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91_HB0520sam001
LRB9102551SMdvam02
1 AMENDMENT TO HOUSE BILL 520
2 AMENDMENT NO. . Amend House Bill 520 by replacing
3 the title with the following:
4 "AN ACT to amend the Motor Vehicle Franchise Act by
5 changing Sections 4, 5, 6, 13, and 29."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Motor Vehicle Franchise Act is amended
9 by changing Sections 4, 5, 6, 13, and 29 as follows:
10 (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
11 Sec. 4. Unfair competition and practices.
12 (a) The unfair methods of competition and unfair and
13 deceptive acts or practices listed in this Section are hereby
14 declared to be unlawful. In construing the provisions of this
15 Section, the courts may be guided by the interpretations of
16 the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
17 from time to time amended.
18 (b) It shall be deemed a violation for any manufacturer,
19 factory branch, factory representative, distributor or
20 wholesaler, distributor branch, distributor representative or
21 motor vehicle dealer to engage in any action with respect to
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1 a franchise which is arbitrary, in bad faith or
2 unconscionable and which causes damage to any of the parties
3 or to the public.
4 (c) It shall be deemed a violation for a manufacturer, a
5 distributor, a wholesaler, a distributor branch or division,
6 a factory branch or division, or a wholesale branch or
7 division, or officer, agent or other representative thereof,
8 to coerce, or attempt to coerce, any motor vehicle dealer:
9 (1) to accept, buy or order any motor vehicle or
10 vehicles, appliances, equipment, parts or accessories
11 therefor, or any other commodity or commodities or
12 service or services which such motor vehicle dealer has
13 not voluntarily ordered or requested except items
14 required by applicable local, state or federal law; or to
15 require a motor vehicle dealer to accept, buy, order or
16 purchase such items in order to obtain any motor vehicle
17 or vehicles or any other commodity or commodities which
18 have been ordered or requested by such motor vehicle
19 dealer;
20 (2) to order or accept delivery of any motor
21 vehicle with special features, appliances, accessories or
22 equipment not included in the list price of the motor
23 vehicles as publicly advertised by the manufacturer
24 thereof, except items required by applicable law; or
25 (3) to order for anyone any parts, accessories,
26 equipment, machinery, tools, appliances or any commodity
27 whatsoever, except items required by applicable law.
28 (d) It shall be deemed a violation for a manufacturer, a
29 distributor, a wholesaler, a distributor branch or division,
30 or officer, agent or other representative thereof:
31 (1) to adopt, change, establish or implement a plan
32 or system for the allocation and distribution of new
33 motor vehicles to motor vehicle dealers which is
34 arbitrary or capricious or to modify an existing plan so
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1 as to cause the same to be arbitrary or capricious;
2 (2) to fail or refuse to advise or disclose to any
3 motor vehicle dealer having a franchise or selling
4 agreement, upon written request therefor, the basis upon
5 which new motor vehicles of the same line make are
6 allocated or distributed to motor vehicle dealers in the
7 State and the basis upon which the current allocation or
8 distribution is being made or will be made to such motor
9 vehicle dealer;
10 (3) to refuse to deliver in reasonable quantities
11 and within a reasonable time after receipt of dealer's
12 order, to any motor vehicle dealer having a franchise or
13 selling agreement for the retail sale of new motor
14 vehicles sold or distributed by such manufacturer,
15 distributor, wholesaler, distributor branch or division,
16 factory branch or division or wholesale branch or
17 division, any such motor vehicles as are covered by such
18 franchise or selling agreement specifically publicly
19 advertised in the State by such manufacturer,
20 distributor, wholesaler, distributor branch or division,
21 factory branch or division, or wholesale branch or
22 division to be available for immediate delivery.
23 However, the failure to deliver any motor vehicle shall
24 not be considered a violation of this Act if such failure
25 is due to an act of God, a work stoppage or delay due to
26 a strike or labor difficulty, a shortage of materials, a
27 lack of manufacturing capacity, a freight embargo or
28 other cause over which the manufacturer, distributor, or
29 wholesaler, or any agent thereof has no control;
30 (4) to coerce, or attempt to coerce, any motor
31 vehicle dealer to enter into any agreement with such
32 manufacturer, distributor, wholesaler, distributor branch
33 or division, factory branch or division, or wholesale
34 branch or division, or officer, agent or other
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1 representative thereof, or to do any other act
2 prejudicial to the dealer by threatening to reduce his
3 allocation of motor vehicles or cancel any franchise or
4 any selling agreement existing between such manufacturer,
5 distributor, wholesaler, distributor branch or division,
6 or factory branch or division, or wholesale branch or
7 division, and the dealer. However, notice in good faith
8 to any motor vehicle dealer of the dealer's violation of
9 any terms or provisions of such franchise or selling
10 agreement or of any law or regulation applicable to the
11 conduct of a motor vehicle dealer shall not constitute a
12 violation of this Act;
13 (5) to require a franchisee to participate in an
14 advertising campaign or contest or any promotional
15 campaign, or to purchase or lease any promotional
16 materials, training materials, show room or other display
17 decorations or materials at the expense of the
18 franchisee;
19 (6) to cancel or terminate the franchise or selling
20 agreement of a motor vehicle dealer without good cause
21 and without giving notice as hereinafter provided; to
22 fail or refuse to extend the franchise or selling
23 agreement of a motor vehicle dealer upon its expiration
24 without good cause and without giving notice as
25 hereinafter provided; or, to offer a renewal, replacement
26 or succeeding franchise or selling agreement containing
27 terms and provisions the effect of which is to
28 substantially change or modify the sales and service
29 obligations or capital requirements of the motor vehicle
30 dealer arbitrarily and without good cause and without
31 giving notice as hereinafter provided notwithstanding any
32 term or provision of a franchise or selling agreement.
33 (A) If a manufacturer, distributor,
34 wholesaler, distributor branch or division, factory
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1 branch or division or wholesale branch or division
2 intends to cancel or terminate a franchise or
3 selling agreement or intends not to extend or renew
4 a franchise or selling agreement on its expiration,
5 it shall send a letter by certified mail, return
6 receipt requested, to the affected franchisee at
7 least 60 days before the effective date of the
8 proposed action, or not later than 10 days before
9 the proposed action when the reason for the action
10 is based upon either of the following:
11 (i) the business operations of the
12 franchisee have been abandoned or the
13 franchisee has failed to conduct customary
14 sales and service operations during customary
15 business hours for at least 7 consecutive
16 business days unless such closing is due to an
17 act of God, strike or labor difficulty or other
18 cause over which the franchisee has no control;
19 or
20 (ii) the conviction of or plea of nolo
21 contendere by the motor vehicle dealer or any
22 operator thereof in a court of competent
23 jurisdiction to an offense punishable by
24 imprisonment for more than two years.
25 Each notice of proposed action shall include a
26 detailed statement setting forth the specific
27 grounds for the proposed cancellation, termination,
28 or refusal to extend or renew and shall state that
29 the dealer has only 30 days from receipt of the
30 notice to file with the Motor Vehicle Review Board a
31 written protest against the proposed action.
32 (B) If a manufacturer, distributor,
33 wholesaler, distributor branch or division, factory
34 branch or division or wholesale branch or division
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1 intends to change substantially or modify the sales
2 and service obligations or capital requirements of a
3 motor vehicle dealer as a condition to extending or
4 renewing the existing franchise or selling agreement
5 of such motor vehicle dealer, it shall send a letter
6 by certified mail, return receipt requested, to the
7 affected franchisee at least 60 days before the
8 date of expiration of the franchise or selling
9 agreement. Each notice of proposed action shall
10 include a detailed statement setting forth the
11 specific grounds for the proposed action and shall
12 state that the dealer has only 30 days from receipt
13 of the notice to file with the Motor Vehicle Review
14 Board a written protest against the proposed action.
15 (C) Within 30 15 days from receipt of the
16 notice under subparagraphs (A) and (B), the
17 franchisee may file with the Board a written protest
18 against the proposed action.
19 When the protest has been timely filed, the
20 Board shall enter an order, fixing a date (within 60
21 days of the date of the order), time, and place of a
22 hearing on the protest required under Sections 12
23 and 29 of this Act, and send by certified mail,
24 return receipt requested, a copy of the order to the
25 manufacturer that filed the notice of intention of
26 the proposed action and to the protesting dealer or
27 franchisee.
28 The manufacturer shall have the burden of proof
29 to establish that good cause exists to cancel or
30 terminate, or fail to extend or renew the franchise
31 or selling agreement of a motor vehicle dealer or
32 franchisee, and to change substantially or modify
33 the sales and service obligations or capital
34 requirements of a motor vehicle dealer as a
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1 condition to extending or renewing the existing
2 franchise or selling agreement. The determination
3 whether good cause exists to cancel, terminate, or
4 refuse to renew or extend the franchise or selling
5 agreement, or to change or modify the obligations of
6 the dealer as a condition to offer renewal,
7 replacement, or succession shall be made by the
8 Board under subsection (d) of Section 12 of this
9 Act.
10 (D) Notwithstanding the terms, conditions, or
11 provisions of a franchise or selling agreement, the
12 following shall not constitute good cause for
13 cancelling or terminating or failing to extend or
14 renew the franchise or selling agreement: (i) the
15 change of ownership or executive management of the
16 franchisee's dealership; or (ii) the fact that the
17 franchisee or owner of an interest in the franchise
18 owns, has an investment in, participates in the
19 management of, or holds a license for the sale of
20 the same or any other line make of new motor
21 vehicles.
22 Good cause shall exist to cancel, terminate or
23 fail to offer a renewal or replacement franchise or
24 selling agreement to all franchisees of a line make
25 if the manufacturer permanently discontinues the
26 manufacture or assembly of motor vehicles of such
27 line make.
28 (E) The manufacturer may not cancel or
29 terminate, or fail to extend or renew a franchise or
30 selling agreement or change or modify the
31 obligations of the franchisee as a condition to
32 offering a renewal, replacement, or succeeding
33 franchise or selling agreement before the hearing
34 process is concluded as prescribed by this Act, and
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1 thereafter, if the Board determines that the
2 manufacturer has failed to meet its burden of proof
3 and that good cause does not exist to allow the
4 proposed action; or
5 (7) notwithstanding the terms of any franchise
6 agreement, to fail to indemnify and hold harmless its
7 franchised dealers against any judgment or settlement for
8 damages, including, but not limited to, court costs,
9 expert witness fees, and reasonable attorneys' fees of
10 the new motor vehicle dealer, and other expenses incurred
11 in the litigation, so long as such fees and costs are
12 reasonable, arising out of complaints, claims or lawsuits
13 including, but not limited to, strict liability,
14 negligence, misrepresentation, warranty (express or
15 implied), or recision of the sale as defined in Section
16 2-608 of the Uniform Commercial Code, to the extent that
17 the judgment or settlement relates to the alleged
18 defective or negligent manufacture, assembly or design of
19 new motor vehicles, parts or accessories or other
20 functions by the manufacturer, beyond the control of the
21 dealer; provided that, in order to provide an adequate
22 defense, the manufacturer receives notice of the filing
23 of a complaint, claim, or lawsuit within 60 days after
24 the filing.
25 (e) It shall be deemed a violation for a manufacturer, a
26 distributor, a wholesaler, a distributor branch or division
27 or officer, agent or other representative thereof:
28 (1) to resort to or use any false or misleading
29 advertisement in connection with his business as such
30 manufacturer, distributor, wholesaler, distributor branch
31 or division or officer, agent or other representative
32 thereof;
33 (2) to offer to sell or lease, or to sell or lease,
34 any new motor vehicle to any motor vehicle dealer at a
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1 lower actual price therefor than the actual price offered
2 to any other motor vehicle dealer for the same model
3 vehicle similarly equipped or to utilize any device
4 including, but not limited to, sales promotion plans or
5 programs which result in such lesser actual price or
6 fail to make available to any motor vehicle dealer any
7 preferential pricing, incentive, rebate, finance rate, or
8 low interest loan program offered to competing motor
9 vehicle dealers in other contiguous states. However, the
10 provisions of this paragraph shall not apply to sales to
11 a motor vehicle dealer for resale to any unit of the
12 United States Government, the State or any of its
13 political subdivisions;
14 (3) to offer to sell or lease, or to sell or lease,
15 any new motor vehicle to any person, except a wholesaler,
16 distributor or manufacturer's employees at a lower actual
17 price therefor than the actual price offered and charged
18 to a motor vehicle dealer for the same model vehicle
19 similarly equipped or to utilize any device which results
20 in such lesser actual price. However, the provisions of
21 this paragraph shall not apply to sales to a motor
22 vehicle dealer for resale to any unit of the United
23 States Government, the State or any of its political
24 subdivisions;
25 (4) to prevent or attempt to prevent by contract or
26 otherwise any motor vehicle dealer or franchisee from
27 changing the executive management control of the motor
28 vehicle dealer or franchisee unless the franchiser,
29 having the burden of proof, proves that such change of
30 executive management will result in executive management
31 control by a person or persons who are not of good moral
32 character or who do not meet the franchiser's existing
33 and, with consideration given to the volume of sales and
34 service of the dealership, uniformly applied minimum
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1 business experience standards in the market area. However
2 where the manufacturer rejects a proposed change in
3 executive management control, the manufacturer shall give
4 written notice of his reasons to the dealer within 60
5 days of notice to the manufacturer by the dealer of the
6 proposed change. If the manufacturer does not send a
7 letter to the franchisee by certified mail, return
8 receipt requested, within 60 days from receipt by the
9 manufacturer of the proposed change, then the change of
10 the executive management control of the franchisee shall
11 be deemed accepted as proposed by the franchisee, and the
12 manufacturer shall give immediate effect to such change;
13 (5) to prevent or attempt to prevent by contract or
14 otherwise any motor vehicle dealer from establishing or
15 changing the capital structure of his dealership or the
16 means by or through which he finances the operation
17 thereof; provided the dealer meets any reasonable capital
18 standards agreed to between the dealer and the
19 manufacturer, distributor or wholesaler, who may require
20 that the sources, method and manner by which the dealer
21 finances or intends to finance its operation, equipment
22 or facilities be fully disclosed;
23 (6) to refuse to give effect to or prevent or
24 attempt to prevent by contract or otherwise any motor
25 vehicle dealer or any officer, partner or stockholder of
26 any motor vehicle dealer from selling or transferring any
27 part of the interest of any of them to any other person
28 or persons or party or parties unless such sale or
29 transfer is to a transferee who would not otherwise
30 qualify for a new motor vehicle dealers license under
31 "The Illinois Vehicle Code" or unless the franchiser,
32 having the burden of proof, proves that such sale or
33 transfer is to a person or party who is not of good moral
34 character or does not meet the franchiser's existing and
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1 reasonable capital standards and, with consideration
2 given to the volume of sales and service of the
3 dealership, uniformly applied minimum business experience
4 standards in the market area. However, nothing herein
5 shall be construed to prevent a franchiser from
6 implementing affirmative action programs providing
7 business opportunities for minorities or from complying
8 with applicable federal, State or local law:
9 (A) If the manufacturer intends to refuse to
10 approve the sale or transfer of all or a part of the
11 interest, then it shall, within 60 days from receipt
12 of the completed application forms generally
13 utilized by a manufacturer to conduct its review and
14 a copy of all agreements regarding the proposed
15 transfer, send a letter by certified mail, return
16 receipt requested, advising the franchisee of any
17 refusal to approve the sale or transfer of all or
18 part of the interest and shall state that the dealer
19 only has 30 days from the receipt of the notice to
20 file with the Motor Vehicle Review Board a written
21 protest against the proposed action. The notice
22 shall set forth specific criteria used to evaluate
23 the prospective transferee and the grounds for
24 refusing to approve the sale or transfer to that
25 transferee. Within 30 15 days from the franchisee's
26 receipt of the manufacturer's notice, the franchisee
27 may file with the Board a written protest against
28 the proposed action.
29 When a protest has been timely filed, the Board
30 shall enter an order, fixing the date (within 60
31 days of the date of such order), time, and place of
32 a hearing on the protest, required under Sections 12
33 and 29 of this Act, and send by certified mail,
34 return receipt requested, a copy of the order to the
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1 manufacturer that filed notice of intention of the
2 proposed action and to the protesting franchisee.
3 The manufacturer shall have the burden of proof
4 to establish that good cause exists to refuse to
5 approve the sale or transfer to the transferee. The
6 determination whether good cause exists to refuse to
7 approve the sale or transfer shall be made by the
8 Board under subdivisions (6)(B). The manufacturer
9 shall not refuse to approve the sale or transfer by
10 a dealer or an officer, partner, or stockholder of a
11 franchise or any part of the interest to any person
12 or persons before the hearing process is concluded
13 as prescribed by this Act, and thereafter if the
14 Board determines that the manufacturer has failed to
15 meet its burden of proof and that good cause does
16 not exist to refuse to approve the sale or transfer
17 to the transferee.
18 (B) Good cause to refuse to approve such sale
19 or transfer under this Section is established when
20 such sale or transfer is to a transferee who would
21 not otherwise qualify for a new motor vehicle
22 dealers license under "The Illinois Vehicle Code" or
23 such sale or transfer is to a person or party who is
24 not of good moral character or does not meet the
25 franchiser's existing and reasonable capital
26 standards and, with consideration given to the
27 volume of sales and service of the dealership,
28 uniformly applied minimum business experience
29 standards in the market area.
30 (7) to obtain money, goods, services, anything of
31 value, or any other benefit from any other person with
32 whom the motor vehicle dealer does business, on account
33 of or in relation to the transactions between the dealer
34 and the other person as compensation, except for services
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1 actually rendered, unless such benefit is promptly
2 accounted for and transmitted to the motor vehicle
3 dealer;
4 (8) to grant an additional franchise in the
5 relevant market area of an existing franchise of the same
6 line make or to relocate an existing motor vehicle
7 dealership within or into a relevant market area of an
8 existing franchise of the same line make. However, if the
9 manufacturer wishes to grant such an additional franchise
10 to an independent person in a bona fide relationship in
11 which such person is prepared to make a significant
12 investment subject to loss in such a dealership, or if
13 the manufacturer wishes to relocate an existing motor
14 vehicle dealership, then the manufacturer shall send a
15 letter by certified mail, return receipt requested, to
16 each existing dealer or dealers of the same line make
17 whose relevant market area includes the proposed location
18 of the additional or relocated franchise at least 60 days
19 before the manufacturer grants an additional franchise or
20 relocates an existing franchise of the same line make
21 within or into the relevant market area of an existing
22 franchisee of the same line make. Each notice shall set
23 forth the specific grounds for the proposed grant of an
24 additional or relocation of an existing franchise.
25 Unless the parties agree upon the grant or establishment
26 of the additional or relocated franchise within 30 15
27 days from the date the notice was received by the
28 existing franchisee of the same line make or any person
29 entitled to receive such notice, the franchisee or other
30 person may file with the Board a written protest against
31 the grant or establishment of the proposed additional or
32 relocated franchise and shall state that the dealer only
33 has 30 days from the receipt of the notice to file with
34 the Motor Vehicle Review Board a written protest against
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1 the proposed action.
2 When a protest has been timely filed, the Board
3 shall enter an order fixing a date (within 60 days of the
4 date of the order), time, and place of a hearing on the
5 protest, required under Sections 12 and 29 of this Act,
6 and send by certified or registered mail, return receipt
7 requested, a copy of the order to the manufacturer that
8 filed the notice of intention to grant or establish the
9 proposed additional or relocated franchise and to the
10 protesting dealer or dealers of the same line make whose
11 relevant market area includes the proposed location of
12 the additional or relocated franchise.
13 When more than one protest is filed against the
14 grant or establishment of the additional or relocated
15 franchise of the same line make, the Board may
16 consolidate the hearings to expedite disposition of the
17 matter. The manufacturer shall have the burden of proof
18 to establish that good cause exists to allow the grant or
19 establishment of the additional or relocated franchise.
20 The manufacturer may not grant or establish the
21 additional franchise or relocate the existing franchise
22 before the hearing process is concluded as prescribed by
23 this Act, and thereafter if the Board determines that the
24 manufacturer has failed to meet its burden of proof and
25 that good cause does not exist to allow the grant or
26 establishment of the additional franchise or relocation
27 of the existing franchise.
28 The determination whether good cause exists for
29 allowing the grant or establishment of an additional
30 franchise or relocated existing franchise, shall be made
31 by the Board under subsection (c) of Section 12 of this
32 Act. If the manufacturer seeks to enter into a contract,
33 agreement or other arrangement with any person,
34 establishing any additional motor vehicle dealership or
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1 other facility, limited to the sale of factory repurchase
2 vehicles or late model vehicles, then the manufacturer
3 shall follow the notice procedures set forth in this
4 Section and the determination whether good cause exists
5 for allowing the proposed agreement shall be made by the
6 Board under subsection (c) of Section 12, with the
7 manufacturer having the burden of proof.
8 A. (Blank).
9 B. For the purposes of this Section,
10 appointment of a successor motor vehicle dealer at
11 the same location as its predecessor, or within 2
12 miles of such location, or the relocation of an
13 existing dealer or franchise within 2 miles of the
14 relocating dealer's or franchisee's existing
15 location, shall not be construed as a grant,
16 establishment or the entering into of an additional
17 franchise or selling agreement, or a relocation of
18 an existing franchise. The reopening of a motor
19 vehicle dealership that has not been in operation
20 for 18 months or more shall be deemed the grant of
21 an additional franchise or selling agreement.
22 C. This Section does not apply to the
23 relocation of an existing dealership or franchise in
24 a county having a population of more than 300,000
25 persons when the new location is within the dealer's
26 current relevant market area, provided the new
27 location is more than 7 miles from the nearest
28 dealer of the same line make or is further away from
29 the nearest dealer of the same line make. This
30 Section does not apply to the relocation of an
31 existing dealership or franchise in a county having
32 a population of less than 300,000 persons when the
33 new location is within the dealer's current relevant
34 market area, provided the new location is more than
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1 12 miles from the nearest dealer of the same line
2 make or is further away from the nearest dealer of
3 the same line make.
4 D. Nothing in this Section shall be construed
5 to prevent a franchiser from implementing
6 affirmative action programs providing business
7 opportunities for minorities or from complying with
8 applicable federal, State or local law;
9 (9) to require a motor vehicle dealer to assent to
10 a release, assignment, novation, waiver or estoppel which
11 would relieve any person from liability imposed by this
12 Act;
13 (10) to prevent or refuse to give effect to the
14 succession to the ownership or management control of a
15 dealership by any legatee under the will of a dealer or
16 to an heir under the laws of descent and distribution of
17 this State unless the franchisee has designated a
18 successor to the ownership or management control under
19 the succession provisions of the franchise. Unless the
20 franchiser, having the burden of proof, proves that the
21 successor is a person who is not of good moral character
22 or does not meet the franchiser's existing and reasonable
23 capital standards and, with consideration given to the
24 volume of sales and service of the dealership, uniformly
25 applied minimum business experience standards in the
26 market area, any designated successor of a dealer or
27 franchisee may succeed to the ownership or management
28 control of a dealership under the existing franchise if:
29 (i) The designated successor gives the
30 franchiser written notice by certified mail,
31 return receipt requested, of his or her
32 intention to succeed to the ownership of the
33 dealer within 60 days of the dealer's death or
34 incapacity; and
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1 (ii) The designated successor agrees to
2 be bound by all the terms and conditions of the
3 existing franchise.
4 Notwithstanding the foregoing, in the event the
5 motor vehicle dealer or franchisee and manufacturer have
6 duly executed an agreement concerning succession rights
7 prior to the dealer's death or incapacitation, the
8 agreement shall be observed.
9 (A) If the franchiser intends to refuse to
10 honor the successor to the ownership of a deceased
11 or incapacitated dealer or franchisee under an
12 existing franchise agreement, the franchiser shall
13 send a letter by certified mail, return receipt
14 requested, to the designated successor within 60
15 days from receipt of a proposal advising of its
16 intent to refuse to honor the succession and to
17 discontinue the existing franchise agreement and
18 shall state that the designated successor only has
19 30 days from the receipt of the notice to file with
20 the Motor Vehicle Review Board a written protest
21 against the proposed action. The notice shall set
22 forth the specific grounds for the refusal to honor
23 the succession and discontinue the existing
24 franchise agreement.
25 If notice of refusal is not timely served upon
26 the designated successor, the franchise agreement
27 shall continue in effect subject to termination only
28 as otherwise permitted by paragraph (6) of
29 subsection (d) of Section 4 of this Act.
30 Within 30 15 days from the date the notice was
31 received by the designated successor or any other
32 person entitled to notice, the designee or other
33 person may file with the Board a written protest
34 against the proposed action.
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1 When a protest has been timely filed, the Board
2 shall enter an order, fixing a date (within 60 days
3 of the date of the order), time, and place of a
4 hearing on the protest, required under Sections 12
5 and 29 of this Act, and send by certified mail,
6 return receipt requested, a copy of the order to the
7 franchiser that filed the notice of intention of the
8 proposed action and to the protesting designee or
9 such other person.
10 The manufacturer shall have the burden of proof
11 to establish that good cause exists to refuse to
12 honor the succession and discontinue the existing
13 franchise agreement. The determination whether good
14 cause exists to refuse to honor the succession shall
15 be made by the Board under subdivision (B) of this
16 paragraph (10). The manufacturer shall not refuse
17 to honor the succession or discontinue the existing
18 franchise agreement before the hearing process is
19 concluded as prescribed by this Act, and thereafter
20 if the Board determines that it has failed to meet
21 its burden of proof and that good cause does not
22 exist to refuse to honor the succession and
23 discontinue the existing franchise agreement.
24 (B) No manufacturer shall impose any
25 conditions upon honoring the succession and
26 continuing the existing franchise agreement with the
27 designated successor other than that the franchisee
28 has designated a successor to the ownership or
29 management control under the succession provisions
30 of the franchise, or that the designated successor
31 is of good moral character or meets the reasonable
32 capital standards and, with consideration given to
33 the volume of sales and service of the dealership,
34 uniformly applied minimum business experience
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1 standards in the market area;
2 (11) to prevent or refuse to approve a proposal to
3 establish a successor franchise at a location previously
4 approved by the franchiser when submitted with the
5 voluntary termination by the existing franchisee unless
6 the successor franchisee would not otherwise qualify for
7 a new motor vehicle dealer's license under the Illinois
8 Vehicle Code or unless the franchiser, having the burden
9 of proof, proves that such proposed successor is not of
10 good moral character or does not meet the franchiser's
11 existing and reasonable capital standards and, with
12 consideration given to the volume of sales and service of
13 the dealership, uniformly applied minimum business
14 experience standards in the market area. However, when
15 such a rejection of a proposal is made, the manufacturer
16 shall give written notice of its reasons to the
17 franchisee within 60 days of receipt by the manufacturer
18 of the proposal. However, nothing herein shall be
19 construed to prevent a franchiser from implementing
20 affirmative action programs providing business
21 opportunities for minorities, or from complying with
22 applicable federal, State or local law;
23 (12) to prevent or refuse to grant a franchise to a
24 person because such person owns, has investment in or
25 participates in the management of or holds a franchise
26 for the sale of another make or line of motor vehicles
27 within 7 miles of the proposed franchise location in a
28 county having a population of more than 300,000 persons,
29 or within 12 miles of the proposed franchise location in
30 a county having a population of less than 300,000
31 persons; or
32 (13) to prevent or attempt to prevent any new motor
33 vehicle dealer from establishing any additional motor
34 vehicle dealership or other facility limited to the sale
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1 of factory repurchase vehicles or late model vehicles or
2 otherwise offering for sale factory repurchase vehicles
3 of the same line make at an existing franchise by failing
4 to make available any contract, agreement or other
5 arrangement which is made available or otherwise offered
6 to any person.
7 (Source: P.A. 89-145, eff. 7-14-95; 90-655, eff. 7-30-98.)
8 (815 ILCS 710/5) (from Ch. 121 1/2, par. 755)
9 Sec. 5. Delivery and preparation obligations; damage
10 disclosures. Every manufacturer shall specify in writing to
11 the dealer the delivery and preparation obligations of its
12 motor vehicle dealers prior to delivery of new motor vehicles
13 to retail buyers. A copy of the delivery and preparation
14 obligations of its motor vehicle dealers and a schedule of
15 the compensation to be paid to its motor vehicle dealers for
16 the work and services they shall be required to perform in
17 connection with such delivery and preparation obligations
18 shall be presented to the dealer and the obligations
19 specified therein shall constitute any such dealer's only
20 predelivery obligations as between such dealer and such
21 manufacturer. The compensation as set forth on said schedule
22 shall be reasonable.
23 A manufacturer, factory branch, distributor, distributor
24 branch, or wholesaler of new motor vehicles sold or
25 transferred to a motor vehicle dealer in this State shall
26 disclose to the motor vehicle dealer, in writing, before
27 delivery of a vehicle to the motor vehicle dealer all
28 in-transit, post-manufacture, or other damage to the vehicle
29 that was sustained or incurred by the motor vehicle at any
30 time after the manufacturing process was complete but before
31 delivery of the vehicle to the dealer. This disclosure is
32 not required when the cost to repair does not exceed 6% of
33 the manufacturer's suggested retail price of the vehicle
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1 based upon the dealer's actual retail repair cost, including
2 labor, parts, and materials if the damage is repaired or
3 retail estimate to repair if the vehicle is not repaired. New
4 motor vehicles that are repaired may be sold as new and shall
5 be fully warranted by the manufacturer.
6 For purposes of this Section, "manufacturer's suggested
7 retail price" means the retail price of the new motor vehicle
8 suggested by the manufacturer including the retail delivered
9 price suggested by the manufacturer for each separately
10 priced accessory or item of optional equipment physically
11 attached to the new motor vehicle at the time of delivery.
12 Whenever a new motor vehicle sustains or incurs any
13 in-transit, post-manufacture, or other damage at any time
14 after the manufacturing process is complete, but before
15 delivery of the vehicle to the motor vehicle dealer, the
16 dealer may within a reasonable period of time after delivery
17 of the motor vehicle notify the manufacturer or distributor
18 of that damage and either:
19 (1) revoke acceptance of the delivery of the new
20 motor vehicle whereby ownership of the motor vehicle
21 shall revert to the manufacturer, and the dealer shall
22 incur no obligations, financial, or otherwise for that
23 new motor vehicle; or
24 (2) request authorization from the manufacturer to
25 repair the damage sustained or incurred by the new motor
26 vehicle. If the manufacturer refuses or fails to
27 authorize repair of the damage within 3 days of the
28 request by the dealer, the dealer may then revoke
29 acceptance of the delivery of the new motor vehicle;
30 ownership shall revert to the manufacturer; and the
31 dealer shall incur no obligations, financial, or
32 otherwise for that new motor vehicle.
33 A motor vehicle dealer shall disclose to the purchaser
34 before delivery of the new motor vehicle, in writing, any
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1 damage that the dealer has actual knowledge was sustained or
2 incurred by the motor vehicle at any time after the
3 manufacturing process was complete but before delivery of the
4 vehicle to the purchaser. This disclosure is not required
5 when the cost to repair does not exceed 6% of the
6 manufacturer's suggested retail price of the vehicle based
7 upon the dealer's actual retail repair cost, including labor,
8 parts, and materials if the damage is repaired or the retail
9 estimate to repair the vehicle if it is not repaired.
10 Damage to glass, tires, bumpers, and in-dash audio
11 equipment is not to be considered in determining the cost of
12 repair if replaced with the manufacturer's original
13 equipment.
14 If disclosure is not required under this Section, a
15 purchaser may not revoke or rescind a sales contract due to
16 the fact the new vehicle was damaged and repaired before
17 completion of the sale. In that circumstance, nondisclosure
18 does not constitute a misrepresentation or omission of fact.
19 A manufacturer, factory branch, distributor, distributor
20 branch, or wholesaler of new motor vehicles shall,
21 notwithstanding the terms of any franchise agreement,
22 indemnify and hold harmless the motor vehicle dealer
23 obtaining a new motor vehicle from the manufacturer, factory
24 branch, distributor, distributor branch, or wholesaler from
25 and against any liability, including reasonable attorney's
26 fees, expert witness fees, court costs, and other expenses
27 incurred in the litigation, so long as such fees and costs
28 are reasonable, that the motor vehicle dealer may be
29 subjected to by the purchaser of the vehicle because of
30 damage to the motor vehicle that occurred before delivery of
31 the vehicle to the dealer and that was not disclosed in
32 writing to the dealer prior to delivery of the vehicle. This
33 indemnity obligation of the manufacturer, factory branch,
34 distributor, distributor branch, or wholesaler applies
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1 regardless of whether the damage falls below the 6% threshold
2 under this Section. The failure of the manufacturer, factory
3 branch, distributor, distributor branch, or wholesaler to
4 indemnify and hold harmless the motor vehicle dealer is a
5 violation of this Section.
6 (Source: P.A. 88-581, eff. 1-1-95.)
7 (815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
8 Sec. 6. Warranty agreements; claims; approval; payment;
9 written disapproval.
10 (a) Every manufacturer, distributor, wholesaler,
11 distributor branch or division, factory branch or division,
12 or wholesale branch or division shall properly fulfill any
13 warranty agreement and adequately and fairly compensate each
14 of its motor vehicle dealers for labor and parts.
15 (b) In no event shall such compensation fail to include
16 reasonable compensation for diagnostic work, as well as
17 repair service, and labor, and parts. Time allowances for the
18 diagnosis and performance of warranty work and service shall
19 be reasonable and adequate for the work to be performed. In
20 the determination of what constitutes reasonable compensation
21 under this Section, the principal factor to be given
22 consideration shall be the prevailing wage rates being paid
23 by the dealer in the relevant market area in which the motor
24 vehicle dealer is doing business, and in no event shall such
25 compensation of a motor vehicle dealer for warranty service
26 be less than the rates charged by such dealer for like
27 service to retail customers for nonwarranty service and
28 repairs. The franchiser shall reimburse the franchisee for
29 any parts provided in satisfaction of a warranty at the
30 prevailing retail price charged by that dealer for the same
31 parts when not provided in satisfaction of a warranty;
32 provided that such motor vehicle franchisee's prevailing
33 retail price is not unreasonable when compared with that of
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1 the holders of motor vehicle franchises from the same motor
2 vehicle franchiser for identical merchandise in the
3 geographic area in which the motor vehicle franchisee is
4 engaged in business. All claims, either original or
5 resubmitted, made by motor vehicle dealers hereunder and
6 under Section 5 for such labor and parts shall be either
7 approved or disapproved within 30 days following their
8 submission. All approved claims shall be paid within 30 days
9 following their approval. The motor vehicle dealer who
10 submits a claim which is disapproved shall be notified in
11 writing of the disapproval within the same period, and each
12 such notice shall state the specific grounds upon which the
13 disapproval is based. The motor vehicle dealer shall be
14 permitted to correct and resubmit such disapproved claims
15 within 30 days of receipt of disapproval. Any claims not
16 specifically disapproved in writing within 30 days from their
17 submission shall be deemed approved and payment shall follow
18 within 30 days. The manufacturer or franchiser shall have the
19 right to require reasonable documentation for claims and to
20 audit such claims within a one year period from the date the
21 claim was paid or credit issued by the manufacturer or
22 franchiser, and to charge back any false or unsubstantiated
23 claims. The audit and charge back provisions of this Section
24 also apply to all other incentive and reimbursement programs
25 for a period of 18 months after the date of the transactions
26 that are subject to audit by the franchiser. However, the
27 manufacturer retains the right to charge back any fraudulent
28 claim if the manufacturer establishes in a court of competent
29 jurisdiction in this State that the claim is fraudulent.
30 (c) The motor vehicle franchiser shall not, by
31 agreement, by restrictions upon reimbursement, or otherwise,
32 restrict the nature and extent of services to be rendered or
33 parts to be provided so that such restriction prevents the
34 motor vehicle franchisee from satisfying the warranty by
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1 rendering services in a good and workmanlike manner and
2 providing parts which are required in accordance with
3 generally accepted standards. Any such restriction shall
4 constitute a prohibited practice.
5 (d) For the purposes of this Section, the "prevailing
6 retail price charged by that dealer for the same parts" means
7 the price paid by the motor vehicle franchisee for parts,
8 including all shipping and other charges, multiplied by the
9 sum of 1.0 and the franchisee's average percentage markup
10 over the price paid by the motor vehicle franchisee for parts
11 purchased by the motor vehicle franchisee from the motor
12 vehicle franchiser and sold at retail. The motor vehicle
13 franchisee may establish average percentage markup under this
14 Section by submitting to the motor vehicle franchiser 100
15 sequential customer paid service repair orders or 90 days of
16 customer paid service repair orders, whichever is less,
17 covering repairs made no more than 180 days before the
18 submission, and declaring what the average percentage markup
19 is. The average percentage markup so declared shall go into
20 effect 30 days following the declaration, subject to audit of
21 the submitted repair orders by the motor vehicle franchiser
22 and adjustment of the average percentage markup based on that
23 audit. Any audit must be conducted within 30 days following
24 the declaration. Only retail sales not involving warranty
25 repairs, parts covered by subsection (e) of this Section, or
26 parts supplied for routine vehicle maintenance, shall be
27 considered in calculating average percentage markup. No
28 motor vehicle franchiser shall require a motor vehicle
29 franchisee to establish average percentage markup by a
30 methodology, or by requiring information, that is unduly
31 burdensome or time consuming to provide, including, but not
32 limited to, part by part or transaction by transaction
33 calculations. A motor vehicle franchisee shall not request a
34 change in the average percentage markup more than twice in
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1 one calendar year.
2 (e) If a motor vehicle franchiser supplies a part or
3 parts for use in a repair rendered under a warranty other
4 than by sale of that part or parts to the motor vehicle
5 franchisee, the motor vehicle franchisee shall be entitled to
6 compensation equivalent to the motor vehicle franchisee's
7 average percentage markup on the part or parts, as if the
8 part or parts had been sold to the motor vehicle franchisee
9 by the motor vehicle franchiser. The requirements of this
10 subsection (e) shall not apply to entire engine assemblies
11 and entire transmission assemblies. In the case of those
12 assemblies, the motor vehicle franchiser shall reimburse the
13 motor vehicle franchisee in the amount of 30% of what the
14 motor vehicle franchisee would have paid the motor vehicle
15 franchiser for the assembly if the assembly had not been
16 supplied by the franchiser other than by the sale of that
17 assembly to the motor vehicle franchisee.
18 (f) The obligations imposed on motor vehicle franchisers
19 by this Section shall apply to any parent, subsidiary,
20 affiliate, or agent of the motor vehicle franchiser, any
21 person under common ownership or control, any employee of the
22 motor vehicle franchiser, and any person holding 1% or more
23 of the shares of any class of securities or other ownership
24 interest in the motor vehicle franchiser, if a warranty or
25 service or repair plan is issued by that person instead of or
26 in addition to one issued by the motor vehicle franchiser.
27 (Source: P.A. 87-1163.)
28 (815 ILCS 710/13) (from Ch. 121 1/2, par. 763)
29 Sec. 13. Damages; equitable relief. Any franchisee or
30 motor vehicle dealer who suffers any loss of money or
31 property, real or personal, as a result of the use or
32 employment by a manufacturer, wholesaler, distributor,
33 distributor branch or division, factory branch or division,
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1 wholesale branch or division, or any agent, servant or
2 employee thereof, of an unfair method of competition or an
3 unfair or deceptive act or practice declared unlawful by this
4 Act may bring an action for damages and equitable relief,
5 including injunctive relief. Where the misconduct is willful
6 or wanton, the court may award treble damages. A motor
7 vehicle dealer, if it has not suffered any loss of money or
8 property, may obtain permanent equitable relief if it can be
9 shown that the unfair act or practice may have the effect of
10 causing such loss of money or property. Where the franchisee
11 or dealer substantially prevails the court or arbitration
12 panel or Motor Vehicle Review Board shall award attorney's
13 fees and assess costs, including expert witness fees and
14 other expenses incurred by the dealer in the litigation, so
15 long as such fees and costs are reasonable, against the
16 opposing party. Moreover, for the purposes of the award of
17 attorney's fees, expert witness fees, and costs whenever the
18 franchisee or dealer is seeking injunctive or other relief,
19 the franchisee or dealer may be considered to have prevailed
20 when a judgment is entered in its favor, when a final
21 administrative decision is entered in its favor and affirmed,
22 if subject to judicial review, when a consent order is
23 entered into, or when the manufacturer, distributor,
24 wholesaler, distributor branch or division, factory factor
25 branch or division, wholesale branch or division, or any
26 officer, agent or other representative thereof ceases the
27 conduct, act or practice which is alleged to be in violation
28 of any Section of this Act.
29 (Source: P.A. 89-145, eff. 7-14-95.)
30 (815 ILCS 710/29)
31 Sec. 29. Procedures for hearing on protest. Upon
32 receipt of a timely notice of protest under paragraph (6) of
33 subsection (d) or paragraph (6), (8), or (10) of subsection
-28- LRB9102551SMdvam02
1 (e) of Section 4 and Section 12 of this Act, the Motor
2 Vehicle Review Board shall enter an order fixing a date
3 (within 60 days of the date of the order), time, the place of
4 a hearing and send by certified mail, return receipt
5 requested, a copy of the order to the manufacturer and the
6 objecting dealer or dealers. Subject to Section 10-20 of the
7 Illinois Administrative Procedure Act, the Board shall
8 designate a hearing officer who shall conduct the hearing.
9 All administrative hearing officers shall be attorneys
10 licensed to practice law in this State.
11 At the time and place fixed in the Board's order, the
12 Board or its duly authorized agent, the hearing officer,
13 shall proceed to hear the protest, and all parties to the
14 protest shall be afforded an opportunity to present in person
15 or by counsel, statements, testimony, evidence, and argument
16 as may be pertinent to the issues. The hearing officer may
17 continue the hearing date by agreement of the parties, or
18 upon a finding of good cause, but in no event shall the
19 hearing be rescheduled more than 90 days after the Board's
20 initial order.
21 Upon any hearing, the Board or its duly authorized agent,
22 the hearing officer, may administer oaths to witnesses and
23 issue subpoenas for the attendance of witnesses or other
24 persons and the production of relevant documents, records,
25 and other evidence and may require examination thereon. For
26 purposes of discovery, the Board or its designated hearing
27 officer may, if deemed appropriate and proper under the
28 circumstances, authorize the parties to engage in such
29 discovery procedures as are provided for in civil actions in
30 Section 2-1003 of the Code of Civil Procedure. Discovery
31 shall be completed no later than 15 days prior to
32 commencement of the proceeding or hearing. Enforcement of
33 discovery procedures shall be as provided in the regulations.
34 Subpoenas issued shall be served in the same manner as
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1 subpoenas issued out of the circuit courts. The fees of
2 subpoenaed witnesses under this Act for attendance and travel
3 shall be the same as fees of witnesses before the circuit
4 courts of this State, such fees to be paid when the witness
5 is excused from further attendance, provided the witness is
6 subpoenaed at the instance of the Board or an agent
7 authorized by the Board; and payment of fees shall be made
8 and audited in the same manner as other expenses of the
9 Board. Whenever a subpoena is issued at the request of a
10 party to a proceeding, complainant, or respondent, as the
11 case may be, the Board may require that the cost of service
12 of the subpoena and the fee of same shall be borne by the
13 party at whose instance the witness is summoned, and the
14 Board shall have power, in its discretion, to require a
15 deposit to cover the cost of service and witness fees and the
16 payment of the legal witness fee and mileage to the witness
17 served with the subpoena. In any protest before the Board,
18 the Board or its designated hearing officer may order a
19 mandatory settlement conference. The failure of a party to
20 appear, to be prepared, or to have authority to settle the
21 matter may result in any or all of the following:
22 (a) The Board or its designated hearing officer may
23 suspend all proceedings before the Board in the matter until
24 compliance.
25 (b) The Board or its designated hearing officer may
26 dismiss the proceedings or any part thereof before the Board
27 with or without prejudice.
28 (c) The Board or its designated hearing officer may
29 require all of the Board's costs to be paid by the party at
30 fault.
31 Any circuit court of this State, upon application of the
32 Board, or an officer or agent designated by the Board for the
33 purpose of conducting any hearing, may, in its discretion,
34 compel the attendance of witnesses, the production of books,
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1 papers, accounts, or documents, and giving of testimony
2 before the Board or before any officer or agent designated
3 for the purpose of conducting the hearing. Failure to obey
4 the order may be punished by the circuit court as contempt.
5 A party may conduct cross-examination required for a full
6 and fair disclosure of the facts. Within 20 days of the date
7 of the hearing, the hearing officer shall issue his or her
8 proposed decision to the Board and shall, by certified mail,
9 return receipt requested, serve the proposed decision upon
10 the parties, with an opportunity afforded to each party to
11 file exceptions and present a brief to the Board within 10
12 days of their receipt of the proposed decision. The proposed
13 decision shall contain a statement of the reasons for the
14 decision and each issue of fact or law necessary to the
15 proposed decision. The Board shall then issue its final
16 order which, if applicable, shall include the award of
17 attorney's fees, expert witness fees, and an assessment of
18 costs, including other expenses incurred in the litigation,
19 if permitted under this Act, so long as such fees and costs
20 are reasonable.
21 In a hearing on a protest filed under paragraph (6) of
22 subsection (d) or paragraph (6), (8), or (10) of Section 4 or
23 Section 12 of this Act, the manufacturer shall have the
24 burden of proof to establish that there is good cause for the
25 franchiser to: grant or establish an additional franchise or
26 relocate an existing franchise; cancel, terminate, refuse to
27 extend or renew a franchise or selling agreement; or change
28 or modify the obligations of the motor vehicle dealer as a
29 condition to offering a renewal, replacement, or succeeding
30 franchise or selling agreement or refuse to honor succession
31 to ownership or refuse to approve a proposed transfer or
32 sale. The determination whether good cause exists shall be
33 made under Section 12 of this Act.
34 The Board shall record the testimony and preserve a
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1 record of all proceedings at the hearing by proper means of
2 recordation. The notice required to be given by the
3 manufacturer and notice of protest by the dealer or other
4 party, the notice of hearing, and all other documents in the
5 nature of pleadings, motions, and rulings, all evidence,
6 offers of proof, objections, and rulings thereon, the
7 transcript of testimony, the report of findings or proposed
8 decision of the hearing officer, and the orders of the Board
9 shall constitute the record of the proceedings. The Board
10 shall furnish a transcript of the record to any person
11 interested in the hearing upon payment of the actual cost
12 thereof.
13 (Source: P.A. 89-145, eff. 7-14-95; 89-433, eff. 12-15-95.)".