08 LC 28
4061
House
Bill 1350
By:
Representative Heard of the
104th
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; 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 from the definition of motor vehicle relative to motor
vehicle franchises; to provide for definitions; to provide purposes and policies
to protect motorcycle 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 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 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 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 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 products or services
related thereto at wholesale or retail, whether by leasing, sale, or
otherwise.
(5)
'Grantor' means a person who grants a motorcycle 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 dealer' means a person who is a grantee of a motorcycle dealership
situated in Georgia.
(9)
'Motorcycle dealership' means an established place of business engaged in the
marketing of new motorcycle 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 and from the sale of motorcycle
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 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 and from the sale of motorcycle 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 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 dealers and grantors and in the continuation of motorcycle
dealerships on a fair basis;
(2)
To protect motorcycle dealers against unfair treatment by grantors who
inherently have superior economic power and superior bargaining power in the
negotiations of motorcycle dealerships;
(3)
To provide motorcycle dealers with rights and remedies in addition to those
existing by contract or common law; and
(4)
To govern all franchise agreements for motorcycle 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 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 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 dealer
written notice of intent to terminate, cancel, or nonrenew. The motorcycle
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 this Code section 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 dealership franchise agreement is terminated, canceled, or not
renewed without good cause by the grantor, the grantor, at the option of the
motorcycle dealer, shall repurchase:
(1)
All inventories of motorcycles, parts, and accessories sold by the grantor to
the motorcycle 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 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 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 inventory acquired from the manufacturer
which has not been materially altered or damaged and of all new motorcycle
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 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 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 dealer with
an opportunity, at the time of signing a motorcycle 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 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 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 and
motorcycle 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 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 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 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.
(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
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, 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 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
dealer franchise agreement issued to, amended, or renewed for motorcycles in
Georgia on or after July 1, 2008, shall be deemed to incorporate provisions
consistent with the requirements of this subsection.
(g)
Whenever a new motorcycle is damaged in transit when the carrier or means of
transportation is determined by the grantor or distributor or whenever a
motorcycle is otherwise damaged prior to delivery to the motorcycle dealer or if
a new motorcycle is found to have substantial box or chassis defects upon
arrival at the motorcycle 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 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 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 because of damage, ownership of the new motorcycle shall revert to
the grantor or distributor and the motorcycle dealer shall have no obligations,
financial or otherwise, with respect to such motorcycle.
(i)
All manufacturers, distributors, and suppliers of motorcycle components shall be
subject to the provisions of this article.
10-1-725.10.
If
any grantor violates this article, a motorcycle dealer may bring an action
against such grantor in a court of competent jurisdiction in the county of the
motorcycle 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 dealer against a grantor under this article,
any violation of this article by the grantor shall be deemed an irreparable
injury to the motorcycle 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 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 in
Georgia unless the dealer has a franchise dealership agreement with a grantor
with the express right to sell or distribute motorcycles in Georgia, operates a
motorcycle 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 are exhibited or
demonstrated and seminars are provided but shall be prohibited from contracting
to sell or distribute motorcycles to the public.
10-1-725.14.
(a)
Nothing contained in this article is intended to discourage or prohibit any
person or dealer from entering into a franchise agreement with any
manufacturer.
(b)
Nothing contained in this article shall prohibit a manufacturer from prohibiting
the sale of its products except through an authorized franchisee.
(c)
The provisions of this article shall not apply to any seller´s agreement or
contract when the manufacturer and the dealer enter into such seller´s
agreement or contract after meaningful and genuine negotiations of the terms and
conditions of the agreement or contract. The burden of proof shall be on the
manufacturer to prove that genuine negotiations took place between the parties.
The provisions of this article shall apply if, in order to be awarded a
franchise, the dealer had no realistic ability to negotiate the terms and
conditions of the agreement or the dealer´s only option was to sign a
prepared agreement. Genuine or realistic negotiations shall include, but not be
limited to, negotiations regarding the areas of responsibility and the terms of
the agreement."
SECTION
3.
This
Act shall become effective on July 1, 2008, and shall apply to any agreement
entered into on or after July 1, 2008, and to any renewal, modification, or
amendment made on or after July 1, 2008, to any such agreement.
SECTION
4.
All
laws and parts of laws in conflict with this Act are repealed.