SS SCS HCS HB 2198 -- MOTOR VEHICLE FRANCHISE PRACTICES ACT

This bill changes the laws regarding the Motor Vehicle Franchise
Practices Act.  In its main provisions, the bill:

(1)  Specifies that the public policy of the state is to provide
for fair and impartial regulation of individuals engaged in the
manufacturing, distribution, importation, or selling of motor
vehicles and to protect the public interest in the purchase and
trade of motor vehicles;

(2)  Requires all franchise licenses and license renewals after
August 28, 2010, to be bound by the provisions of the act and
prohibits any franchise agreement made, entered, modified, or
renewed after that date from avoiding or violating the provisions
of the act;

(3)  Requires the provisions of the act to apply to each
franchise that a franchisor, manufacturer, importer, or
distributor has with a franchisee and all agreements between a
franchisee and a common entity or any person controlled by a
franchisor;

(4)  Increases the distance requirements of a relevant market
area when locating or relocating a dealership.  A franchisor must
give written notice to a franchisee of the opening of any new
dealership or the reopening of a previously existing franchise in
the relevant market area selling vehicles of the same line-make.
A franchisee may bring an action before the Administrative
Hearing Commission within 30 days of the notice to determine if
there is good cause to allow the competition.  The bill revises
the circumstances that the commission will take into
consideration when determining good cause;

(5)  Requires a reopened or replaced franchise to be offered to
the former owner if a dealership reopens within two miles of the
closed established place of business;

(6)  Requires a franchisor to be licensed and to annually renew
his or her license with the Department of Revenue;

(7)  Regulates the offering of a franchise by a successor
manufacturer and specifies certain criteria that must be met
before a new franchise may be offered or sold if a manufacturer
previously canceled or otherwise ended a franchise agreement;

(8)  Allows for the filing of a complaint instead of an
application for a hearing before the commission regarding a
violation of the act.  When a proceeding is pending before the
commission, a demand for mediation must be filed which will stay
further action by the commission.  If mediation is unsuccessful,
the commission must issue its order terminating the stay;

(9)  Specifies that the actions listed in Section 407.825, RSMo,
whether committed directly or indirectly through an agent,
employee, affiliate, common entity, representative, or
franchisor-controlled entity will be considered an unlawful
practice;

(10)  Revises existing unlawful practices and establishes
additional unlawful practice violations including:

(a)  Engaging in certain specified restraint of trade actions
such as conditioning the offer of a franchise on a site control
agreement or agreement for exclusive use;

(b)  Terminating a franchise agreement without specified notice
regarding unsatisfactory sales or service performance;

(c)  Conditioning the retention of a franchise agreement on
certain specified control requirements over the franchisee's
business;

(d)  Failing to perform or cause to be performed any written
warranties;

(e)  Interfering with or withholding contracted services;

(f)  Requiring installment financing with a particular financial
institution;

(g)  Requiring changes in a franchisee's location without good
cause;

(h)  Allowing an unauthorized person to perform warranty service
with certain exceptions;

(i)  Discriminating in the models of the same line-make offered
to a franchisee;

(j)  Failing to make available the offering of bonuses or
rebates;

(k)  Conditioning a franchise agreement on facility improvements
unless reasonably required by the technology of a motor vehicle;

(l)  Entering into a site control agreement unless voluntarily
accepted by the franchisee;

(m)  Failing to offer rebates, dealer incentives, interest rate
reductions, finance terms for the same line-make, and various
cash incentives and promotional items;

(n)  Discriminating unreasonably among franchisees in any program
providing assistance including Internet listings, sales leads,
warranty policy adjustments, marketing programs, and dealer
recognition programs;

(o)  Failing to include in any franchise with a franchisee
specific language regarding the conformance of the provisions of
the act when a provision is in conflict with the laws or
regulations of any state or other jurisdiction;

(p)  Interfering with the delivery of motor vehicle parts;

(q)  Using data concerning a franchisee to discriminate against
it in various specified ways;

(r)  Refusing to sell or deliver motor vehicles;

(s)  Requiring the use of customer information obtained from the
franchisee with certain exceptions and requiring a franchisee to
make a customer purchase additional products from the franchisor;

(t)  Establishing unfair performance standards for a franchisee;

(u)  Implementing any plan for delivery of parts that is
inequitable; and

(v)  Violating any other provision of the act that adversely
impacts a franchisee;

(11)  Establishes the deadline and other rules for submitting a
claim after a franchisee completes the preparation, delivery, or
warranty service authorized under Section 407.828;

(12)  Requires a franchisor to indemnify and hold harmless a
franchisee for damage to a vehicle occurring prior to delivery to
the franchisee that was not disclosed in writing to the
franchisee prior to the delivery of the vehicle;

(13)  Requires a franchisor to give 90 days' notice of any
modification that substantially and adversely affects the
franchisee's rights, obligations, investments, or return on
investments unless the modification is required by law or court
order; and

(14)  Specifies that a person has the right to appeal a judgment
of the Administrative Hearing Commission in court and allows
actual damages, court costs, and punitive damages to be recovered
for a violation of the provisions of the act.  Mediation is non-
binding, and Missouri law will govern all disputes brought
pursuant to the act.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:13 pm