Illinois General Assembly - Full Text of SB0140
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Full Text of SB0140  99th General Assembly

SB0140ham002 99TH GENERAL ASSEMBLY

Rep. Dan Brady

Filed: 5/16/2016

 

 


 

 


 
09900SB0140ham002LRB099 03415 JLS 48746 a

1
AMENDMENT TO SENATE BILL 140

2    AMENDMENT NO. ______. Amend Senate Bill 140 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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1motor vehicle dealer to engage in any action with respect to a
2franchise which is arbitrary, in bad faith or unconscionable
3and which causes damage to any of the parties or to the public.
4    (c) It shall be deemed a violation for a manufacturer, a
5distributor, a wholesaler, a distributor branch or division, a
6factory branch or division, or a wholesale branch or division,
7or officer, agent or other representative thereof, to coerce,
8or attempt to coerce, any motor vehicle dealer:
9        (1) to accept, buy or order any motor vehicle or
10    vehicles, appliances, equipment, parts or accessories
11    therefor, or any other commodity or commodities or service
12    or services which such motor vehicle dealer has not
13    voluntarily ordered or requested except items required by
14    applicable local, state or federal law; or to require a
15    motor vehicle dealer to accept, buy, order or purchase such
16    items in order to obtain any motor vehicle or vehicles or
17    any other commodity or commodities which have been ordered
18    or requested by such motor vehicle dealer;
19        (2) to order or accept delivery of any motor vehicle
20    with special features, appliances, accessories or
21    equipment not included in the list price of the motor
22    vehicles as publicly advertised by the manufacturer
23    thereof, except items required by applicable law; or
24        (3) to order for anyone any parts, accessories,
25    equipment, machinery, tools, appliances or any commodity
26    whatsoever, except items required by applicable law.

 

 

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1    (d) It shall be deemed a violation for a manufacturer, a
2distributor, a wholesaler, a distributor branch or division, or
3officer, agent or other representative thereof:
4        (1) to adopt, change, establish or implement a plan or
5    system for the allocation and distribution of new motor
6    vehicles to motor vehicle dealers which is arbitrary or
7    capricious or to modify an existing plan so as to cause the
8    same to be arbitrary or capricious;
9        (2) to fail or refuse to advise or disclose to any
10    motor vehicle dealer having a franchise or selling
11    agreement, upon written request therefor, the basis upon
12    which new motor vehicles of the same line make are
13    allocated or distributed to motor vehicle dealers in the
14    State and the basis upon which the current allocation or
15    distribution is being made or will be made to such motor
16    vehicle dealer;
17        (3) to refuse to deliver in reasonable quantities and
18    within a reasonable time after receipt of dealer's order,
19    to any motor vehicle dealer having a franchise or selling
20    agreement for the retail sale of new motor vehicles sold or
21    distributed by such manufacturer, distributor, wholesaler,
22    distributor branch or division, factory branch or division
23    or wholesale branch or division, any such motor vehicles as
24    are covered by such franchise or selling agreement
25    specifically publicly advertised in the State by such
26    manufacturer, distributor, wholesaler, distributor branch

 

 

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1    or division, factory branch or division, or wholesale
2    branch or division to be available for immediate delivery.
3    However, the failure to deliver any motor vehicle shall not
4    be considered a violation of this Act if such failure is
5    due to an act of God, a work stoppage or delay due to a
6    strike or labor difficulty, a shortage of materials, a lack
7    of manufacturing capacity, a freight embargo or other cause
8    over which the manufacturer, distributor, or wholesaler,
9    or any agent thereof has no control;
10        (4) to coerce, or attempt to coerce, any motor vehicle
11    dealer to enter into any agreement with such manufacturer,
12    distributor, wholesaler, distributor branch or division,
13    factory branch or division, or wholesale branch or
14    division, or officer, agent or other representative
15    thereof, or to do any other act prejudicial to the dealer
16    by threatening to reduce his allocation of motor vehicles
17    or cancel any franchise or any selling agreement existing
18    between such manufacturer, distributor, wholesaler,
19    distributor branch or division, or factory branch or
20    division, or wholesale branch or division, and the dealer.
21    However, notice in good faith to any motor vehicle dealer
22    of the dealer's violation of any terms or provisions of
23    such franchise or selling agreement or of any law or
24    regulation applicable to the conduct of a motor vehicle
25    dealer shall not constitute a violation of this Act;
26        (5) to require a franchisee to participate in an

 

 

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1    advertising campaign or contest or any promotional
2    campaign, or to purchase or lease any promotional
3    materials, training materials, show room or other display
4    decorations or materials at the expense of the franchisee;
5        (6) to cancel or terminate the franchise or selling
6    agreement of a motor vehicle dealer without good cause and
7    without giving notice as hereinafter provided; to fail or
8    refuse to extend the franchise or selling agreement of a
9    motor vehicle dealer upon its expiration without good cause
10    and without giving notice as hereinafter provided; or, to
11    offer a renewal, replacement or succeeding franchise or
12    selling agreement containing terms and provisions the
13    effect of which is to substantially change or modify the
14    sales and service obligations or capital requirements of
15    the motor vehicle dealer arbitrarily and without good cause
16    and without giving notice as hereinafter provided
17    notwithstanding any term or provision of a franchise or
18    selling agreement.
19            (A) If a manufacturer, distributor, wholesaler,
20        distributor branch or division, factory branch or
21        division or wholesale branch or division intends to
22        cancel or terminate a franchise or selling agreement or
23        intends not to extend or renew a franchise or selling
24        agreement on its expiration, it shall send a letter by
25        certified mail, return receipt requested, to the
26        affected franchisee at least 60 days before the

 

 

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1        effective date of the proposed action, or not later
2        than 10 days before the proposed action when the reason
3        for the action is based upon either of the following:
4                (i) the business operations of the franchisee
5            have been abandoned or the franchisee has failed to
6            conduct customary sales and service operations
7            during customary business hours for at least 7
8            consecutive business days unless such closing is
9            due to an act of God, strike or labor difficulty or
10            other cause over which the franchisee has no
11            control; or
12                (ii) the conviction of or plea of nolo
13            contendere by the motor vehicle dealer or any
14            operator thereof in a court of competent
15            jurisdiction to an offense punishable by
16            imprisonment for more than two years.
17            Each notice of proposed action shall include a
18        detailed statement setting forth the specific grounds
19        for the proposed cancellation, termination, or refusal
20        to extend or renew and shall state that the dealer has
21        only 30 days from receipt of the notice to file with
22        the Motor Vehicle Review Board a written protest
23        against the proposed action.
24            (B) If a manufacturer, distributor, wholesaler,
25        distributor branch or division, factory branch or
26        division or wholesale branch or division intends to

 

 

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

 

 

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

 

 

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1            (E) The manufacturer may not cancel or terminate,
2        or fail to extend or renew a franchise or selling
3        agreement or change or modify the obligations of the
4        franchisee as a condition to offering a renewal,
5        replacement, or succeeding franchise or selling
6        agreement before the hearing process is concluded as
7        prescribed by this Act, and thereafter, if the Board
8        determines that the manufacturer has failed to meet its
9        burden of proof and that good cause does not exist to
10        allow the proposed action;
11        (7) notwithstanding the terms of any franchise
12    agreement, to fail to indemnify and hold harmless its
13    franchised dealers against any judgment or settlement for
14    damages, including, but not limited to, court costs, expert
15    witness fees, reasonable attorneys' fees of the new motor
16    vehicle dealer, and other expenses incurred in the
17    litigation, so long as such fees and costs are reasonable,
18    arising out of complaints, claims or lawsuits including,
19    but not limited to, strict liability, negligence,
20    misrepresentation, warranty (express or implied), or
21    recision of the sale as defined in Section 2-608 of the
22    Uniform Commercial Code, to the extent that the judgment or
23    settlement relates to the alleged defective or negligent
24    manufacture, assembly or design of new motor vehicles,
25    parts or accessories or other functions by the
26    manufacturer, beyond the control of the dealer; provided

 

 

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1    that, in order to provide an adequate defense, the
2    manufacturer receives notice of the filing of a complaint,
3    claim, or lawsuit within 60 days after the filing;
4        (8) to require or otherwise coerce a motor vehicle
5    dealer to underutilize the motor vehicle dealer's
6    facilities by requiring or otherwise coercing the motor
7    vehicle dealer to exclude or remove from the motor vehicle
8    dealer's facilities operations for selling or servicing of
9    any vehicles for which the motor vehicle dealer has a
10    franchise agreement with another manufacturer,
11    distributor, wholesaler, distribution branch or division,
12    or officer, agent, or other representative thereof;
13    provided, however, that, in light of all existing
14    circumstances, (i) the motor vehicle dealer maintains a
15    reasonable line of credit for each make or line of new
16    motor vehicle, (ii) the new motor vehicle dealer remains in
17    compliance with any reasonable facilities requirements of
18    the manufacturer, (iii) no change is made in the principal
19    management of the new motor vehicle dealer, and (iv) the
20    addition of the make or line of new motor vehicles would be
21    reasonable. The reasonable facilities requirement set
22    forth in item (ii) of subsection (d)(8) shall not include
23    any requirement that a franchisee establish or maintain
24    exclusive facilities, personnel, or display space. Any
25    decision by a motor vehicle dealer to sell additional makes
26    or lines at the motor vehicle dealer's facility shall be

 

 

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1    presumed to be reasonable, and the manufacturer shall have
2    the burden to overcome that presumption. A motor vehicle
3    dealer must provide a written notification of its intent to
4    add a make or line of new motor vehicles to the
5    manufacturer. If the manufacturer does not respond to the
6    motor vehicle dealer, in writing, objecting to the addition
7    of the make or line within 60 days after the date that the
8    motor vehicle dealer sends the written notification, then
9    the manufacturer shall be deemed to have approved the
10    addition of the make or line; or
11        (9) to use or consider the performance of a motor
12    vehicle dealer relating to the sale of the manufacturer's,
13    distributor's, or wholesaler's vehicles or the motor
14    vehicle dealer's ability to satisfy any minimum sales or
15    market share quota or responsibility relating to the sale
16    of the manufacturer's, distributor's, or wholesaler's new
17    vehicles in determining:
18            (A) the motor vehicle dealer's eligibility to
19        purchase program, certified, or other used motor
20        vehicles from the manufacturer, distributor, or
21        wholesaler;
22            (B) the volume, type, or model of program,
23        certified, or other used motor vehicles that a motor
24        vehicle dealer is eligible to purchase from the
25        manufacturer, distributor, or wholesaler;
26            (C) the price of any program, certified, or other

 

 

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1        used motor vehicle that the dealer is eligible to
2        purchase from the manufacturer, distributor, or
3        wholesaler; or
4            (D) the availability or amount of any discount,
5        credit, rebate, or sales incentive that the dealer is
6        eligible to receive from the manufacturer,
7        distributor, or wholesaler for the purchase of any
8        program, certified, or other used motor vehicle
9        offered for sale by the manufacturer, distributor, or
10        wholesaler.
11    (e) It shall be deemed a violation for a manufacturer, a
12distributor, a wholesaler, a distributor branch or division or
13officer, agent or other representative thereof:
14        (1) to resort to or use any false or misleading
15    advertisement in connection with his business as such
16    manufacturer, distributor, wholesaler, distributor branch
17    or division or officer, agent or other representative
18    thereof;
19        (2) to offer to sell or lease, or to sell or lease, any
20    new motor vehicle to any motor vehicle dealer at a lower
21    actual price therefor than the actual price offered to any
22    other motor vehicle dealer for the same model vehicle
23    similarly equipped or to utilize any device including, but
24    not limited to, sales promotion plans or programs which
25    result in such lesser actual price or fail to make
26    available to any motor vehicle dealer any preferential

 

 

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1    pricing, incentive, rebate, finance rate, or low interest
2    loan program offered to competing motor vehicle dealers in
3    other contiguous states. However, the provisions of this
4    paragraph shall not apply to sales to a motor vehicle
5    dealer for resale to any unit of the United States
6    Government, the State or any of its political subdivisions;
7        (3) to offer to sell or lease, or to sell or lease, any
8    new motor vehicle to any person, except a wholesaler,
9    distributor or manufacturer's employees at a lower actual
10    price therefor than the actual price offered and charged to
11    a motor vehicle dealer for the same model vehicle similarly
12    equipped or to utilize any device which results in such
13    lesser actual price. However, the provisions of this
14    paragraph shall not apply to sales to a motor vehicle
15    dealer for resale to any unit of the United States
16    Government, the State or any of its political subdivisions;
17        (4) to prevent or attempt to prevent by contract or
18    otherwise any motor vehicle dealer or franchisee from
19    changing the executive management control of the motor
20    vehicle dealer or franchisee unless the franchiser, having
21    the burden of proof, proves that such change of executive
22    management will result in executive management control by a
23    person or persons who are not of good moral character or
24    who do not meet the franchiser's existing and, with
25    consideration given to the volume of sales and service of
26    the dealership, uniformly applied minimum business

 

 

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1    experience standards in the market area. However where the
2    manufacturer rejects a proposed change in executive
3    management control, the manufacturer shall give written
4    notice of his reasons to the dealer within 60 days of
5    notice to the manufacturer by the dealer of the proposed
6    change. If the manufacturer does not send a letter to the
7    franchisee by certified mail, return receipt requested,
8    within 60 days from receipt by the manufacturer of the
9    proposed change, then the change of the executive
10    management control of the franchisee shall be deemed
11    accepted as proposed by the franchisee, and the
12    manufacturer shall give immediate effect to such change;
13        (5) to prevent or attempt to prevent by contract or
14    otherwise any motor vehicle dealer from establishing or
15    changing the capital structure of his dealership or the
16    means by or through which he finances the operation
17    thereof; provided the dealer meets any reasonable capital
18    standards agreed to between the dealer and the
19    manufacturer, distributor or wholesaler, who may require
20    that the sources, method and manner by which the dealer
21    finances or intends to finance its operation, equipment or
22    facilities be fully disclosed;
23        (6) to refuse to give effect to or prevent or attempt
24    to prevent by contract or otherwise any motor vehicle
25    dealer or any officer, partner or stockholder of any motor
26    vehicle dealer from selling or transferring any part of the

 

 

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1    interest of any of them to any other person or persons or
2    party or parties unless such sale or transfer is to a
3    transferee who would not otherwise qualify for a new motor
4    vehicle dealers license under "The Illinois Vehicle Code"
5    or unless the franchiser, having the burden of proof,
6    proves that such sale or transfer is to a person or party
7    who is not of good moral character or does not meet the
8    franchiser's existing and reasonable capital standards
9    and, with consideration given to the volume of sales and
10    service of the dealership, uniformly applied minimum
11    business experience standards in the market area. However,
12    nothing herein shall be construed to prevent a franchiser
13    from implementing affirmative action programs providing
14    business opportunities for minorities or from complying
15    with applicable federal, State or local law:
16            (A) If the manufacturer intends to refuse to
17        approve the sale or transfer of all or a part of the
18        interest, then it shall, within 60 days from receipt of
19        the completed application forms generally utilized by
20        a manufacturer to conduct its review and a copy of all
21        agreements regarding the proposed transfer, send a
22        letter by certified mail, return receipt requested,
23        advising the franchisee of any refusal to approve the
24        sale or transfer of all or part of the interest and
25        shall state that the dealer only has 30 days from the
26        receipt of the notice to file with the Motor Vehicle

 

 

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1        Review Board a written protest against the proposed
2        action. The notice shall set forth specific criteria
3        used to evaluate the prospective transferee and the
4        grounds for refusing to approve the sale or transfer to
5        that transferee. Within 30 days from the franchisee's
6        receipt of the manufacturer's notice, the franchisee
7        may file with the Board a written protest against the
8        proposed action.
9            When a protest has been timely filed, the Board
10        shall enter an order, fixing the date (within 60 days
11        of the date of such order), time, and place of a
12        hearing on the protest, required under Sections 12 and
13        29 of this Act, and send by certified mail, return
14        receipt requested, a copy of the order to the
15        manufacturer that filed notice of intention of the
16        proposed action and to the protesting franchisee.
17            The manufacturer shall have the burden of proof to
18        establish that good cause exists to refuse to approve
19        the sale or transfer to the transferee. The
20        determination whether good cause exists to refuse to
21        approve the sale or transfer shall be made by the Board
22        under subdivisions (6)(B). The manufacturer shall not
23        refuse to approve the sale or transfer by a dealer or
24        an officer, partner, or stockholder of a franchise or
25        any part of the interest to any person or persons
26        before the hearing process is concluded as prescribed

 

 

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1        by this Act, and thereafter if the Board determines
2        that the manufacturer has failed to meet its burden of
3        proof and that good cause does not exist to refuse to
4        approve the sale or transfer to the transferee.
5            (B) Good cause to refuse to approve such sale or
6        transfer under this Section is established when such
7        sale or transfer is to a transferee who would not
8        otherwise qualify for a new motor vehicle dealers
9        license under "The Illinois Vehicle Code" or such sale
10        or transfer is to a person or party who is not of good
11        moral character or does not meet the franchiser's
12        existing and reasonable capital standards and, with
13        consideration given to the volume of sales and service
14        of the dealership, uniformly applied minimum business
15        experience standards in the market area.
16        (7) to obtain money, goods, services, anything of
17    value, or any other benefit from any other person with whom
18    the motor vehicle dealer does business, on account of or in
19    relation to the transactions between the dealer and the
20    other person as compensation, except for services actually
21    rendered, unless such benefit is promptly accounted for and
22    transmitted to the motor vehicle dealer;
23        (8) to grant an additional franchise in the relevant
24    market area of an existing franchise of the same line make
25    or to relocate an existing motor vehicle dealership within
26    or into a relevant market area of an existing franchise of

 

 

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1    the same line make. However, if the manufacturer wishes to
2    grant such an additional franchise to an independent person
3    in a bona fide relationship in which such person is
4    prepared to make a significant investment subject to loss
5    in such a dealership, or if the manufacturer wishes to
6    relocate an existing motor vehicle dealership, then the
7    manufacturer shall send a letter by certified mail, return
8    receipt requested, to each existing dealer or dealers of
9    the same line make whose relevant market area includes the
10    proposed location of the additional or relocated franchise
11    at least 60 days before the manufacturer grants an
12    additional franchise or relocates an existing franchise of
13    the same line make within or into the relevant market area
14    of an existing franchisee of the same line make. Each
15    notice shall set forth the specific grounds for the
16    proposed grant of an additional or relocation of an
17    existing franchise and shall state that the dealer has only
18    30 days from the date of receipt of the notice to file with
19    the Motor Vehicle Review Board a written protest against
20    the proposed action. Unless the parties agree upon the
21    grant or establishment of the additional or relocated
22    franchise within 30 days from the date the notice was
23    received by the existing franchisee of the same line make
24    or any person entitled to receive such notice, the
25    franchisee or other person may file with the Board a
26    written protest against the grant or establishment of the

 

 

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1    proposed additional or relocated franchise.
2        When a protest has been timely filed, the Board shall
3    enter an order fixing a date (within 60 days of the date of
4    the order), time, and place of a hearing on the protest,
5    required under Sections 12 and 29 of this Act, and send by
6    certified or registered mail, return receipt requested, a
7    copy of the order to the manufacturer that filed the notice
8    of intention to grant or establish the proposed additional
9    or relocated franchise and to the protesting dealer or
10    dealers of the same line make whose relevant market area
11    includes the proposed location of the additional or
12    relocated franchise.
13        When more than one protest is filed against the grant
14    or establishment of the additional or relocated franchise
15    of the same line make, the Board may consolidate the
16    hearings to expedite disposition of the matter. The
17    manufacturer shall have the burden of proof to establish
18    that good cause exists to allow the grant or establishment
19    of the additional or relocated franchise. The manufacturer
20    may not grant or establish the additional franchise or
21    relocate the existing franchise before the hearing process
22    is concluded as prescribed by this Act, and thereafter if
23    the Board determines that the manufacturer has failed to
24    meet its burden of proof and that good cause does not exist
25    to allow the grant or establishment of the additional
26    franchise or relocation of the existing franchise.

 

 

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1        The determination whether good cause exists for
2    allowing the grant or establishment of an additional
3    franchise or relocated existing franchise, shall be made by
4    the Board under subsection (c) of Section 12 of this Act.
5    If the manufacturer seeks to enter into a contract,
6    agreement or other arrangement with any person,
7    establishing any additional motor vehicle dealership or
8    other facility, limited to the sale of factory repurchase
9    vehicles or late model vehicles, then the manufacturer
10    shall follow the notice procedures set forth in this
11    Section and the determination whether good cause exists for
12    allowing the proposed agreement shall be made by the Board
13    under subsection (c) of Section 12, with the manufacturer
14    having the burden of proof.
15            A. (Blank).
16            B. For the purposes of this Section, appointment of
17        a successor motor vehicle dealer at the same location
18        as its predecessor, or within 2 miles of such location,
19        or the relocation of an existing dealer or franchise
20        within 2 miles of the relocating dealer's or
21        franchisee's existing location, shall not be construed
22        as a grant, establishment or the entering into of an
23        additional franchise or selling agreement, or a
24        relocation of an existing franchise. The reopening of a
25        motor vehicle dealership that has not been in operation
26        for 18 months or more shall be deemed the grant of an

 

 

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

 

 

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1    Act;
2        (10) to prevent or refuse to give effect to the
3    succession to the ownership or management control of a
4    dealership by any legatee under the will of a dealer or to
5    an heir under the laws of descent and distribution of this
6    State unless the franchisee has designated a successor to
7    the ownership or management control under the succession
8    provisions of the franchise. Unless the franchiser, having
9    the burden of proof, proves that the successor is a person
10    who is not of good moral character or does not meet the
11    franchiser's existing and reasonable capital standards
12    and, with consideration given to the volume of sales and
13    service of the dealership, uniformly applied minimum
14    business experience standards in the market area, any
15    designated successor of a dealer or franchisee may succeed
16    to the ownership or management control of a dealership
17    under the existing franchise if:
18                (i) The designated successor gives the
19            franchiser written notice by certified mail,
20            return receipt requested, of his or her intention
21            to succeed to the ownership of the dealer within 60
22            days of the dealer's death or incapacity; and
23                (ii) The designated successor agrees to be
24            bound by all the terms and conditions of the
25            existing franchise.
26        Notwithstanding the foregoing, in the event the motor

 

 

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1    vehicle dealer or franchisee and manufacturer have duly
2    executed an agreement concerning succession rights prior
3    to the dealer's death or incapacitation, the agreement
4    shall be observed.
5            (A) If the franchiser intends to refuse to honor
6        the successor to the ownership of a deceased or
7        incapacitated dealer or franchisee under an existing
8        franchise agreement, the franchiser shall send a
9        letter by certified mail, return receipt requested, to
10        the designated successor within 60 days from receipt of
11        a proposal advising of its intent to refuse to honor
12        the succession and to discontinue the existing
13        franchise agreement and shall state that the
14        designated successor only has 30 days from the receipt
15        of the notice to file with the Motor Vehicle Review
16        Board a written protest against the proposed action.
17        The notice shall set forth the specific grounds for the
18        refusal to honor the succession and discontinue the
19        existing franchise agreement.
20            If notice of refusal is not timely served upon the
21        designated successor, the franchise agreement shall
22        continue in effect subject to termination only as
23        otherwise permitted by paragraph (6) of subsection (d)
24        of Section 4 of this Act.
25            Within 30 days from the date the notice was
26        received by the designated successor or any other

 

 

09900SB0140ham002- 24 -LRB099 03415 JLS 48746 a

1        person entitled to notice, the designee or other person
2        may file with the Board a written protest against the
3        proposed action.
4            When a protest has been timely filed, the Board
5        shall enter an order, fixing a date (within 60 days of
6        the date of the order), time, and place of a hearing on
7        the protest, required under Sections 12 and 29 of this
8        Act, and send by certified mail, return receipt
9        requested, a copy of the order to the franchiser that
10        filed the notice of intention of the proposed action
11        and to the protesting designee or such other person.
12            The manufacturer shall have the burden of proof to
13        establish that good cause exists to refuse to honor the
14        succession and discontinue the existing franchise
15        agreement. The determination whether good cause exists
16        to refuse to honor the succession shall be made by the
17        Board under subdivision (B) of this paragraph (10). The
18        manufacturer shall not refuse to honor the succession
19        or discontinue the existing franchise agreement before
20        the hearing process is concluded as prescribed by this
21        Act, and thereafter if the Board determines that it has
22        failed to meet its burden of proof and that good cause
23        does not exist to refuse to honor the succession and
24        discontinue the existing franchise agreement.
25            (B) No manufacturer shall impose any conditions
26        upon honoring the succession and continuing the

 

 

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1        existing franchise agreement with the designated
2        successor other than that the franchisee has
3        designated a successor to the ownership or management
4        control under the succession provisions of the
5        franchise, or that the designated successor is of good
6        moral character or meets the reasonable capital
7        standards and, with consideration given to the volume
8        of sales and service of the dealership, uniformly
9        applied minimum business experience standards in the
10        market area;
11        (11) to prevent or refuse to approve a proposal to
12    establish a successor franchise at a location previously
13    approved by the franchiser when submitted with the
14    voluntary termination by the existing franchisee unless
15    the successor franchisee would not otherwise qualify for a
16    new motor vehicle dealer's license under the Illinois
17    Vehicle Code or unless the franchiser, having the burden of
18    proof, proves that such proposed successor is not of good
19    moral character or does not meet the franchiser's existing
20    and reasonable capital standards and, with consideration
21    given to the volume of sales and service of the dealership,
22    uniformly applied minimum business experience standards in
23    the market area. However, when such a rejection of a
24    proposal is made, the manufacturer shall give written
25    notice of its reasons to the franchisee within 60 days of
26    receipt by the manufacturer of the proposal. However,

 

 

09900SB0140ham002- 26 -LRB099 03415 JLS 48746 a

1    nothing herein shall be construed to prevent a franchiser
2    from implementing affirmative action programs providing
3    business opportunities for minorities, or from complying
4    with applicable federal, State or local law;
5        (12) to prevent or refuse to grant a franchise to a
6    person because such person owns, has investment in or
7    participates in the management of or holds a franchise for
8    the sale of another make or line of motor vehicles within 7
9    miles of the proposed franchise location in a county having
10    a population of more than 300,000 persons, or within 12
11    miles of the proposed franchise location in a county having
12    a population of less than 300,000 persons; or
13        (13) to prevent or attempt to prevent any new motor
14    vehicle dealer from establishing any additional motor
15    vehicle dealership or other facility limited to the sale of
16    factory repurchase vehicles or late model vehicles or
17    otherwise offering for sale factory repurchase vehicles of
18    the same line make at an existing franchise by failing to
19    make available any contract, agreement or other
20    arrangement which is made available or otherwise offered to
21    any person.
22    (f) It is deemed a violation for a manufacturer, a
23distributor, a wholesaler wholesale, a distributor branch or
24division, a factory branch or division, or a wholesale branch
25or division, or officer, agent, broker, shareholder, except a
26shareholder of 1% or less of the outstanding shares of any

 

 

09900SB0140ham002- 27 -LRB099 03415 JLS 48746 a

1class of securities of a manufacturer, distributor, or
2wholesaler which is a publicly traded corporation, or other
3representative, directly or indirectly, to own or operate a
4place of business as a motor vehicle franchisee or motor
5vehicle financing affiliate, except that, this subsection
6shall not prohibit:
7        (1) the ownership or operation of a place of business
8    by a manufacturer, distributor, or wholesaler for a period,
9    not to exceed 18 months, during the transition from one
10    motor vehicle franchisee to another; or
11        (2) the investment in a motor vehicle franchisee by a
12    manufacturer, distributor, or wholesaler if the investment
13    is for the sole purpose of enabling a partner or
14    shareholder in that motor vehicle franchisee to acquire an
15    interest in that motor vehicle franchisee and that partner
16    or shareholder is not otherwise employed by or associated
17    with the manufacturer, distributor, or wholesaler and
18    would not otherwise have the requisite capital investment
19    funds to invest in the motor vehicle franchisee, and has
20    the right to purchase the entire equity interest of the
21    manufacturer, distributor, or wholesaler in the motor
22    vehicle franchisee within a reasonable period of time not
23    to exceed 5 years; or .
24        (3) the ownership or operation of a place of business
25    by a manufacturer that manufactures only diesel engines for
26    installation in trucks having a gross vehicle weight rating

 

 

09900SB0140ham002- 28 -LRB099 03415 JLS 48746 a

1    of more than 16,000 pounds that are required to be
2    registered under the Illinois Vehicle Code, provided that:
3            (A) the manufacturer does not otherwise
4        manufacture, distribute, or sell motor vehicles as
5        defined under Section 1-217 of the Illinois Vehicle
6        Code;
7            (B) the manufacturer owned a place of business and
8        it was in operation as of January 1, 2016;
9            (C) the manufacturer complies with all obligations
10        owed to dealers that are not owned, operated, or
11        controlled by the manufacturer, including, but not
12        limited to those obligations arising pursuant to
13        Section 6;
14            (D) to further avoid any acts or practices, the
15        effect of which may be to lessen or eliminate
16        competition, the manufacturer provides to dealers on
17        substantially equal terms access to all support for
18        completing repairs, including, but not limited to,
19        parts and assemblies, training, and technical service
20        bulletins, and other information concerning repairs
21        that the manufacturer provides to facilities that are
22        owned, operated, or controlled by the manufacturer;
23        and
24            (E) the manufacturer does not require that
25        warranty repair work be performed by a
26        manufacturer-owned repair facility and the

 

 

09900SB0140ham002- 29 -LRB099 03415 JLS 48746 a

1        manufacturer provides any dealer that has an agreement
2        with the manufacturer to sell and perform warranty
3        repairs on the manufacturer's engines the opportunity
4        to perform warranty repairs on those engines,
5        regardless of whether the dealer sold the truck into
6        which the engine was installed.
7    (g) Notwithstanding the terms, provisions, or conditions
8of any agreement or waiver, it shall be deemed a violation for
9a manufacturer, a distributor, a wholesaler, a distributor
10branch or division, a factory branch or division, or a
11wholesale branch or division, or officer, agent or other
12representative thereof, to directly or indirectly condition
13the awarding of a franchise to a prospective new motor vehicle
14dealer, the addition of a line make or franchise to an existing
15dealer, the renewal of a franchise of an existing dealer, the
16approval of the relocation of an existing dealer's facility, or
17the approval of the sale or transfer of the ownership of a
18franchise on the willingness of a dealer, proposed new dealer,
19or owner of an interest in the dealership facility to enter
20into a site control agreement or exclusive use agreement unless
21separate and reasonable consideration was offered and accepted
22for that agreement.
23    For purposes of this subsection (g), the terms "site
24control agreement" and "exclusive use agreement" include any
25agreement that has the effect of either (i) requiring that the
26dealer establish or maintain exclusive dealership facilities;

 

 

09900SB0140ham002- 30 -LRB099 03415 JLS 48746 a

1or (ii) restricting the ability of the dealer, or the ability
2of the dealer's lessor in the event the dealership facility is
3being leased, to transfer, sell, lease, or change the use of
4the dealership premises, whether by sublease, lease,
5collateral pledge of lease, or other similar agreement. "Site
6control agreement" and "exclusive use agreement" also include a
7manufacturer restricting the ability of a dealer to transfer,
8sell, or lease the dealership premises by right of first
9refusal to purchase or lease, option to purchase, or option to
10lease if the transfer, sale, or lease of the dealership
11premises is to a person who is an immediate family member of
12the dealer. For the purposes of this subsection (g), "immediate
13family member" means a spouse, parent, son, daughter,
14son-in-law, daughter-in-law, brother, and sister.
15    If a manufacturer exercises any right of first refusal to
16purchase or lease or option to purchase or lease with regard to
17a transfer, sale, or lease of the dealership premises to a
18person who is not an immediate family member of the dealer,
19then (1) within 60 days from the receipt of the completed
20application forms generally utilized by a manufacturer to
21conduct its review and a copy of all agreements regarding the
22proposed transfer, the manufacturer must notify the dealer of
23its intent to exercise the right of first refusal to purchase
24or lease or option to purchase or lease and (2) the exercise of
25the right of first refusal to purchase or lease or option to
26purchase or lease must result in the dealer receiving

 

 

09900SB0140ham002- 31 -LRB099 03415 JLS 48746 a

1consideration, terms, and conditions that either are the same
2as or greater than that which they have contracted to receive
3in connection with the proposed transfer, sale, or lease of the
4dealership premises.
5    Any provision contained in any agreement entered into on or
6after the effective date of this amendatory Act of the 96th
7General Assembly that is inconsistent with the provisions of
8this subsection (g) shall be voidable at the election of the
9affected dealer, prospective dealer, or owner of an interest in
10the dealership facility.
11    (h) For purposes of this subsection:
12    "Successor manufacturer" means any motor vehicle
13manufacturer that, on or after January 1, 2009, acquires,
14succeeds to, or assumes any part of the business of another
15manufacturer, referred to as the "predecessor manufacturer",
16as the result of any of the following:
17        (i) A change in ownership, operation, or control of the
18    predecessor manufacturer by sale or transfer of assets,
19    corporate stock or other equity interest, assignment,
20    merger, consolidation, combination, joint venture,
21    redemption, court-approved sale, operation of law or
22    otherwise.
23        (ii) The termination, suspension, or cessation of a
24    part or all of the business operations of the predecessor
25    manufacturer.
26        (iii) The discontinuance of the sale of the product

 

 

09900SB0140ham002- 32 -LRB099 03415 JLS 48746 a

1    line.
2        (iv) A change in distribution system by the predecessor
3    manufacturer, whether through a change in distributor or
4    the predecessor manufacturer's decision to cease
5    conducting business through a distributor altogether.
6    "Former Franchisee" means a new motor vehicle dealer that
7has entered into a franchise with a predecessor manufacturer
8and that has either:
9        (i) entered into a termination agreement or deferred
10    termination agreement with a predecessor or successor
11    manufacturer related to such franchise; or
12        (ii) has had such franchise canceled, terminated,
13    nonrenewed, noncontinued, rejected, nonassumed, or
14    otherwise ended.
15    For a period of 3 years from: (i) the date that a successor
16manufacturer acquires, succeeds to, or assumes any part of the
17business of a predecessor manufacturer; (ii) the last day that
18a former franchisee is authorized to remain in business as a
19franchised dealer with respect to a particular franchise under
20a termination agreement or deferred termination agreement with
21a predecessor or successor manufacturer; (iii) the last day
22that a former franchisee that was cancelled, terminated,
23nonrenewed, noncontinued, rejected, nonassumed, or otherwise
24ended by a predecessor or successor manufacturer is authorized
25to remain in business as a franchised dealer with respect to a
26particular franchise; or (iv) the effective date of this

 

 

09900SB0140ham002- 33 -LRB099 03415 JLS 48746 a

1amendatory Act of the 96th General Assembly, whichever is
2latest, it shall be unlawful for such successor manufacturer to
3enter into a same line make franchise with any person or to
4permit the relocation of any existing same line make franchise,
5for a line make of the predecessor manufacturer that would be
6located or relocated within the relevant market area of a
7former franchisee who owned or leased a dealership facility in
8that relevant market area without first offering the additional
9or relocated franchise to the former franchisee, or the
10designated successor of such former franchisee in the event the
11former franchisee is deceased or a person with a disability, at
12no cost and without any requirements or restrictions other than
13those imposed generally on the manufacturer's other
14franchisees at that time, unless one of the following applies:
15        (1) As a result of the former franchisee's
16    cancellation, termination, noncontinuance, or nonrenewal
17    of the franchise, the predecessor manufacturer had
18    consolidated the line make with another of its line makes
19    for which the predecessor manufacturer had a franchisee
20    with a then-existing dealership facility located within
21    that relevant market area.
22        (2) The successor manufacturer has paid the former
23    franchisee, or the designated successor of such former
24    franchisee in the event the former franchisee is deceased
25    or a person with a disability, the fair market value of the
26    former franchisee's franchise on (i) the date the

 

 

09900SB0140ham002- 34 -LRB099 03415 JLS 48746 a

1    franchisor announces the action which results in the
2    termination, cancellation, or nonrenewal; or (ii) the date
3    the action which results in termination, cancellation, or
4    nonrenewal first became general knowledge; or (iii) the day
5    12 months prior to the date on which the notice of
6    termination, cancellation, or nonrenewal is issued,
7    whichever amount is higher. Payment is due within 90 days
8    of the effective date of the termination, cancellation, or
9    nonrenewal. If the termination, cancellation, or
10    nonrenewal is due to a manufacturer's change in
11    distributors, the manufacturer may avoid paying fair
12    market value to the dealer if the new distributor or the
13    manufacturer offers the dealer a franchise agreement with
14    terms acceptable to the dealer.
15        (3) The successor manufacturer proves that it would
16    have had good cause to terminate the franchise agreement of
17    the former franchisee, or the successor of the former
18    franchisee under item (e)(10) in the event that the former
19    franchisee is deceased or a person with a disability. The
20    determination of whether the successor manufacturer would
21    have had good cause to terminate the franchise agreement of
22    the former franchisee, or the successor of the former
23    franchisee, shall be made by the Board under subsection (d)
24    of Section 12. A successor manufacturer that seeks to
25    assert that it would have had good cause to terminate a
26    former franchisee, or the successor of the former

 

 

09900SB0140ham002- 35 -LRB099 03415 JLS 48746 a

1    franchisee, must file a petition seeking a hearing on this
2    issue before the Board and shall have the burden of proving
3    that it would have had good cause to terminate the former
4    franchisee or the successor of the former franchisee. No
5    successor dealer, other than the former franchisee, may be
6    appointed or franchised by the successor manufacturer
7    within the relevant market area of the former franchisee
8    until the Board has held a hearing and rendered a
9    determination on the issue of whether the successor
10    manufacturer would have had good cause to terminate the
11    former franchisee.
12    In the event that a successor manufacturer attempts to
13enter into a same line make franchise with any person or to
14permit the relocation of any existing line make franchise under
15this subsection (h) at a location that is within the relevant
16market area of 2 or more former franchisees, then the successor
17manufacturer may not offer it to any person other than one of
18those former franchisees unless the successor manufacturer can
19prove that at least one of the 3 exceptions in items (1), (2),
20and (3) of this subsection (h) applies to each of those former
21franchisees.
22(Source: P.A. 99-143, eff. 7-27-15.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.".