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| [ Introduced ] | [ Enrolled ] | [ House Amendment 001 ] |
91_HB3037eng HB3037 Engrossed LRB9110146STsb 1 AN ACT to amend the Motor Vehicle Franchise Act by 2 changing Section 4. 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 Section 4 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 HB3037 Engrossed -2- LRB9110146STsb 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 HB3037 Engrossed -3- LRB9110146STsb 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 HB3037 Engrossed -4- LRB9110146STsb 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 HB3037 Engrossed -5- LRB9110146STsb 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 HB3037 Engrossed -6- LRB9110146STsb 1 Board a written protest against the proposed action. 2 (C) Within 30 days from receipt of the notice 3 under subparagraphs (A) and (B), the franchisee may 4 file with the Board a written protest against the 5 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 HB3037 Engrossed -7- LRB9110146STsb 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, reasonable attorneys' fees of the 31 new motor vehicle dealer, and other expenses incurred in 32 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, HB3037 Engrossed -8- LRB9110146STsb 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; HB3037 Engrossed -9- LRB9110146STsb 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 HB3037 Engrossed -10- LRB9110146STsb 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 HB3037 Engrossed -11- LRB9110146STsb 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 30 days 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 HB3037 Engrossed -12- LRB9110146STsb 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 HB3037 Engrossed -13- LRB9110146STsb 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 30 days 14 from the date the notice was received by the existing 15 franchisee of the same line make or any person entitled 16 to receive such notice, the franchisee or other person 17 may file with the Board a written protest against the 18 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 HB3037 Engrossed -14- LRB9110146STsb 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 HB3037 Engrossed -15- LRB9110146STsb 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 makeor is further away from16the 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 makeor is further away from the nearest dealer of24the same line make. A dealer that would be farther 25 away from the new location of an existing dealership 26 or franchise of the same line make after a 27 relocation may not file a written protest against 28 the relocation with the Motor Vehicle Review Board. 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 HB3037 Engrossed -16- LRB9110146STsb 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 HB3037 Engrossed -17- LRB9110146STsb 1 honor the successor to the ownership of a deceased 2 or incapacitated dealer or franchisee under an 3 existing franchise agreement, the franchiser shall 4 send a letter by certified mail, return receipt 5 requested, to the designated successor within 60 6 days from receipt of a proposal advising of its 7 intent to refuse to honor the succession and to 8 discontinue the existing franchise agreement and 9 shall state that the designated successor only has 10 30 days from the receipt of the notice to file with 11 the Motor Vehicle Review Board a written protest 12 against the proposed action. The notice shall set 13 forth the specific grounds for the refusal to honor 14 the succession and discontinue the existing 15 franchise agreement. 16 If notice of refusal is not timely served upon 17 the designated successor, the franchise agreement 18 shall continue in effect subject to termination only 19 as otherwise permitted by paragraph (6) of 20 subsection (d) of Section 4 of this Act. 21 Within 30 days from the date the notice was 22 received by the designated successor or any other 23 person entitled to notice, the designee or other 24 person may file with the Board a written protest 25 against the proposed action. 26 When a protest has been timely filed, the Board 27 shall enter an order, fixing a date (within 60 days 28 of the date of the order), time, and place of a 29 hearing on the protest, required under Sections 12 30 and 29 of this Act, and send by certified mail, 31 return receipt requested, a copy of the order to the 32 franchiser that filed the notice of intention of the 33 proposed action and to the protesting designee or 34 such other person. HB3037 Engrossed -18- LRB9110146STsb 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 HB3037 Engrossed -19- LRB9110146STsb 1 good moral character or does not meet the franchiser's 2 existing and reasonable capital standards and, with 3 consideration given to the volume of sales and service of 4 the dealership, uniformly applied minimum business 5 experience standards in the market area. However, when 6 such a rejection of a proposal is made, the manufacturer 7 shall give written notice of its reasons to the 8 franchisee within 60 days of receipt by the manufacturer 9 of the proposal. However, nothing herein shall be 10 construed to prevent a franchiser from implementing 11 affirmative action programs providing business 12 opportunities for minorities, or from complying with 13 applicable federal, State or local law; 14 (12) to prevent or refuse to grant a franchise to a 15 person because such person owns, has investment in or 16 participates in the management of or holds a franchise 17 for the sale of another make or line of motor vehicles 18 within 7 miles of the proposed franchise location in a 19 county having a population of more than 300,000 persons, 20 or within 12 miles of the proposed franchise location in 21 a county having a population of less than 300,000 22 persons; or 23 (13) to prevent or attempt to prevent any new motor 24 vehicle dealer from establishing any additional motor 25 vehicle dealership or other facility limited to the sale 26 of factory repurchase vehicles or late model vehicles or 27 otherwise offering for sale factory repurchase vehicles 28 of the same line make at an existing franchise by failing 29 to make available any contract, agreement or other 30 arrangement which is made available or otherwise offered 31 to any person. 32 (f) It is deemed a violation for a manufacturer, a 33 distributor, a wholesale, a distributor branch or division, a 34 factory branch or division, or a wholesale branch or HB3037 Engrossed -20- LRB9110146STsb 1 division, or officer, agent, broker, shareholder, except a 2 shareholder of 1% or less of the outstanding shares of any 3 class of securities of a manufacturer, distributor, or 4 wholesaler which is a publicly traded corporation, or other 5 representative, directly or indirectly, to own or operate a 6 place of business as a motor vehicle franchisee or motor 7 vehicle financing affiliate, except that, this subsection 8 shall not prohibit the ownership or operation of a place of 9 business by a manufacturer, distributor, or wholesaler for a 10 period, not to exceed 18 months, during the transition from 11 one motor vehicle franchisee to another; or the investment in 12 a motor vehicle franchisee by a manufacturer, distributor, or 13 wholesaler if the investment is for the sole purpose of 14 enabling a partner or shareholder in that motor vehicle 15 franchisee to acquire an interest in that motor vehicle 16 franchisee and that partner or shareholder is not otherwise 17 employed by or associated with the manufacturer, distributor, 18 or wholesaler and would not otherwise have the requisite 19 capital investment funds to invest in the motor vehicle 20 franchisee, and has the right to purchase the entire equity 21 interest of the manufacturer, distributor, or wholesaler in 22 the motor vehicle franchisee within a reasonable period of 23 time not to exceed 5 years. 24 (Source: P.A. 90-655, eff. 7-30-98; 91-415, eff. 1-1-00; 25 91-485, eff. 1-1-00; revised 10-19-99.) 26 Section 99. Effective date. This Act takes effect upon 27 becoming law.