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| [ Introduced ] | [ Engrossed ] | [ Senate Amendment 001 ] |
91_HB0520enr HB0520 Enrolled LRB9102551SMdvA 1 AN ACT to amend the Motor Vehicle Franchise Act by 2 changing Sections 4, 5, 6, 13, and 29. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Motor Vehicle Franchise Act is amended by 6 changing Sections 4, 5, 6, 13, and 29 as follows: 7 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754) 8 Sec. 4. Unfair competition and practices. 9 (a) The unfair methods of competition and unfair and 10 deceptive acts or practices listed in this Section are hereby 11 declared to be unlawful. In construing the provisions of this 12 Section, the courts may be guided by the interpretations of 13 the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as 14 from time to time amended. 15 (b) It shall be deemed a violation for any manufacturer, 16 factory branch, factory representative, distributor or 17 wholesaler, distributor branch, distributor representative or 18 motor vehicle dealer to engage in any action with respect to 19 a franchise which is arbitrary, in bad faith or 20 unconscionable and which causes damage to any of the parties 21 or to the public. 22 (c) It shall be deemed a violation for a manufacturer, a 23 distributor, a wholesaler, a distributor branch or division, 24 a factory branch or division, or a wholesale branch or 25 division, or officer, agent or other representative thereof, 26 to coerce, or attempt to coerce, any motor vehicle dealer: 27 (1) to accept, buy or order any motor vehicle or 28 vehicles, appliances, equipment, parts or accessories 29 therefor, or any other commodity or commodities or 30 service or services which such motor vehicle dealer has 31 not voluntarily ordered or requested except items HB0520 Enrolled -2- LRB9102551SMdvA 1 required by applicable local, state or federal law; or to 2 require a motor vehicle dealer to accept, buy, order or 3 purchase such items in order to obtain any motor vehicle 4 or vehicles or any other commodity or commodities which 5 have been ordered or requested by such motor vehicle 6 dealer; 7 (2) to order or accept delivery of any motor 8 vehicle with special features, appliances, accessories or 9 equipment not included in the list price of the motor 10 vehicles as publicly advertised by the manufacturer 11 thereof, except items required by applicable law; or 12 (3) to order for anyone any parts, accessories, 13 equipment, machinery, tools, appliances or any commodity 14 whatsoever, except items required by applicable law. 15 (d) It shall be deemed a violation for a manufacturer, a 16 distributor, a wholesaler, a distributor branch or division, 17 or officer, agent or other representative thereof: 18 (1) to adopt, change, establish or implement a plan 19 or system for the allocation and distribution of new 20 motor vehicles to motor vehicle dealers which is 21 arbitrary or capricious or to modify an existing plan so 22 as to cause the same to be arbitrary or capricious; 23 (2) to fail or refuse to advise or disclose to any 24 motor vehicle dealer having a franchise or selling 25 agreement, upon written request therefor, the basis upon 26 which new motor vehicles of the same line make are 27 allocated or distributed to motor vehicle dealers in the 28 State and the basis upon which the current allocation or 29 distribution is being made or will be made to such motor 30 vehicle dealer; 31 (3) to refuse to deliver in reasonable quantities 32 and within a reasonable time after receipt of dealer's 33 order, to any motor vehicle dealer having a franchise or 34 selling agreement for the retail sale of new motor HB0520 Enrolled -3- LRB9102551SMdvA 1 vehicles sold or distributed by such manufacturer, 2 distributor, wholesaler, distributor branch or division, 3 factory branch or division or wholesale branch or 4 division, any such motor vehicles as are covered by such 5 franchise or selling agreement specifically publicly 6 advertised in the State by such manufacturer, 7 distributor, wholesaler, distributor branch or division, 8 factory branch or division, or wholesale branch or 9 division to be available for immediate delivery. 10 However, the failure to deliver any motor vehicle shall 11 not be considered a violation of this Act if such failure 12 is due to an act of God, a work stoppage or delay due to 13 a strike or labor difficulty, a shortage of materials, a 14 lack of manufacturing capacity, a freight embargo or 15 other cause over which the manufacturer, distributor, or 16 wholesaler, or any agent thereof has no control; 17 (4) to coerce, or attempt to coerce, any motor 18 vehicle dealer to enter into any agreement with such 19 manufacturer, distributor, wholesaler, distributor branch 20 or division, factory branch or division, or wholesale 21 branch or division, or officer, agent or other 22 representative thereof, or to do any other act 23 prejudicial to the dealer by threatening to reduce his 24 allocation of motor vehicles or cancel any franchise or 25 any selling agreement existing between such manufacturer, 26 distributor, wholesaler, distributor branch or division, 27 or factory branch or division, or wholesale branch or 28 division, and the dealer. However, notice in good faith 29 to any motor vehicle dealer of the dealer's violation of 30 any terms or provisions of such franchise or selling 31 agreement or of any law or regulation applicable to the 32 conduct of a motor vehicle dealer shall not constitute a 33 violation of this Act; 34 (5) to require a franchisee to participate in an HB0520 Enrolled -4- LRB9102551SMdvA 1 advertising campaign or contest or any promotional 2 campaign, or to purchase or lease any promotional 3 materials, training materials, show room or other display 4 decorations or materials at the expense of the 5 franchisee; 6 (6) to cancel or terminate the franchise or selling 7 agreement of a motor vehicle dealer without good cause 8 and without giving notice as hereinafter provided; to 9 fail or refuse to extend the franchise or selling 10 agreement of a motor vehicle dealer upon its expiration 11 without good cause and without giving notice as 12 hereinafter provided; or, to offer a renewal, replacement 13 or succeeding franchise or selling agreement containing 14 terms and provisions the effect of which is to 15 substantially change or modify the sales and service 16 obligations or capital requirements of the motor vehicle 17 dealer arbitrarily and without good cause and without 18 giving notice as hereinafter provided notwithstanding any 19 term or provision of a franchise or selling agreement. 20 (A) If a manufacturer, distributor, 21 wholesaler, distributor branch or division, factory 22 branch or division or wholesale branch or division 23 intends to cancel or terminate a franchise or 24 selling agreement or intends not to extend or renew 25 a franchise or selling agreement on its expiration, 26 it shall send a letter by certified mail, return 27 receipt requested, to the affected franchisee at 28 least 60 days before the effective date of the 29 proposed action, or not later than 10 days before 30 the proposed action when the reason for the action 31 is based upon either of the following: 32 (i) the business operations of the 33 franchisee have been abandoned or the 34 franchisee has failed to conduct customary HB0520 Enrolled -5- LRB9102551SMdvA 1 sales and service operations during customary 2 business hours for at least 7 consecutive 3 business days unless such closing is due to an 4 act of God, strike or labor difficulty or other 5 cause over which the franchisee has no control; 6 or 7 (ii) the conviction of or plea of nolo 8 contendere by the motor vehicle dealer or any 9 operator thereof in a court of competent 10 jurisdiction to an offense punishable by 11 imprisonment for more than two years. 12 Each notice of proposed action shall include a 13 detailed statement setting forth the specific 14 grounds for the proposed cancellation, termination, 15 or refusal to extend or renew and shall state that 16 the dealer has only 30 days from receipt of the 17 notice to file with the Motor Vehicle Review Board a 18 written protest against the proposed action. 19 (B) If a manufacturer, distributor, 20 wholesaler, distributor branch or division, factory 21 branch or division or wholesale branch or division 22 intends to change substantially or modify the sales 23 and service obligations or capital requirements of a 24 motor vehicle dealer as a condition to extending or 25 renewing the existing franchise or selling agreement 26 of such motor vehicle dealer, it shall send a letter 27 by certified mail, return receipt requested, to the 28 affected franchisee at least 60 days before the 29 date of expiration of the franchise or selling 30 agreement. Each notice of proposed action shall 31 include a detailed statement setting forth the 32 specific grounds for the proposed action and shall 33 state that the dealer has only 30 days from receipt 34 of the notice to file with the Motor Vehicle Review HB0520 Enrolled -6- LRB9102551SMdvA 1 Board a written protest against the proposed action. 2 (C) Within 3015days from receipt of the 3 notice under subparagraphs (A) and (B), the 4 franchisee may file with the Board a written protest 5 against the proposed action. 6 When the protest has been timely filed, the 7 Board shall enter an order, fixing a date (within 60 8 days of the date of the order), time, and place of a 9 hearing on the protest required under Sections 12 10 and 29 of this Act, and send by certified mail, 11 return receipt requested, a copy of the order to the 12 manufacturer that filed the notice of intention of 13 the proposed action and to the protesting dealer or 14 franchisee. 15 The manufacturer shall have the burden of proof 16 to establish that good cause exists to cancel or 17 terminate, or fail to extend or renew the franchise 18 or selling agreement of a motor vehicle dealer or 19 franchisee, and to change substantially or modify 20 the sales and service obligations or capital 21 requirements of a motor vehicle dealer as a 22 condition to extending or renewing the existing 23 franchise or selling agreement. The determination 24 whether good cause exists to cancel, terminate, or 25 refuse to renew or extend the franchise or selling 26 agreement, or to change or modify the obligations of 27 the dealer as a condition to offer renewal, 28 replacement, or succession shall be made by the 29 Board under subsection (d) of Section 12 of this 30 Act. 31 (D) Notwithstanding the terms, conditions, or 32 provisions of a franchise or selling agreement, the 33 following shall not constitute good cause for 34 cancelling or terminating or failing to extend or HB0520 Enrolled -7- LRB9102551SMdvA 1 renew the franchise or selling agreement: (i) the 2 change of ownership or executive management of the 3 franchisee's dealership; or (ii) the fact that the 4 franchisee or owner of an interest in the franchise 5 owns, has an investment in, participates in the 6 management of, or holds a license for the sale of 7 the same or any other line make of new motor 8 vehicles. 9 Good cause shall exist to cancel, terminate or 10 fail to offer a renewal or replacement franchise or 11 selling agreement to all franchisees of a line make 12 if the manufacturer permanently discontinues the 13 manufacture or assembly of motor vehicles of such 14 line make. 15 (E) The manufacturer may not cancel or 16 terminate, or fail to extend or renew a franchise or 17 selling agreement or change or modify the 18 obligations of the franchisee as a condition to 19 offering a renewal, replacement, or succeeding 20 franchise or selling agreement before the hearing 21 process is concluded as prescribed by this Act, and 22 thereafter, if the Board determines that the 23 manufacturer has failed to meet its burden of proof 24 and that good cause does not exist to allow the 25 proposed action; or 26 (7) notwithstanding the terms of any franchise 27 agreement, to fail to indemnify and hold harmless its 28 franchised dealers against any judgment or settlement for 29 damages, including, but not limited to, court costs, 30 expert witness fees,andreasonable attorneys' fees of 31 the new motor vehicle dealer, and other expenses incurred 32 in the litigation, so long as such fees and costs are 33 reasonable, arising out of complaints, claims or lawsuits 34 including, but not limited to, strict liability, HB0520 Enrolled -8- LRB9102551SMdvA 1 negligence, misrepresentation, warranty (express or 2 implied), or recision of the sale as defined in Section 3 2-608 of the Uniform Commercial Code, to the extent that 4 the judgment or settlement relates to the alleged 5 defective or negligent manufacture, assembly or design of 6 new motor vehicles, parts or accessories or other 7 functions by the manufacturer, beyond the control of the 8 dealer; provided that, in order to provide an adequate 9 defense, the manufacturer receives notice of the filing 10 of a complaint, claim, or lawsuit within 60 days after 11 the filing. 12 (e) It shall be deemed a violation for a manufacturer, a 13 distributor, a wholesaler, a distributor branch or division 14 or officer, agent or other representative thereof: 15 (1) to resort to or use any false or misleading 16 advertisement in connection with his business as such 17 manufacturer, distributor, wholesaler, distributor branch 18 or division or officer, agent or other representative 19 thereof; 20 (2) to offer to sell or lease, or to sell or lease, 21 any new motor vehicle to any motor vehicle dealer at a 22 lower actual price therefor than the actual price offered 23 to any other motor vehicle dealer for the same model 24 vehicle similarly equipped or to utilize any device 25 including, but not limited to, sales promotion plans or 26 programs which result in such lesser actual price or 27 fail to make available to any motor vehicle dealer any 28 preferential pricing, incentive, rebate, finance rate, or 29 low interest loan program offered to competing motor 30 vehicle dealers in other contiguous states. However, the 31 provisions of this paragraph shall not apply to sales to 32 a motor vehicle dealer for resale to any unit of the 33 United States Government, the State or any of its 34 political subdivisions; HB0520 Enrolled -9- LRB9102551SMdvA 1 (3) to offer to sell or lease, or to sell or lease, 2 any new motor vehicle to any person, except a wholesaler, 3 distributor or manufacturer's employees at a lower actual 4 price therefor than the actual price offered and charged 5 to a motor vehicle dealer for the same model vehicle 6 similarly equipped or to utilize any device which results 7 in such lesser actual price. However, the provisions of 8 this paragraph shall not apply to sales to a motor 9 vehicle dealer for resale to any unit of the United 10 States Government, the State or any of its political 11 subdivisions; 12 (4) to prevent or attempt to prevent by contract or 13 otherwise any motor vehicle dealer or franchisee from 14 changing the executive management control of the motor 15 vehicle dealer or franchisee unless the franchiser, 16 having the burden of proof, proves that such change of 17 executive management will result in executive management 18 control by a person or persons who are not of good moral 19 character or who do not meet the franchiser's existing 20 and, with consideration given to the volume of sales and 21 service of the dealership, uniformly applied minimum 22 business experience standards in the market area. However 23 where the manufacturer rejects a proposed change in 24 executive management control, the manufacturer shall give 25 written notice of his reasons to the dealer within 60 26 days of notice to the manufacturer by the dealer of the 27 proposed change. If the manufacturer does not send a 28 letter to the franchisee by certified mail, return 29 receipt requested, within 60 days from receipt by the 30 manufacturer of the proposed change, then the change of 31 the executive management control of the franchisee shall 32 be deemed accepted as proposed by the franchisee, and the 33 manufacturer shall give immediate effect to such change; 34 (5) to prevent or attempt to prevent by contract or HB0520 Enrolled -10- LRB9102551SMdvA 1 otherwise any motor vehicle dealer from establishing or 2 changing the capital structure of his dealership or the 3 means by or through which he finances the operation 4 thereof; provided the dealer meets any reasonable capital 5 standards agreed to between the dealer and the 6 manufacturer, distributor or wholesaler, who may require 7 that the sources, method and manner by which the dealer 8 finances or intends to finance its operation, equipment 9 or facilities be fully disclosed; 10 (6) to refuse to give effect to or prevent or 11 attempt to prevent by contract or otherwise any motor 12 vehicle dealer or any officer, partner or stockholder of 13 any motor vehicle dealer from selling or transferring any 14 part of the interest of any of them to any other person 15 or persons or party or parties unless such sale or 16 transfer is to a transferee who would not otherwise 17 qualify for a new motor vehicle dealers license under 18 "The Illinois Vehicle Code" or unless the franchiser, 19 having the burden of proof, proves that such sale or 20 transfer is to a person or party who is not of good moral 21 character or does not meet the franchiser's existing and 22 reasonable capital standards and, with consideration 23 given to the volume of sales and service of the 24 dealership, uniformly applied minimum business experience 25 standards in the market area. However, nothing herein 26 shall be construed to prevent a franchiser from 27 implementing affirmative action programs providing 28 business opportunities for minorities or from complying 29 with applicable federal, State or local law: 30 (A) If the manufacturer intends to refuse to 31 approve the sale or transfer of all or a part of the 32 interest, then it shall, within 60 days from receipt 33 of the completed application forms generally 34 utilized by a manufacturer to conduct its review and HB0520 Enrolled -11- LRB9102551SMdvA 1 a copy of all agreements regarding the proposed 2 transfer, send a letter by certified mail, return 3 receipt requested, advising the franchisee of any 4 refusal to approve the sale or transfer of all or 5 part of the interest and shall state that the dealer 6 only has 30 days from the receipt of the notice to 7 file with the Motor Vehicle Review Board a written 8 protest against the proposed action. The notice 9 shall set forth specific criteria used to evaluate 10 the prospective transferee and the grounds for 11 refusing to approve the sale or transfer to that 12 transferee. Within 3015days from the franchisee's 13 receipt of the manufacturer's notice, the franchisee 14 may file with the Board a written protest against 15 the proposed action. 16 When a protest has been timely filed, the Board 17 shall enter an order, fixing the date (within 60 18 days of the date of such order), time, and place of 19 a hearing on the protest, required under Sections 12 20 and 29 of this Act, and send by certified mail, 21 return receipt requested, a copy of the order to the 22 manufacturer that filed notice of intention of the 23 proposed action and to the protesting franchisee. 24 The manufacturer shall have the burden of proof 25 to establish that good cause exists to refuse to 26 approve the sale or transfer to the transferee. The 27 determination whether good cause exists to refuse to 28 approve the sale or transfer shall be made by the 29 Board under subdivisions (6)(B). The manufacturer 30 shall not refuse to approve the sale or transfer by 31 a dealer or an officer, partner, or stockholder of a 32 franchise or any part of the interest to any person 33 or persons before the hearing process is concluded 34 as prescribed by this Act, and thereafter if the HB0520 Enrolled -12- LRB9102551SMdvA 1 Board determines that the manufacturer has failed to 2 meet its burden of proof and that good cause does 3 not exist to refuse to approve the sale or transfer 4 to the transferee. 5 (B) Good cause to refuse to approve such sale 6 or transfer under this Section is established when 7 such sale or transfer is to a transferee who would 8 not otherwise qualify for a new motor vehicle 9 dealers license under "The Illinois Vehicle Code" or 10 such sale or transfer is to a person or party who is 11 not of good moral character or does not meet the 12 franchiser's existing and reasonable capital 13 standards and, with consideration given to the 14 volume of sales and service of the dealership, 15 uniformly applied minimum business experience 16 standards in the market area. 17 (7) to obtain money, goods, services, anything of 18 value, or any other benefit from any other person with 19 whom the motor vehicle dealer does business, on account 20 of or in relation to the transactions between the dealer 21 and the other person as compensation, except for services 22 actually rendered, unless such benefit is promptly 23 accounted for and transmitted to the motor vehicle 24 dealer; 25 (8) to grant an additional franchise in the 26 relevant market area of an existing franchise of the same 27 line make or to relocate an existing motor vehicle 28 dealership within or into a relevant market area of an 29 existing franchise of the same line make. However, if the 30 manufacturer wishes to grant such an additional franchise 31 to an independent person in a bona fide relationship in 32 which such person is prepared to make a significant 33 investment subject to loss in such a dealership, or if 34 the manufacturer wishes to relocate an existing motor HB0520 Enrolled -13- LRB9102551SMdvA 1 vehicle dealership, then the manufacturer shall send a 2 letter by certified mail, return receipt requested, to 3 each existing dealer or dealers of the same line make 4 whose relevant market area includes the proposed location 5 of the additional or relocated franchise at least 60 days 6 before the manufacturer grants an additional franchise or 7 relocates an existing franchise of the same line make 8 within or into the relevant market area of an existing 9 franchisee of the same line make. Each notice shall set 10 forth the specific grounds for the proposed grant of an 11 additional or relocation of an existing franchise. 12 Unless the parties agree upon the grant or establishment 13 of the additional or relocated franchise within 301514 days from the date the notice was received by the 15 existing franchisee of the same line make or any person 16 entitled to receive such notice, the franchisee or other 17 person may file with the Board a written protest against 18 the grant or establishment of the proposed additional or 19 relocated franchise and shall state that the dealer only 20 has 30 days from the receipt of the notice to file with 21 the Motor Vehicle Review Board a written protest against 22 the proposed action. 23 When a protest has been timely filed, the Board 24 shall enter an order fixing a date (within 60 days of the 25 date of the order), time, and place of a hearing on the 26 protest, required under Sections 12 and 29 of this Act, 27 and send by certified or registered mail, return receipt 28 requested, a copy of the order to the manufacturer that 29 filed the notice of intention to grant or establish the 30 proposed additional or relocated franchise and to the 31 protesting dealer or dealers of the same line make whose 32 relevant market area includes the proposed location of 33 the additional or relocated franchise. 34 When more than one protest is filed against the HB0520 Enrolled -14- LRB9102551SMdvA 1 grant or establishment of the additional or relocated 2 franchise of the same line make, the Board may 3 consolidate the hearings to expedite disposition of the 4 matter. The manufacturer shall have the burden of proof 5 to establish that good cause exists to allow the grant or 6 establishment of the additional or relocated franchise. 7 The manufacturer may not grant or establish the 8 additional franchise or relocate the existing franchise 9 before the hearing process is concluded as prescribed by 10 this Act, and thereafter if the Board determines that the 11 manufacturer has failed to meet its burden of proof and 12 that good cause does not exist to allow the grant or 13 establishment of the additional franchise or relocation 14 of the existing franchise. 15 The determination whether good cause exists for 16 allowing the grant or establishment of an additional 17 franchise or relocated existing franchise, shall be made 18 by the Board under subsection (c) of Section 12 of this 19 Act. If the manufacturer seeks to enter into a contract, 20 agreement or other arrangement with any person, 21 establishing any additional motor vehicle dealership or 22 other facility, limited to the sale of factory repurchase 23 vehicles or late model vehicles, then the manufacturer 24 shall follow the notice procedures set forth in this 25 Section and the determination whether good cause exists 26 for allowing the proposed agreement shall be made by the 27 Board under subsection (c) of Section 12, with the 28 manufacturer having the burden of proof. 29 A. (Blank). 30 B. For the purposes of this Section, 31 appointment of a successor motor vehicle dealer at 32 the same location as its predecessor, or within 2 33 miles of such location, or the relocation of an 34 existing dealer or franchise within 2 miles of the HB0520 Enrolled -15- LRB9102551SMdvA 1 relocating dealer's or franchisee's existing 2 location, shall not be construed as a grant, 3 establishment or the entering into of an additional 4 franchise or selling agreement, or a relocation of 5 an existing franchise. The reopening of a motor 6 vehicle dealership that has not been in operation 7 for 18 months or more shall be deemed the grant of 8 an additional franchise or selling agreement. 9 C. This Section does not apply to the 10 relocation of an existing dealership or franchise in 11 a county having a population of more than 300,000 12 persons when the new location is within the dealer's 13 current relevant market area, provided the new 14 location is more than 7 miles from the nearest 15 dealer of the same line make or is further away from 16 the nearest dealer of the same line make. This 17 Section does not apply to the relocation of an 18 existing dealership or franchise in a county having 19 a population of less than 300,000 persons when the 20 new location is within the dealer's current relevant 21 market area, provided the new location is more than 22 12 miles from the nearest dealer of the same line 23 make or is further away from the nearest dealer of 24 the same line make. 25 D. Nothing in this Section shall be construed 26 to prevent a franchiser from implementing 27 affirmative action programs providing business 28 opportunities for minorities or from complying with 29 applicable federal, State or local law; 30 (9) to require a motor vehicle dealer to assent to 31 a release, assignment, novation, waiver or estoppel which 32 would relieve any person from liability imposed by this 33 Act; 34 (10) to prevent or refuse to give effect to the HB0520 Enrolled -16- LRB9102551SMdvA 1 succession to the ownership or management control of a 2 dealership by any legatee under the will of a dealer or 3 to an heir under the laws of descent and distribution of 4 this State unless the franchisee has designated a 5 successor to the ownership or management control under 6 the succession provisions of the franchise. Unless the 7 franchiser, having the burden of proof, proves that the 8 successor is a person who is not of good moral character 9 or does not meet the franchiser's existing and reasonable 10 capital standards and, with consideration given to the 11 volume of sales and service of the dealership, uniformly 12 applied minimum business experience standards in the 13 market area, any designated successor of a dealer or 14 franchisee may succeed to the ownership or management 15 control of a dealership under the existing franchise if: 16 (i) The designated successor gives the 17 franchiser written notice by certified mail, 18 return receipt requested, of his or her 19 intention to succeed to the ownership of the 20 dealer within 60 days of the dealer's death or 21 incapacity; and 22 (ii) The designated successor agrees to 23 be bound by all the terms and conditions of the 24 existing franchise. 25 Notwithstanding the foregoing, in the event the 26 motor vehicle dealer or franchisee and manufacturer have 27 duly executed an agreement concerning succession rights 28 prior to the dealer's death or incapacitation, the 29 agreement shall be observed. 30 (A) If the franchiser intends to refuse to 31 honor the successor to the ownership of a deceased 32 or incapacitated dealer or franchisee under an 33 existing franchise agreement, the franchiser shall 34 send a letter by certified mail, return receipt HB0520 Enrolled -17- LRB9102551SMdvA 1 requested, to the designated successor within 60 2 days from receipt of a proposal advising of its 3 intent to refuse to honor the succession and to 4 discontinue the existing franchise agreement and 5 shall state that the designated successor only has 6 30 days from the receipt of the notice to file with 7 the Motor Vehicle Review Board a written protest 8 against the proposed action. The notice shall set 9 forth the specific grounds for the refusal to honor 10 the succession and discontinue the existing 11 franchise agreement. 12 If notice of refusal is not timely served upon 13 the designated successor, the franchise agreement 14 shall continue in effect subject to termination only 15 as otherwise permitted by paragraph (6) of 16 subsection (d) of Section 4 of this Act. 17 Within 3015days from the date the notice was 18 received by the designated successor or any other 19 person entitled to notice, the designee or other 20 person may file with the Board a written protest 21 against the proposed action. 22 When a protest has been timely filed, the Board 23 shall enter an order, fixing a date (within 60 days 24 of the date of the order), time, and place of a 25 hearing on the protest, required under Sections 12 26 and 29 of this Act, and send by certified mail, 27 return receipt requested, a copy of the order to the 28 franchiser that filed the notice of intention of the 29 proposed action and to the protesting designee or 30 such other person. 31 The manufacturer shall have the burden of proof 32 to establish that good cause exists to refuse to 33 honor the succession and discontinue the existing 34 franchise agreement. The determination whether good HB0520 Enrolled -18- LRB9102551SMdvA 1 cause exists to refuse to honor the succession shall 2 be made by the Board under subdivision (B) of this 3 paragraph (10). The manufacturer shall not refuse 4 to honor the succession or discontinue the existing 5 franchise agreement before the hearing process is 6 concluded as prescribed by this Act, and thereafter 7 if the Board determines that it has failed to meet 8 its burden of proof and that good cause does not 9 exist to refuse to honor the succession and 10 discontinue the existing franchise agreement. 11 (B) No manufacturer shall impose any 12 conditions upon honoring the succession and 13 continuing the existing franchise agreement with the 14 designated successor other than that the franchisee 15 has designated a successor to the ownership or 16 management control under the succession provisions 17 of the franchise, or that the designated successor 18 is of good moral character or meets the reasonable 19 capital standards and, with consideration given to 20 the volume of sales and service of the dealership, 21 uniformly applied minimum business experience 22 standards in the market area; 23 (11) to prevent or refuse to approve a proposal to 24 establish a successor franchise at a location previously 25 approved by the franchiser when submitted with the 26 voluntary termination by the existing franchisee unless 27 the successor franchisee would not otherwise qualify for 28 a new motor vehicle dealer's license under the Illinois 29 Vehicle Code or unless the franchiser, having the burden 30 of proof, proves that such proposed successor is not of 31 good moral character or does not meet the franchiser's 32 existing and reasonable capital standards and, with 33 consideration given to the volume of sales and service of 34 the dealership, uniformly applied minimum business HB0520 Enrolled -19- LRB9102551SMdvA 1 experience standards in the market area. However, when 2 such a rejection of a proposal is made, the manufacturer 3 shall give written notice of its reasons to the 4 franchisee within 60 days of receipt by the manufacturer 5 of the proposal. However, nothing herein shall be 6 construed to prevent a franchiser from implementing 7 affirmative action programs providing business 8 opportunities for minorities, or from complying with 9 applicable federal, State or local law; 10 (12) to prevent or refuse to grant a franchise to a 11 person because such person owns, has investment in or 12 participates in the management of or holds a franchise 13 for the sale of another make or line of motor vehicles 14 within 7 miles of the proposed franchise location in a 15 county having a population of more than 300,000 persons, 16 or within 12 miles of the proposed franchise location in 17 a county having a population of less than 300,000 18 persons; or 19 (13) to prevent or attempt to prevent any new motor 20 vehicle dealer from establishing any additional motor 21 vehicle dealership or other facility limited to the sale 22 of factory repurchase vehicles or late model vehicles or 23 otherwise offering for sale factory repurchase vehicles 24 of the same line make at an existing franchise by failing 25 to make available any contract, agreement or other 26 arrangement which is made available or otherwise offered 27 to any person. 28 (Source: P.A. 89-145, eff. 7-14-95; 90-655, eff. 7-30-98.) 29 (815 ILCS 710/5) (from Ch. 121 1/2, par. 755) 30 Sec. 5. Delivery and preparation obligations; damage 31 disclosures. Every manufacturer shall specify in writing to 32 the dealer the delivery and preparation obligations of its 33 motor vehicle dealers prior to delivery of new motor vehicles HB0520 Enrolled -20- LRB9102551SMdvA 1 to retail buyers. A copy of the delivery and preparation 2 obligations of its motor vehicle dealers and a schedule of 3 the compensation to be paid to its motor vehicle dealers for 4 the work and services they shall be required to perform in 5 connection with such delivery and preparation obligations 6 shall be presented to the dealer and the obligations 7 specified therein shall constitute any such dealer's only 8 predelivery obligations as between such dealer and such 9 manufacturer. The compensation as set forth on said schedule 10 shall be reasonable. 11 A manufacturer, factory branch, distributor, distributor 12 branch, or wholesaler of new motor vehicles sold or 13 transferred to a motor vehicle dealer in this State shall 14 disclose to the motor vehicle dealer, in writing, before 15 delivery of a vehicle to the motor vehicle dealer all 16 in-transit, post-manufacture, or other damage to the vehicle 17 that was sustained or incurred by the motor vehicle at any 18 time after the manufacturing process was complete but before 19 delivery of the vehicle to the dealer. This disclosure is 20 not required when the cost to repair does not exceed 6% of 21 the manufacturer's suggested retail price of the vehicle 22 based upon the dealer's actual retail repair cost, including 23 labor, parts, and materials if the damage is repaired or 24 retail estimate to repair if the vehicle is not repaired. New 25 motor vehicles that are repaired may be sold as new and shall 26 be fully warranted by the manufacturer. 27 For purposes of this Section, "manufacturer's suggested 28 retail price" means the retail price of the new motor vehicle 29 suggested by the manufacturer including the retail delivered 30 price suggested by the manufacturer for each separately 31 priced accessory or item of optional equipment physically 32 attached to the new motor vehicle at the time of delivery. 33 Whenever a new motor vehicle sustains or incurs any 34 in-transit, post-manufacture, or other damage at any time HB0520 Enrolled -21- LRB9102551SMdvA 1 after the manufacturing process is complete, but before 2 delivery of the vehicle to the motor vehicle dealer, the 3 dealer may within a reasonable period of time after delivery 4 of the motor vehicle notify the manufacturer or distributor 5 of that damage and either: 6 (1) revoke acceptance of the delivery of the new 7 motor vehicle whereby ownership of the motor vehicle 8 shall revert to the manufacturer, and the dealer shall 9 incur no obligations, financial, or otherwise for that 10 new motor vehicle; or 11 (2) request authorization from the manufacturer to 12 repair the damage sustained or incurred by the new motor 13 vehicle. If the manufacturer refuses or fails to 14 authorize repair of the damage within 3 days of the 15 request by the dealer, the dealer may then revoke 16 acceptance of the delivery of the new motor vehicle; 17 ownership shall revert to the manufacturer; and the 18 dealer shall incur no obligations, financial, or 19 otherwise for that new motor vehicle. 20 A motor vehicle dealer shall disclose to the purchaser 21 before delivery of the new motor vehicle, in writing, any 22 damage that the dealer has actual knowledge was sustained or 23 incurred by the motor vehicle at any time after the 24 manufacturing process was complete but before delivery of the 25 vehicle to the purchaser. This disclosure is not required 26 when the cost to repair does not exceed 6% of the 27 manufacturer's suggested retail price of the vehicle based 28 upon the dealer's actual retail repair cost, including labor, 29 parts, and materials if the damage is repaired or the retail 30 estimate to repair the vehicle if it is not repaired. 31 Damage to glass, tires, bumpers, and in-dash audio 32 equipment is not to be considered in determining the cost of 33 repair if replaced with the manufacturer's original 34 equipment. HB0520 Enrolled -22- LRB9102551SMdvA 1 If disclosure is not required under this Section, a 2 purchaser may not revoke or rescind a sales contract due to 3 the fact the new vehicle was damaged and repaired before 4 completion of the sale. In that circumstance, nondisclosure 5 does not constitute a misrepresentation or omission of fact. 6 A manufacturer, factory branch, distributor, distributor 7 branch, or wholesaler of new motor vehicles shall, 8 notwithstanding the terms of any franchise agreement, 9 indemnify and hold harmless the motor vehicle dealer 10 obtaining a new motor vehicle from the manufacturer, factory 11 branch, distributor, distributor branch, or wholesaler from 12 and against any liability, including reasonable attorney's 13 fees, expert witness fees, court costs, and other expenses 14 incurred in the litigation, so long as such fees and costs 15 are reasonable, that the motor vehicle dealer may be 16 subjected to by the purchaser of the vehicle because of 17 damage to the motor vehicle that occurred before delivery of 18 the vehicle to the dealer and that was not disclosed in 19 writing to the dealer prior to delivery of the vehicle. This 20 indemnity obligation of the manufacturer, factory branch, 21 distributor, distributor branch, or wholesaler applies 22 regardless of whether the damage falls below the 6% threshold 23 under this Section. The failure of the manufacturer, factory 24 branch, distributor, distributor branch, or wholesaler to 25 indemnify and hold harmless the motor vehicle dealer is a 26 violation of this Section. 27 (Source: P.A. 88-581, eff. 1-1-95.) 28 (815 ILCS 710/6) (from Ch. 121 1/2, par. 756) 29 Sec. 6. Warranty agreements; claims; approval; payment; 30 written disapproval. 31 (a) Every manufacturer, distributor, wholesaler, 32 distributor branch or division, factory branch or division, 33 or wholesale branch or division shall properly fulfill any HB0520 Enrolled -23- LRB9102551SMdvA 1 warranty agreement and adequately and fairly compensate each 2 of its motor vehicle dealers for labor and parts. 3 (b) In no event shall such compensation fail to include 4 reasonable compensation for diagnostic work, as well as 5 repair service,andlabor, and parts. Time allowances for the 6 diagnosis and performance of warranty work and service shall 7 be reasonable and adequate for the work to be performed. In 8 the determination of what constitutes reasonable compensation 9 under this Section, the principal factor to be given 10 consideration shall be the prevailing wage rates being paid 11 by the dealer in the relevant market area in which the motor 12 vehicle dealer is doing business, and in no event shall such 13 compensation of a motor vehicle dealer for warranty service 14 be less than the rates charged by such dealer for like 15 service to retail customers for nonwarranty service and 16 repairs. The franchiser shall reimburse the franchisee for 17 any parts provided in satisfaction of a warranty at the 18 prevailing retail price charged by that dealer for the same 19 parts when not provided in satisfaction of a warranty; 20 provided that such motor vehicle franchisee's prevailing 21 retail price is not unreasonable when compared with that of 22 the holders of motor vehicle franchises from the same motor 23 vehicle franchiser for identical merchandise in the 24 geographic area in which the motor vehicle franchisee is 25 engaged in business. All claims, either original or 26 resubmitted, made by motor vehicle dealers hereunder and 27 under Section 5 for such labor and parts shall be either 28 approved or disapproved within 30 days following their 29 submission. All approved claims shall be paid within 30 days 30 following their approval. The motor vehicle dealer who 31 submits a claim which is disapproved shall be notified in 32 writing of the disapproval within the same period, and each 33 such notice shall state the specific grounds upon which the 34 disapproval is based. The motor vehicle dealer shall be HB0520 Enrolled -24- LRB9102551SMdvA 1 permitted to correct and resubmit such disapproved claims 2 within 30 days of receipt of disapproval. Any claims not 3 specifically disapproved in writing within 30 days from their 4 submission shall be deemed approved and payment shall follow 5 within 30 days. The manufacturer or franchiser shall have the 6 right to require reasonable documentation for claims and to 7 audit such claims within a one year period from the date the 8 claim was paid or credit issued by the manufacturer or 9 franchiser, and to charge back any false or unsubstantiated 10 claims. The audit and charge back provisions of this Section 11 also apply to all other incentive and reimbursement programs 12 for a period of 18 months after the date of the transactions 13 that are subject to audit by the franchiser. However, the 14 manufacturer retains the right to charge back any fraudulent 15 claim if the manufacturer establishes in a court of competent 16 jurisdiction in this State that the claim is fraudulent. 17 (c) The motor vehicle franchiser shall not, by 18 agreement, by restrictions upon reimbursement, or otherwise, 19 restrict the nature and extent of services to be rendered or 20 parts to be provided so that such restriction prevents the 21 motor vehicle franchisee from satisfying the warranty by 22 rendering services in a good and workmanlike manner and 23 providing parts which are required in accordance with 24 generally accepted standards. Any such restriction shall 25 constitute a prohibited practice. 26 (d) For the purposes of this Section, the "prevailing 27 retail price charged by that dealer for the same parts" means 28 the price paid by the motor vehicle franchisee for parts, 29 including all shipping and other charges, multiplied by the 30 sum of 1.0 and the franchisee's average percentage markup 31 over the price paid by the motor vehicle franchisee for parts 32 purchased by the motor vehicle franchisee from the motor 33 vehicle franchiser and sold at retail. The motor vehicle 34 franchisee may establish average percentage markup under this HB0520 Enrolled -25- LRB9102551SMdvA 1 Section by submitting to the motor vehicle franchiser 100 2 sequential customer paid service repair orders or 90 days of 3 customer paid service repair orders, whichever is less, 4 covering repairs made no more than 180 days before the 5 submission, and declaring what the average percentage markup 6 is. The average percentage markup so declared shall go into 7 effect 30 days following the declaration, subject to audit of 8 the submitted repair orders by the motor vehicle franchiser 9 and adjustment of the average percentage markup based on that 10 audit. Any audit must be conducted within 30 days following 11 the declaration. Only retail sales not involving warranty 12 repairs, parts covered by subsection (e) of this Section, or 13 parts supplied for routine vehicle maintenance, shall be 14 considered in calculating average percentage markup. No 15 motor vehicle franchiser shall require a motor vehicle 16 franchisee to establish average percentage markup by a 17 methodology, or by requiring information, that is unduly 18 burdensome or time consuming to provide, including, but not 19 limited to, part by part or transaction by transaction 20 calculations. A motor vehicle franchisee shall not request a 21 change in the average percentage markup more than twice in 22 one calendar year. 23 (e) If a motor vehicle franchiser supplies a part or 24 parts for use in a repair rendered under a warranty other 25 than by sale of that part or parts to the motor vehicle 26 franchisee, the motor vehicle franchisee shall be entitled to 27 compensation equivalent to the motor vehicle franchisee's 28 average percentage markup on the part or parts, as if the 29 part or parts had been sold to the motor vehicle franchisee 30 by the motor vehicle franchiser. The requirements of this 31 subsection (e) shall not apply to entire engine assemblies 32 and entire transmission assemblies. In the case of those 33 assemblies, the motor vehicle franchiser shall reimburse the 34 motor vehicle franchisee in the amount of 30% of what the HB0520 Enrolled -26- LRB9102551SMdvA 1 motor vehicle franchisee would have paid the motor vehicle 2 franchiser for the assembly if the assembly had not been 3 supplied by the franchiser other than by the sale of that 4 assembly to the motor vehicle franchisee. 5 (f) The obligations imposed on motor vehicle franchisers 6 by this Section shall apply to any parent, subsidiary, 7 affiliate, or agent of the motor vehicle franchiser, any 8 person under common ownership or control, any employee of the 9 motor vehicle franchiser, and any person holding 1% or more 10 of the shares of any class of securities or other ownership 11 interest in the motor vehicle franchiser, if a warranty or 12 service or repair plan is issued by that person instead of or 13 in addition to one issued by the motor vehicle franchiser. 14 (Source: P.A. 87-1163.) 15 (815 ILCS 710/13) (from Ch. 121 1/2, par. 763) 16 Sec. 13. Damages; equitable relief. Any franchisee or 17 motor vehicle dealer who suffers any loss of money or 18 property, real or personal, as a result of the use or 19 employment by a manufacturer, wholesaler, distributor, 20 distributor branch or division, factory branch or division, 21 wholesale branch or division, or any agent, servant or 22 employee thereof, of an unfair method of competition or an 23 unfair or deceptive act or practice declared unlawful by this 24 Act may bring an action for damages and equitable relief, 25 including injunctive relief. Where the misconduct is willful 26 or wanton, the court may award treble damages. A motor 27 vehicle dealer, if it has not suffered any loss of money or 28 property, may obtain permanent equitable relief if it can be 29 shown that the unfair act or practice may have the effect of 30 causing such loss of money or property. Where the franchisee 31 or dealer substantially prevails the court or arbitration 32 panel or Motor Vehicle Review Board shall award attorney's 33 fees and assess costs, including expert witness fees and HB0520 Enrolled -27- LRB9102551SMdvA 1 other expenses incurred by the dealer in the litigation, so 2 long as such fees and costs are reasonable, against the 3 opposing party. Moreover, for the purposes of the award of 4 attorney's fees, expert witness fees, and costs whenever the 5 franchisee or dealer is seeking injunctive or other relief, 6 the franchisee or dealer may be considered to have prevailed 7 when a judgment is entered in its favor, when a final 8 administrative decision is entered in its favor and affirmed, 9 if subject to judicial review, when a consent order is 10 entered into, or when the manufacturer, distributor, 11 wholesaler, distributor branch or division, factoryfactor12 branch or division, wholesale branch or division, or any 13 officer, agent or other representative thereof ceases the 14 conduct, act or practice which is alleged to be in violation 15 of any Section of this Act. 16 (Source: P.A. 89-145, eff. 7-14-95.) 17 (815 ILCS 710/29) 18 Sec. 29. Procedures for hearing on protest. Upon 19 receipt of a timely notice of protest under paragraph (6) of 20 subsection (d) or paragraph (6), (8), or (10) of subsection 21 (e) of Section 4 and Section 12 of this Act, the Motor 22 Vehicle Review Board shall enter an order fixing a date 23 (within 60 days of the date of the order), time, the place of 24 a hearing and send by certified mail, return receipt 25 requested, a copy of the order to the manufacturer and the 26 objecting dealer or dealers. Subject to Section 10-20 of the 27 Illinois Administrative Procedure Act, the Board shall 28 designate a hearing officer who shall conduct the hearing. 29 All administrative hearing officers shall be attorneys 30 licensed to practice law in this State. 31 At the time and place fixed in the Board's order, the 32 Board or its duly authorized agent, the hearing officer, 33 shall proceed to hear the protest, and all parties to the HB0520 Enrolled -28- LRB9102551SMdvA 1 protest shall be afforded an opportunity to present in person 2 or by counsel, statements, testimony, evidence, and argument 3 as may be pertinent to the issues. The hearing officer may 4 continue the hearing date by agreement of the parties, or 5 upon a finding of good cause, but in no event shall the 6 hearing be rescheduled more than 90 days after the Board's 7 initial order. 8 Upon any hearing, the Board or its duly authorized agent, 9 the hearing officer, may administer oaths to witnesses and 10 issue subpoenas for the attendance of witnesses or other 11 persons and the production of relevant documents, records, 12 and other evidence and may require examination thereon. For 13 purposes of discovery, the Board or its designated hearing 14 officer may, if deemed appropriate and proper under the 15 circumstances, authorize the parties to engage in such 16 discovery procedures as are provided for in civil actions in 17 Section 2-1003 of the Code of Civil Procedure. Discovery 18 shall be completed no later than 15 days prior to 19 commencement of the proceeding or hearing. Enforcement of 20 discovery procedures shall be as provided in the regulations. 21 Subpoenas issued shall be served in the same manner as 22 subpoenas issued out of the circuit courts. The fees of 23 subpoenaed witnesses under this Act for attendance and travel 24 shall be the same as fees of witnesses before the circuit 25 courts of this State, such fees to be paid when the witness 26 is excused from further attendance, provided the witness is 27 subpoenaed at the instance of the Board or an agent 28 authorized by the Board; and payment of fees shall be made 29 and audited in the same manner as other expenses of the 30 Board. Whenever a subpoena is issued at the request of a 31 party to a proceeding, complainant, or respondent, as the 32 case may be, the Board may require that the cost of service 33 of the subpoena and the fee of same shall be borne by the 34 party at whose instance the witness is summoned, and the HB0520 Enrolled -29- LRB9102551SMdvA 1 Board shall have power, in its discretion, to require a 2 deposit to cover the cost of service and witness fees and the 3 payment of the legal witness fee and mileage to the witness 4 served with the subpoena. In any protest before the Board, 5 the Board or its designated hearing officer may order a 6 mandatory settlement conference. The failure of a party to 7 appear, to be prepared, or to have authority to settle the 8 matter may result in any or all of the following: 9 (a) The Board or its designated hearing officer may 10 suspend all proceedings before the Board in the matter until 11 compliance. 12 (b) The Board or its designated hearing officer may 13 dismiss the proceedings or any part thereof before the Board 14 with or without prejudice. 15 (c) The Board or its designated hearing officer may 16 require all of the Board's costs to be paid by the party at 17 fault. 18 Any circuit court of this State, upon application of the 19 Board, or an officer or agent designated by the Board for the 20 purpose of conducting any hearing, may, in its discretion, 21 compel the attendance of witnesses, the production of books, 22 papers, accounts, or documents, and giving of testimony 23 before the Board or before any officer or agent designated 24 for the purpose of conducting the hearing. Failure to obey 25 the order may be punished by the circuit court as contempt. 26 A party may conduct cross-examination required for a full 27 and fair disclosure of the facts. Within 20 days of the date 28 of the hearing, the hearing officer shall issue his or her 29 proposed decision to the Board and shall, by certified mail, 30 return receipt requested, serve the proposed decision upon 31 the parties, with an opportunity afforded to each party to 32 file exceptions and present a brief to the Board within 10 33 days of their receipt of the proposed decision. The proposed 34 decision shall contain a statement of the reasons for the HB0520 Enrolled -30- LRB9102551SMdvA 1 decision and each issue of fact or law necessary to the 2 proposed decision. The Board shall then issue its final 3 order which, if applicable, shall include the award of 4 attorney's fees, expert witness fees, and an assessment of 5 costs, including other expenses incurred in the litigation, 6 if permitted under this Act, so long as such fees and costs 7 are reasonable. 8 In a hearing on a protest filed under paragraph (6) of 9 subsection (d) or paragraph (6), (8), or (10) of Section 4 or 10 Section 12 of this Act, the manufacturer shall have the 11 burden of proof to establish that there is good cause for the 12 franchiser to: grant or establish an additional franchise or 13 relocate an existing franchise; cancel, terminate, refuse to 14 extend or renew a franchise or selling agreement; or change 15 or modify the obligations of the motor vehicle dealer as a 16 condition to offering a renewal, replacement, or succeeding 17 franchise or selling agreement or refuse to honor succession 18 to ownership or refuse to approve a proposed transfer or 19 sale. The determination whether good cause exists shall be 20 made under Section 12 of this Act. 21 The Board shall record the testimony and preserve a 22 record of all proceedings at the hearing by proper means of 23 recordation. The notice required to be given by the 24 manufacturer and notice of protest by the dealer or other 25 party, the notice of hearing, and all other documents in the 26 nature of pleadings, motions, and rulings, all evidence, 27 offers of proof, objections, and rulings thereon, the 28 transcript of testimony, the report of findings or proposed 29 decision of the hearing officer, and the orders of the Board 30 shall constitute the record of the proceedings. The Board 31 shall furnish a transcript of the record to any person 32 interested in the hearing upon payment of the actual cost 33 thereof. 34 (Source: P.A. 89-145, eff. 7-14-95; 89-433, eff. 12-15-95.)