State of Illinois
91st General Assembly
Legislation

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[ Introduced ][ Enrolled ][ House Amendment 001 ]

91_HB3037eng

 
HB3037 Engrossed                               LRB9110146STsb

 1        AN ACT to  amend  the  Motor  Vehicle  Franchise  Act  by
 2    changing Section 4.

 3        Be it  enacted  by  the  People  of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section 5.  The Motor Vehicle Franchise Act is amended by
 6    changing Section 4 as follows:

 7        (815 ILCS 710/4) (from Ch. 121 1/2, par. 754)
 8        Sec. 4.  Unfair competition and practices.
 9        (a)  The  unfair  methods  of  competition and unfair and
10    deceptive acts or practices listed in this Section are hereby
11    declared to be unlawful. In construing the provisions of this
12    Section, the courts may be guided by the  interpretations  of
13    the  Federal  Trade Commission Act (15 U.S.C. 45 et seq.), as
14    from time to time amended.
15        (b)  It shall be deemed a violation for any manufacturer,
16    factory  branch,  factory  representative,   distributor   or
17    wholesaler, distributor branch, distributor representative or
18    motor  vehicle dealer to engage in any action with respect to
19    a  franchise  which   is   arbitrary,   in   bad   faith   or
20    unconscionable  and which causes damage to any of the parties
21    or to the public.
22        (c)  It shall be deemed a violation for a manufacturer, a
23    distributor, a wholesaler, a distributor branch or  division,
24    a  factory  branch  or  division,  or  a  wholesale branch or
25    division, or officer, agent or other representative  thereof,
26    to coerce, or attempt to coerce, any motor vehicle dealer:
27             (1)  to  accept,  buy  or order any motor vehicle or
28        vehicles, appliances,  equipment,  parts  or  accessories
29        therefor,  or  any  other  commodity  or  commodities  or
30        service  or  services which such motor vehicle dealer has
31        not  voluntarily  ordered  or  requested   except   items
 
HB3037 Engrossed            -2-                LRB9110146STsb
 1        required by applicable local, state or federal law; or to
 2        require  a  motor vehicle dealer to accept, buy, order or
 3        purchase such items in order to obtain any motor  vehicle
 4        or  vehicles  or any other commodity or commodities which
 5        have been ordered or  requested  by  such  motor  vehicle
 6        dealer;
 7             (2)  to  order  or  accept  delivery  of  any  motor
 8        vehicle with special features, appliances, accessories or
 9        equipment  not  included  in  the list price of the motor
10        vehicles  as  publicly  advertised  by  the  manufacturer
11        thereof, except items required by applicable law; or
12             (3)  to order for  anyone  any  parts,  accessories,
13        equipment,  machinery, tools, appliances or any commodity
14        whatsoever, except items required by applicable law.
15        (d)  It shall be deemed a violation for a manufacturer, a
16    distributor, a wholesaler, a distributor branch or  division,
17    or officer, agent or other representative thereof:
18             (1)  to adopt, change, establish or implement a plan
19        or  system  for  the  allocation  and distribution of new
20        motor  vehicles  to  motor  vehicle  dealers   which   is
21        arbitrary  or capricious or to modify an existing plan so
22        as to cause the same to be arbitrary or capricious;
23             (2)  to fail or refuse to advise or disclose to  any
24        motor  vehicle  dealer  having  a  franchise  or  selling
25        agreement,  upon written request therefor, the basis upon
26        which new motor  vehicles  of  the  same  line  make  are
27        allocated  or distributed to motor vehicle dealers in the
28        State and the basis upon which the current allocation  or
29        distribution  is being made or will be made to such motor
30        vehicle dealer;
31             (3)  to refuse to deliver in  reasonable  quantities
32        and  within  a  reasonable time after receipt of dealer's
33        order, to any motor vehicle dealer having a franchise  or
34        selling  agreement  for  the  retail  sale  of  new motor
 
HB3037 Engrossed            -3-                LRB9110146STsb
 1        vehicles  sold  or  distributed  by  such   manufacturer,
 2        distributor,  wholesaler, distributor branch or division,
 3        factory  branch  or  division  or  wholesale  branch   or
 4        division,  any such motor vehicles as are covered by such
 5        franchise  or  selling  agreement  specifically  publicly
 6        advertised   in   the   State   by   such   manufacturer,
 7        distributor, wholesaler, distributor branch or  division,
 8        factory  branch  or  division,  or  wholesale  branch  or
 9        division   to   be   available  for  immediate  delivery.
10        However, the failure to deliver any motor  vehicle  shall
11        not be considered a violation of this Act if such failure
12        is  due to an act of God, a work stoppage or delay due to
13        a strike or labor difficulty, a shortage of materials,  a
14        lack  of  manufacturing  capacity,  a  freight embargo or
15        other cause over which the manufacturer, distributor,  or
16        wholesaler, or any agent thereof has no control;
17             (4)  to  coerce,  or  attempt  to  coerce, any motor
18        vehicle dealer to enter  into  any  agreement  with  such
19        manufacturer, distributor, wholesaler, distributor branch
20        or  division,  factory  branch  or division, or wholesale
21        branch  or  division,  or   officer,   agent   or   other
22        representative   thereof,   or   to   do  any  other  act
23        prejudicial to the dealer by threatening  to  reduce  his
24        allocation  of  motor vehicles or cancel any franchise or
25        any selling agreement existing between such manufacturer,
26        distributor, wholesaler, distributor branch or  division,
27        or  factory  branch  or  division, or wholesale branch or
28        division, and the dealer. However, notice in  good  faith
29        to  any motor vehicle dealer of the dealer's violation of
30        any terms or provisions  of  such  franchise  or  selling
31        agreement  or  of any law or regulation applicable to the
32        conduct of a motor vehicle dealer shall not constitute  a
33        violation of this Act;
34             (5)  to  require  a  franchisee to participate in an
 
HB3037 Engrossed            -4-                LRB9110146STsb
 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
 5        franchisee;
 6             (6)  to cancel or terminate the franchise or selling
 7        agreement  of  a  motor vehicle dealer without good cause
 8        and without giving notice  as  hereinafter  provided;  to
 9        fail  or  refuse  to  extend  the  franchise  or  selling
10        agreement  of  a motor vehicle dealer upon its expiration
11        without  good  cause  and  without   giving   notice   as
12        hereinafter provided; or, to offer a renewal, replacement
13        or  succeeding  franchise or selling agreement containing
14        terms  and  provisions  the  effect  of   which   is   to
15        substantially  change  or  modify  the  sales and service
16        obligations or capital requirements of the motor  vehicle
17        dealer  arbitrarily  and  without  good cause and without
18        giving notice as hereinafter provided notwithstanding any
19        term or provision of a franchise or selling agreement.
20                  (A)  If    a     manufacturer,     distributor,
21             wholesaler,  distributor branch or division, factory
22             branch or division or wholesale branch  or  division
23             intends  to  cancel  or  terminate  a  franchise  or
24             selling  agreement or intends not to extend or renew
25             a franchise or selling agreement on its  expiration,
26             it  shall  send  a  letter by certified mail, return
27             receipt requested, to  the  affected  franchisee  at
28             least  60  days  before  the  effective  date of the
29             proposed action, or not later than  10  days  before
30             the  proposed  action when the reason for the action
31             is based upon either of the following:
32                       (i)  the  business   operations   of   the
33                  franchisee   have   been   abandoned   or   the
34                  franchisee  has  failed  to  conduct  customary
 
HB3037 Engrossed            -5-                LRB9110146STsb
 1                  sales  and  service operations during customary
 2                  business  hours  for  at  least  7  consecutive
 3                  business days unless such closing is due to  an
 4                  act of God, strike or labor difficulty or other
 5                  cause over which the franchisee has no control;
 6                  or
 7                       (ii)  the  conviction  of  or plea of nolo
 8                  contendere by the motor vehicle dealer  or  any
 9                  operator   thereof  in  a  court  of  competent
10                  jurisdiction  to  an  offense   punishable   by
11                  imprisonment for more than two years.
12                  Each  notice of proposed action shall include a
13             detailed  statement  setting  forth   the   specific
14             grounds  for the proposed cancellation, termination,
15             or refusal to extend or renew and shall  state  that
16             the  dealer  has  only  30  days from receipt of the
17             notice to file with the Motor Vehicle Review Board a
18             written protest against the proposed action.
19                  (B)  If    a     manufacturer,     distributor,
20             wholesaler,  distributor branch or division, factory
21             branch or division or wholesale branch  or  division
22             intends  to change substantially or modify the sales
23             and service obligations or capital requirements of a
24             motor vehicle dealer as a condition to extending  or
25             renewing the existing franchise or selling agreement
26             of such motor vehicle dealer, it shall send a letter
27             by  certified mail, return receipt requested, to the
28             affected franchisee at least 60    days  before  the
29             date  of  expiration  of  the  franchise  or selling
30             agreement.  Each notice  of  proposed  action  shall
31             include  a  detailed  statement  setting  forth  the
32             specific  grounds  for the proposed action and shall
33             state that the dealer has only 30 days from  receipt
34             of  the notice to file with the Motor Vehicle Review
 
HB3037 Engrossed            -6-                LRB9110146STsb
 1             Board a written protest against the proposed action.
 2                  (C)  Within 30 days from receipt of the  notice
 3             under  subparagraphs (A) and (B), the franchisee may
 4             file with the Board a written  protest  against  the
 5             proposed action.
 6                  When  the  protest  has  been timely filed, the
 7             Board shall enter an order, fixing a date (within 60
 8             days of the date of the order), time, and place of a
 9             hearing on the protest required  under  Sections  12
10             and  29  of  this  Act,  and send by certified mail,
11             return receipt requested, a copy of the order to the
12             manufacturer that filed the notice of  intention  of
13             the  proposed action and to the protesting dealer or
14             franchisee.
15                  The manufacturer shall have the burden of proof
16             to establish that good cause  exists  to  cancel  or
17             terminate,  or fail to extend or renew the franchise
18             or selling agreement of a motor  vehicle  dealer  or
19             franchisee,  and  to  change substantially or modify
20             the  sales  and  service  obligations   or   capital
21             requirements   of   a  motor  vehicle  dealer  as  a
22             condition to  extending  or  renewing  the  existing
23             franchise  or  selling agreement.  The determination
24             whether good cause exists to cancel,  terminate,  or
25             refuse  to  renew or extend the franchise or selling
26             agreement, or to change or modify the obligations of
27             the  dealer  as  a  condition  to   offer   renewal,
28             replacement,  or  succession  shall  be  made by the
29             Board under subsection (d) of  Section  12  of  this
30             Act.
31                  (D)  Notwithstanding  the terms, conditions, or
32             provisions of a franchise or selling agreement,  the
33             following   shall  not  constitute  good  cause  for
34             cancelling or terminating or failing  to  extend  or
 
HB3037 Engrossed            -7-                LRB9110146STsb
 1             renew  the  franchise  or selling agreement: (i) the
 2             change of ownership or executive management  of  the
 3             franchisee's  dealership;  or (ii) the fact that the
 4             franchisee or owner of an interest in the  franchise
 5             owns,  has  an  investment  in,  participates in the
 6             management of, or holds a license for  the  sale  of
 7             the  same  or  any  other  line  make  of  new motor
 8             vehicles.
 9                  Good cause shall exist to cancel, terminate  or
10             fail  to offer a renewal or replacement franchise or
11             selling agreement to all franchisees of a line  make
12             if  the  manufacturer  permanently  discontinues the
13             manufacture or assembly of motor  vehicles  of  such
14             line make.
15                  (E)  The   manufacturer   may   not  cancel  or
16             terminate, or fail to extend or renew a franchise or
17             selling  agreement   or   change   or   modify   the
18             obligations  of  the  franchisee  as  a condition to
19             offering  a  renewal,  replacement,  or   succeeding
20             franchise  or  selling  agreement before the hearing
21             process is concluded as prescribed by this Act,  and
22             thereafter,   if   the  Board  determines  that  the
23             manufacturer has failed to meet its burden of  proof
24             and  that  good  cause  does  not exist to allow the
25             proposed action; or
26             (7)  notwithstanding  the  terms  of  any  franchise
27        agreement, to fail to indemnify  and  hold  harmless  its
28        franchised dealers against any judgment or settlement for
29        damages,  including,  but  not  limited  to, court costs,
30        expert witness fees, reasonable attorneys'  fees  of  the
31        new  motor vehicle dealer, and other expenses incurred in
32        the litigation, so  long  as  such  fees  and  costs  are
33        reasonable, arising out of complaints, claims or lawsuits
34        including,   but   not   limited  to,  strict  liability,
 
HB3037 Engrossed            -8-                LRB9110146STsb
 1        negligence,  misrepresentation,  warranty   (express   or
 2        implied),  or  recision of the sale as defined in Section
 3        2-608 of the Uniform Commercial Code, to the extent  that
 4        the   judgment  or  settlement  relates  to  the  alleged
 5        defective or negligent manufacture, assembly or design of
 6        new  motor  vehicles,  parts  or  accessories  or   other
 7        functions  by the manufacturer, beyond the control of the
 8        dealer; provided that, in order to  provide  an  adequate
 9        defense,  the  manufacturer receives notice of the filing
10        of a complaint, claim, or lawsuit within  60  days  after
11        the filing.
12        (e)  It shall be deemed a violation for a manufacturer, a
13    distributor,  a  wholesaler, a distributor branch or division
14    or officer, agent or other representative thereof:
15             (1)  to resort to or use  any  false  or  misleading
16        advertisement  in  connection  with  his business as such
17        manufacturer, distributor, wholesaler, distributor branch
18        or division or officer,  agent  or  other  representative
19        thereof;
20             (2)  to offer to sell or lease, or to sell or lease,
21        any  new  motor  vehicle to any motor vehicle dealer at a
22        lower actual price therefor than the actual price offered
23        to any other motor vehicle  dealer  for  the  same  model
24        vehicle  similarly  equipped  or  to  utilize  any device
25        including, but not limited to, sales promotion  plans  or
26        programs  which  result  in  such lesser actual price  or
27        fail to make available to any motor  vehicle  dealer  any
28        preferential pricing, incentive, rebate, finance rate, or
29        low  interest  loan  program  offered  to competing motor
30        vehicle dealers in other contiguous states. However,  the
31        provisions  of this paragraph shall not apply to sales to
32        a motor vehicle dealer for resale  to  any  unit  of  the
33        United  States  Government,  the  State  or  any  of  its
34        political subdivisions;
 
HB3037 Engrossed            -9-                LRB9110146STsb
 1             (3)  to offer to sell or lease, or to sell or lease,
 2        any new motor vehicle to any person, except a wholesaler,
 3        distributor or manufacturer's employees at a lower actual
 4        price  therefor than the actual price offered and charged
 5        to a motor vehicle dealer  for  the  same  model  vehicle
 6        similarly equipped or to utilize any device which results
 7        in  such  lesser actual price. However, the provisions of
 8        this paragraph shall  not  apply  to  sales  to  a  motor
 9        vehicle  dealer  for  resale  to  any  unit of the United
10        States Government, the State  or  any  of  its  political
11        subdivisions;
12             (4)  to prevent or attempt to prevent by contract or
13        otherwise  any  motor  vehicle  dealer or franchisee from
14        changing the executive management control  of  the  motor
15        vehicle  dealer  or  franchisee  unless  the  franchiser,
16        having  the  burden  of proof, proves that such change of
17        executive management will result in executive  management
18        control  by a person or persons who are not of good moral
19        character or who do not meet  the  franchiser's  existing
20        and,  with consideration given to the volume of sales and
21        service of  the  dealership,  uniformly  applied  minimum
22        business experience standards in the market area. However
23        where  the  manufacturer  rejects  a  proposed  change in
24        executive management control, the manufacturer shall give
25        written notice of his reasons to  the  dealer  within  60
26        days  of  notice to the manufacturer by the dealer of the
27        proposed change. If the  manufacturer  does  not  send  a
28        letter  to  the  franchisee  by  certified  mail,  return
29        receipt  requested,  within  60  days from receipt by the
30        manufacturer of the proposed change, then the  change  of
31        the  executive management control of the franchisee shall
32        be deemed accepted as proposed by the franchisee, and the
33        manufacturer shall give immediate effect to such change;
34             (5)  to prevent or attempt to prevent by contract or
 
HB3037 Engrossed            -10-               LRB9110146STsb
 1        otherwise any motor vehicle dealer from  establishing  or
 2        changing  the  capital structure of his dealership or the
 3        means by or  through  which  he  finances  the  operation
 4        thereof; provided the dealer meets any reasonable capital
 5        standards   agreed   to   between   the  dealer  and  the
 6        manufacturer, distributor or wholesaler, who may  require
 7        that  the  sources, method and manner by which the dealer
 8        finances or intends to finance its  operation,  equipment
 9        or facilities be fully disclosed;
10             (6)  to  refuse  to  give  effect  to  or prevent or
11        attempt to prevent by contract  or  otherwise  any  motor
12        vehicle  dealer or any officer, partner or stockholder of
13        any motor vehicle dealer from selling or transferring any
14        part of the interest of any of them to any  other  person
15        or  persons  or  party  or  parties  unless  such sale or
16        transfer is to  a  transferee  who  would  not  otherwise
17        qualify  for  a  new  motor vehicle dealers license under
18        "The Illinois Vehicle Code"  or  unless  the  franchiser,
19        having  the  burden  of  proof,  proves that such sale or
20        transfer is to a person or party who is not of good moral
21        character or does not meet the franchiser's existing  and
22        reasonable  capital  standards  and,  with  consideration
23        given   to  the  volume  of  sales  and  service  of  the
24        dealership, uniformly applied minimum business experience
25        standards in the market  area.  However,  nothing  herein
26        shall   be   construed   to  prevent  a  franchiser  from
27        implementing  affirmative   action   programs   providing
28        business  opportunities  for minorities or from complying
29        with applicable federal, State or local law:
30                  (A)  If the manufacturer intends to  refuse  to
31             approve the sale or transfer of all or a part of the
32             interest, then it shall, within 60 days from receipt
33             of   the   completed   application  forms  generally
34             utilized by a manufacturer to conduct its review and
 
HB3037 Engrossed            -11-               LRB9110146STsb
 1             a copy of  all  agreements  regarding  the  proposed
 2             transfer,  send  a  letter by certified mail, return
 3             receipt requested, advising the  franchisee  of  any
 4             refusal  to  approve  the sale or transfer of all or
 5             part of the interest and shall state that the dealer
 6             only has 30 days from the receipt of the  notice  to
 7             file  with  the Motor Vehicle Review Board a written
 8             protest against  the  proposed  action.  The  notice
 9             shall  set  forth specific criteria used to evaluate
10             the  prospective  transferee  and  the  grounds  for
11             refusing to approve the sale  or  transfer  to  that
12             transferee.  Within  30  days  from the franchisee's
13             receipt of the manufacturer's notice, the franchisee
14             may file with the Board a  written  protest  against
15             the proposed action.
16                  When a protest has been timely filed, the Board
17             shall  enter  an  order,  fixing the date (within 60
18             days of the date of such order), time, and place  of
19             a hearing on the protest, required under Sections 12
20             and  29  of  this  Act,  and send by certified mail,
21             return receipt requested, a copy of the order to the
22             manufacturer that filed notice of intention  of  the
23             proposed action and to the protesting franchisee.
24                  The manufacturer shall have the burden of proof
25             to  establish  that  good  cause exists to refuse to
26             approve the sale or transfer to the transferee.  The
27             determination whether good cause exists to refuse to
28             approve the sale or transfer shall be  made  by  the
29             Board  under  subdivisions  (6)(B). The manufacturer
30             shall not refuse to approve the sale or transfer  by
31             a dealer or an officer, partner, or stockholder of a
32             franchise  or any part of the interest to any person
33             or persons before the hearing process  is  concluded
34             as  prescribed  by  this  Act, and thereafter if the
 
HB3037 Engrossed            -12-               LRB9110146STsb
 1             Board determines that the manufacturer has failed to
 2             meet its burden of proof and that  good  cause  does
 3             not  exist to refuse to approve the sale or transfer
 4             to the transferee.
 5                  (B)  Good cause to refuse to approve such  sale
 6             or  transfer  under this Section is established when
 7             such sale or transfer is to a transferee  who  would
 8             not  otherwise  qualify  for  a  new  motor  vehicle
 9             dealers license under "The Illinois Vehicle Code" or
10             such sale or transfer is to a person or party who is
11             not  of  good  moral  character or does not meet the
12             franchiser's   existing   and   reasonable   capital
13             standards  and,  with  consideration  given  to  the
14             volume of  sales  and  service  of  the  dealership,
15             uniformly   applied   minimum   business  experience
16             standards in the market area.
17             (7)  to obtain money, goods, services,  anything  of
18        value,  or  any  other benefit from any other person with
19        whom the motor vehicle dealer does business,  on  account
20        of  or in relation to the transactions between the dealer
21        and the other person as compensation, except for services
22        actually  rendered,  unless  such  benefit  is   promptly
23        accounted  for  and  transmitted  to  the  motor  vehicle
24        dealer;
25             (8)  to   grant   an  additional  franchise  in  the
26        relevant market area of an existing franchise of the same
27        line make  or  to  relocate  an  existing  motor  vehicle
28        dealership  within  or  into a relevant market area of an
29        existing franchise of the same line make. However, if the
30        manufacturer wishes to grant such an additional franchise
31        to an independent person in a bona fide  relationship  in
32        which  such  person  is  prepared  to  make a significant
33        investment subject to loss in such a  dealership,  or  if
34        the  manufacturer  wishes  to  relocate an existing motor
 
HB3037 Engrossed            -13-               LRB9110146STsb
 1        vehicle dealership, then the manufacturer  shall  send  a
 2        letter  by  certified  mail, return receipt requested, to
 3        each existing dealer or dealers of  the  same  line  make
 4        whose relevant market area includes the proposed location
 5        of the additional or relocated franchise at least 60 days
 6        before the manufacturer grants an additional franchise or
 7        relocates  an  existing  franchise  of the same line make
 8        within or into the relevant market area  of  an  existing
 9        franchisee  of the same line make.  Each notice shall set
10        forth the specific grounds for the proposed grant  of  an
11        additional   or  relocation  of  an  existing  franchise.
12        Unless the parties agree upon the grant or  establishment
13        of  the  additional or relocated franchise within 30 days
14        from the date the notice was  received  by  the  existing
15        franchisee  of  the same line make or any person entitled
16        to receive such notice, the franchisee  or  other  person
17        may  file  with  the  Board a written protest against the
18        grant or establishment  of  the  proposed  additional  or
19        relocated  franchise and shall state that the dealer only
20        has 30 days from the receipt of the notice to  file  with
21        the  Motor Vehicle Review Board a written protest against
22        the proposed action.
23             When a protest has  been  timely  filed,  the  Board
24        shall enter an order fixing a date (within 60 days of the
25        date  of  the order), time, and place of a hearing on the
26        protest, required under Sections 12 and 29 of  this  Act,
27        and  send by certified or registered mail, return receipt
28        requested, a copy of the order to the  manufacturer  that
29        filed  the  notice of intention to grant or establish the
30        proposed additional or relocated  franchise  and  to  the
31        protesting  dealer or dealers of the same line make whose
32        relevant market area includes the  proposed  location  of
33        the additional or relocated franchise.
34             When  more  than  one  protest  is filed against the
 
HB3037 Engrossed            -14-               LRB9110146STsb
 1        grant or establishment of  the  additional  or  relocated
 2        franchise   of   the   same  line  make,  the  Board  may
 3        consolidate the hearings to expedite disposition  of  the
 4        matter.   The manufacturer shall have the burden of proof
 5        to establish that good cause exists to allow the grant or
 6        establishment of the additional or  relocated  franchise.
 7        The   manufacturer   may   not  grant  or  establish  the
 8        additional franchise or relocate the  existing  franchise
 9        before  the hearing process is concluded as prescribed by
10        this Act, and thereafter if the Board determines that the
11        manufacturer has failed to meet its burden of  proof  and
12        that  good  cause  does  not  exist to allow the grant or
13        establishment of the additional franchise  or  relocation
14        of the existing franchise.
15             The  determination  whether  good  cause  exists for
16        allowing the grant  or  establishment  of  an  additional
17        franchise  or relocated existing franchise, shall be made
18        by the Board under subsection (c) of Section 12  of  this
19        Act.  If the manufacturer seeks to enter into a contract,
20        agreement  or  other   arrangement   with   any   person,
21        establishing  any  additional motor vehicle dealership or
22        other facility, limited to the sale of factory repurchase
23        vehicles or late model vehicles,  then  the  manufacturer
24        shall  follow  the  notice  procedures  set forth in this
25        Section and the determination whether good  cause  exists
26        for  allowing the proposed agreement shall be made by the
27        Board under  subsection  (c)  of  Section  12,  with  the
28        manufacturer having the burden of proof.
29                  A.  (Blank).
30                  B.  For   the   purposes   of   this   Section,
31             appointment  of  a successor motor vehicle dealer at
32             the same location as its predecessor,  or  within  2
33             miles  of  such  location,  or  the relocation of an
34             existing dealer or franchise within 2 miles  of  the
 
HB3037 Engrossed            -15-               LRB9110146STsb
 1             relocating   dealer's   or   franchisee's   existing
 2             location,   shall  not  be  construed  as  a  grant,
 3             establishment or the entering into of an  additional
 4             franchise  or  selling agreement, or a relocation of
 5             an existing franchise.  The  reopening  of  a  motor
 6             vehicle  dealership  that  has not been in operation
 7             for 18 months or more shall be deemed the  grant  of
 8             an additional franchise or selling agreement.
 9                  C.  This   Section   does   not  apply  to  the
10             relocation of an existing dealership or franchise in
11             a county having a population of  more  than  300,000
12             persons when the new location is within the dealer's
13             current  relevant  market  area,  provided  the  new
14             location  is  more  than  7  miles  from the nearest
15             dealer of the same line make or is further away from
16             the nearest dealer  of  the  same  line  make.  This
17             Section  does  not  apply  to  the  relocation of an
18             existing dealership or franchise in a county  having
19             a  population  of less than 300,000 persons when the
20             new location is within the dealer's current relevant
21             market area, provided the new location is more  than
22             12  miles  from  the nearest dealer of the same line
23             make or is further away from the nearest  dealer  of
24             the  same line make.  A dealer that would be farther
25             away from the new location of an existing dealership
26             or  franchise  of  the  same  line  make   after   a
27             relocation  may  not  file a written protest against
28             the relocation with the Motor Vehicle Review Board.
29                  D.  Nothing in this Section shall be  construed
30             to    prevent   a   franchiser   from   implementing
31             affirmative  action  programs   providing   business
32             opportunities  for minorities or from complying with
33             applicable federal, State or local law;
34             (9)  to require a motor vehicle dealer to assent  to
 
HB3037 Engrossed            -16-               LRB9110146STsb
 1        a release, assignment, novation, waiver or estoppel which
 2        would  relieve  any person from liability imposed by this
 3        Act;
 4             (10)  to prevent or refuse to  give  effect  to  the
 5        succession  to  the  ownership or management control of a
 6        dealership by any legatee under the will of a  dealer  or
 7        to  an heir under the laws of descent and distribution of
 8        this  State  unless  the  franchisee  has  designated   a
 9        successor  to  the  ownership or management control under
10        the succession provisions of the franchise.   Unless  the
11        franchiser,  having  the burden of proof, proves that the
12        successor is a person who is not of good moral  character
13        or does not meet the franchiser's existing and reasonable
14        capital  standards  and,  with consideration given to the
15        volume of sales and service of the dealership,  uniformly
16        applied  minimum  business  experience  standards  in the
17        market area, any designated  successor  of  a  dealer  or
18        franchisee  may  succeed  to  the ownership or management
19        control of a dealership under the existing franchise if:
20                       (i)  The designated  successor  gives  the
21                  franchiser  written  notice  by certified mail,
22                  return  receipt  requested,  of  his   or   her
23                  intention  to  succeed  to the ownership of the
24                  dealer within 60 days of the dealer's death  or
25                  incapacity; and
26                       (ii)  The  designated  successor agrees to
27                  be bound by all the terms and conditions of the
28                  existing franchise.
29             Notwithstanding the  foregoing,  in  the  event  the
30        motor  vehicle dealer or franchisee and manufacturer have
31        duly executed an agreement concerning  succession  rights
32        prior  to  the  dealer's  death  or  incapacitation,  the
33        agreement shall be observed.
34                  (A)  If  the  franchiser  intends  to refuse to
 
HB3037 Engrossed            -17-               LRB9110146STsb
 1             honor the successor to the ownership of  a  deceased
 2             or  incapacitated  dealer  or  franchisee  under  an
 3             existing  franchise  agreement, the franchiser shall
 4             send a letter  by  certified  mail,  return  receipt
 5             requested,  to  the  designated  successor within 60
 6             days from receipt of  a  proposal  advising  of  its
 7             intent  to  refuse  to  honor  the succession and to
 8             discontinue the  existing  franchise  agreement  and
 9             shall  state  that the designated successor only has
10             30 days from the receipt of the notice to file  with
11             the  Motor  Vehicle  Review  Board a written protest
12             against the proposed action. The  notice  shall  set
13             forth  the specific grounds for the refusal to honor
14             the  succession   and   discontinue   the   existing
15             franchise agreement.
16                  If  notice of refusal is not timely served upon
17             the designated successor,  the  franchise  agreement
18             shall continue in effect subject to termination only
19             as   otherwise   permitted   by   paragraph  (6)  of
20             subsection (d) of Section 4 of this Act.
21                  Within 30 days from the  date  the  notice  was
22             received  by  the  designated successor or any other
23             person entitled to notice,  the  designee  or  other
24             person  may  file  with  the Board a written protest
25             against the proposed action.
26                  When a protest has been timely filed, the Board
27             shall enter an order, fixing a date (within 60  days
28             of  the  date  of  the  order), time, and place of a
29             hearing on the protest, required under  Sections  12
30             and  29  of  this  Act,  and send by certified mail,
31             return receipt requested, a copy of the order to the
32             franchiser that filed the notice of intention of the
33             proposed action and to the  protesting  designee  or
34             such other person.
 
HB3037 Engrossed            -18-               LRB9110146STsb
 1                  The manufacturer shall have the burden of proof
 2             to  establish  that  good  cause exists to refuse to
 3             honor the succession and  discontinue  the  existing
 4             franchise agreement.  The determination whether good
 5             cause exists to refuse to honor the succession shall
 6             be  made  by the Board under subdivision (B) of this
 7             paragraph (10).  The manufacturer shall  not  refuse
 8             to  honor the succession or discontinue the existing
 9             franchise agreement before the  hearing  process  is
10             concluded  as prescribed by this Act, and thereafter
11             if the Board determines that it has failed  to  meet
12             its  burden  of  proof  and that good cause does not
13             exist  to  refuse  to  honor  the   succession   and
14             discontinue the existing franchise agreement.
15                  (B)  No    manufacturer    shall   impose   any
16             conditions  upon   honoring   the   succession   and
17             continuing the existing franchise agreement with the
18             designated  successor other than that the franchisee
19             has designated  a  successor  to  the  ownership  or
20             management  control  under the succession provisions
21             of the franchise, or that the  designated  successor
22             is  of  good moral character or meets the reasonable
23             capital standards and, with consideration  given  to
24             the  volume  of sales and service of the dealership,
25             uniformly  applied   minimum   business   experience
26             standards in the market area;
27             (11)  to  prevent or refuse to approve a proposal to
28        establish a successor franchise at a location  previously
29        approved  by  the  franchiser  when  submitted  with  the
30        voluntary  termination  by the existing franchisee unless
31        the successor franchisee would not otherwise qualify  for
32        a  new  motor vehicle dealer's license under the Illinois
33        Vehicle Code or unless the franchiser, having the  burden
34        of  proof,  proves that such proposed successor is not of
 
HB3037 Engrossed            -19-               LRB9110146STsb
 1        good moral character or does not  meet  the  franchiser's
 2        existing  and  reasonable  capital  standards  and,  with
 3        consideration given to the volume of sales and service of
 4        the   dealership,   uniformly  applied  minimum  business
 5        experience standards in the market  area.  However,  when
 6        such  a rejection of a proposal is made, the manufacturer
 7        shall  give  written  notice  of  its  reasons   to   the
 8        franchisee  within 60 days of receipt by the manufacturer
 9        of  the  proposal.   However,  nothing  herein  shall  be
10        construed  to  prevent  a  franchiser  from  implementing
11        affirmative   action    programs    providing    business
12        opportunities  for  minorities,  or  from  complying with
13        applicable federal, State or local law;
14             (12)  to prevent or refuse to grant a franchise to a
15        person because such person owns,  has  investment  in  or
16        participates  in  the  management of or holds a franchise
17        for the sale of another make or line  of  motor  vehicles
18        within  7  miles  of the proposed franchise location in a
19        county having a population of more than 300,000  persons,
20        or  within 12 miles of the proposed franchise location in
21        a  county  having  a  population  of  less  than  300,000
22        persons; or
23             (13)  to prevent or attempt to prevent any new motor
24        vehicle dealer from  establishing  any  additional  motor
25        vehicle  dealership or other facility limited to the sale
26        of factory repurchase vehicles or late model vehicles  or
27        otherwise  offering  for sale factory repurchase vehicles
28        of the same line make at an existing franchise by failing
29        to  make  available  any  contract,  agreement  or  other
30        arrangement which is made available or otherwise  offered
31        to any person.
32        (f)  It  is  deemed  a  violation  for  a manufacturer, a
33    distributor, a wholesale, a distributor branch or division, a
34    factory  branch  or  division,  or  a  wholesale  branch   or
 
HB3037 Engrossed            -20-               LRB9110146STsb
 1    division,  or  officer,  agent, broker, shareholder, except a
 2    shareholder of 1% or less of the outstanding  shares  of  any
 3    class  of  securities  of  a  manufacturer,  distributor,  or
 4    wholesaler  which  is a publicly traded corporation, or other
 5    representative, directly or indirectly, to own or  operate  a
 6    place  of  business  as  a  motor vehicle franchisee or motor
 7    vehicle financing affiliate,  except  that,  this  subsection
 8    shall  not  prohibit the ownership or operation of a place of
 9    business by a manufacturer, distributor, or wholesaler for  a
10    period,  not  to exceed 18 months, during the transition from
11    one motor vehicle franchisee to another; or the investment in
12    a motor vehicle franchisee by a manufacturer, distributor, or
13    wholesaler if the investment  is  for  the  sole  purpose  of
14    enabling  a  partner  or  shareholder  in  that motor vehicle
15    franchisee to acquire  an  interest  in  that  motor  vehicle
16    franchisee  and  that partner or shareholder is not otherwise
17    employed by or associated with the manufacturer, distributor,
18    or wholesaler and would  not  otherwise  have  the  requisite
19    capital  investment  funds  to  invest  in  the motor vehicle
20    franchisee, and has the right to purchase the  entire  equity
21    interest  of  the manufacturer, distributor, or wholesaler in
22    the motor vehicle franchisee within a  reasonable  period  of
23    time not to exceed 5 years.
24    (Source: P.A.  90-655,  eff.  7-30-98;  91-415,  eff. 1-1-00;
25    91-485, eff. 1-1-00; revised 10-19-99.)

26        Section 99.  Effective date.  This Act takes effect  upon
27    becoming law.

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