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Public Act 91-0485
HB0520 Enrolled LRB9102551SMdvA
AN ACT to amend the Motor Vehicle Franchise Act by
changing Sections 4, 5, 6, 13, and 29.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Motor Vehicle Franchise Act is amended by
changing Sections 4, 5, 6, 13, and 29 as follows:
(815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
Sec. 4. Unfair competition and practices.
(a) The unfair methods of competition and unfair and
deceptive acts or practices listed in this Section are hereby
declared to be unlawful. In construing the provisions of this
Section, the courts may be guided by the interpretations of
the Federal Trade Commission Act (15 U.S.C. 45 et seq.), as
from time to time amended.
(b) It shall be deemed a violation for any manufacturer,
factory branch, factory representative, distributor or
wholesaler, distributor branch, distributor representative or
motor vehicle dealer to engage in any action with respect to
a franchise which is arbitrary, in bad faith or
unconscionable and which causes damage to any of the parties
or to the public.
(c) It shall be deemed a violation for a manufacturer, a
distributor, a wholesaler, a distributor branch or division,
a factory branch or division, or a wholesale branch or
division, or officer, agent or other representative thereof,
to coerce, or attempt to coerce, any motor vehicle dealer:
(1) to accept, buy or order any motor vehicle or
vehicles, appliances, equipment, parts or accessories
therefor, or any other commodity or commodities or
service or services which such motor vehicle dealer has
not voluntarily ordered or requested except items
required by applicable local, state or federal law; or to
require a motor vehicle dealer to accept, buy, order or
purchase such items in order to obtain any motor vehicle
or vehicles or any other commodity or commodities which
have been ordered or requested by such motor vehicle
dealer;
(2) to order or accept delivery of any motor
vehicle with special features, appliances, accessories or
equipment not included in the list price of the motor
vehicles as publicly advertised by the manufacturer
thereof, except items required by applicable law; or
(3) to order for anyone any parts, accessories,
equipment, machinery, tools, appliances or any commodity
whatsoever, except items required by applicable law.
(d) It shall be deemed a violation for a manufacturer, a
distributor, a wholesaler, a distributor branch or division,
or officer, agent or other representative thereof:
(1) to adopt, change, establish or implement a plan
or system for the allocation and distribution of new
motor vehicles to motor vehicle dealers which is
arbitrary or capricious or to modify an existing plan so
as to cause the same to be arbitrary or capricious;
(2) to fail or refuse to advise or disclose to any
motor vehicle dealer having a franchise or selling
agreement, upon written request therefor, the basis upon
which new motor vehicles of the same line make are
allocated or distributed to motor vehicle dealers in the
State and the basis upon which the current allocation or
distribution is being made or will be made to such motor
vehicle dealer;
(3) to refuse to deliver in reasonable quantities
and within a reasonable time after receipt of dealer's
order, to any motor vehicle dealer having a franchise or
selling agreement for the retail sale of new motor
vehicles sold or distributed by such manufacturer,
distributor, wholesaler, distributor branch or division,
factory branch or division or wholesale branch or
division, any such motor vehicles as are covered by such
franchise or selling agreement specifically publicly
advertised in the State by such manufacturer,
distributor, wholesaler, distributor branch or division,
factory branch or division, or wholesale branch or
division to be available for immediate delivery.
However, the failure to deliver any motor vehicle shall
not be considered a violation of this Act if such failure
is due to an act of God, a work stoppage or delay due to
a strike or labor difficulty, a shortage of materials, a
lack of manufacturing capacity, a freight embargo or
other cause over which the manufacturer, distributor, or
wholesaler, or any agent thereof has no control;
(4) to coerce, or attempt to coerce, any motor
vehicle dealer to enter into any agreement with such
manufacturer, distributor, wholesaler, distributor branch
or division, factory branch or division, or wholesale
branch or division, or officer, agent or other
representative thereof, or to do any other act
prejudicial to the dealer by threatening to reduce his
allocation of motor vehicles or cancel any franchise or
any selling agreement existing between such manufacturer,
distributor, wholesaler, distributor branch or division,
or factory branch or division, or wholesale branch or
division, and the dealer. However, notice in good faith
to any motor vehicle dealer of the dealer's violation of
any terms or provisions of such franchise or selling
agreement or of any law or regulation applicable to the
conduct of a motor vehicle dealer shall not constitute a
violation of this Act;
(5) to require a franchisee to participate in an
advertising campaign or contest or any promotional
campaign, or to purchase or lease any promotional
materials, training materials, show room or other display
decorations or materials at the expense of the
franchisee;
(6) to cancel or terminate the franchise or selling
agreement of a motor vehicle dealer without good cause
and without giving notice as hereinafter provided; to
fail or refuse to extend the franchise or selling
agreement of a motor vehicle dealer upon its expiration
without good cause and without giving notice as
hereinafter provided; or, to offer a renewal, replacement
or succeeding franchise or selling agreement containing
terms and provisions the effect of which is to
substantially change or modify the sales and service
obligations or capital requirements of the motor vehicle
dealer arbitrarily and without good cause and without
giving notice as hereinafter provided notwithstanding any
term or provision of a franchise or selling agreement.
(A) If a manufacturer, distributor,
wholesaler, distributor branch or division, factory
branch or division or wholesale branch or division
intends to cancel or terminate a franchise or
selling agreement or intends not to extend or renew
a franchise or selling agreement on its expiration,
it shall send a letter by certified mail, return
receipt requested, to the affected franchisee at
least 60 days before the effective date of the
proposed action, or not later than 10 days before
the proposed action when the reason for the action
is based upon either of the following:
(i) the business operations of the
franchisee have been abandoned or the
franchisee has failed to conduct customary
sales and service operations during customary
business hours for at least 7 consecutive
business days unless such closing is due to an
act of God, strike or labor difficulty or other
cause over which the franchisee has no control;
or
(ii) the conviction of or plea of nolo
contendere by the motor vehicle dealer or any
operator thereof in a court of competent
jurisdiction to an offense punishable by
imprisonment for more than two years.
Each notice of proposed action shall include a
detailed statement setting forth the specific
grounds for the proposed cancellation, termination,
or refusal to extend or renew and shall state that
the dealer has only 30 days from receipt of the
notice to file with the Motor Vehicle Review Board a
written protest against the proposed action.
(B) If a manufacturer, distributor,
wholesaler, distributor branch or division, factory
branch or division or wholesale branch or division
intends to change substantially or modify the sales
and service obligations or capital requirements of a
motor vehicle dealer as a condition to extending or
renewing the existing franchise or selling agreement
of such motor vehicle dealer, it shall send a letter
by certified mail, return receipt requested, to the
affected franchisee at least 60 days before the
date of expiration of the franchise or selling
agreement. Each notice of proposed action shall
include a detailed statement setting forth the
specific grounds for the proposed action and shall
state that the dealer has only 30 days from receipt
of the notice to file with the Motor Vehicle Review
Board a written protest against the proposed action.
(C) Within 30 15 days from receipt of the
notice under subparagraphs (A) and (B), the
franchisee may file with the Board a written protest
against the proposed action.
When the protest has been timely filed, the
Board shall enter an order, fixing a date (within 60
days of the date of the order), time, and place of a
hearing on the protest required under Sections 12
and 29 of this Act, and send by certified mail,
return receipt requested, a copy of the order to the
manufacturer that filed the notice of intention of
the proposed action and to the protesting dealer or
franchisee.
The manufacturer shall have the burden of proof
to establish that good cause exists to cancel or
terminate, or fail to extend or renew the franchise
or selling agreement of a motor vehicle dealer or
franchisee, and to change substantially or modify
the sales and service obligations or capital
requirements of a motor vehicle dealer as a
condition to extending or renewing the existing
franchise or selling agreement. The determination
whether good cause exists to cancel, terminate, or
refuse to renew or extend the franchise or selling
agreement, or to change or modify the obligations of
the dealer as a condition to offer renewal,
replacement, or succession shall be made by the
Board under subsection (d) of Section 12 of this
Act.
(D) Notwithstanding the terms, conditions, or
provisions of a franchise or selling agreement, the
following shall not constitute good cause for
cancelling or terminating or failing to extend or
renew the franchise or selling agreement: (i) the
change of ownership or executive management of the
franchisee's dealership; or (ii) the fact that the
franchisee or owner of an interest in the franchise
owns, has an investment in, participates in the
management of, or holds a license for the sale of
the same or any other line make of new motor
vehicles.
Good cause shall exist to cancel, terminate or
fail to offer a renewal or replacement franchise or
selling agreement to all franchisees of a line make
if the manufacturer permanently discontinues the
manufacture or assembly of motor vehicles of such
line make.
(E) The manufacturer may not cancel or
terminate, or fail to extend or renew a franchise or
selling agreement or change or modify the
obligations of the franchisee as a condition to
offering a renewal, replacement, or succeeding
franchise or selling agreement before the hearing
process is concluded as prescribed by this Act, and
thereafter, if the Board determines that the
manufacturer has failed to meet its burden of proof
and that good cause does not exist to allow the
proposed action; or
(7) notwithstanding the terms of any franchise
agreement, to fail to indemnify and hold harmless its
franchised dealers against any judgment or settlement for
damages, including, but not limited to, court costs,
expert witness fees, and reasonable attorneys' fees of
the new motor vehicle dealer, and other expenses incurred
in the litigation, so long as such fees and costs are
reasonable, arising out of complaints, claims or lawsuits
including, but not limited to, strict liability,
negligence, misrepresentation, warranty (express or
implied), or recision of the sale as defined in Section
2-608 of the Uniform Commercial Code, to the extent that
the judgment or settlement relates to the alleged
defective or negligent manufacture, assembly or design of
new motor vehicles, parts or accessories or other
functions by the manufacturer, beyond the control of the
dealer; provided that, in order to provide an adequate
defense, the manufacturer receives notice of the filing
of a complaint, claim, or lawsuit within 60 days after
the filing.
(e) It shall be deemed a violation for a manufacturer, a
distributor, a wholesaler, a distributor branch or division
or officer, agent or other representative thereof:
(1) to resort to or use any false or misleading
advertisement in connection with his business as such
manufacturer, distributor, wholesaler, distributor branch
or division or officer, agent or other representative
thereof;
(2) to offer to sell or lease, or to sell or lease,
any new motor vehicle to any motor vehicle dealer at a
lower actual price therefor than the actual price offered
to any other motor vehicle dealer for the same model
vehicle similarly equipped or to utilize any device
including, but not limited to, sales promotion plans or
programs which result in such lesser actual price or
fail to make available to any motor vehicle dealer any
preferential pricing, incentive, rebate, finance rate, or
low interest loan program offered to competing motor
vehicle dealers in other contiguous states. However, the
provisions of this paragraph shall not apply to sales to
a motor vehicle dealer for resale to any unit of the
United States Government, the State or any of its
political subdivisions;
(3) to offer to sell or lease, or to sell or lease,
any new motor vehicle to any person, except a wholesaler,
distributor or manufacturer's employees at a lower actual
price therefor than the actual price offered and charged
to a motor vehicle dealer for the same model vehicle
similarly equipped or to utilize any device which results
in such lesser actual price. However, the provisions of
this paragraph shall not apply to sales to a motor
vehicle dealer for resale to any unit of the United
States Government, the State or any of its political
subdivisions;
(4) to prevent or attempt to prevent by contract or
otherwise any motor vehicle dealer or franchisee from
changing the executive management control of the motor
vehicle dealer or franchisee unless the franchiser,
having the burden of proof, proves that such change of
executive management will result in executive management
control by a person or persons who are not of good moral
character or who do not meet the franchiser's existing
and, with consideration given to the volume of sales and
service of the dealership, uniformly applied minimum
business experience standards in the market area. However
where the manufacturer rejects a proposed change in
executive management control, the manufacturer shall give
written notice of his reasons to the dealer within 60
days of notice to the manufacturer by the dealer of the
proposed change. If the manufacturer does not send a
letter to the franchisee by certified mail, return
receipt requested, within 60 days from receipt by the
manufacturer of the proposed change, then the change of
the executive management control of the franchisee shall
be deemed accepted as proposed by the franchisee, and the
manufacturer shall give immediate effect to such change;
(5) to prevent or attempt to prevent by contract or
otherwise any motor vehicle dealer from establishing or
changing the capital structure of his dealership or the
means by or through which he finances the operation
thereof; provided the dealer meets any reasonable capital
standards agreed to between the dealer and the
manufacturer, distributor or wholesaler, who may require
that the sources, method and manner by which the dealer
finances or intends to finance its operation, equipment
or facilities be fully disclosed;
(6) to refuse to give effect to or prevent or
attempt to prevent by contract or otherwise any motor
vehicle dealer or any officer, partner or stockholder of
any motor vehicle dealer from selling or transferring any
part of the interest of any of them to any other person
or persons or party or parties unless such sale or
transfer is to a transferee who would not otherwise
qualify for a new motor vehicle dealers license under
"The Illinois Vehicle Code" or unless the franchiser,
having the burden of proof, proves that such sale or
transfer is to a person or party who is not of good moral
character or does not meet the franchiser's existing and
reasonable capital standards and, with consideration
given to the volume of sales and service of the
dealership, uniformly applied minimum business experience
standards in the market area. However, nothing herein
shall be construed to prevent a franchiser from
implementing affirmative action programs providing
business opportunities for minorities or from complying
with applicable federal, State or local law:
(A) If the manufacturer intends to refuse to
approve the sale or transfer of all or a part of the
interest, then it shall, within 60 days from receipt
of the completed application forms generally
utilized by a manufacturer to conduct its review and
a copy of all agreements regarding the proposed
transfer, send a letter by certified mail, return
receipt requested, advising the franchisee of any
refusal to approve the sale or transfer of all or
part of the interest and shall state that the dealer
only has 30 days from the receipt of the notice to
file with the Motor Vehicle Review Board a written
protest against the proposed action. The notice
shall set forth specific criteria used to evaluate
the prospective transferee and the grounds for
refusing to approve the sale or transfer to that
transferee. Within 30 15 days from the franchisee's
receipt of the manufacturer's notice, the franchisee
may file with the Board a written protest against
the proposed action.
When a protest has been timely filed, the Board
shall enter an order, fixing the date (within 60
days of the date of such order), time, and place of
a hearing on the protest, required under Sections 12
and 29 of this Act, and send by certified mail,
return receipt requested, a copy of the order to the
manufacturer that filed notice of intention of the
proposed action and to the protesting franchisee.
The manufacturer shall have the burden of proof
to establish that good cause exists to refuse to
approve the sale or transfer to the transferee. The
determination whether good cause exists to refuse to
approve the sale or transfer shall be made by the
Board under subdivisions (6)(B). The manufacturer
shall not refuse to approve the sale or transfer by
a dealer or an officer, partner, or stockholder of a
franchise or any part of the interest to any person
or persons before the hearing process is concluded
as prescribed by this Act, and thereafter if the
Board determines that the manufacturer has failed to
meet its burden of proof and that good cause does
not exist to refuse to approve the sale or transfer
to the transferee.
(B) Good cause to refuse to approve such sale
or transfer under this Section is established when
such sale or transfer is to a transferee who would
not otherwise qualify for a new motor vehicle
dealers license under "The Illinois Vehicle Code" or
such sale or transfer is to a person or party who is
not of good moral character or does not meet the
franchiser's existing and reasonable capital
standards and, with consideration given to the
volume of sales and service of the dealership,
uniformly applied minimum business experience
standards in the market area.
(7) to obtain money, goods, services, anything of
value, or any other benefit from any other person with
whom the motor vehicle dealer does business, on account
of or in relation to the transactions between the dealer
and the other person as compensation, except for services
actually rendered, unless such benefit is promptly
accounted for and transmitted to the motor vehicle
dealer;
(8) to grant an additional franchise in the
relevant market area of an existing franchise of the same
line make or to relocate an existing motor vehicle
dealership within or into a relevant market area of an
existing franchise of the same line make. However, if the
manufacturer wishes to grant such an additional franchise
to an independent person in a bona fide relationship in
which such person is prepared to make a significant
investment subject to loss in such a dealership, or if
the manufacturer wishes to relocate an existing motor
vehicle dealership, then the manufacturer shall send a
letter by certified mail, return receipt requested, to
each existing dealer or dealers of the same line make
whose relevant market area includes the proposed location
of the additional or relocated franchise at least 60 days
before the manufacturer grants an additional franchise or
relocates an existing franchise of the same line make
within or into the relevant market area of an existing
franchisee of the same line make. Each notice shall set
forth the specific grounds for the proposed grant of an
additional or relocation of an existing franchise.
Unless the parties agree upon the grant or establishment
of the additional or relocated franchise within 30 15
days from the date the notice was received by the
existing franchisee of the same line make or any person
entitled to receive such notice, the franchisee or other
person may file with the Board a written protest against
the grant or establishment of the proposed additional or
relocated franchise and shall state that the dealer only
has 30 days from the receipt of the notice to file with
the Motor Vehicle Review Board a written protest against
the proposed action.
When a protest has been timely filed, the Board
shall enter an order fixing a date (within 60 days of the
date of the order), time, and place of a hearing on the
protest, required under Sections 12 and 29 of this Act,
and send by certified or registered mail, return receipt
requested, a copy of the order to the manufacturer that
filed the notice of intention to grant or establish the
proposed additional or relocated franchise and to the
protesting dealer or dealers of the same line make whose
relevant market area includes the proposed location of
the additional or relocated franchise.
When more than one protest is filed against the
grant or establishment of the additional or relocated
franchise of the same line make, the Board may
consolidate the hearings to expedite disposition of the
matter. The manufacturer shall have the burden of proof
to establish that good cause exists to allow the grant or
establishment of the additional or relocated franchise.
The manufacturer may not grant or establish the
additional franchise or relocate the existing franchise
before the hearing process is concluded as prescribed by
this Act, and thereafter if the Board determines that the
manufacturer has failed to meet its burden of proof and
that good cause does not exist to allow the grant or
establishment of the additional franchise or relocation
of the existing franchise.
The determination whether good cause exists for
allowing the grant or establishment of an additional
franchise or relocated existing franchise, shall be made
by the Board under subsection (c) of Section 12 of this
Act. If the manufacturer seeks to enter into a contract,
agreement or other arrangement with any person,
establishing any additional motor vehicle dealership or
other facility, limited to the sale of factory repurchase
vehicles or late model vehicles, then the manufacturer
shall follow the notice procedures set forth in this
Section and the determination whether good cause exists
for allowing the proposed agreement shall be made by the
Board under subsection (c) of Section 12, with the
manufacturer having the burden of proof.
A. (Blank).
B. For the purposes of this Section,
appointment of a successor motor vehicle dealer at
the same location as its predecessor, or within 2
miles of such location, or the relocation of an
existing dealer or franchise within 2 miles of the
relocating dealer's or franchisee's existing
location, shall not be construed as a grant,
establishment or the entering into of an additional
franchise or selling agreement, or a relocation of
an existing franchise. The reopening of a motor
vehicle dealership that has not been in operation
for 18 months or more shall be deemed the grant of
an additional franchise or selling agreement.
C. This Section does not apply to the
relocation of an existing dealership or franchise in
a county having a population of more than 300,000
persons when the new location is within the dealer's
current relevant market area, provided the new
location is more than 7 miles from the nearest
dealer of the same line make or is further away from
the nearest dealer of the same line make. This
Section does not apply to the relocation of an
existing dealership or franchise in a county having
a population of less than 300,000 persons when the
new location is within the dealer's current relevant
market area, provided the new location is more than
12 miles from the nearest dealer of the same line
make or is further away from the nearest dealer of
the same line make.
D. Nothing in this Section shall be construed
to prevent a franchiser from implementing
affirmative action programs providing business
opportunities for minorities or from complying with
applicable federal, State or local law;
(9) to require a motor vehicle dealer to assent to
a release, assignment, novation, waiver or estoppel which
would relieve any person from liability imposed by this
Act;
(10) to prevent or refuse to give effect to the
succession to the ownership or management control of a
dealership by any legatee under the will of a dealer or
to an heir under the laws of descent and distribution of
this State unless the franchisee has designated a
successor to the ownership or management control under
the succession provisions of the franchise. Unless the
franchiser, having the burden of proof, proves that the
successor is a person who is not of good moral character
or does not meet the franchiser's existing and reasonable
capital standards and, with consideration given to the
volume of sales and service of the dealership, uniformly
applied minimum business experience standards in the
market area, any designated successor of a dealer or
franchisee may succeed to the ownership or management
control of a dealership under the existing franchise if:
(i) The designated successor gives the
franchiser written notice by certified mail,
return receipt requested, of his or her
intention to succeed to the ownership of the
dealer within 60 days of the dealer's death or
incapacity; and
(ii) The designated successor agrees to
be bound by all the terms and conditions of the
existing franchise.
Notwithstanding the foregoing, in the event the
motor vehicle dealer or franchisee and manufacturer have
duly executed an agreement concerning succession rights
prior to the dealer's death or incapacitation, the
agreement shall be observed.
(A) If the franchiser intends to refuse to
honor the successor to the ownership of a deceased
or incapacitated dealer or franchisee under an
existing franchise agreement, the franchiser shall
send a letter by certified mail, return receipt
requested, to the designated successor within 60
days from receipt of a proposal advising of its
intent to refuse to honor the succession and to
discontinue the existing franchise agreement and
shall state that the designated successor only has
30 days from the receipt of the notice to file with
the Motor Vehicle Review Board a written protest
against the proposed action. The notice shall set
forth the specific grounds for the refusal to honor
the succession and discontinue the existing
franchise agreement.
If notice of refusal is not timely served upon
the designated successor, the franchise agreement
shall continue in effect subject to termination only
as otherwise permitted by paragraph (6) of
subsection (d) of Section 4 of this Act.
Within 30 15 days from the date the notice was
received by the designated successor or any other
person entitled to notice, the designee or other
person may file with the Board a written protest
against the proposed action.
When a protest has been timely filed, the Board
shall enter an order, fixing a date (within 60 days
of the date of the order), time, and place of a
hearing on the protest, required under Sections 12
and 29 of this Act, and send by certified mail,
return receipt requested, a copy of the order to the
franchiser that filed the notice of intention of the
proposed action and to the protesting designee or
such other person.
The manufacturer shall have the burden of proof
to establish that good cause exists to refuse to
honor the succession and discontinue the existing
franchise agreement. The determination whether good
cause exists to refuse to honor the succession shall
be made by the Board under subdivision (B) of this
paragraph (10). The manufacturer shall not refuse
to honor the succession or discontinue the existing
franchise agreement before the hearing process is
concluded as prescribed by this Act, and thereafter
if the Board determines that it has failed to meet
its burden of proof and that good cause does not
exist to refuse to honor the succession and
discontinue the existing franchise agreement.
(B) No manufacturer shall impose any
conditions upon honoring the succession and
continuing the existing franchise agreement with the
designated successor other than that the franchisee
has designated a successor to the ownership or
management control under the succession provisions
of the franchise, or that the designated successor
is of good moral character or meets the reasonable
capital standards and, with consideration given to
the volume of sales and service of the dealership,
uniformly applied minimum business experience
standards in the market area;
(11) to prevent or refuse to approve a proposal to
establish a successor franchise at a location previously
approved by the franchiser when submitted with the
voluntary termination by the existing franchisee unless
the successor franchisee would not otherwise qualify for
a new motor vehicle dealer's license under the Illinois
Vehicle Code or unless the franchiser, having the burden
of proof, proves that such proposed successor is not of
good moral character or does not meet the franchiser's
existing and reasonable capital standards and, with
consideration given to the volume of sales and service of
the dealership, uniformly applied minimum business
experience standards in the market area. However, when
such a rejection of a proposal is made, the manufacturer
shall give written notice of its reasons to the
franchisee within 60 days of receipt by the manufacturer
of the proposal. However, nothing herein shall be
construed to prevent a franchiser from implementing
affirmative action programs providing business
opportunities for minorities, or from complying with
applicable federal, State or local law;
(12) to prevent or refuse to grant a franchise to a
person because such person owns, has investment in or
participates in the management of or holds a franchise
for the sale of another make or line of motor vehicles
within 7 miles of the proposed franchise location in a
county having a population of more than 300,000 persons,
or within 12 miles of the proposed franchise location in
a county having a population of less than 300,000
persons; or
(13) to prevent or attempt to prevent any new motor
vehicle dealer from establishing any additional motor
vehicle dealership or other facility limited to the sale
of factory repurchase vehicles or late model vehicles or
otherwise offering for sale factory repurchase vehicles
of the same line make at an existing franchise by failing
to make available any contract, agreement or other
arrangement which is made available or otherwise offered
to any person.
(Source: P.A. 89-145, eff. 7-14-95; 90-655, eff. 7-30-98.)
(815 ILCS 710/5) (from Ch. 121 1/2, par. 755)
Sec. 5. Delivery and preparation obligations; damage
disclosures. Every manufacturer shall specify in writing to
the dealer the delivery and preparation obligations of its
motor vehicle dealers prior to delivery of new motor vehicles
to retail buyers. A copy of the delivery and preparation
obligations of its motor vehicle dealers and a schedule of
the compensation to be paid to its motor vehicle dealers for
the work and services they shall be required to perform in
connection with such delivery and preparation obligations
shall be presented to the dealer and the obligations
specified therein shall constitute any such dealer's only
predelivery obligations as between such dealer and such
manufacturer. The compensation as set forth on said schedule
shall be reasonable.
A manufacturer, factory branch, distributor, distributor
branch, or wholesaler of new motor vehicles sold or
transferred to a motor vehicle dealer in this State shall
disclose to the motor vehicle dealer, in writing, before
delivery of a vehicle to the motor vehicle dealer all
in-transit, post-manufacture, or other damage to the vehicle
that was sustained or incurred by the motor vehicle at any
time after the manufacturing process was complete but before
delivery of the vehicle to the dealer. This disclosure is
not required when the cost to repair does not exceed 6% of
the manufacturer's suggested retail price of the vehicle
based upon the dealer's actual retail repair cost, including
labor, parts, and materials if the damage is repaired or
retail estimate to repair if the vehicle is not repaired. New
motor vehicles that are repaired may be sold as new and shall
be fully warranted by the manufacturer.
For purposes of this Section, "manufacturer's suggested
retail price" means the retail price of the new motor vehicle
suggested by the manufacturer including the retail delivered
price suggested by the manufacturer for each separately
priced accessory or item of optional equipment physically
attached to the new motor vehicle at the time of delivery.
Whenever a new motor vehicle sustains or incurs any
in-transit, post-manufacture, or other damage at any time
after the manufacturing process is complete, but before
delivery of the vehicle to the motor vehicle dealer, the
dealer may within a reasonable period of time after delivery
of the motor vehicle notify the manufacturer or distributor
of that damage and either:
(1) revoke acceptance of the delivery of the new
motor vehicle whereby ownership of the motor vehicle
shall revert to the manufacturer, and the dealer shall
incur no obligations, financial, or otherwise for that
new motor vehicle; or
(2) request authorization from the manufacturer to
repair the damage sustained or incurred by the new motor
vehicle. If the manufacturer refuses or fails to
authorize repair of the damage within 3 days of the
request by the dealer, the dealer may then revoke
acceptance of the delivery of the new motor vehicle;
ownership shall revert to the manufacturer; and the
dealer shall incur no obligations, financial, or
otherwise for that new motor vehicle.
A motor vehicle dealer shall disclose to the purchaser
before delivery of the new motor vehicle, in writing, any
damage that the dealer has actual knowledge was sustained or
incurred by the motor vehicle at any time after the
manufacturing process was complete but before delivery of the
vehicle to the purchaser. This disclosure is not required
when the cost to repair does not exceed 6% of the
manufacturer's suggested retail price of the vehicle based
upon the dealer's actual retail repair cost, including labor,
parts, and materials if the damage is repaired or the retail
estimate to repair the vehicle if it is not repaired.
Damage to glass, tires, bumpers, and in-dash audio
equipment is not to be considered in determining the cost of
repair if replaced with the manufacturer's original
equipment.
If disclosure is not required under this Section, a
purchaser may not revoke or rescind a sales contract due to
the fact the new vehicle was damaged and repaired before
completion of the sale. In that circumstance, nondisclosure
does not constitute a misrepresentation or omission of fact.
A manufacturer, factory branch, distributor, distributor
branch, or wholesaler of new motor vehicles shall,
notwithstanding the terms of any franchise agreement,
indemnify and hold harmless the motor vehicle dealer
obtaining a new motor vehicle from the manufacturer, factory
branch, distributor, distributor branch, or wholesaler from
and against any liability, including reasonable attorney's
fees, expert witness fees, court costs, and other expenses
incurred in the litigation, so long as such fees and costs
are reasonable, that the motor vehicle dealer may be
subjected to by the purchaser of the vehicle because of
damage to the motor vehicle that occurred before delivery of
the vehicle to the dealer and that was not disclosed in
writing to the dealer prior to delivery of the vehicle. This
indemnity obligation of the manufacturer, factory branch,
distributor, distributor branch, or wholesaler applies
regardless of whether the damage falls below the 6% threshold
under this Section. The failure of the manufacturer, factory
branch, distributor, distributor branch, or wholesaler to
indemnify and hold harmless the motor vehicle dealer is a
violation of this Section.
(Source: P.A. 88-581, eff. 1-1-95.)
(815 ILCS 710/6) (from Ch. 121 1/2, par. 756)
Sec. 6. Warranty agreements; claims; approval; payment;
written disapproval.
(a) Every manufacturer, distributor, wholesaler,
distributor branch or division, factory branch or division,
or wholesale branch or division shall properly fulfill any
warranty agreement and adequately and fairly compensate each
of its motor vehicle dealers for labor and parts.
(b) In no event shall such compensation fail to include
reasonable compensation for diagnostic work, as well as
repair service, and labor, and parts. 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 Section, the principal factor to be given
consideration shall be the prevailing wage rates being paid
by the dealer in the relevant market area in which the motor
vehicle dealer is doing business, and in no event shall such
compensation of a motor vehicle dealer for warranty service
be less than the rates charged by such dealer for like
service to retail customers for nonwarranty service and
repairs. The franchiser shall reimburse the franchisee for
any parts provided in satisfaction of a warranty at the
prevailing retail price charged by that dealer for the same
parts when not provided in satisfaction of a warranty;
provided that such motor vehicle franchisee's prevailing
retail price is not unreasonable when compared with that of
the holders of motor vehicle franchises from the same motor
vehicle franchiser for identical merchandise in the
geographic area in which the motor vehicle franchisee is
engaged in business. All claims, either original or
resubmitted, made by motor vehicle dealers hereunder and
under Section 5 for such labor and parts shall be either
approved or disapproved within 30 days following their
submission. All approved claims shall be paid within 30 days
following their approval. The motor vehicle dealer who
submits a claim which is disapproved shall be notified in
writing of the disapproval within the same period, and each
such notice shall state the specific grounds upon which the
disapproval is based. The motor vehicle dealer shall be
permitted to correct and resubmit such disapproved claims
within 30 days of receipt of disapproval. Any claims not
specifically disapproved in writing within 30 days from their
submission shall be deemed approved and payment shall follow
within 30 days. The manufacturer or franchiser shall have the
right to require reasonable documentation for claims and to
audit such claims within a one year period from the date the
claim was paid or credit issued by the manufacturer or
franchiser, and to charge back any false or unsubstantiated
claims. The audit and charge back provisions of this Section
also apply to all other incentive and reimbursement programs
for a period of 18 months after the date of the transactions
that are subject to audit by the franchiser. However, the
manufacturer retains the right to charge back any fraudulent
claim if the manufacturer establishes in a court of competent
jurisdiction in this State that the claim is fraudulent.
(c) The motor vehicle franchiser shall not, by
agreement, by restrictions upon reimbursement, or otherwise,
restrict the nature and extent of services to be rendered or
parts to be provided so that such restriction prevents the
motor vehicle franchisee from satisfying the warranty by
rendering services in a good and workmanlike manner and
providing parts which are required in accordance with
generally accepted standards. Any such restriction shall
constitute a prohibited practice.
(d) For the purposes of this Section, the "prevailing
retail price charged by that dealer for the same parts" means
the price paid by the motor vehicle franchisee for parts,
including all shipping and other charges, multiplied by the
sum of 1.0 and the franchisee's average percentage markup
over the price paid by the motor vehicle franchisee for parts
purchased by the motor vehicle franchisee from the motor
vehicle franchiser and sold at retail. The motor vehicle
franchisee may establish average percentage markup under this
Section by submitting to the motor vehicle franchiser 100
sequential customer paid service repair orders or 90 days of
customer paid service repair orders, whichever is less,
covering repairs made no more than 180 days before the
submission, and declaring what the average percentage markup
is. The average percentage markup so declared shall go into
effect 30 days following the declaration, subject to audit of
the submitted repair orders by the motor vehicle franchiser
and adjustment of the average percentage markup based on that
audit. Any audit must be conducted within 30 days following
the declaration. Only retail sales not involving warranty
repairs, parts covered by subsection (e) of this Section, or
parts supplied for routine vehicle maintenance, shall be
considered in calculating average percentage markup. No
motor vehicle franchiser shall require a motor vehicle
franchisee to establish average percentage markup by a
methodology, or by requiring information, that is unduly
burdensome or time consuming to provide, including, but not
limited to, part by part or transaction by transaction
calculations. A motor vehicle franchisee shall not request a
change in the average percentage markup more than twice in
one calendar year.
(e) If a motor vehicle franchiser supplies a part or
parts for use in a repair rendered under a warranty other
than by sale of that part or parts to the motor vehicle
franchisee, the motor vehicle franchisee shall be entitled to
compensation equivalent to the motor vehicle franchisee's
average percentage markup on the part or parts, as if the
part or parts had been sold to the motor vehicle franchisee
by the motor vehicle franchiser. The requirements of this
subsection (e) shall not apply to entire engine assemblies
and entire transmission assemblies. In the case of those
assemblies, the motor vehicle franchiser shall reimburse the
motor vehicle franchisee in the amount of 30% of what the
motor vehicle franchisee would have paid the motor vehicle
franchiser for the assembly if the assembly had not been
supplied by the franchiser other than by the sale of that
assembly to the motor vehicle franchisee.
(f) The obligations imposed on motor vehicle franchisers
by this Section shall apply to any parent, subsidiary,
affiliate, or agent of the motor vehicle franchiser, any
person under common ownership or control, any employee of the
motor vehicle franchiser, and any person holding 1% or more
of the shares of any class of securities or other ownership
interest in the motor vehicle franchiser, if a warranty or
service or repair plan is issued by that person instead of or
in addition to one issued by the motor vehicle franchiser.
(Source: P.A. 87-1163.)
(815 ILCS 710/13) (from Ch. 121 1/2, par. 763)
Sec. 13. Damages; equitable relief. Any franchisee or
motor vehicle dealer who suffers any loss of money or
property, real or personal, as a result of the use or
employment by a manufacturer, wholesaler, distributor,
distributor branch or division, factory branch or division,
wholesale branch or division, or any agent, servant or
employee thereof, of an unfair method of competition or an
unfair or deceptive act or practice declared unlawful by this
Act may bring an action for damages and equitable relief,
including injunctive relief. Where the misconduct is willful
or wanton, the court may award treble damages. A motor
vehicle dealer, if it has not suffered any loss of money or
property, may obtain permanent equitable relief if it can be
shown that the unfair act or practice may have the effect of
causing such loss of money or property. Where the franchisee
or dealer substantially prevails the court or arbitration
panel or Motor Vehicle Review Board shall award attorney's
fees and assess costs, including expert witness fees and
other expenses incurred by the dealer in the litigation, so
long as such fees and costs are reasonable, against the
opposing party. Moreover, for the purposes of the award of
attorney's fees, expert witness fees, and costs whenever the
franchisee or dealer is seeking injunctive or other relief,
the franchisee or dealer may be considered to have prevailed
when a judgment is entered in its favor, when a final
administrative decision is entered in its favor and affirmed,
if subject to judicial review, when a consent order is
entered into, or when the manufacturer, distributor,
wholesaler, distributor branch or division, factory factor
branch or division, wholesale branch or division, or any
officer, agent or other representative thereof ceases the
conduct, act or practice which is alleged to be in violation
of any Section of this Act.
(Source: P.A. 89-145, eff. 7-14-95.)
(815 ILCS 710/29)
Sec. 29. Procedures for hearing on protest. Upon
receipt of a timely notice of protest under paragraph (6) of
subsection (d) or paragraph (6), (8), or (10) of subsection
(e) of Section 4 and Section 12 of this Act, the Motor
Vehicle Review Board shall enter an order fixing a date
(within 60 days of the date of the order), time, the place of
a hearing and send by certified mail, return receipt
requested, a copy of the order to the manufacturer and the
objecting dealer or dealers. Subject to Section 10-20 of the
Illinois Administrative Procedure Act, the Board shall
designate a hearing officer who shall conduct the hearing.
All administrative hearing officers shall be attorneys
licensed to practice law in this State.
At the time and place fixed in the Board's order, the
Board or its duly authorized agent, the hearing officer,
shall proceed to hear the protest, and all parties to the
protest shall be afforded an opportunity to present in person
or by counsel, statements, testimony, evidence, and argument
as may be pertinent to the issues. The hearing officer may
continue the hearing date by agreement of the parties, or
upon a finding of good cause, but in no event shall the
hearing be rescheduled more than 90 days after the Board's
initial order.
Upon any hearing, the Board or its duly authorized agent,
the hearing officer, may administer oaths to witnesses and
issue subpoenas for the attendance of witnesses or other
persons and the production of relevant documents, records,
and other evidence and may require examination thereon. For
purposes of discovery, the Board or its designated hearing
officer may, if deemed appropriate and proper under the
circumstances, authorize the parties to engage in such
discovery procedures as are provided for in civil actions in
Section 2-1003 of the Code of Civil Procedure. Discovery
shall be completed no later than 15 days prior to
commencement of the proceeding or hearing. Enforcement of
discovery procedures shall be as provided in the regulations.
Subpoenas issued shall be served in the same manner as
subpoenas issued out of the circuit courts. The fees of
subpoenaed witnesses under this Act for attendance and travel
shall be the same as fees of witnesses before the circuit
courts of this State, such fees to be paid when the witness
is excused from further attendance, provided the witness is
subpoenaed at the instance of the Board or an agent
authorized by the Board; and payment of fees shall be made
and audited in the same manner as other expenses of the
Board. Whenever a subpoena is issued at the request of a
party to a proceeding, complainant, or respondent, as the
case may be, the Board may require that the cost of service
of the subpoena and the fee of same shall be borne by the
party at whose instance the witness is summoned, and the
Board shall have power, in its discretion, to require a
deposit to cover the cost of service and witness fees and the
payment of the legal witness fee and mileage to the witness
served with the subpoena. In any protest before the Board,
the Board or its designated hearing officer may order a
mandatory settlement conference. The failure of a party to
appear, to be prepared, or to have authority to settle the
matter may result in any or all of the following:
(a) The Board or its designated hearing officer may
suspend all proceedings before the Board in the matter until
compliance.
(b) The Board or its designated hearing officer may
dismiss the proceedings or any part thereof before the Board
with or without prejudice.
(c) The Board or its designated hearing officer may
require all of the Board's costs to be paid by the party at
fault.
Any circuit court of this State, upon application of the
Board, or an officer or agent designated by the Board for the
purpose of conducting any hearing, may, in its discretion,
compel the attendance of witnesses, the production of books,
papers, accounts, or documents, and giving of testimony
before the Board or before any officer or agent designated
for the purpose of conducting the hearing. Failure to obey
the order may be punished by the circuit court as contempt.
A party may conduct cross-examination required for a full
and fair disclosure of the facts. Within 20 days of the date
of the hearing, the hearing officer shall issue his or her
proposed decision to the Board and shall, by certified mail,
return receipt requested, serve the proposed decision upon
the parties, with an opportunity afforded to each party to
file exceptions and present a brief to the Board within 10
days of their receipt of the proposed decision. The proposed
decision shall contain a statement of the reasons for the
decision and each issue of fact or law necessary to the
proposed decision. The Board shall then issue its final
order which, if applicable, shall include the award of
attorney's fees, expert witness fees, and an assessment of
costs, including other expenses incurred in the litigation,
if permitted under this Act, so long as such fees and costs
are reasonable.
In a hearing on a protest filed under paragraph (6) of
subsection (d) or paragraph (6), (8), or (10) of Section 4 or
Section 12 of this Act, the manufacturer shall have the
burden of proof to establish that there is good cause for the
franchiser to: grant or establish an additional franchise or
relocate an existing franchise; cancel, terminate, refuse to
extend or renew a franchise or selling agreement; or change
or modify the obligations of the motor vehicle dealer as a
condition to offering a renewal, replacement, or succeeding
franchise or selling agreement or refuse to honor succession
to ownership or refuse to approve a proposed transfer or
sale. The determination whether good cause exists shall be
made under Section 12 of this Act.
The Board shall record the testimony and preserve a
record of all proceedings at the hearing by proper means of
recordation. The notice required to be given by the
manufacturer and notice of protest by the dealer or other
party, the notice of hearing, and all other documents in the
nature of pleadings, motions, and rulings, all evidence,
offers of proof, objections, and rulings thereon, the
transcript of testimony, the report of findings or proposed
decision of the hearing officer, and the orders of the Board
shall constitute the record of the proceedings. The Board
shall furnish a transcript of the record to any person
interested in the hearing upon payment of the actual cost
thereof.
(Source: P.A. 89-145, eff. 7-14-95; 89-433, eff. 12-15-95.)
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