SB0140 EnrolledLRB099 03415 JLS 23423 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Motor Vehicle Franchise Act is amended by
5changing Section 4 as follows:
 
6    (815 ILCS 710/4)  (from Ch. 121 1/2, par. 754)
7    Sec. 4. Unfair competition and practices.
8    (a) The unfair methods of competition and unfair and
9deceptive acts or practices listed in this Section are hereby
10declared to be unlawful. In construing the provisions of this
11Section, the courts may be guided by the interpretations of the
12Federal Trade Commission Act (15 U.S.C. 45 et seq.), as from
13time to time amended.
14    (b) It shall be deemed a violation for any manufacturer,
15factory branch, factory representative, distributor or
16wholesaler, distributor branch, distributor representative or
17motor vehicle dealer to engage in any action with respect to a
18franchise which is arbitrary, in bad faith or unconscionable
19and which causes damage to any of the parties or to the public.
20    (c) It shall be deemed a violation for a manufacturer, a
21distributor, a wholesaler, a distributor branch or division, a
22factory branch or division, or a wholesale branch or division,
23or officer, agent or other representative thereof, to coerce,

 

 

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1or attempt to coerce, any motor vehicle dealer:
2        (1) to accept, buy or order any motor vehicle or
3    vehicles, appliances, equipment, parts or accessories
4    therefor, or any other commodity or commodities or service
5    or services which such motor vehicle dealer has not
6    voluntarily ordered or requested except items required by
7    applicable local, state or federal law; or to require a
8    motor vehicle dealer to accept, buy, order or purchase such
9    items in order to obtain any motor vehicle or vehicles or
10    any other commodity or commodities which have been ordered
11    or requested by such motor vehicle dealer;
12        (2) to order or accept delivery of any motor vehicle
13    with special features, appliances, accessories or
14    equipment not included in the list price of the motor
15    vehicles as publicly advertised by the manufacturer
16    thereof, except items required by applicable law; or
17        (3) to order for anyone any parts, accessories,
18    equipment, machinery, tools, appliances or any commodity
19    whatsoever, except items required by applicable law.
20    (d) It shall be deemed a violation for a manufacturer, a
21distributor, a wholesaler, a distributor branch or division, or
22officer, agent or other representative thereof:
23        (1) to adopt, change, establish or implement a plan or
24    system for the allocation and distribution of new motor
25    vehicles to motor vehicle dealers which is arbitrary or
26    capricious or to modify an existing plan so as to cause the

 

 

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1    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 and
11    within a reasonable time after receipt of dealer's order,
12    to any motor vehicle dealer having a franchise or selling
13    agreement for the retail sale of new motor vehicles sold or
14    distributed by such manufacturer, distributor, wholesaler,
15    distributor branch or division, factory branch or division
16    or wholesale branch or division, any such motor vehicles as
17    are covered by such franchise or selling agreement
18    specifically publicly advertised in the State by such
19    manufacturer, distributor, wholesaler, distributor branch
20    or division, factory branch or division, or wholesale
21    branch or division to be available for immediate delivery.
22    However, the failure to deliver any motor vehicle shall not
23    be considered a violation of this Act if such failure is
24    due to an act of God, a work stoppage or delay due to a
25    strike or labor difficulty, a shortage of materials, a lack
26    of manufacturing capacity, a freight embargo or other cause

 

 

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1    over which the manufacturer, distributor, or wholesaler,
2    or any agent thereof has no control;
3        (4) to coerce, or attempt to coerce, any motor vehicle
4    dealer to enter into any agreement with such manufacturer,
5    distributor, wholesaler, distributor branch or division,
6    factory branch or division, or wholesale branch or
7    division, or officer, agent or other representative
8    thereof, or to do any other act prejudicial to the dealer
9    by threatening to reduce his allocation of motor vehicles
10    or cancel any franchise or any selling agreement existing
11    between such manufacturer, distributor, wholesaler,
12    distributor branch or division, or factory branch or
13    division, or wholesale branch or division, and the dealer.
14    However, notice in good faith to any motor vehicle dealer
15    of the dealer's violation of any terms or provisions of
16    such franchise or selling agreement or of any law or
17    regulation applicable to the conduct of a motor vehicle
18    dealer shall not constitute a violation of this Act;
19        (5) to require a franchisee to participate in an
20    advertising campaign or contest or any promotional
21    campaign, or to purchase or lease any promotional
22    materials, training materials, show room or other display
23    decorations or materials at the expense of the franchisee;
24        (6) to cancel or terminate the franchise or selling
25    agreement of a motor vehicle dealer without good cause and
26    without giving notice as hereinafter provided; to fail or

 

 

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1    refuse to extend the franchise or selling agreement of a
2    motor vehicle dealer upon its expiration without good cause
3    and without giving notice as hereinafter provided; or, to
4    offer a renewal, replacement or succeeding franchise or
5    selling agreement containing terms and provisions the
6    effect of which is to substantially change or modify the
7    sales and service obligations or capital requirements of
8    the motor vehicle dealer arbitrarily and without good cause
9    and without giving notice as hereinafter provided
10    notwithstanding any term or provision of a franchise or
11    selling agreement.
12            (A) If a manufacturer, distributor, wholesaler,
13        distributor branch or division, factory branch or
14        division or wholesale branch or division intends to
15        cancel or terminate a franchise or selling agreement or
16        intends not to extend or renew a franchise or selling
17        agreement on its expiration, it shall send a letter by
18        certified mail, return receipt requested, to the
19        affected franchisee at least 60 days before the
20        effective date of the proposed action, or not later
21        than 10 days before the proposed action when the reason
22        for the action is based upon either of the following:
23                (i) the business operations of the franchisee
24            have been abandoned or the franchisee has failed to
25            conduct customary sales and service operations
26            during customary business hours for at least 7

 

 

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1            consecutive business days unless such closing is
2            due to an act of God, strike or labor difficulty or
3            other cause over which the franchisee has no
4            control; or
5                (ii) the conviction of or plea of nolo
6            contendere by the motor vehicle dealer or any
7            operator thereof in a court of competent
8            jurisdiction to an offense punishable by
9            imprisonment for more than two years.
10            Each notice of proposed action shall include a
11        detailed statement setting forth the specific grounds
12        for the proposed cancellation, termination, or refusal
13        to extend or renew and shall state that the dealer has
14        only 30 days from receipt of the notice to file with
15        the Motor Vehicle Review Board a written protest
16        against the proposed action.
17            (B) If a manufacturer, distributor, wholesaler,
18        distributor branch or division, factory branch or
19        division or wholesale branch or division intends to
20        change substantially or modify the sales and service
21        obligations or capital requirements of a motor vehicle
22        dealer as a condition to extending or renewing the
23        existing franchise or selling agreement of such motor
24        vehicle dealer, it shall send a letter by certified
25        mail, return receipt requested, to the affected
26        franchisee at least 60 days before the date of

 

 

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1        expiration of the franchise or selling agreement. Each
2        notice of proposed action shall include a detailed
3        statement setting forth the specific grounds for the
4        proposed action and shall state that the dealer has
5        only 30 days from receipt of the notice to file with
6        the Motor Vehicle Review Board a written protest
7        against the proposed action.
8            (C) Within 30 days from receipt of the notice under
9        subparagraphs (A) and (B), the franchisee may file with
10        the Board a written protest against the proposed
11        action.
12            When the protest has been timely filed, the Board
13        shall enter an order, fixing a date (within 60 days of
14        the date of the order), time, and place of a hearing on
15        the protest required under Sections 12 and 29 of this
16        Act, and send by certified mail, return receipt
17        requested, a copy of the order to the manufacturer that
18        filed the notice of intention of the proposed action
19        and to the protesting dealer or franchisee.
20            The manufacturer shall have the burden of proof to
21        establish that good cause exists to cancel or
22        terminate, or fail to extend or renew the franchise or
23        selling agreement of a motor vehicle dealer or
24        franchisee, and to change substantially or modify the
25        sales and service obligations or capital requirements
26        of a motor vehicle dealer as a condition to extending

 

 

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1        or renewing the existing franchise or selling
2        agreement. The determination whether good cause exists
3        to cancel, terminate, or refuse to renew or extend the
4        franchise or selling agreement, or to change or modify
5        the obligations of the dealer as a condition to offer
6        renewal, replacement, or succession shall be made by
7        the Board under subsection (d) of Section 12 of this
8        Act.
9            (D) Notwithstanding the terms, conditions, or
10        provisions of a franchise or selling agreement, the
11        following shall not constitute good cause for
12        cancelling or terminating or failing to extend or renew
13        the franchise or selling agreement: (i) the change of
14        ownership or executive management of the franchisee's
15        dealership; or (ii) the fact that the franchisee or
16        owner of an interest in the franchise owns, has an
17        investment in, participates in the management of, or
18        holds a license for the sale of the same or any other
19        line make of new motor vehicles.
20            (E) The manufacturer may not cancel or terminate,
21        or fail to extend or renew a franchise or selling
22        agreement or change or modify the obligations of the
23        franchisee as a condition to offering a renewal,
24        replacement, or succeeding franchise or selling
25        agreement before the hearing process is concluded as
26        prescribed by this Act, and thereafter, if the Board

 

 

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1        determines that the manufacturer has failed to meet its
2        burden of proof and that good cause does not exist to
3        allow the proposed action;
4        (7) notwithstanding the terms of any franchise
5    agreement, to fail to indemnify and hold harmless its
6    franchised dealers against any judgment or settlement for
7    damages, including, but not limited to, court costs, expert
8    witness fees, reasonable attorneys' fees of the new motor
9    vehicle dealer, and other expenses incurred in the
10    litigation, so long as such fees and costs are reasonable,
11    arising out of complaints, claims or lawsuits including,
12    but not limited to, strict liability, negligence,
13    misrepresentation, warranty (express or implied), or
14    recision of the sale as defined in Section 2-608 of the
15    Uniform Commercial Code, to the extent that the judgment or
16    settlement relates to the alleged defective or negligent
17    manufacture, assembly or design of new motor vehicles,
18    parts or accessories or other functions by the
19    manufacturer, beyond the control of the dealer; provided
20    that, in order to provide an adequate defense, the
21    manufacturer receives notice of the filing of a complaint,
22    claim, or lawsuit within 60 days after the filing;
23        (8) to require or otherwise coerce a motor vehicle
24    dealer to underutilize the motor vehicle dealer's
25    facilities by requiring or otherwise coercing the motor
26    vehicle dealer to exclude or remove from the motor vehicle

 

 

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1    dealer's facilities operations for selling or servicing of
2    any vehicles for which the motor vehicle dealer has a
3    franchise agreement with another manufacturer,
4    distributor, wholesaler, distribution branch or division,
5    or officer, agent, or other representative thereof;
6    provided, however, that, in light of all existing
7    circumstances, (i) the motor vehicle dealer maintains a
8    reasonable line of credit for each make or line of new
9    motor vehicle, (ii) the new motor vehicle dealer remains in
10    compliance with any reasonable facilities requirements of
11    the manufacturer, (iii) no change is made in the principal
12    management of the new motor vehicle dealer, and (iv) the
13    addition of the make or line of new motor vehicles would be
14    reasonable. The reasonable facilities requirement set
15    forth in item (ii) of subsection (d)(8) shall not include
16    any requirement that a franchisee establish or maintain
17    exclusive facilities, personnel, or display space. Any
18    decision by a motor vehicle dealer to sell additional makes
19    or lines at the motor vehicle dealer's facility shall be
20    presumed to be reasonable, and the manufacturer shall have
21    the burden to overcome that presumption. A motor vehicle
22    dealer must provide a written notification of its intent to
23    add a make or line of new motor vehicles to the
24    manufacturer. If the manufacturer does not respond to the
25    motor vehicle dealer, in writing, objecting to the addition
26    of the make or line within 60 days after the date that the

 

 

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1    motor vehicle dealer sends the written notification, then
2    the manufacturer shall be deemed to have approved the
3    addition of the make or line; or
4        (9) to use or consider the performance of a motor
5    vehicle dealer relating to the sale of the manufacturer's,
6    distributor's, or wholesaler's vehicles or the motor
7    vehicle dealer's ability to satisfy any minimum sales or
8    market share quota or responsibility relating to the sale
9    of the manufacturer's, distributor's, or wholesaler's new
10    vehicles in determining:
11            (A) the motor vehicle dealer's eligibility to
12        purchase program, certified, or other used motor
13        vehicles from the manufacturer, distributor, or
14        wholesaler;
15            (B) the volume, type, or model of program,
16        certified, or other used motor vehicles that a motor
17        vehicle dealer is eligible to purchase from the
18        manufacturer, distributor, or wholesaler;
19            (C) the price of any program, certified, or other
20        used motor vehicle that the dealer is eligible to
21        purchase from the manufacturer, distributor, or
22        wholesaler; or
23            (D) the availability or amount of any discount,
24        credit, rebate, or sales incentive that the dealer is
25        eligible to receive from the manufacturer,
26        distributor, or wholesaler for the purchase of any

 

 

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1        program, certified, or other used motor vehicle
2        offered for sale by the manufacturer, distributor, or
3        wholesaler.
4    (e) It shall be deemed a violation for a manufacturer, a
5distributor, a wholesaler, a distributor branch or division or
6officer, agent or other representative thereof:
7        (1) to resort to or use any false or misleading
8    advertisement in connection with his business as such
9    manufacturer, distributor, wholesaler, distributor branch
10    or division or officer, agent or other representative
11    thereof;
12        (2) to offer to sell or lease, or to sell or lease, any
13    new motor vehicle to any motor vehicle dealer at a lower
14    actual price therefor than the actual price offered to any
15    other motor vehicle dealer for the same model vehicle
16    similarly equipped or to utilize any device including, but
17    not limited to, sales promotion plans or programs which
18    result in such lesser actual price or fail to make
19    available to any motor vehicle dealer any preferential
20    pricing, incentive, rebate, finance rate, or low interest
21    loan program offered to competing motor vehicle dealers in
22    other contiguous states. However, the provisions of this
23    paragraph shall not apply to sales to a motor vehicle
24    dealer for resale to any unit of the United States
25    Government, the State or any of its political subdivisions;
26        (3) to offer to sell or lease, or to sell or lease, any

 

 

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1    new motor vehicle to any person, except a wholesaler,
2    distributor or manufacturer's employees at a lower actual
3    price therefor than the actual price offered and charged to
4    a motor vehicle dealer for the same model vehicle similarly
5    equipped or to utilize any device which results in such
6    lesser actual price. However, the provisions of this
7    paragraph shall not apply to sales to a motor vehicle
8    dealer for resale to any unit of the United States
9    Government, the State or any of its political subdivisions;
10        (4) to prevent or attempt to prevent by contract or
11    otherwise any motor vehicle dealer or franchisee from
12    changing the executive management control of the motor
13    vehicle dealer or franchisee unless the franchiser, having
14    the burden of proof, proves that such change of executive
15    management will result in executive management control by a
16    person or persons who are not of good moral character or
17    who do not meet the franchiser's existing and, with
18    consideration given to the volume of sales and service of
19    the dealership, uniformly applied minimum business
20    experience standards in the market area. However where the
21    manufacturer rejects a proposed change in executive
22    management control, the manufacturer shall give written
23    notice of his reasons to the dealer within 60 days of
24    notice to the manufacturer by the dealer of the proposed
25    change. If the manufacturer does not send a letter to the
26    franchisee by certified mail, return receipt requested,

 

 

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1    within 60 days from receipt by the manufacturer of the
2    proposed change, then the change of the executive
3    management control of the franchisee shall be deemed
4    accepted as proposed by the franchisee, and the
5    manufacturer shall give immediate effect to such change;
6        (5) to prevent or attempt to prevent by contract or
7    otherwise any motor vehicle dealer from establishing or
8    changing the capital structure of his dealership or the
9    means by or through which he finances the operation
10    thereof; provided the dealer meets any reasonable capital
11    standards agreed to between the dealer and the
12    manufacturer, distributor or wholesaler, who may require
13    that the sources, method and manner by which the dealer
14    finances or intends to finance its operation, equipment or
15    facilities be fully disclosed;
16        (6) to refuse to give effect to or prevent or attempt
17    to prevent by contract or otherwise any motor vehicle
18    dealer or any officer, partner or stockholder of any motor
19    vehicle dealer from selling or transferring any part of the
20    interest of any of them to any other person or persons or
21    party or parties unless such sale or transfer is to a
22    transferee who would not otherwise qualify for a new motor
23    vehicle dealers license under "The Illinois Vehicle Code"
24    or unless the franchiser, having the burden of proof,
25    proves that such sale or transfer is to a person or party
26    who is not of good moral character or does not meet the

 

 

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1    franchiser's existing and reasonable capital standards
2    and, with consideration given to the volume of sales and
3    service of the dealership, uniformly applied minimum
4    business experience standards in the market area. However,
5    nothing herein shall be construed to prevent a franchiser
6    from 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 of
12        the completed application forms generally utilized by
13        a manufacturer to conduct its review and a copy of all
14        agreements regarding the proposed transfer, send a
15        letter by certified mail, return receipt requested,
16        advising the franchisee of any refusal to approve the
17        sale or transfer of all or part of the interest and
18        shall state that the dealer only has 30 days from the
19        receipt of the notice to file with the Motor Vehicle
20        Review Board a written protest against the proposed
21        action. The notice shall set forth specific criteria
22        used to evaluate the prospective transferee and the
23        grounds for refusing to approve the sale or transfer to
24        that transferee. Within 30 days from the franchisee's
25        receipt of the manufacturer's notice, the franchisee
26        may file with the Board a written protest against the

 

 

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1        proposed action.
2            When a protest has been timely filed, the Board
3        shall enter an order, fixing the date (within 60 days
4        of the date of such order), time, and place of a
5        hearing on the protest, required under Sections 12 and
6        29 of this Act, and send by certified mail, return
7        receipt requested, a copy of the order to the
8        manufacturer that filed notice of intention of the
9        proposed action and to the protesting franchisee.
10            The manufacturer shall have the burden of proof to
11        establish that good cause exists to refuse to approve
12        the sale or transfer to the transferee. The
13        determination whether good cause exists to refuse to
14        approve the sale or transfer shall be made by the Board
15        under subdivisions (6)(B). The manufacturer shall not
16        refuse to approve the sale or transfer by a dealer or
17        an officer, partner, or stockholder of a franchise or
18        any part of the interest to any person or persons
19        before the hearing process is concluded as prescribed
20        by this Act, and thereafter if the Board determines
21        that the manufacturer has failed to meet its burden of
22        proof and that good cause does not exist to refuse to
23        approve the sale or transfer to the transferee.
24            (B) Good cause to refuse to approve such sale or
25        transfer under this Section is established when such
26        sale or transfer is to a transferee who would not

 

 

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1        otherwise qualify for a new motor vehicle dealers
2        license under "The Illinois Vehicle Code" or such sale
3        or transfer is to a person or party who is not of good
4        moral character or does not meet the franchiser's
5        existing and reasonable capital standards and, with
6        consideration given to the volume of sales and service
7        of the dealership, uniformly applied minimum business
8        experience standards in the market area.
9        (7) to obtain money, goods, services, anything of
10    value, or any other benefit from any other person with whom
11    the motor vehicle dealer does business, on account of or in
12    relation to the transactions between the dealer and the
13    other person as compensation, except for services actually
14    rendered, unless such benefit is promptly accounted for and
15    transmitted to the motor vehicle dealer;
16        (8) to grant an additional franchise in the relevant
17    market area of an existing franchise of the same line make
18    or to relocate an existing motor vehicle dealership within
19    or into a relevant market area of an existing franchise of
20    the same line make. However, if the manufacturer wishes to
21    grant such an additional franchise to an independent person
22    in a bona fide relationship in which such person is
23    prepared to make a significant investment subject to loss
24    in such a dealership, or if the manufacturer wishes to
25    relocate an existing motor vehicle dealership, then the
26    manufacturer shall send a letter by certified mail, return

 

 

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1    receipt requested, to each existing dealer or dealers of
2    the same line make whose relevant market area includes the
3    proposed location of the additional or relocated franchise
4    at least 60 days before the manufacturer grants an
5    additional franchise or relocates an existing franchise of
6    the same line make within or into the relevant market area
7    of an existing franchisee of the same line make. Each
8    notice shall set forth the specific grounds for the
9    proposed grant of an additional or relocation of an
10    existing franchise and shall state that the dealer has only
11    30 days from the date of receipt of the notice to file with
12    the Motor Vehicle Review Board a written protest against
13    the proposed action. Unless the parties agree upon the
14    grant or establishment of the additional or relocated
15    franchise within 30 days from the date the notice was
16    received by the existing franchisee of the same line make
17    or any person entitled to receive such notice, the
18    franchisee or other person may file with the Board a
19    written protest against the grant or establishment of the
20    proposed additional or relocated franchise.
21        When a protest has been timely filed, the Board shall
22    enter an order fixing a date (within 60 days of the date of
23    the order), time, and place of a hearing on the protest,
24    required under Sections 12 and 29 of this Act, and send by
25    certified or registered mail, return receipt requested, a
26    copy of the order to the manufacturer that filed the notice

 

 

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1    of intention to grant or establish the proposed additional
2    or relocated franchise and to the protesting dealer or
3    dealers of the same line make whose relevant market area
4    includes the proposed location of the additional or
5    relocated franchise.
6        When more than one protest is filed against the grant
7    or establishment of the additional or relocated franchise
8    of the same line make, the Board may consolidate the
9    hearings to expedite disposition of the matter. The
10    manufacturer shall have the burden of proof to establish
11    that good cause exists to allow the grant or establishment
12    of the additional or relocated franchise. The manufacturer
13    may not grant or establish the additional franchise or
14    relocate the existing franchise before the hearing process
15    is concluded as prescribed by this Act, and thereafter if
16    the Board determines that the manufacturer has failed to
17    meet its burden of proof and that good cause does not exist
18    to allow the grant or establishment of the additional
19    franchise or relocation of the existing franchise.
20        The determination whether good cause exists for
21    allowing the grant or establishment of an additional
22    franchise or relocated existing franchise, shall be made by
23    the Board under subsection (c) of Section 12 of this Act.
24    If the manufacturer seeks to enter into a contract,
25    agreement or other arrangement with any person,
26    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 for
5    allowing the proposed agreement shall be made by the Board
6    under subsection (c) of Section 12, with the manufacturer
7    having the burden of proof.
8            A. (Blank).
9            B. For the purposes of this Section, appointment of
10        a successor motor vehicle dealer at the same location
11        as its predecessor, or within 2 miles of such location,
12        or the relocation of an existing dealer or franchise
13        within 2 miles of the relocating dealer's or
14        franchisee's existing location, shall not be construed
15        as a grant, establishment or the entering into of an
16        additional franchise or selling agreement, or a
17        relocation of an existing franchise. The reopening of a
18        motor vehicle dealership that has not been in operation
19        for 18 months or more shall be deemed the grant of an
20        additional franchise or selling agreement.
21            C. This Section does not apply to the relocation of
22        an existing dealership or franchise in a county having
23        a population of more than 300,000 persons when the new
24        location is within the dealer's current relevant
25        market area, provided the new location is more than 7
26        miles from the nearest dealer of the same line make.

 

 

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1        This Section does not apply to the relocation of an
2        existing dealership or franchise in a county having a
3        population of less than 300,000 persons when the new
4        location is within the dealer's current relevant
5        market area, provided the new location is more than 12
6        miles from the nearest dealer of the same line make. A
7        dealer that would be farther away from the new location
8        of an existing dealership or franchise of the same line
9        make after a relocation may not file a written protest
10        against the relocation with the Motor Vehicle Review
11        Board.
12            D. Nothing in this Section shall be construed to
13        prevent a franchiser from implementing affirmative
14        action programs providing business opportunities for
15        minorities or from complying with applicable federal,
16        State or local law;
17        (9) to require a motor vehicle dealer to assent to a
18    release, assignment, novation, waiver or estoppel which
19    would relieve any person from liability imposed by this
20    Act;
21        (10) to prevent or refuse to give effect to the
22    succession to the ownership or management control of a
23    dealership by any legatee under the will of a dealer or to
24    an heir under the laws of descent and distribution of this
25    State unless the franchisee has designated a successor to
26    the ownership or management control under the succession

 

 

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1    provisions of the franchise. Unless the franchiser, having
2    the burden of proof, proves that the successor is a person
3    who is not of good moral character or does not meet the
4    franchiser's existing and reasonable capital standards
5    and, with consideration given to the volume of sales and
6    service of the dealership, uniformly applied minimum
7    business experience standards in the market area, any
8    designated successor of a dealer or franchisee may succeed
9    to the ownership or management control of a dealership
10    under the existing franchise if:
11                (i) The designated successor gives the
12            franchiser written notice by certified mail,
13            return receipt requested, of his or her intention
14            to succeed to the ownership of the dealer within 60
15            days of the dealer's death or incapacity; and
16                (ii) The designated successor agrees to be
17            bound by all the terms and conditions of the
18            existing franchise.
19        Notwithstanding the foregoing, in the event the motor
20    vehicle dealer or franchisee and manufacturer have duly
21    executed an agreement concerning succession rights prior
22    to the dealer's death or incapacitation, the agreement
23    shall be observed.
24            (A) If the franchiser intends to refuse to honor
25        the successor to the ownership of a deceased or
26        incapacitated dealer or franchisee under an existing

 

 

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1        franchise agreement, the franchiser shall send a
2        letter by certified mail, return receipt requested, to
3        the designated successor within 60 days from receipt of
4        a proposal advising of its intent to refuse to honor
5        the succession and to discontinue the existing
6        franchise agreement and shall state that the
7        designated successor only has 30 days from the receipt
8        of the notice to file with the Motor Vehicle Review
9        Board a written protest against the proposed action.
10        The notice shall set forth the specific grounds for the
11        refusal to honor the succession and discontinue the
12        existing franchise agreement.
13            If notice of refusal is not timely served upon the
14        designated successor, the franchise agreement shall
15        continue in effect subject to termination only as
16        otherwise permitted by paragraph (6) of subsection (d)
17        of Section 4 of this Act.
18            Within 30 days from the date the notice was
19        received by the designated successor or any other
20        person entitled to notice, the designee or other person
21        may file with the Board a written protest against the
22        proposed action.
23            When a protest has been timely filed, the Board
24        shall enter an order, fixing a date (within 60 days of
25        the date of the order), time, and place of a hearing on
26        the protest, required under Sections 12 and 29 of this

 

 

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1        Act, and send by certified mail, return receipt
2        requested, a copy of the order to the franchiser that
3        filed the notice of intention of the proposed action
4        and to the protesting designee or such other person.
5            The manufacturer shall have the burden of proof to
6        establish that good cause exists to refuse to honor the
7        succession and discontinue the existing franchise
8        agreement. The determination whether good cause exists
9        to refuse to honor the succession shall be made by the
10        Board under subdivision (B) of this paragraph (10). The
11        manufacturer shall not refuse to honor the succession
12        or discontinue the existing franchise agreement before
13        the hearing process is concluded as prescribed by this
14        Act, and thereafter if the Board determines that it has
15        failed to meet its burden of proof and that good cause
16        does not exist to refuse to honor the succession and
17        discontinue the existing franchise agreement.
18            (B) No manufacturer shall impose any conditions
19        upon honoring the succession and continuing the
20        existing franchise agreement with the designated
21        successor other than that the franchisee has
22        designated a successor to the ownership or management
23        control under the succession provisions of the
24        franchise, or that the designated successor is of good
25        moral character or meets the reasonable capital
26        standards and, with consideration given to the volume

 

 

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1        of sales and service of the dealership, uniformly
2        applied minimum business experience standards in the
3        market area;
4        (11) to prevent or refuse to approve a proposal to
5    establish a successor franchise at a location previously
6    approved by the franchiser when submitted with the
7    voluntary termination by the existing franchisee unless
8    the successor franchisee would not otherwise qualify for a
9    new motor vehicle dealer's license under the Illinois
10    Vehicle Code or unless the franchiser, having the burden of
11    proof, proves that such proposed successor is not of good
12    moral character or does not meet the franchiser's existing
13    and reasonable capital standards and, with consideration
14    given to the volume of sales and service of the dealership,
15    uniformly applied minimum business experience standards in
16    the market area. However, when such a rejection of a
17    proposal is made, the manufacturer shall give written
18    notice of its reasons to the franchisee within 60 days of
19    receipt by the manufacturer of the proposal. However,
20    nothing herein shall be construed to prevent a franchiser
21    from implementing affirmative action programs providing
22    business opportunities for minorities, or from complying
23    with applicable federal, State or local law;
24        (12) to prevent or refuse to grant a franchise to a
25    person because such person owns, has investment in or
26    participates in the management of or holds a franchise for

 

 

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1    the sale of another make or line of motor vehicles within 7
2    miles of the proposed franchise location in a county having
3    a population of more than 300,000 persons, or within 12
4    miles of the proposed franchise location in a county having
5    a population of less than 300,000 persons; or
6        (13) to prevent or attempt to prevent any new motor
7    vehicle dealer from establishing any additional motor
8    vehicle dealership or other facility limited to the sale of
9    factory repurchase vehicles or late model vehicles or
10    otherwise offering for sale factory repurchase vehicles of
11    the same line make at an existing franchise by failing to
12    make available any contract, agreement or other
13    arrangement which is made available or otherwise offered to
14    any person.
15    (f) It is deemed a violation for a manufacturer, a
16distributor, a wholesaler wholesale, a distributor branch or
17division, a factory branch or division, or a wholesale branch
18or division, or officer, agent, broker, shareholder, except a
19shareholder of 1% or less of the outstanding shares of any
20class of securities of a manufacturer, distributor, or
21wholesaler which is a publicly traded corporation, or other
22representative, directly or indirectly, to own or operate a
23place of business as a motor vehicle franchisee or motor
24vehicle financing affiliate, except that, this subsection
25shall not prohibit:
26        (1) the ownership or operation of a place of business

 

 

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1    by a manufacturer, distributor, or wholesaler for a period,
2    not to exceed 18 months, during the transition from one
3    motor vehicle franchisee to another; or
4        (2) the investment in a motor vehicle franchisee by a
5    manufacturer, distributor, or wholesaler if the investment
6    is for the sole purpose of enabling a partner or
7    shareholder in that motor vehicle franchisee to acquire an
8    interest in that motor vehicle franchisee and that partner
9    or shareholder is not otherwise employed by or associated
10    with the manufacturer, distributor, or wholesaler and
11    would not otherwise have the requisite capital investment
12    funds to invest in the motor vehicle franchisee, and has
13    the right to purchase the entire equity interest of the
14    manufacturer, distributor, or wholesaler in the motor
15    vehicle franchisee within a reasonable period of time not
16    to exceed 5 years; or .
17        (3) the ownership or operation of a place of business
18    by a manufacturer that manufactures only diesel engines for
19    installation in trucks having a gross vehicle weight rating
20    of more than 16,000 pounds that are required to be
21    registered under the Illinois Vehicle Code, provided that:
22            (A) the manufacturer does not otherwise
23        manufacture, distribute, or sell motor vehicles as
24        defined under Section 1-217 of the Illinois Vehicle
25        Code;
26            (B) the manufacturer owned a place of business and

 

 

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1        it was in operation as of January 1, 2016;
2            (C) the manufacturer complies with all obligations
3        owed to dealers that are not owned, operated, or
4        controlled by the manufacturer, including, but not
5        limited to those obligations arising pursuant to
6        Section 6;
7            (D) to further avoid any acts or practices, the
8        effect of which may be to lessen or eliminate
9        competition, the manufacturer provides to dealers on
10        substantially equal terms access to all support for
11        completing repairs, including, but not limited to,
12        parts and assemblies, training, and technical service
13        bulletins, and other information concerning repairs
14        that the manufacturer provides to facilities that are
15        owned, operated, or controlled by the manufacturer;
16        and
17            (E) the manufacturer does not require that
18        warranty repair work be performed by a
19        manufacturer-owned repair facility and the
20        manufacturer provides any dealer that has an agreement
21        with the manufacturer to sell and perform warranty
22        repairs on the manufacturer's engines the opportunity
23        to perform warranty repairs on those engines,
24        regardless of whether the dealer sold the truck into
25        which the engine was installed.
26    (g) Notwithstanding the terms, provisions, or conditions

 

 

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1of any agreement or waiver, it shall be deemed a violation for
2a manufacturer, a distributor, a wholesaler, a distributor
3branch or division, a factory branch or division, or a
4wholesale branch or division, or officer, agent or other
5representative thereof, to directly or indirectly condition
6the awarding of a franchise to a prospective new motor vehicle
7dealer, the addition of a line make or franchise to an existing
8dealer, the renewal of a franchise of an existing dealer, the
9approval of the relocation of an existing dealer's facility, or
10the approval of the sale or transfer of the ownership of a
11franchise on the willingness of a dealer, proposed new dealer,
12or owner of an interest in the dealership facility to enter
13into a site control agreement or exclusive use agreement unless
14separate and reasonable consideration was offered and accepted
15for that agreement.
16    For purposes of this subsection (g), the terms "site
17control agreement" and "exclusive use agreement" include any
18agreement that has the effect of either (i) requiring that the
19dealer establish or maintain exclusive dealership facilities;
20or (ii) restricting the ability of the dealer, or the ability
21of the dealer's lessor in the event the dealership facility is
22being leased, to transfer, sell, lease, or change the use of
23the dealership premises, whether by sublease, lease,
24collateral pledge of lease, or other similar agreement. "Site
25control agreement" and "exclusive use agreement" also include a
26manufacturer restricting the ability of a dealer to transfer,

 

 

SB0140 Enrolled- 30 -LRB099 03415 JLS 23423 b

1sell, or lease the dealership premises by right of first
2refusal to purchase or lease, option to purchase, or option to
3lease if the transfer, sale, or lease of the dealership
4premises is to a person who is an immediate family member of
5the dealer. For the purposes of this subsection (g), "immediate
6family member" means a spouse, parent, son, daughter,
7son-in-law, daughter-in-law, brother, and sister.
8    If a manufacturer exercises any right of first refusal to
9purchase or lease or option to purchase or lease with regard to
10a transfer, sale, or lease of the dealership premises to a
11person who is not an immediate family member of the dealer,
12then (1) within 60 days from the receipt of the completed
13application forms generally utilized by a manufacturer to
14conduct its review and a copy of all agreements regarding the
15proposed transfer, the manufacturer must notify the dealer of
16its intent to exercise the right of first refusal to purchase
17or lease or option to purchase or lease and (2) the exercise of
18the right of first refusal to purchase or lease or option to
19purchase or lease must result in the dealer receiving
20consideration, terms, and conditions that either are the same
21as or greater than that which they have contracted to receive
22in connection with the proposed transfer, sale, or lease of the
23dealership premises.
24    Any provision contained in any agreement entered into on or
25after the effective date of this amendatory Act of the 96th
26General Assembly that is inconsistent with the provisions of

 

 

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1this subsection (g) shall be voidable at the election of the
2affected dealer, prospective dealer, or owner of an interest in
3the dealership facility.
4    (h) For purposes of this subsection:
5    "Successor manufacturer" means any motor vehicle
6manufacturer that, on or after January 1, 2009, acquires,
7succeeds to, or assumes any part of the business of another
8manufacturer, referred to as the "predecessor manufacturer",
9as the result of any of the following:
10        (i) A change in ownership, operation, or control of the
11    predecessor manufacturer by sale or transfer of assets,
12    corporate stock or other equity interest, assignment,
13    merger, consolidation, combination, joint venture,
14    redemption, court-approved sale, operation of law or
15    otherwise.
16        (ii) The termination, suspension, or cessation of a
17    part or all of the business operations of the predecessor
18    manufacturer.
19        (iii) The discontinuance of the sale of the product
20    line.
21        (iv) A change in distribution system by the predecessor
22    manufacturer, whether through a change in distributor or
23    the predecessor manufacturer's decision to cease
24    conducting business through a distributor altogether.
25    "Former Franchisee" means a new motor vehicle dealer that
26has entered into a franchise with a predecessor manufacturer

 

 

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1and that has either:
2        (i) entered into a termination agreement or deferred
3    termination agreement with a predecessor or successor
4    manufacturer related to such franchise; or
5        (ii) has had such franchise canceled, terminated,
6    nonrenewed, noncontinued, rejected, nonassumed, or
7    otherwise ended.
8    For a period of 3 years from: (i) the date that a successor
9manufacturer acquires, succeeds to, or assumes any part of the
10business of a predecessor manufacturer; (ii) the last day that
11a former franchisee is authorized to remain in business as a
12franchised dealer with respect to a particular franchise under
13a termination agreement or deferred termination agreement with
14a predecessor or successor manufacturer; (iii) the last day
15that a former franchisee that was cancelled, terminated,
16nonrenewed, noncontinued, rejected, nonassumed, or otherwise
17ended by a predecessor or successor manufacturer is authorized
18to remain in business as a franchised dealer with respect to a
19particular franchise; or (iv) the effective date of this
20amendatory Act of the 96th General Assembly, whichever is
21latest, it shall be unlawful for such successor manufacturer to
22enter into a same line make franchise with any person or to
23permit the relocation of any existing same line make franchise,
24for a line make of the predecessor manufacturer that would be
25located or relocated within the relevant market area of a
26former franchisee who owned or leased a dealership facility in

 

 

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1that relevant market area without first offering the additional
2or relocated franchise to the former franchisee, or the
3designated successor of such former franchisee in the event the
4former franchisee is deceased or a person with a disability, at
5no cost and without any requirements or restrictions other than
6those imposed generally on the manufacturer's other
7franchisees at that time, unless one of the following applies:
8        (1) As a result of the former franchisee's
9    cancellation, termination, noncontinuance, or nonrenewal
10    of the franchise, the predecessor manufacturer had
11    consolidated the line make with another of its line makes
12    for which the predecessor manufacturer had a franchisee
13    with a then-existing dealership facility located within
14    that relevant market area.
15        (2) The successor manufacturer has paid the former
16    franchisee, or the designated successor of such former
17    franchisee in the event the former franchisee is deceased
18    or a person with a disability, the fair market value of the
19    former franchisee's franchise on (i) the date the
20    franchisor announces the action which results in the
21    termination, cancellation, or nonrenewal; or (ii) the date
22    the action which results in termination, cancellation, or
23    nonrenewal first became general knowledge; or (iii) the day
24    12 months prior to the date on which the notice of
25    termination, cancellation, or nonrenewal is issued,
26    whichever amount is higher. Payment is due within 90 days

 

 

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1    of the effective date of the termination, cancellation, or
2    nonrenewal. If the termination, cancellation, or
3    nonrenewal is due to a manufacturer's change in
4    distributors, the manufacturer may avoid paying fair
5    market value to the dealer if the new distributor or the
6    manufacturer offers the dealer a franchise agreement with
7    terms acceptable to the dealer.
8        (3) The successor manufacturer proves that it would
9    have had good cause to terminate the franchise agreement of
10    the former franchisee, or the successor of the former
11    franchisee under item (e)(10) in the event that the former
12    franchisee is deceased or a person with a disability. The
13    determination of whether the successor manufacturer would
14    have had good cause to terminate the franchise agreement of
15    the former franchisee, or the successor of the former
16    franchisee, shall be made by the Board under subsection (d)
17    of Section 12. A successor manufacturer that seeks to
18    assert that it would have had good cause to terminate a
19    former franchisee, or the successor of the former
20    franchisee, must file a petition seeking a hearing on this
21    issue before the Board and shall have the burden of proving
22    that it would have had good cause to terminate the former
23    franchisee or the successor of the former franchisee. No
24    successor dealer, other than the former franchisee, may be
25    appointed or franchised by the successor manufacturer
26    within the relevant market area of the former franchisee

 

 

SB0140 Enrolled- 35 -LRB099 03415 JLS 23423 b

1    until the Board has held a hearing and rendered a
2    determination on the issue of whether the successor
3    manufacturer would have had good cause to terminate the
4    former franchisee.
5    In the event that a successor manufacturer attempts to
6enter into a same line make franchise with any person or to
7permit the relocation of any existing line make franchise under
8this subsection (h) at a location that is within the relevant
9market area of 2 or more former franchisees, then the successor
10manufacturer may not offer it to any person other than one of
11those former franchisees unless the successor manufacturer can
12prove that at least one of the 3 exceptions in items (1), (2),
13and (3) of this subsection (h) applies to each of those former
14franchisees.
15(Source: P.A. 99-143, eff. 7-27-15.)
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.