07 HB117/AP
House
Bill 117 (AS PASSED HOUSE AND SENATE)
By:
Representatives Heard of the
104th,
Knox of the
24th,
Lewis of the
15th,
Hembree of the
67th,
Yates of the
73rd,
and others
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend provisions of the Official Code of Georgia Annotated relating to dealers
and franchises of motorcycles, recreational vehicles, utility vehicles, and
all-terrain vehicles; to amend Chapter 1 of Title 10 of the Official Code of
Georgia Annotated, relating to selling and other trade practices, so as to
exempt motorcycles, all-terrain vehicles, and utility vehicles from the
definition of motor vehicle relative to motor vehicle franchises; to provide for
certain franchise agreement exemptions for rallies or conventions involving more
than 2,500 recreational vehicles; to provide for definitions; to provide
purposes and policies to protect motorcycle, all-terrain vehicle, and utility
vehicle dealers; to provide for sales of such vehicles; to provide for changing
or terminating sales areas only for good cause; to provide for notice of
termination or substantial change to a sales area; to provide for repurchase of
inventories by the grantor upon termination of a dealership; to provide that it
is illegal for a grantor to coerce a dealer to purchase its parts or
accessories; to provide that a grantor must approve a sale of a dealership if
the terms are reasonable; to provide for succession of the dealership to the
dealer´s named beneficiaries; to provide for warranty obligations; to
provide for dispute resolution; to prohibit certain distributions or sales; to
provide for applicability; to provide an effective date; to provide for related
matters; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Chapter
1 of Title 10 of the Official Code of Georgia Annotated, relating to selling and
other trade practices, is amended by revising paragraph (10) of Code Section
10-1-622, relating to definitions relative to motor vehicle franchises, as
follows:
"(10)
'Motor vehicle' means every self-propelled vehicle intended primarily for use
and operation on the public highways, except farm tractors and other machines
and tools used in the production, harvesting, and care of farm products,
construction equipment,
motorcycles as
defined in paragraph (7) of subsection (a) of Code Section 10-1-725, all-terrain
vehicles as defined in paragraph (1) of subsection (a) of Code Section 10-1-725,
utility vehicles as defined in paragraph (12) of subsection (a) of Code Section
10-1-725, and recreational vehicles as
defined in paragraph (5) of subsection (a) of Code Section
10-1-679."
SECTION
2.
Said
chapter is further amended by revising Code Section 10-1-649.14, relating to
franchise agreements required to sell or distribute recreational vehicles, as
follows:
"10-1-679.14.
(a)
It shall be unlawful for any dealer to sell or distribute any new recreational
vehicle in Georgia unless the dealer has a franchise dealership agreement with a
grantor with the express right to sell or distribute recreational vehicles in
Georgia and meets the requirements and definitions provided in this article.
Any dealer who does not meet the requirements of this article may participate in
events where recreational vehicles are exhibited or demonstrated and seminars
are provided but shall be prohibited from contracting to sell or distribute
recreational vehicles to the public. Notwithstanding the foregoing, this Code
section shall not apply to the sale of recreational vehicles at events sponsored
by a Georgia based recreational vehicle grantor with manufacturing facilities
located in the state, where recreational vehicles are sold or contracted for by
its franchised out-of-state recreational vehicle dealers.
(b)
This Code section shall not apply to any convention or rally involving more than
2,500 recreational vehicles which are registered with the sponsor of said event;
provided, however, that no dealers from outside of this state shall be invited
to said event by a participating manufacturer unless all franchised Georgia
dealers for such participating manufacturer shall be invited to said event, and
there shall be no discrimination in terms of sales by a manufacturer to any
franchised Georgia dealer for recreational vehicles to be sold at the convention
or rally; nor shall any franchised Georgia dealer be required by a manufacturer
to purchase inventory in addition to that required under a current franchise
agreement between the manufacturer and such dealer in order for the dealer to
participate in such convention or rally. Out of state dealers shall register
with the Department of Revenue and purchase a permit 30 days prior to
participating in any rally in Georgia. The cost of the permit shall be $500.00
per dealer. Nothing in this subsection shall be applied to impair an obligation
of a contract existing on the effective date of this subsection. Any
manufacturer or dealer that violates this subsection shall not be eligible to
participate in any such
events."
SECTION
3.
Said
chapter is further amended by inserting a new Article 25A to read as
follows:
"ARTICLE
25A
10-1-725.
(a)
As used in this article, the term:
(1)
'All-terrain vehicle' means any motorized vehicle designed for off-road use
which is equipped with three or more low pressure tires and with a seat to be
straddled by the operator and with handlebars for steering control.
(2)
'Community of interest' means a continuing financial interest between the
grantor and the grantee in either the operation of the dealership business or
the marketing of such goods or services.
(3)
'Dealer' means a person who performs retail sales of new motorcycles,
all-terrain vehicles, or utility vehicle products situated in
Georgia.
(4)
'Franchise' means an oral or written agreement for a definite or indefinite
period of time in which a manufacturer grants to a motorcycle, all-terrain
vehicle, or utility vehicle dealer permission to use a trade name, service mark,
or related characteristic and in which there is a community of interest in the
marketing of motorcycle, all-terrain vehicle, or utility vehicle products or
services related thereto at wholesale or retail, whether by leasing, sale, or
otherwise.
(5)
'Grantor' means a person who grants a motorcycle, all-terrain vehicle, or
utility vehicle dealership.
(6)
'Moped' or 'scooter' means a motor driven cycle equipped with two wheels, with
or without foot pedals to permit muscular propulsion, and an independent power
source providing a maximum of two brake horsepower. If a combustion engine is
used, the maximum piston or rotor displacement shall be 3.05 cubic inches (50
cubic centimeters) regardless of the number of chambers in such power source.
The power source shall be capable of propelling the vehicle, unassisted, at a
speed not to exceed 30 miles per hour (48.28 kilometers per hour) on level road
surfaces and shall be equipped with a power drive system that functions directly
or automatically only, not requiring clutching or shifting by the operator after
the drive system is engaged.
(7)
'Motorcycle' means every motor vehicle having a seat or saddle for the use of
the rider and designed to travel on not more than three wheels in contact with
the ground, but excluding a tractor, all-terrain vehicle, utility vehicle, and
moped.
(8)
'Motorcycle, all-terrain vehicle, or utility vehicle dealer' means a person who
is a grantee of a motorcycle, all-terrain vehicle, or utility vehicle dealership
situated in Georgia.
(9)
'Motorcycle, all-terrain vehicle, or utility vehicle dealership' means an
established place of business engaged in the marketing of new motorcycle,
all-terrain vehicle, or utility vehicle products or services related thereto at
wholesale or retail, whether by leasing, sale, or otherwise, and which is marked
by an appropriate permanent sign; which has a working telephone with a telephone
number listed in the local phone directory; which derives at least 75 percent
of its revenue from the sale of new motorcycles, all-terrain vehicles, or
utility vehicles and from the sale of motorcycle, all-terrain vehicle, or
utility vehicle related products and services; and which provides services or
repair for such vehicles on site; provided, however, that any dealer as defined
in Code Section 13-8-12 and subject to the provisions of Article 2 of Chapter 8
of Title 13 and which is also engaged in the marketing of new motorcycle,
all-terrain vehicle, or utility vehicle products or services related thereto
shall not be subject to the criteria of this paragraph requiring that at least
75 percent of its revenue be derived from the sale of new motorcycles,
all-terrain vehicles, or utility vehicles and from the sale of motorcycle,
all-terrain vehicle, or utility vehicle related products and
services.
(10)
'Person' means a natural person, partnership, joint venture, corporation, or
other entity.
(11)
'Relevant market area' means the larger of the following:
(A)
The area of responsibility defined in the franchise agreement of an existing
dealer; or
(B)
The geographic area within a radius of ten miles of any existing dealer of the
same line or make of vehicle that is located in a county with a population of
more than 200,000 persons according to the most recent United States decennial
census or within a radius of 15 miles of an existing dealer of the same line or
make of vehicle that is located in a county with a population of 200,000 or
fewer persons according to the most recent United States decennial
census.
(12)
'Tractor' means any self-propelled vehicle designed for use as a traveling power
plant or for drawing other vehicles but having no provision for carrying loads
independently.
(13)
'Utility vehicle' means any motorized vehicle designed and manufactured for
off-road use only which has a gross vehicle weight of 850 pounds or more and
which is equipped with four or more low pressure tires, with one or more bench
or bucket seats for the operator and passengers, with a steering wheel for
steering control, and with a cargo bed.
(b)
For purposes of this article when determining whether there is good cause for a
proposed action, the trier of fact shall consider:
(1)
The volume of the affected dealer´s business in the relevant market
area;
(2)
The nature and extent of the dealer´s investment in its
business;
(3)
The adequacy of the dealer´s service facilities, equipment, parts,
supplies, and personnel;
(4)
The effect of the proposed action on the community;
(5)
The extent and quality of the dealer´s service under motorcycle,
all-terrain vehicle, or utility vehicle warranties; and
(6)
The dealer´s performance under the terms of its franchise
agreement.
10-1-725.1.
(a)
This article shall be reasonably construed and applied to promote its underlying
remedial purposes and policies.
(b)
The underlying purposes and policies of this article are:
(1)
To promote the compelling interest of the public in fair business relations
between motorcycle, all-terrain vehicle, and utility vehicle dealers and
grantors and in the continuation of motorcycle, all-terrain vehicle, and utility
vehicle dealerships on a fair basis;
(2)
To protect motorcycle, all-terrain vehicle, and utility vehicle dealers against
unfair treatment by grantors who inherently have superior economic power and
superior bargaining power in the negotiations of motorcycle, all-terrain
vehicle, and utility vehicle dealerships;
(3)
To provide motorcycle, all-terrain vehicle, and utility vehicle dealers with
rights and remedies in addition to those existing by contract or common law;
and
(4)
To govern all franchise agreements for motorcycle, all-terrain vehicle, and
utility vehicle dealerships, including any renewals or amendments, to the full
extent consistent with the Constitutions of Georgia and the United
States.
(c)
The effect of this article may not be varied by contract or agreement. Any
contract or agreement purporting to do so is void and unenforceable to that
extent only.
10-1-725.2.
Sales
of motorcycles, all-terrain vehicles, and utility vehicles by grantors or
distributors shall be in accordance with published prices, charges, and terms of
sale in effect at any given time.
10-1-725.3.
No
grantor, directly or through any officer, agent, or employee, may terminate,
cancel, fail to renew, or substantially change the area of sales responsibility
of a motorcycle, all-terrain vehicle, or utility vehicle dealership agreement
without good cause. The burden of proving good cause shall be on the
grantor.
10-1-725.4.
Except
as provided in this Code section, a grantor shall provide a motorcycle,
all-terrain vehicle, or utility vehicle dealer written notice of intent to
terminate, cancel, or nonrenew. The motorcycle, all-terrain vehicle, or utility
vehicle dealer shall have 90 days following receipt of notice in which to
rectify any claimed deficiency. If the deficiency is rectified within 90 days,
the notice shall be void. The notice provisions of Code Section 10-1-725.3
shall not apply if the reason for termination, cancellation, or nonrenewal is
insolvency; the occurrence of an assignment for the benefit of creditors;
bankruptcy; failure of the dealer to conduct its customary sales and service
operations during its customary business hours for seven consecutive business
days, except for acts of God or circumstances beyond the control of the dealer;
conviction of the dealer, general manager, or managing executive or any owner
with a substantial interest therein of any crime which materially relates to the
operation of the dealership or any felony which is punishable by imprisonment;
suspension or revocation for a period of more than 14 days of any license which
the dealer is required to have to operate a dealership; or fraud or intentional
misrepresentation by the dealer that materially affects the franchise. In such
event, the termination, cancellation, or nonrenewal shall become effective 15
days after receipt of notice by the dealer.
10-1-725.5.
(a)
If a motorcycle, all-terrain vehicle, or utility vehicle dealership franchise
agreement is terminated, canceled, or not renewed without good cause by the
grantor, the grantor, at the option of the motorcycle, all-terrain vehicle, or
utility vehicle dealer, shall repurchase:
(1)
All inventories of motorcycles, all-terrain vehicles, or utility vehicles,
parts, and accessories sold by the grantor to the motorcycle, all-terrain
vehicle, or utility vehicle dealer for resale; and
(2)
All diagnostic equipment, special tools, other equipment and machinery, and
signage as were required to meet the dealer´s service responsibilities in
accordance with manufacturer´s guides and applicable customer service
bulletins and signs sold under the motorcycle, all-terrain vehicle, or utility
vehicle dealership agreement.
(b)
The repurchase price shall be at the original invoice price plus freight,
destination, delivery, and distribution charges and sales taxes incurred by the
motorcycle, all-terrain vehicle, or utility vehicle dealer. The grantor shall
pay the dealer within 30 days of receipt of the returned items. This Code
section shall apply only to merchandise with a name, trademark, label, or other
mark on it which identifies the grantor or with proof of purchase from the
grantor.
(c)
The grantor shall reimburse the dealer for 100 percent of the invoiced cost to
the dealer by the grantor, including transportation, of all new current model
year and new current year motorcycle, all-terrain vehicle, or utility vehicle
inventory acquired from the manufacturer which has not been materially altered
or damaged and of all new motorcycle, all-terrain vehicle, or utility vehicle
inventory not of the current model year which has not been materially altered or
damaged, provided that the noncurrent model year vehicles were acquired from the
manufacturer within 12 months prior to the effective date of the termination,
cancellation, or nonrenewal.
(d)
The grantor shall reimburse the dealer for 100 percent of the current net prices
as published in the grantor´s current price lists or catalogs on
accessories and parts, including superseded parts, plus 7 percent of the current
net price of all grantor´s accessories and parts returned to compensate the
dealer for handling, packing, and loading the parts.
10-1-725.6.
It
shall be unlawful for any grantor, directly or through any officer, agent, or
employee:
(1)
To coerce, or attempt to coerce, any dealer to accept delivery of any parts or
accessories or any other commodities which have not been ordered by such dealer;
or
(2)
To coerce, or attempt to coerce, any dealer to enter into an agreement with such
grantor or do any other act unfair to such dealer by threatening to cancel any
motorcycle, all-terrain vehicle, or utility vehicle dealership franchise
agreement existing between such grantor and such dealer.
10-1-725.7.
It
shall be unlawful for any grantor to prevent or refuse to approve the sale or
transfer of the ownership of a motorcycle, all-terrain vehicle, or utility
vehicle dealership by the sale of the business assets, stock transfer, or
otherwise or a change in executive management or principal operator of the
dealership if the new owner, principal operator, or management is creditworthy,
has not been convicted of a felony, and is properly licensed; the sale or
transfer will not result in a relocation of the business; and the sale or
transfer is otherwise reasonable under the circumstances. The burden of proving
that any sale or transfer is not reasonable shall be on the grantor; provided,
however, that the grantor and the dealer may mutually agree to a relocation of
the business.
10-1-725.8.
(a)
It shall be unlawful for any grantor to fail to provide a motorcycle,
all-terrain vehicle, or utility vehicle dealer with an opportunity, at the time
of signing a motorcycle, all-terrain vehicle, or utility vehicle dealership
franchise agreement or at a reasonable time thereafter, to designate a member of
his or her family as a successor to the dealership in the event of the death or
incapacity of the dealer. A dealer may from time to time during the term of the
franchise agreement change the beneficiary by providing a written notification
to the manufacturer.
(b)
It shall be unlawful to prevent or refuse to honor the succession to a
dealership by a member of the family of the deceased or incapacitated dealer
unless the grantor has provided to the member of the family so designated
written notice of its objections. The burden of proving that such transfer is
not reasonable shall be on the grantor.
(c)
Grounds for objection shall be lack of creditworthiness, conviction of a felony,
inability to obtain necessary licenses by the beneficiary, lack of required
licenses, or other conditions which make such succession unreasonable under the
circumstances; but the grantor shall bear the burden of proving the
unreasonableness of such succession. No member of the family of the deceased or
incapacitated dealer may succeed to a motorcycle, all-terrain vehicle, or
utility vehicle dealership unless the succession to such dealership will not
involve, without the grantor´s consent, a relocation of the
business.
10-1-725.9.
(a)
Each grantor shall specify in writing to each of its motorcycle, all-terrain
vehicle, or utility vehicle dealers licensed in Georgia the dealer´s
obligation for preparation, delivery, and warranty service on its products;
shall compensate the dealer for warranty service required of the dealer by the
manufacturer; and shall provide the dealer the schedule of compensation to be
paid to such dealers for parts, work, and service in connection with warranty
service and the time allowances for the performance of such work and service.
In no event shall such schedule of compensation fail to include reasonable
compensation for diagnostic work as well as repair service and
labor.
(b)
Time allowances for the diagnosis and performance of warranty work and service
shall be reasonable and adequate for the work to be performed. In the
determination of what constitutes reasonable compensation under this Code
section, the principal factors to be given consideration shall be the prevailing
wage rates being paid by the dealer and the prevailing labor rate being charged
by the dealer in the community in which the dealer is doing business. In no
event shall such compensation of a dealer for warranty service be less than the
rates charged by the dealer for like service to retail customers for nonwarranty
service and repairs so long as such rates are reasonable, unless the grantor
conditions payment of such compensation upon the dealer´s completion of
factory training and the dealer has failed to complete such
training.
(c)
A grantor shall reimburse the dealer for warranty parts at actual wholesale
costs plus a minimum 25 percent handling charge and the cost, if any, of freight
to return warranty parts to the manufacturer. Warranty audits of dealer records
may be conducted by the grantor on a reasonable basis. A grantor must
disapprove warranty claims in writing within 30 days of the date of submission
by the dealer in the manner and form prescribed by the grantor. Claims not
specifically disapproved in writing within this 30 days shall be construed to be
approved and shall be paid or credited within 45 days.
(d)
Dealer claims for warranty compensation shall not be denied except for good
cause such as performance of nonwarranty repairs, lack of material
documentation, fraud, or misrepresentation. Claims for dealer compensation
shall be paid within 30 days of dealer submission or rejected in writing for
stated reasons.
(e)
It shall be a violation of this article for any grantor to:
(1)
Fail to perform any of its warranty obligations with respect to a motorcycle,
all-terrain vehicle, or utility vehicle and motorcycle, all-terrain vehicle, or
utility vehicle components;
(2)
Fail to assume all responsibility for any liability resulting from structural or
production defects;
(3)
Fail to include written notices of factory recalls to vehicle owners and dealers
and the expected date by which necessary parts and equipment will be available
to dealers for the correction of such defects;
(4)
Fail to compensate any of its motorcycle, all-terrain vehicle, or utility
vehicle dealers licensed in Georgia for repairs effected by such dealer of
merchandise damaged in manufacture or transit to the dealer where the carrier is
designated by the manufacturer, factory branch, distributor, or distributor
branch;
(5)
Fail to compensate its motorcycle, all-terrain vehicle, or utility vehicle
dealers licensed in this state for warranty parts, work, and service in
accordance with the schedule of compensation provided the dealer pursuant to
subsection (a) of this Code section or for legal costs and expenses incurred by
such dealers in connection with warranty obligations for which the grantor is
legally responsible or which the grantor imposes upon the dealer;
(6)
Misrepresent in any way purchases of motorcycles, all-terrain vehicles, or
utility vehicles that contain warranties with respect to the manufacture,
performance, or design of the vehicles which are made by the dealer, either as
warrantor or co-warrantor; or
(7)
Require the dealer to make warranties to customers in any manner related to the
manufacture of a motorcycle, all-terrain vehicle, or utility
vehicle.
(f)
Notwithstanding the terms of any agreement, it shall be a violation of this
article for any grantor to fail to indemnify and hold harmless its motorcycle,
all-terrain vehicle, or utility vehicle dealers against any losses or damages
arising out of claims, costs, judgments, expenses including reasonable
attorney´s fees, or suits relating to the manufacture, assembly, or design
of motorcycles, all-terrain vehicles, or utility vehicles, parts, or
accessories, or other functions by the grantor beyond the control of the dealer,
including, without limitation, the selection by the grantor of parts or
components for the motorcycle, all-terrain vehicle, or utility vehicle or any
damages to merchandise occurring in transit to the dealer where the carrier is
designated by the grantor. The dealer shall give notice to the grantor of
pending suits in which allegations are made which fall under within this
subsection whenever reasonably practicable to do so. Any motorcycle,
all-terrain vehicle, or utility vehicle dealer franchise agreement issued to,
amended, or renewed for motorcycles, all-terrain vehicles, or utility vehicles
in Georgia on or after July 1, 2007, shall be deemed to incorporate provisions
consistent with the requirements of this subsection.
(g)
Whenever a new motorcycle, all-terrain vehicle, or utility vehicle is damaged in
transit when the carrier or means of transportation is determined by the grantor
or distributor or whenever a motorcycle, all-terrain vehicle, or utility vehicle
is otherwise damaged prior to delivery to the motorcycle, all-terrain vehicle,
or utility vehicle dealer or if a new motorcycle, all-terrain vehicle, or
utility vehicle is found to have substantial box or chassis defects upon arrival
at the motorcycle, all-terrain vehicle, or utility vehicle dealership, the
dealer must notify the grantor or distributor of such damage or such defects
within ten business days from the date of delivery or within a reasonable amount
of additional time or, if longer, such time as specified in the motorcycle,
all-terrain vehicle, or utility vehicle dealership franchise agreement and
either:
(1)
Request from the manufacturer or distributor authorization to replace the
components, parts, and accessories damaged or otherwise correct the damage;
or
(2)
Reject the vehicle.
If
the dealer exercises the option to refuse delivery of the vehicle, the
motorcycle, all-terrain vehicle, or utility vehicle manufacturer must
immediately repurchase such vehicle.
(h)
If the grantor or distributor refuses or fails to authorize repair of such
damage within ten days after receipt of notification or if the dealer rejects a
motorcycle, all-terrain vehicle, or utility vehicle because of damage, ownership
of the new motorcycle, all-terrain vehicle, or utility vehicle shall revert to
the grantor or distributor and the motorcycle, all-terrain vehicle, or utility
vehicle dealer shall have no obligations, financial or otherwise, with respect
to such motorcycle, all-terrain vehicle, or utility vehicle.
(i)
All manufacturers, distributors, and suppliers of motorcycle, all-terrain
vehicle, or utility vehicle components shall be subject to the provisions of
this article.
10-1-725.10.
If
any grantor violates this article, a motorcycle, all-terrain vehicle, or utility
vehicle dealer may bring an action against such grantor in a court of competent
jurisdiction in the county of the motorcycle, all-terrain vehicle, or utility
vehicle dealer for damages sustained as a consequence of the grantor´s
violation, together with the actual costs of the action including reasonable
attorney´s fees; and the dealer also may be granted injunctive relief
against unlawful termination, cancellation, or nonrenewal and refusal to permit
transfer of ownership in accordance with this article.
10-1-725.11.
In
any action brought by a motorcycle, all-terrain vehicle, or utility vehicle
dealer against a grantor under this article, any violation of this article by
the grantor shall be deemed an irreparable injury to the motorcycle, all-terrain
vehicle, or utility vehicle dealer for determining if a temporary injunction
should be issued.
10-1-725.12.
It
shall be unlawful for a grantor to establish a new motorcycle, all-terrain
vehicle, or utility vehicle dealership unless the dealer meets the requirements
and definitions provided in this article.
10-1-725.13.
It
shall be unlawful for any dealer to sell or distribute any new motorcycle,
all-terrain vehicle, or utility vehicle in Georgia unless the dealer has a
franchise dealership agreement with a grantor with the express right to sell or
distribute motorcycles, all-terrain vehicles, or utility vehicles in Georgia,
operates a motorcycle, all-terrain vehicle, or utility vehicle dealership, and
meets all of the requirements and definitions provided in this article. Any
dealer who does not meet the requirements of this article may participate in
events where motorcycles, all-terrain vehicles, or utility vehicles are
exhibited or demonstrated and seminars are provided but shall be prohibited from
contracting to sell or distribute motorcycles, all-terrain vehicles, or utility
vehicles to the public."
SECTION
4.
This
Act shall become effective on July 1, 2007, and shall apply to any agreement
entered into on or after July 1, 2007, and to any renewal, modification, or
amendment made on or after July 1, 2007, to any such agreement.
SECTION
5.
All
laws and parts of laws in conflict with this Act are repealed.