manufacturer's suggested retail price of the vehicle
9 based upon the dealer's actual retail repair cost, including
10 labor, parts, and materials if the damage is repaired or
11 retail estimate to repair if the vehicle is not repaired. New
12 motor vehicles that are repaired may be sold as new and shall
13 be fully warranted by the manufacturer.
14 For purposes of this Section, "manufacturer's suggested
15 retail price" means the retail price of the new motor vehicle
16 suggested by the manufacturer including the retail delivered
17 price suggested by the manufacturer for each separately
18 priced accessory or item of optional equipment physically
19 attached to the new motor vehicle at the time of delivery.
20 Whenever a new motor vehicle sustains or incurs any
21 in-transit, post-manufacture, or other damage at any time
22 after the manufacturing process is complete, but before
23 delivery of the vehicle to the motor vehicle dealer, the
24 dealer may within a reasonable period of time after delivery
25 of the motor vehicle notify the manufacturer or distributor
26 of that damage and either:
27 (1) revoke acceptance of the delivery of the new
28 motor vehicle whereby ownership of the motor vehicle
29 shall revert to the manufacturer, and the dealer shall
30 incur no obligations, financial, or otherwise for that
31 new motor vehicle; or
32 (2) request authorization from the manufacturer to
33 repair the damage sustained or incurred by the new motor
34 vehicle. If the manufacturer refuses or fails to
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1 authorize repair of the damage within 3 days of the
2 request by the dealer, the dealer may then revoke
3 acceptance of the delivery of the new motor vehicle;
4 ownership shall revert to the manufacturer; and the
5 dealer shall incur no obligations, financial, or
6 otherwise for that new motor vehicle.
7 A motor vehicle dealer shall disclose to the purchaser
8 before delivery of the new motor vehicle, in writing, any
9 damage that the dealer has actual knowledge was sustained or
10 incurred by the motor vehicle at any time after the
11 manufacturing process was complete but before delivery of the
12 vehicle to the purchaser. This disclosure is not required
13 when the cost to repair does not exceed 6% of the
14 manufacturer's suggested retail price of the vehicle based
15 upon the dealer's actual retail repair cost, including labor,
16 parts, and materials if the damage is repaired or the retail
17 estimate to repair the vehicle if it is not repaired.
18 Damage to glass, tires, bumpers, and in-dash audio
19 equipment is not to be considered in determining the cost of
20 repair if replaced with the manufacturer's original
21 equipment.
22 If disclosure is not required under this Section, a
23 purchaser may not revoke or rescind a sales contract due to
24 the fact the new vehicle was damaged and repaired before
25 completion of the sale. In that circumstance, nondisclosure
26 does not constitute a misrepresentation or omission of fact.
27 A manufacturer, factory branch, distributor, distributor
28 branch, or wholesaler of new motor vehicles shall,
29 notwithstanding the terms of any franchise agreement,
30 indemnify and hold harmless the motor vehicle dealer
31 obtaining a new motor vehicle from the manufacturer, factory
32 branch, distributor, distributor branch, or wholesaler from
33 and against any liability, including reasonable attorney's
34 fees, expert witness fees, court costs, and other expenses
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1 incurred in the litigation that the motor vehicle dealer may
2 be subjected to by the purchaser of the vehicle because of
3 damage to the motor vehicle that occurred before delivery of
4 the vehicle to the dealer and that was not disclosed in
5 writing to the dealer prior to delivery of the vehicle. This
6 indemnity obligation of the manufacturer, factory branch,
7 distributor, distributor branch, or wholesaler applies
8 regardless of whether the damage falls below the 6% threshold
9 under this Section. The failure of the manufacturer, factory
10 branch, distributor, distributor branch, or wholesaler to
11 indemnify and hold harmless the motor vehicle dealer is a
12 violation of this Section.
13 (Source: P.A. 88-581, eff. 1-1-95.)
14 (815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
15 Sec. 6. Warranty agreements; claims; approval; payment;
16 written disapproval.
17 (a) Every manufacturer, distributor, wholesaler,
18 distributor branch or division, factory branch or division,
19 or wholesale branch or division shall properly fulfill any
20 warranty agreement and adequately and fairly compensate each
21 of its motor vehicle dealers for labor and parts.
22 (b) In no event shall such compensation fail to include
23 reasonable compensation for diagnostic work, as well as
24 repair service, and labor, and parts. Time allowances for the
25 diagnosis and performance of warranty work and service shall
26 be reasonable and adequate for the work to be performed. In
27 the determination of what constitutes reasonable compensation
28 under this Section, the principal factor to be given
29 consideration shall be the prevailing wage rates being paid
30 by the dealer in the relevant market area in which the motor
31 vehicle dealer is doing business, and in no event shall such
32 compensation of a motor vehicle dealer for warranty service
33 be less than the rates charged by such dealer for like
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1 service to retail customers for nonwarranty service and
2 repairs. The franchiser shall reimburse the franchisee for
3 any parts provided in satisfaction of a warranty at the
4 retail rate customarily charged by that dealer for the same
5 parts when not provided in satisfaction of a warranty. All
6 claims, either original or resubmitted, made by motor vehicle
7 dealers hereunder and under Section 5 for such labor and
8 parts shall be either approved or disapproved within 30 days
9 following their submission. All approved claims shall be
10 paid within 30 days following their approval. The motor
11 vehicle dealer who submits a claim which is disapproved shall
12 be notified in writing of the disapproval within the same
13 period, and each such notice shall state the specific grounds
14 upon which the disapproval is based. The motor vehicle
15 dealer shall be permitted to correct and resubmit such
16 disapproved claims within 30 days of receipt of disapproval.
17 Any claims not specifically disapproved in writing within 30
18 days from their submission shall be deemed approved and
19 payment shall follow within 30 days. The manufacturer or
20 franchiser shall have the right to require reasonable
21 documentation for claims and to audit such claims within a
22 one year period from the date the claim was paid or credit
23 issued by the manufacturer or franchiser, and to charge back
24 any false or unsubstantiated claims. The manufacturer shall
25 have the burden of establishing that the documentation is
26 reasonable. The audit and charge back provisions of this
27 Section also apply to all other incentive and reimbursement
28 programs for a period of 18 months after the date of the
29 transactions that are subject to audit by the franchiser.
30 However, the manufacturer retains the right to charge back
31 any fraudulent claim if the manufacturer establishes in a
32 court of competent jurisdiction in this State that the claim
33 is fraudulent. Any charge back resulting from an audit shall
34 not be made until a final order is issued by the Motor
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1 Vehicle Review Board if a protest to the proposed charge back
2 is filed within 30 days of the notification of the amount
3 claimed by the manufacturer, distributor, branch, or division
4 to be due.
5 (Source: P.A. 87-1163.)
6 (815 ILCS 710/7.1 new)
7 Sec. 7.1. Prefiling of franchise agreements and
8 amendments. Any franchise, as defined in Section 2, offered
9 to a motor vehicle dealer in this State shall provide that
10 all terms and conditions in the agreement inconsistent with
11 any laws or rules of this State are of no force and effect.
12 On or before January 1, 2000, every manufacturer, factory
13 branch, distributor, or distributor branch which uses an
14 identical or substantially similar form franchise agreement
15 for its franchisees in this State shall file with the Motor
16 Vehicle Review Board a copy of the franchise agreement and
17 all supplements. Not later than 60 days prior to the date a
18 revision, modification, or addition to a franchise agreement
19 is offered generally to a franchisee in this State, the
20 manufacturer, factory branch, distributor, or distributor
21 branch shall notify the Motor Vehicle Review Board of the
22 proposed revision, modification, or addition to the franchise
23 agreement on file with the Board and include with the
24 notification:
25 (1) A copy of the form franchise agreement which
26 incorporates all of the proposed revisions,
27 modifications, and additions;
28 (2) A separate statement which identifies all
29 substantive revisions, modifications, and additions
30 proposed.
31 It shall be unlawful for a franchise agreement or any
32 addendum or supplement thereto to be offered to a motor
33 vehicle dealer in this State after January 1, 2000, until the
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1 manufacturer, factory branch, distributor, or distributor
2 branch has complied with all of the requirements of this
3 Section. The Board is authorized and directed to investigate
4 and prevent violations of this Section, including
5 inconsistencies of any manufacturer's franchise agreement
6 with the provisions of this Act.
7 (815 ILCS 710/13) (from Ch. 121 1/2, par. 763)
8 Sec. 13. Damages; equitable relief. Any franchisee or
9 motor vehicle dealer who suffers any loss of money or
10 property, real or personal, as a result of the use or
11 employment by a manufacturer, wholesaler, distributor,
12 distributor branch or division, factory branch or division,
13 wholesale branch or division, or any agent, servant or
14 employee thereof, of an unfair method of competition or an
15 unfair or deceptive act or practice declared unlawful by this
16 Act may bring an action for damages and equitable relief,
17 including injunctive relief. Where the misconduct is willful
18 or wanton, the court may award treble damages. A motor
19 vehicle dealer, if it has not suffered any loss of money or
20 property, may obtain permanent equitable relief if it can be
21 shown that the unfair act or practice may have the effect of
22 causing such loss of money or property. Where the franchisee
23 or dealer substantially prevails the court or arbitration
24 panel or Motor Vehicle Review Board shall award attorney's
25 fees and assess costs, including expert witness fees and
26 other expenses incurred by the dealer in the litigation,
27 against the opposing party. Moreover, for the purposes of the
28 award of attorney's fees, expert witness fees, and costs
29 whenever the franchisee or dealer is seeking injunctive or
30 other relief, the franchisee or dealer may be considered to
31 have prevailed when a judgment is entered in its favor, when
32 a final administrative decision is entered in its favor and
33 affirmed, if subject to judicial review, when a consent order
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1 is entered into, or when the manufacturer, distributor,
2 wholesaler, distributor branch or division, factory factor
3 branch or division, wholesale branch or division, or any
4 officer, agent or other representative thereof ceases the
5 conduct, act or practice which is alleged to be in violation
6 of any Section of this Act.
7 (Source: P.A. 89-145, eff. 7-14-95.)
8 (815 ILCS 710/29)
9 Sec. 29. Procedures for hearing on protest. Upon
10 receipt of a timely notice of protest under paragraph (6) of
11 subsection (d) or paragraph (6), (8), or (10) of subsection
12 (e) of Section 4 and Section 12 of this Act, the Motor
13 Vehicle Review Board shall enter an order fixing a date
14 (within 60 days of the date of the order), time, the place of
15 a hearing and send by certified mail, return receipt
16 requested, a copy of the order to the manufacturer and the
17 objecting dealer or dealers. Subject to Section 10-20 of the
18 Illinois Administrative Procedure Act, the Board shall
19 designate a hearing officer who shall conduct the hearing.
20 All administrative hearing officers shall be attorneys
21 licensed to practice law in this State.
22 At the time and place fixed in the Board's order, the
23 Board or its duly authorized agent, the hearing officer,
24 shall proceed to hear the protest, and all parties to the
25 protest shall be afforded an opportunity to present in person
26 or by counsel, statements, testimony, evidence, and argument
27 as may be pertinent to the issues. The hearing officer may
28 continue the hearing date by agreement of the parties, or
29 upon a finding of good cause, but in no event shall the
30 hearing be rescheduled more than 90 days after the Board's
31 initial order.
32 Upon any hearing, the Board or its duly authorized agent,
33 the hearing officer, may administer oaths to witnesses and
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1 issue subpoenas for the attendance of witnesses or other
2 persons and the production of relevant documents, records,
3 and other evidence and may require examination thereon. For
4 purposes of discovery, the Board or its designated hearing
5 officer may, if deemed appropriate and proper under the
6 circumstances, authorize the parties to engage in such
7 discovery procedures as are provided for in civil actions in
8 Section 2-1003 of the Code of Civil Procedure. Discovery
9 shall be completed no later than 15 days prior to
10 commencement of the proceeding or hearing. Enforcement of
11 discovery procedures shall be as provided in the regulations.
12 Subpoenas issued shall be served in the same manner as
13 subpoenas issued out of the circuit courts. The fees of
14 subpoenaed witnesses under this Act for attendance and travel
15 shall be the same as fees of witnesses before the circuit
16 courts of this State, such fees to be paid when the witness
17 is excused from further attendance, provided the witness is
18 subpoenaed at the instance of the Board or an agent
19 authorized by the Board; and payment of fees shall be made
20 and audited in the same manner as other expenses of the
21 Board. Whenever a subpoena is issued at the request of a
22 party to a proceeding, complainant, or respondent, as the
23 case may be, the Board may require that the cost of service
24 of the subpoena and the fee of same shall be borne by the
25 party at whose instance the witness is summoned, and the
26 Board shall have power, in its discretion, to require a
27 deposit to cover the cost of service and witness fees and the
28 payment of the legal witness fee and mileage to the witness
29 served with the subpoena. In any protest before the Board,
30 the Board or its designated hearing officer may order a
31 mandatory settlement conference. The failure of a party to
32 appear, to be prepared, or to have authority to settle the
33 matter may result in any or all of the following:
34 (a) The Board or its designated hearing officer may
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1 suspend all proceedings before the Board in the matter until
2 compliance.
3 (b) The Board or its designated hearing officer may
4 dismiss the proceedings or any part thereof before the Board
5 with or without prejudice.
6 (c) The Board or its designated hearing officer may
7 require all of the Board's costs to be paid by the party at
8 fault.
9 Any circuit court of this State, upon application of the
10 Board, or an officer or agent designated by the Board for the
11 purpose of conducting any hearing, may, in its discretion,
12 compel the attendance of witnesses, the production of books,
13 papers, accounts, or documents, and giving of testimony
14 before the Board or before any officer or agent designated
15 for the purpose of conducting the hearing. Failure to obey
16 the order may be punished by the circuit court as contempt.
17 A party may conduct cross-examination required for a full
18 and fair disclosure of the facts. Within 20 days of the date
19 of the hearing, the hearing officer shall issue his or her
20 proposed decision to the Board and shall, by certified mail,
21 return receipt requested, serve the proposed decision upon
22 the parties, with an opportunity afforded to each party to
23 file exceptions and present a brief to the Board within 10
24 days of their receipt of the proposed decision. The proposed
25 decision shall contain a statement of the reasons for the
26 decision and each issue of fact or law necessary to the
27 proposed decision. The Board shall then issue its final
28 order which, if applicable, shall include the award of
29 attorney's fees, expert witness fees, and an assessment of
30 costs, including other expenses incurred in the litigation,
31 if permitted under this Act.
32 In a hearing on a protest filed under paragraph (6) of
33 subsection (d) or paragraph (6), (8), or (10) of Section 4 or
34 Section 12 of this Act, the manufacturer shall have the
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1 burden of proof to establish that there is good cause for the
2 franchiser to: grant or establish an additional franchise or
3 relocate an existing franchise; cancel, terminate, refuse to
4 extend or renew a franchise or selling agreement; or change
5 or modify the obligations of the motor vehicle dealer as a
6 condition to offering a renewal, replacement, or succeeding
7 franchise or selling agreement or refuse to honor succession
8 to ownership or refuse to approve a proposed transfer or
9 sale. The determination whether good cause exists shall be
10 made under Section 12 of this Act.
11 The Board shall record the testimony and preserve a
12 record of all proceedings at the hearing by proper means of
13 recordation. The notice required to be given by the
14 manufacturer and notice of protest by the dealer or other
15 party, the notice of hearing, and all other documents in the
16 nature of pleadings, motions, and rulings, all evidence,
17 offers of proof, objections, and rulings thereon, the
18 transcript of testimony, the report of findings or proposed
19 decision of the hearing officer, and the orders of the Board
20 shall constitute the record of the proceedings. The Board
21 shall furnish a transcript of the record to any person
22 interested in the hearing upon payment of the actual cost
23 thereof.
24 (Source: P.A. 89-145, eff. 7-14-95; 89-433, eff. 12-15-95.)