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| [ Introduced ] | [ Enrolled ] | [ Senate Amendment 001 ] |
91_HB0520eng HB0520 Engrossed 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 HB0520 Engrossed -2- LRB9102551SMdvA 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 HB0520 Engrossed -3- LRB9102551SMdvA 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 HB0520 Engrossed -4- LRB9102551SMdvA 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 HB0520 Engrossed -5- LRB9102551SMdvA 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 HB0520 Engrossed -6- LRB9102551SMdvA 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 3015days 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 HB0520 Engrossed -7- LRB9102551SMdvA 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 HB0520 Engrossed -8- LRB9102551SMdvA 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,andreasonable 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 HB0520 Engrossed -9- LRB9102551SMdvA 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 HB0520 Engrossed -10- LRB9102551SMdvA 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 HB0520 Engrossed -11- LRB9102551SMdvA 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 3015days 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 HB0520 Engrossed -12- LRB9102551SMdvA 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 HB0520 Engrossed -13- LRB9102551SMdvA 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 301518 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 HB0520 Engrossed -14- LRB9102551SMdvA 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, HB0520 Engrossed -15- LRB9102551SMdvA 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 HB0520 Engrossed -16- LRB9102551SMdvA 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 HB0520 Engrossed -17- LRB9102551SMdvA 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 3015days 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. HB0520 Engrossed -18- LRB9102551SMdvA 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 HB0520 Engrossed -19- LRB9102551SMdvA 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;or23 (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 HB0520 Engrossed -20- LRB9102551SMdvA 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 HB0520 Engrossed -21- LRB9102551SMdvA 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 HB0520 Engrossed -22- LRB9102551SMdvA 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 HB0520 Engrossed -23- LRB9102551SMdvA 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,andlabor, 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 HB0520 Engrossed -24- LRB9102551SMdvA 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 HB0520 Engrossed -25- LRB9102551SMdvA 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 HB0520 Engrossed -26- LRB9102551SMdvA 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 HB0520 Engrossed -27- LRB9102551SMdvA 1 is entered into, or when the manufacturer, distributor, 2 wholesaler, distributor branch or division, factoryfactor3 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 HB0520 Engrossed -28- LRB9102551SMdvA 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 HB0520 Engrossed -29- LRB9102551SMdvA 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 HB0520 Engrossed -30- LRB9102551SMdvA 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.)