senate Bill S5725A

2013-2014 Legislative Session

Relates to automobile manufacturers and unfair practices by franchisors

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Archive: Last Bill Status - STRICKEN


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Mar 11, 2014 recommit, enacting clause stricken
Jan 08, 2014 referred to transportation
Jun 17, 2013 print number 5725a
amend and recommit to transportation
Jun 07, 2013 referred to transportation

Bill Amendments

Original
A (Active)
Original
A (Active)

S5725 - Bill Details

See other versions of this Bill:
S6797
, A7844A
Current Committee:
Law Section:
Vehicle and Traffic Law
Laws Affected:
Amd §§415, 463 & 465, V & T L

S5725 - Bill Texts

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Relates to automobile manufacturers and unfair practices by franchisors.

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BILL NUMBER:S5725

TITLE OF BILL: An act to amend the vehicle and traffic law, in
relation to automobile manufacturers and business practices by
franchisors

PURPOSE OR GENERAL IDEA OF BILL

To update provisions of the state's automobile dealer franchise law so
as to protect automobile dealers from arbitrary or unfair demands by
manufacturers.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subdivision 5 of section 415 of the vehicle and
traffic law by adding a new paragraph b-2 to clarify the extent of the
interest that a franchisor, including a manufacturer or distributor
and other listed entities, may have in an automobile dealer.

Section 2 amends paragraph f of Subdivision 7 of section 415 of the
vehicle and traffic law to clarify that the commissioner of the
department of motor vehicles may not issue an automobile dealer
registration to a franchisor, including a manufacturer or distributor
and other listed entities, or an entity controlled by such an entity,
except in the limited circumstances that are currently permitted.

Section 3 amends paragraph d of subdivision 1 of section 463 of the
vehicle and traffic law to require franchisor training sessions to be
made available within 50 miles of a dealership, or to reimburse
franchises for the cost of travel, lodging and meals of its employees
attending such sessions.

Section 4 amends subdivision 1 of section 463 of the vehicle and
traffic law by adding a new paragraph e to prohibit franchisors from
requiring dealers to sell factory extended service contracts instead
of any other such contract that a dealer chooses.

Section 5 makes a technical change to paragraph b of subdivision 2 of
section 463 of the vehicle and traffic law.

Section 6 amends paragraph c of subdivision 2 of section 463 of the
vehicle and traffic law regarding franchisors' ability to force
dealers to perform repeated facilities upgrades or reject materials or
services that are chosen by dealers and are substantially similar to
those required by franchisors for construction or upgrade projects.

Section 7 amends paragraph o of subdivision 2 of Section 463 of the
vehicle and traffic law to require franchisors to repurchase signage
and other items upon termination; require reimbursement of facilities
upgrades occurring within five years of a termination without cause;
and require reimbursement for liability on Dealer Management System
contracts in the event of a termination.

Section 8 amends paragraph z of subdivision 2 of section 463 of the
vehicle and traffic law to restrict charge-backs for exported vehicles
and require franchisors to identify known exporters to dealers as a
prerequisite to a chargeback, provided a dealer has exercised due


diligence in collecting sales tax and registering and titling the
vehicle.

Section 9 amends paragraph I of subdivision cc of subdivision 2 of
section 463 of the vehicle and traffic law to create a right of
protest to a new point if a dealer sold 25% of its sales into that
RMA.

Section 10 amends paragraph ee of subdivision 2 of Section 463 of the
vehicle and traffic law to require reimbursement of automobile dealers
for loaner cars if loaner cars are required to participate in any
incentive program.

Section 11 amends subsection 2 of paragraph ff of subdivision 2 of

Section 463 of the vehicle and traffic law to increase protections
against unilateral changes to a dealer's Area of Responsibility, or
any other geographic area of the sort, by a franchisor.

Section 12 amends subdivision 2 of section 463 of the vehicle and
traffic law is amended by adding new paragraphs ii, jj and kk to
require franchisors to give credit for sales of new motor vehicles to
persons from areas outside a franchisees assigned sales territory and
to require fair vehicle allocations and notice of the allocation
methodology to dealers and transparency of the actual allocations to
dealers.

Section 13 amends subdivision 1 of section 465 of the vehicle and
traffic law to address issues that arose with the warranty
reimbursement provision of the law since its amendment in 2008.

Section 14 amends subdivisions 3, 4, 6 and 7 of section 465 of the
vehicle and traffic law to include sales and marketing payments into
existing chargeback protections and require franchisors to provide
dealers with information where the dealer may have been making errors
in warranty and sales submissions within six months if the franchisor
intends to audit the same.

Section 15 amends section 467 of the vehicle and traffic law to
require termination assistance to be paid to a dealer notwithstanding
the fact that the dealer holds the real estate in a different company
or name than the dealership.

Section 16 provides that if any provision of the bill is determined to
be invalid that such determination shall not invalidate the remainder
of the bill.

JUSTIFICATION:

In 1983, the state Legislature passed the Franchised Motor Vehicle
Dealer Act (Chapter 815). In passing the Act, the Legislature found
that the distribution of motor vehicles within the state vitally
affects its general economy and therefore it is necessary to regulate
motor vehicle manufacturers, distributors and factory or distributor
representatives. The Act has been amended several times since 1983,
including comprehensive amendments in 2008. The provisions of this
bill are necessary to clarify the intent of the 2008 Act, add to it


several provisions that have become necessary following restructuring
efforts by several automobile manufacturers' as a result of the
Automotive industry crisis of 2008-2010, and to further minimize the
possibility of arbitrary or unfair demands in the
franchisor-franchisee relationship so as to maintain the health and
vitality of the retail automobile industry.

PRIOR LEGISLATIVE HISTORY:

New Legislation.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  5725

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 7, 2013
                               ___________

Introduced  by  Sen.  ZELDIN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Transportation

AN ACT to amend the vehicle and traffic law, in relation  to  automobile
  manufacturers and business practices by franchisors

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 5 of section 415 of the vehicle and traffic law
is amended by adding a new paragraph b-2 to read as follows:
  B-2. A STATEMENT INDICATING IF ANY INTEREST EXISTS IN THE  APPLICANT'S
FRANCHISE  ENTITY  BY  A  PERSON  OR  ENTITY DESCRIBED IN PARAGRAPH F OF
SUBDIVISION SEVEN OF THIS SECTION, AND THE EXTENT OF SUCH INTEREST.
  S 2. Paragraph f of subdivision 7 of section 415 of  the  vehicle  and
traffic  law, as added by chapter 490 of the laws of 2008, is amended to
read as follows:
  f. EXCEPT AS PROVIDED IN PARAGRAPH (BB) OF SUBDIVISION TWO OF  SECTION
FOUR HUNDRED SIXTY-THREE OF THIS TITLE:
  (I)  The  commissioner shall not issue any certificate of registration
authorized by this section to any franchisor, MANUFACTURER,  DISTRIBUTOR
BRANCH OR FACTORY BRANCH, as such [term is] TERMS ARE defined in section
four hundred sixty-two of this title, OR TO ANY SUBSIDIARY, AFFILIATE OR
CONTROLLED  ENTITY  THEREOF, except that the commissioner may renew such
certificate previously issued or otherwise  approved  to  operate  to  a
franchisor  prior  to  [May second, two thousand two] JANUARY FIRST, TWO
THOUSAND FOUR.
  (II) ON OR AFTER THE EFFECTIVE DATE OF THIS SUBPARAGRAPH, THE  COMMIS-
SIONER  SHALL  NOT  ISSUE  ANY CERTIFICATE OF REGISTRATION, OR RENEW ANY
CERTIFICATE ISSUED AFTER JANUARY FIRST, TWO THOUSAND FOUR TO  ANY  MOTOR
VEHICLE   DEALER  IN  WHICH  A  FRANCHISOR,  MANUFACTURER,  DISTRIBUTOR,
DISTRIBUTOR BRANCH OR FACTORY BRANCH,  AS  SUCH  TERMS  ARE  DEFINED  IN
SECTION  FOUR HUNDRED SIXTY-TWO OF THIS TITLE, OR ANY SUBSIDIARY, AFFIL-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11010-02-3

S. 5725                             2

IATE OR  CONTROLLED  ENTITY  THEREOF,  HAS  ACQUIRED,  OR  POSSESSES,  A
CONTROLLING INTEREST IN THE FRANCHISE ENTITY EXCEPT:
  (1)  WHEN  OPERATING  SUCH  FRANCHISE  FOR  A TEMPORARY PERIOD, NOT TO
EXCEED ONE YEAR, DURING THE TRANSITION FROM ONE OWNER OF THE MOTOR VEHI-
CLE DEALERSHIP TO ANOTHER, PROVIDED, HOWEVER, THAT SUCH TEMPORARY PERIOD
MAY BE EXTENDED ONCE FOR AN ADDITIONAL PERIOD NOT TO EXCEED ONE YEAR FOR
GOOD CAUSE. PROVIDED THAT FOR FRANCHISORS OF HOUSE COACHES,  THE  PERIOD
OF  TEMPORARY  OWNERSHIP  OF  A FRANCHISED HOUSE COACH DEALERSHIP MAY BE
EXTENDED IN ONE YEAR INCREMENTS FOR GOOD CAUSE SHOWN,  EXCEPT  THAT  THE
AGGREGATE OF SUCH EXTENSIONS SHALL NOT EXCEED FIVE YEARS; OR
  (2)  WHEN  OPERATING  SUCH  FRANCHISE TEMPORARILY UNDER A PLAN WITH AN
INDEPENDENT INDIVIDUAL WHO IS OBLIGATED TO MAKE A SIGNIFICANT INVESTMENT
IN THE DEALERSHIP THAT IS SUBJECT TO LOSS AND HAS AN OWNERSHIP  INTEREST
OR  EXPECTS  TO  ACQUIRE  FULL  OWNERSHIP  IN  A REASONABLE PERIOD UNDER
REASONABLE TERMS AND CONDITIONS, PROVIDED THAT A REASONABLE PERIOD SHALL
BE PRESUMED TO NOT EXCEED EIGHT YEARS.
  S 3. Paragraph (d) of subdivision 1 of section 463 of the vehicle  and
traffic  law, as added by chapter 490 of the laws of 2008, is amended to
read as follows:
  (d) To participate in any training  program  unless  such  program  is
expressly  limited  to specific information necessary to sell or service
the models of vehicles the dealer is authorized to sell or service under
the dealer's franchise with that  franchisor.  A  franchisor  shall  not
unreasonably  require  an  owner  or dealer principal of a dealership to
attend any meeting  or  training  program.  A  franchisor  who  requires
participation  in  a  training  program  as authorized by this paragraph
shall [to the largest extent practicable make all reasonable efforts  to
limit  or  reimburse the expenses of a dealer incurred in attending such
program] PROVIDE THE TRAINING AT A LOCATION WITHIN A FIFTY  MILE  RADIUS
OF  THE DEALER'S PLACE OF BUSINESS OR OTHERWISE REIMBURSE THE DEALER FOR
ALL TRAVEL, HOTEL AND MEAL EXPENSES AS WELL AS THE SALARIES  OF  DEALER-
SHIP EMPLOYEES FOR THE PERIOD OF THEIR ATTENDANCE AT THE REQUIRED TRAIN-
ING.  Nothing in this paragraph shall be deemed to prohibit any training
program located within a dealer's own principal place of business.
  S  4.  Subdivision  1 of section 463 of the vehicle and traffic law is
amended by adding a new paragraph (e) to read as follows:
  (E) TO SELL, OFFER TO SELL, OR SELL EXCLUSIVELY  AN  EXTENDED  SERVICE
CONTRACT,  EXTENDED  MAINTENANCE PLAN OR SIMILAR PRODUCT, INCLUDING, BUT
NOT LIMITED TO, GAP PRODUCTS, OFFERED,  ENDORSED  OR  SPONSORED  BY  THE
FRANCHISOR BY THE FOLLOWING MEANS:
  (1)  BY  A STATEMENT MADE BY THE FRANCHISOR THAT FAILURE TO DO SO WILL
SUBSTANTIALLY AND ADVERSELY IMPACT THE DEALER; OR
  (2) BY A PROVISION IN A FRANCHISE  AGREEMENT  THAT  THE  DEALER  SELL,
OFFER  TO  SELL,  OR  SELL  EXCLUSIVELY  AN  EXTENDED  SERVICE CONTRACT,
EXTENDED MAINTENANCE PLAN OR SIMILAR PRODUCT OFFERED, ENDORSED OR  SPON-
SORED BY THE FRANCHISOR; OR
  (3) BY MEASURING THE DEALER'S PERFORMANCE UNDER THE FRANCHISE BASED ON
THE  SALE  OF  EXTENDED SERVICE CONTRACTS, EXTENDED MAINTENANCE PLANS OR
SIMILAR PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE  MANUFACTURER  OR
DISTRIBUTOR; OR
  (4)  BY  REQUIRING THE DEALER TO ACTIVELY PROMOTE THE SALE OF EXTENDED
SERVICE  CONTRACTS,  EXTENDED  MAINTENANCE  PLANS  OR  SIMILAR  PRODUCTS
OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR.
  NOTHING IN THIS SECTION SHALL PROHIBIT A FRANCHISOR FROM:
  (A)  INCENTIVIZING A DEALER THAT MAKES THE VOLUNTARY DECISION TO OFFER
TO SELL, SELL OR SELL EXCLUSIVELY AN EXTENDED SERVICE CONTRACT, EXTENDED

S. 5725                             3

MAINTENANCE PLAN OR SIMILAR PRODUCT, INCLUDING, BUT NOT LIMITED TO,  GAP
PRODUCTS, OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR, OR
  (B)  REQUIRING  THAT A DEALER THAT SELLS AN EXTENDED SERVICE CONTRACT,
EXTENDED MAINTENANCE PLAN, OR  SIMILAR  PRODUCT  THAT  IS  NOT  OFFERED,
ENDORSED  OR  SPONSORED  BY THE FRANCHISOR, DISCLOSE TO THE CONSUMER THE
DISCLOSURES REQUIRED UNDER SECTION SEVEN THOUSAND NINE HUNDRED  FIVE  OF
THE INSURANCE LAW.
  S  5. Paragraph (b) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:
  (b)  To  directly  or indirectly coerce or attempt to coerce any fran-
chised motor vehicle dealer to enter into any agreement with such  fran-
chisor  or  officer, agent or other representative thereof, or to do any
other act prejudicial to the monetary interests or  property  rights  of
said  dealer  by threatening to [cancel any unexpired contractual agree-
ment existing  between  such  franchisor  and]  TERMINATE  said  dealer.
Provided,  however, that good faith notice to any franchised motor vehi-
cle dealer of said dealer's violation of any terms or provisions of such
franchise shall not constitute a violation of this article.
  S 6. Paragraph (c) of subdivision 2 of section 463 of the vehicle  and
traffic  law,  as amended by chapter 490 of the laws of 2008, is amended
to read as follows:
  (c) (1) To condition the renewal or extension  of  a  franchise  on  a
franchised motor vehicle dealer's substantial renovation of the dealer's
place  of  business  or  on  the  construction, purchase, acquisition or
rental of a new place of business by the franchised motor vehicle dealer
unless the franchisor has advised the franchised motor vehicle dealer in
writing of its intent to impose such a  condition  within  a  reasonable
time  prior  to  the  effective  date of the proposed date of renewal or
extension (but in no  case  less  than  one  hundred  eighty  days)  and
provided  the  franchisor  demonstrates  the need for such change in the
place of business and the reasonableness of such demand in view  of  the
need  to  service the public and the economic conditions existing in the
automobile industry at the time such action would  be  required  of  the
franchised motor vehicle dealer. As part of any such condition the fran-
chisor  shall  agree, in writing, to supply the dealer with a reasonable
quantity and mix of additional new motor vehicles which,  as  determined
by a reasonable analysis of market conditions, are projected to meet the
sales levels necessary to support the increased overhead incurred by the
franchised   motor   vehicle   dealer  by  reason  of  such  renovation,
construction, purchase, acquisition or rental of a new  place  of  busi-
ness.
  (2) TO REQUIRE OR ATTEMPT TO REQUIRE A FRANCHISED MOTOR VEHICLE DEALER
TO  PURCHASE  GOODS,  BUILDING  MATERIALS,  OR SERVICES FOR THE DEALER'S
PLACE OF BUSINESS, INCLUDING, BUT  NOT  LIMITED  TO,  OFFICE  FURNITURE,
DESIGN  FEATURES,  FLOORING, AND WALL COVERINGS, FROM A VENDOR CHOSEN BY
THE FRANCHISOR IF SUBSTANTIALLY SIMILAR GOODS,  BUILDING  MATERIALS,  OR
SERVICES OF LIKE APPEARANCE AND QUALITY, ARE AVAILABLE FROM OTHER SOURC-
ES,  PROVIDED,  HOWEVER,  THAT  THE  GOODS OR BUILDING MATERIALS ARE NOT
SUBJECT TO THE FRANCHISOR'S INTELLECTUAL PROPERTY OR  TRADEMARK  RIGHTS.
NOTHING  IN  THIS  SUBDIVISION  SHALL BE CONSTRUED TO ALLOW A FRANCHISED
MOTOR VEHICLE DEALER TO IMPAIR OR ELIMINATE A FRANCHISOR'S  INTELLECTUAL
PROPERTY OR TRADEMARK RIGHTS.
  (3)  EXCEPT  AS NECESSARY TO COMPLY WITH A HEALTH OR SAFETY LAW, OR TO
COMPLY WITH A TECHNOLOGY REQUIREMENT COMPLIANCE, WHICH IS  NECESSARY  TO
SELL OR SERVICE A MOTOR VEHICLE THAT THE FRANCHISED MOTOR VEHICLE DEALER

S. 5725                             4

IS  AUTHORIZED  OR  LICENSED  BY  THE  FRANCHISOR TO SELL OR SERVICE, TO
REQUIRE A FRANCHISED MOTOR VEHICLE DEALER TO:
  (I)  CONSTRUCT A NEW DEALER FACILITY OR MATERIALLY ALTER OR REMODEL AN
EXISTING DEALER FACILITY BEFORE THE DATE THAT IS  TEN  YEARS  AFTER  THE
DATE  THE  CONSTRUCTION  OF THE NEW DEALER FACILITY AT THAT LOCATION WAS
COMPLETED REGARDLESS OF WHETHER UNDER THE OWNERSHIP OF  THE  CURRENT  OR
PREVIOUS  NEW  MOTOR  VEHICLE  DEALER, IF THE CONSTRUCTION SUBSTANTIALLY
COMPLIED WITH THE FRANCHISOR'S BRAND IMAGE STANDARDS OR PLANS  THAT  THE
FRANCHISOR  PROVIDED  OR  APPROVED  AT  THE  TIME  THE  CONSTRUCTION WAS
COMPLETED; OR
  (II) MATERIALLY ALTER AN EXISTING DEALER FACILITY BEFORE THE DATE THAT
IS TEN YEARS AFTER THE DATE THE PREVIOUS  ALTERATION  OR  REMODELING  AT
THAT  LOCATION  WAS  COMPLETED, IF THE PREVIOUS ALTERATION OR REMODELING
SUBSTANTIALLY COMPLIED WITH THE FRANCHISOR'S BRAND  IMAGE  STANDARDS  OR
PLANS THAT THE FRANCHISOR PROVIDED OR APPROVED;
  AS USED IN THIS SUBPARAGRAPH, "MATERIALLY ALTER":
  (I) MEANS A SIGNIFICANT ARCHITECTURAL, STRUCTURAL, DESIGN, REDESIGN OR
REMODEL  MODIFICATION  TO A DEALERSHIP FACILITY THAT IS DIRECTLY RELATED
TO THE EFFECTIVE SALE OR SERVICE OF A MOTOR VEHICLE FOR WHICH THE  FRAN-
CHISED  MOTOR  VEHICLE  DEALER HOLDS A VALID LICENSE TO SELL OR SERVICE;
AND
  (II) DOES NOT INCLUDE ROUTINE MAINTENANCE, SUCH AS INTERIOR  PAINTING,
REASONABLY  NECESSARY TO KEEP A DEALERSHIP FACILITY IN ATTRACTIVE CONDI-
TION.
  NOTHING IN THIS SUBPARAGRAPH SHALL PROHIBIT A FRANCHISOR FROM:
  (I) PROVIDING A LUMP SUM PAYMENT TO ASSIST A FRANCHISED MOTOR  VEHICLE
DEALER TO MAKE A FACILITY IMPROVEMENT OR TO PAY FOR A SIGN OR A FRANCHI-
SOR  IMAGE  ELEMENT,  IF  THE PAYMENT IS NOT DEPENDENT ON THE FRANCHISED
MOTOR VEHICLE DEALER SELLING OR PURCHASING  A  SPECIFIC  NUMBER  OF  NEW
VEHICLES;
  (II)  CONTINUING  A PROGRAM THAT IS IN EFFECT AS OF THE EFFECTIVE DATE
OF THIS PARAGRAPH WITH MORE THAN ONE FRANCHISED MOTOR VEHICLE DEALER  IN
THE STATE OR TO RENEWING OR MODIFYING SUCH PROGRAM; OR
  (III)  PROVIDING REIMBURSEMENT TO A FRANCHISED MOTOR VEHICLE DEALER ON
REASONABLE, WRITTEN TERMS FOR A SUBSTANTIAL PORTION  OF  THE  FRANCHISED
MOTOR VEHICLE DEALER'S COST OF MAKING A FACILITY IMPROVEMENT OR INSTALL-
ING SIGNAGE OR A FRANCHISOR IMAGE ELEMENT, PROVIDED THAT SUCH PROGRAM IS
NOT  DEPENDENT  UPON  PER  VEHICLE  SALES OR PURCHASES BY THE FRANCHISED
MOTOR VEHICLE DEALER.
  (4) TO DENY A FRANCHISED MOTOR VEHICLE DEALER A BRAND  IMAGE  STANDARD
PAYMENT,  INCENTIVE OR ALLOWANCE IF THE FRANCHISED MOTOR VEHICLE DEALER,
WITH THE FRANCHISOR'S APPROVAL, HAS BEGUN  RENOVATIONS  OR  CONSTRUCTION
INTENDED  TO  COMPLY  WITH THE FRANCHISOR'S BRAND IMAGE STANDARD PROGRAM
AND THE FRANCHISOR HAS SUBSTANTIALLY CHANGED OR TERMINATED THE PROGRAM.
  (5) TO FAIL TO TAKE INTO ACCOUNT ALL COMMERCIALLY REASONABLE  FACTORS,
INCLUDING,  BUT  NOT LIMITED TO, THE NUMBER OF SHIFTS THAT A DEALER WILL
EMPLOY  IN  ITS  SERVICE  OPERATION,  WHEN  DETERMINING  FACILITY  SPACE
REQUIREMENTS.
  (6) TO REQUIRE OR ATTEMPT TO REQUIRE A FRANCHISED MOTOR VEHICLE DEALER
TO  ESTABLISH  OR MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES UNLESS JUSTI-
FIED BY CURRENT AND REASONABLY EXPECTED FUTURE LOCAL  MARKET  SHARE  AND
ECONOMIC  CONDITIONS,  AND  LOCAL  MARKET SHARE EXISTING IN THE DEALER'S
RELEVANT MARKET AREA AT THE TIME THE REQUEST FOR EXCLUSIVE FACILITIES IS
MADE; PROVIDED THAT THE FOREGOING  SHALL  NOT  RESTRICT  THE  TERMS  AND
CONDITIONS  OF  ANY  AGREEMENT  FOR  WHICH  THE  DEALER  HAS VOLUNTARILY
ACCEPTED VALUABLE CONSIDERATION SEPARATE FROM THE FRANCHISED MOTOR VEHI-

S. 5725                             5

CLE DEALER'S RIGHT TO SELL AND SERVICE MOTOR VEHICLES FOR  THE  FRANCHI-
SOR.  THE  FACT  THAT  LOCAL,  FACING COMPETITIVE BRAND DEALERSHIPS HAVE
EXCLUSIVE DEALERSHIP FACILITIES SHALL CONSTITUTE NON-CONCLUSIVE EVIDENCE
THAT  CURRENT  ECONOMIC CONDITIONS MAY JUSTIFY THE REQUIREMENT TO ESTAB-
LISH AND MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES.
  (7) TO REQUIRE A SITE CONTROL PROVISION REGARDING THE  DEALER'S  PLACE
OF  BUSINESS  TO SURVIVE OR CONTINUE AFTER THE TERMINATION OF SUCH DEAL-
ER'S FRANCHISE IF THE TERMINATION IS DUE TO THE DISCONTINUATION  OF  THE
LINE-MAKE THAT WAS THE SUBJECT OF THE AGREEMENT.
  S  7. Paragraph (o) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:
  (o)  (1)  Upon  a  termination of a franchise by a franchisor or fran-
chised motor vehicle dealer under this article, to refuse  to  accept  a
return of new and unused current model motor vehicle inventory which has
been acquired from the franchisor, new and unused noncurrent model motor
vehicle inventory which has been acquired from the franchisor within one
hundred  [twenty]  EIGHTY days of the effective date of the termination;
supplies, parts, equipment, SIGNAGE and furnishings purchased  from  the
franchisor  or its approved sources and special tools. The obligation of
the franchisor, EXCEPT WITH RESPECT TO SIGNAGE shall be limited  to  the
repurchase  of  the  above property which is unaltered and undamaged, in
good and useable condition, and, in the  case  of  supplies,  parts  and
equipment  to those items which are currently listed in the franchisor's
supplies  and  parts  list.    IN  THE  CASE  OF   SIGNAGE,   EQUIPMENT,
FURNISHINGS,  AND  SPECIAL  TOOLS, THE FRANCHISOR IS OBLIGATED TO REPUR-
CHASE  ANY  FRANCHISOR  REQUIRED   OR   APPROVED   SIGNAGE,   EQUIPMENT,
FURNISHINGS, AND SPECIAL TOOLS PURCHASED WITHIN THE FIVE YEARS PRECEDING
TERMINATION AND WHICH IS IN GOOD AND USEABLE CONDITION. Furthermore, the
obligation  of the franchisor to repurchase supplies upon a termination,
cancellation or nonrenewal by a franchised motor vehicle dealer shall be
limited to supplies mandated  by  the  franchisor.  Parts  eligible  for
repurchase shall include parts which have been renumbered in the current
parts  list  but  which  are  identical  in  design  and material to the
currently numbered part. The return rights afforded the franchised motor
vehicle dealer under the provisions of the paragraph shall be  in  addi-
tion to those, if any, provided in the franchise agreement.
  (2)  The franchisor shall pay fair and reasonable compensation for the
above described property upon repurchase. In the case of new motor vehi-
cle inventory, accessories and parts, fair and  reasonable  compensation
shall  in no instance be less than the net acquisition price paid by the
franchised motor vehicle dealer to the franchisor or its approved sourc-
es.  IN THE CASE OF EQUIPMENT, FURNISHINGS, AND SPECIAL TOOLS  FAIR  AND
REASONABLE  COMPENSATION  SHALL  BE THE PRICE PAID FOR THE ITEM, AND FOR
THE SIGNAGE REASONABLE COMPENSATION SHALL BE THE  PRICE  PAID  FOR  SUCH
ITEM LESS DEPRECIATION FOR EACH AS SET FORTH IN INTERNAL REVENUE CODE OF
ONE-FIFTEENTH  OF  THE INITIAL COST PER YEAR STARTING THE YEAR FOLLOWING
THE DEALER'S ACQUISITION OF THE ITEM. IN THE CASE OF A LEASE BY A  FRAN-
CHISEE FROM A FRANCHISOR OF SIGNAGE, EQUIPMENT, FURNISHINGS, AND SPECIAL
TOOLS,  SUCH  LEASE  SHALL  BE TERMINATED WITHOUT PENALTY. Upon a termi-
nation of a franchise by a franchisor, within thirty days of such termi-
nation, the franchisor shall send to the franchised motor vehicle dealer
instructions on the methodology by which the  franchised  motor  vehicle
dealer  must  ship  the  above described property to the franchisor; the
franchisor shall then remit payment for such property,  INCLUDING  SHIP-

S. 5725                             6

PING  COSTS,  to  the  franchised motor vehicle dealer within sixty days
after receipt of such property.
  (3)  Upon  a  termination of a franchise by a franchised motor vehicle
dealer where the franchise consists primarily of  the  distribution  and
sale of house coaches, the franchisor's repurchase obligations set forth
in this paragraph shall not apply.
  (4)  IN ADDITION TO ANY OTHER REQUIREMENTS OF THIS SUBDIVISION, IN THE
EVENT A FRANCHISOR TERMINATES A FRANCHISE WITHOUT DUE CAUSE,  THE  FRAN-
CHISOR  SHALL  COMPENSATE  THE  DEALER  FOR  ANY  FRANCHISOR REQUIRED OR
APPROVED FACILITY UPGRADES WHICH WERE COMPLETED  BY  THE  DEALER  WITHIN
FIVE  YEARS  OF THE DATE THE FRANCHISOR ANNOUNCED THE TERMINATION OF THE
LINE MAKE. FOR THE PURPOSES OF THIS SECTION, COMPLETION SHALL BE  DEEMED
TO  OCCUR  AT THE LATER OF THE FRANCHISOR'S FINAL APPROVAL OF THE ALTER-
ATION OR THE ISSUANCE OF A CERTIFICATE OF  OCCUPANCY.  THE  COMPENSATION
REQUIRED  UNDER THIS SECTION SHALL BE IN AN AMOUNT EQUAL TO THE DEALER'S
COST FOR THE FACILITY UPGRADES LESS THE AMOUNT FOR DEPRECIATION  AS  SET
FORTH  IN INTERNAL REVENUE CODE OF ONE THIRTY-NINTH OF THE TOTAL INITIAL
COST OF SUCH RENOVATIONS PER YEAR STARTING THE YEAR FOLLOWING THE  DEAL-
ER'S COMPLETION OF THE FACILITY UPGRADES.
  (5) IN ADDITION TO THE REQUIREMENTS OF SUBPARAGRAPH FOUR OF THIS PARA-
GRAPH,  IN  THE  EVENT  A  FRANCHISOR TERMINATES A FRANCHISE WITHOUT DUE
CAUSE THE FRANCHISOR SHALL COMPENSATE THE DEALER IN AN AMOUNT  EQUAL  TO
THE  AMOUNT  REMAINING  ON  THE  TERMINATED  DEALER'S  DEALER MANAGEMENT
COMPUTER SYSTEM LEASE OR CONTRACT  IF  THE  DEALER  MANAGEMENT  COMPUTER
SYSTEM WILL NO LONGER BE UTILIZED AS A RESULT OF THE TERMINATION.
  S  8. Paragraph (z) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:
  (z)  To [charge back or otherwise hold liable a franchised motor vehi-
cle dealer for sales incentives or charges related to a] REFUSE TO ALLO-
CATE, SELL OR  DELIVER  MOTOR  VEHICLES,  TO  CHARGE  BACK  OR  WITHHOLD
PAYMENTS  OR OTHER THINGS OF VALUE FOR WHICH THE FRANCHISEE IS OTHERWISE
ELIGIBLE UNDER A SALES PROMOTION, PROGRAM OR CONTEST,  OR  TO  TAKE  ANY
ADVERSE  ACTION  AGAINST  A FRANCHISEE, INCLUDING CHARGE BACKS, REDUCING
VEHICLE ALLOCATIONS, OR TERMINATING OR THREATENING TO TERMINATE A  FRAN-
CHISE IN CONNECTION WITH OR AS A RESULT OF ANY new motor vehicle sold by
the  franchised motor vehicle dealer and subsequently exported, [provid-
ing such dealer can demonstrate that he exercised] UNLESS  THE  MANUFAC-
TURER  DEMONSTRATED THAT THE DEALER FAILED TO EXERCISE due diligence and
DEMONSTRATED that the sale was NOT made in good faith and [without] WITH
knowledge of the purchaser's intention to export the motor vehicle[,  or
that  such  dealer reasonably relied on approvals from the franchisor to
complete a sale]. A franchised motor vehicle dealer which causes  a  new
motor  vehicle  to be registered in this state or in a foreign state and
causes to be collected the appropriate sales and use  tax  DUE  OR  THAT
SUCH  DEALER  REASONABLY  RELIED  ON  APPROVALS  FROM  THE FRANCHISOR TO
COMPLETE THE SALE shall be presumed to have exercised due diligence.  IT
SHALL ALSO BE PRESUMED THAT THE DEALER EXERCISED DUE  DILIGENCE  IF  THE
FRANCHISOR'S CAPTIVE FINANCE COMPANY HAS APPROVED AND PROVIDED FINANCING
FOR  ANY  SUCH TRANSACTION. A FRANCHISOR SEEKING TO IMPOSE A CHARGE BACK
AS A RESULT OF A MOTOR VEHICLE EXPORT SHALL HAVE THE BURDEN TO ESTABLISH
THAT THE DEALER HAD REASON TO KNOW THE MOTOR VEHICLE WOULD  BE  EXPORTED
IF  THE  DEALER EXERCISED DUE DILIGENCE AS SET FORTH ABOVE. A FRANCHISOR
SEEKING TO IMPOSE A CHARGE BACK AS A RESULT OF A  MOTOR  VEHICLE  EXPORT
SHALL PROVIDE WRITTEN NOTICE TO THE DEALER OF SUCH INTENT ALONG WITH THE
SPECIFIC  AMOUNT OF THE PROPOSED CHARGE BACK AND THE VEHICLE OR VEHICLES

S. 5725                             7

ALLEGEDLY EXPORTED. THE FRANCHISOR SHALL NOT IMPOSE  THE  EXPORT  CHARGE
BACK, DEBIT THE DEALER'S ACCOUNT, OR OTHERWISE SEEK TO OBTAIN ALL OR ANY
PART  OF  THE  EXPORT  CHARGE BACK FUNDS UNTIL FORTY-FIVE DAYS AFTER THE
FRANCHISOR  HAS ESTABLISHED THAT THE DEALER HAD REASON TO KNOW THE MOTOR
VEHICLE WOULD BE EXPORTED WHEN THE DEALER SOLD AND DELIVERED  THE  MOTOR
VEHICLE  AND  ALL  INTERNAL  DISPUTE  RESOLUTION  PROCEDURES  HAVE  BEEN
COMPLETED AND/OR AN ADJUDICATION HAS  BEEN  COMPLETED  PURSUANT  TO  THE
PROCEDURE  SET FORTH IN SECTION FOUR HUNDRED SIXTY-NINE OF THIS ARTICLE.
A DEALER RECEIVING NOTICE OF A PROPOSED  EXPORT  CHARGE  BACK  FROM  THE
FRANCHISOR SHALL BE ENTITLED TO FILE A PROTEST PURSUANT TO THE PROCEDURE
SET  FORTH  IN SECTION FOUR HUNDRED SIXTY-NINE OF THIS ARTICLE AFTER ALL
FRANCHISOR INTERNAL DISPUTE RESOLUTION PROCEDURES HAVE  BEEN  COMPLETED,
WITHIN  THIRTY  DAYS  OF  RECEIPT OF THE FRANCHISOR'S NOTICE OF PROPOSED
EXPORT  CHARGE  BACK  OR  WITHIN  THIRTY  DAYS  OF  COMPLETION  OF   THE
FRANCHISOR'S INTERNAL DISPUTE RESOLUTION PROCEDURES, WHICHEVER IS LATER.
  S  9. Subparagraph 1 of paragraph (cc) of subdivision 2 of section 463
of the vehicle and traffic law, as added by chapter 490 of the  laws  of
2008, is amended to read as follows:
  (1)  To  enter  into  a franchise establishing an additional new motor
vehicle dealer or relocating an existing new motor vehicle  dealer  into
the  relevant  market  area  of an existing [franchise] FRANCHISED motor
vehicle dealer of the same line  make  unless  the  franchisor  provides
notice  pursuant to the terms of this subdivision. All dealers that have
a relevant market area that encompasses the proposed site shall be enti-
tled to written notice, via certified  mail  return  receipt  requested,
informing  them  of  the  proposed addition or relocation. Any new motor
vehicle dealer may institute an  action  as  provided  in  section  four
hundred sixty-nine of this article to protest the establishment or relo-
cation of the new motor vehicle dealer following receipt of such notice,
or following the end of any appeal procedure provided by the franchisor.
In  any  action  brought  by  the  dealer, the franchisor shall have the
burden of proving that there exists good cause for any such addition  or
relocation.  Institution of an action pursuant to this subdivision shall
serve to stay, without bond, the proposed addition or relocation until a
final judgment has been rendered in a proceeding or action  as  provided
in  section  four  hundred  sixty-nine of this article.  FOR PURPOSES OF
THIS SECTION, ANY EXISTING FRANCHISED MOTOR VEHICLE DEALER SHALL ALSO BE
ENTITLED TO PROTEST AN ESTABLISHMENT OF A NEW MOTOR  VEHICLE  DEALER  IF
SUCH  EXISTING  DEALER CAN ESTABLISH THAT DURING ANY TWELVE MONTH PERIOD
IN THE THIRTY-SIX MONTH PERIOD PRECEDING THE NOTICE, SUCH EXISTING DEAL-
ER OR ITS PREDECESSOR MADE TWENTY-FIVE PERCENT OR  MORE  OF  ITS  RETAIL
SALES  (NOT  INCLUDING  ANY  SALES THROUGH A FLEET PROGRAM) OF NEW MOTOR
VEHICLES TO PERSONS WHOSE REGISTERED HOUSEHOLD  ADDRESSES  WERE  LOCATED
WITHIN  THE  RELEVANT  MARKET  AREA  OF THE PROPOSED LOCATION OF THE NEW
DEALER. ANY NOTICE GIVEN BY A FRANCHISOR PURSUANT  TO  THIS  SUBDIVISION
SHALL  PRECISELY  STATE  THE  LOCATION  OF  THE  PROPOSED NEW DEALER AND
PROVIDE DETAIL SUFFICIENT TO DETERMINE THE RELEVANT MARKET AREA OF  SUCH
NEW DEALER.
  S  10.  Paragraph  (ee) of subdivision 2 of section 463 of the vehicle
and traffic law, as added by chapter 490 of the laws of 2008, is amended
to read as follows:
  (ee) To fail to reimburse a dealer in full  for  the  actual  cost  of
providing  a  loaner  vehicle  to  any  customer who is having a vehicle
serviced at the dealership if the provision of such a loaner vehicle  is
required  by  the  franchisor  OR IF THE PROVISION OF LOANER VEHICLES IS
REQUIRED TO EARN BENEFITS UNDER ANY INCENTIVE  PROGRAMS  ESTABLISHED  BY

S. 5725                             8

THE FRANCHISOR OR BY ANY RELATED ENTITY.  For the purposes of this para-
graph,  actual  cost  shall  not exceed the average cost in the dealer's
region for the rental of a substantially similar make and model  as  the
vehicle being serviced.
  S 11. Subparagraph 2 of paragraph (ff) of subdivision 2 of section 463
of  the  vehicle and traffic law, as added by chapter 490 of the laws of
2008, is amended to read as follows:
  (2) For purposes of this paragraph, the term  "modify"  or  "modifica-
tion" means any change or replacement of any franchise if such change or
replacement may substantially and adversely affect the new motor vehicle
dealer's rights, obligations, investment or return on investment INCLUD-
ING,  BUT  NOT LIMITED TO, ANY CHANGE IN THE DEALER'S ASSIGNED GEOGRAPH-
ICAL AREA OF RESPONSIBILITY FOR SALES AND/OR SERVICE.
  S 12. Subdivision 2 of section 463 of the vehicle and traffic  law  is
amended  by  adding  three new paragraphs (ii), (jj) and (kk) to read as
follows:
  (II) TO ALLOCATE NEW MOTOR VEHICLES TO OR EVALUATE THE PERFORMANCE  OF
A  FRANCHISED  MOTOR  VEHICLE  DEALER  BASED  ON, OR OFFER ANY DISCOUNT,
INCENTIVE, BONUS, REBATE, PROGRAM, ALLOWANCE OR  CREDIT  THAT  DIFFEREN-
TIATES BETWEEN VEHICLE SALES BY A FRANCHISED MOTOR VEHICLE DEALER WITHIN
A TERRITORY OR GEOGRAPHIC AREA ASSIGNED TO SUCH DEALER AND VEHICLE SALES
OUTSIDE OF SUCH TERRITORY OR GEOGRAPHIC AREA.
  (JJ)  TO  UTILIZE  A DISCRIMINATORY, UNREASONABLE, ARBITRARY OR UNFAIR
SYSTEM OF ALLOCATION OF NEW MOTOR VEHICLE INVENTORY. BEFORE APPLYING  OR
AMENDING A SYSTEM OF ALLOCATION OF NEW MOTOR VEHICLES INVENTORY, A FRAN-
CHISOR  SHALL COMMUNICATE ITS SYSTEM OF ALLOCATION IN WRITING IN A CLEAR
AND CONCISE MANNER TO ALL SAME LINE-MAKE DEALERS LOCATED IN THIS STATE.
  (KK) TO REFUSE TO DISCLOSE TO ANY FRANCHISED MOTOR VEHICLE DEALER  THE
MANNER  AND  MODE  OF  DISTRIBUTION  OF VEHICLES IN THE FRANCHISED MOTOR
VEHICLE DEALER'S LINE MAKE WITHIN THE STATE, AND AN EXPLANATION  OF  THE
DERIVATION OF THE ALLOCATION SYSTEM, INCLUDING ITS MATHEMATICAL FORMULA,
IF ANY, IN A CLEAR AND COMPREHENSIBLE FORM.
  S  13. Subdivision 1 of section 465 of the vehicle and traffic law, as
amended by chapter 490 of the laws  of  2008,  is  amended  to  read  as
follows:
  1.  Every  franchisor  shall  properly  fulfill any warranty agreement
and/or franchisor's service contract and shall compensate  each  of  its
franchised motor vehicle dealers for warranty parts and labor in amounts
which  reflect  fair  and  reasonable  compensation  for  such work. All
warranty claims and/or claims under a franchisor's service contract made
by franchised motor vehicle dealers shall be  paid  within  thirty  days
following  their  approval.  For  parts reimbursement, other than compo-
nents,  systems,  fixtures,  appliances,  furnishings,  accessories  and
features  of a house coach that are designed, used and maintained prima-
rily for nonvehicular residential purposes, and for labor reimbursement,
fair and reasonable compensation shall not be less than  the  price  and
rate charged by the franchised motor vehicle dealer for like services to
non-warranty and/or non-service contract customers. For purposes of this
section,  the  price  and  rate  charged by the franchised motor vehicle
dealer for parts may be established by submitting to the franchisor  one
hundred  sequential  nonwarranty  customer-paid service repair orders or
the number of sequential nonwarranty customer-paid service repair orders
written within a ninety day period, whichever is less, covering  repairs
made  no  more  than  one hundred eighty days before the submission, and
declaring the price and rate, including average  markup  for  the  fran-
chised motor vehicle dealer as its reimbursement rate. The reimbursement

S. 5725                             9

rate so declared shall go into effect thirty days following the declara-
tion and shall be presumed to be fair and reasonable, however a franchi-
sor  may rebut such presumption by showing that such rate so established
is  unfair and unreasonable in light of the practices of all other fran-
chised motor vehicle dealers in the  vicinity  offering  the  same  line
make.  The franchised motor vehicle dealer shall not request a change in
the reimbursement rate more often than twice in each calendar  year.  In
establishing  the  labor  reimbursement  rate,  the franchisor shall not
require a franchised motor vehicle dealer to establish said  rate  by  a
methodology,  or  by requiring information, that is unduly burdensome or
time consuming to provide, including, but not limited to, a  transaction
by  transaction  calculation.    FOR  THE  PURPOSES OF THIS SECTION, THE
FOLLOWING PARTS OR TYPES OF REPAIRS SHALL BE  EXCLUDED  FROM  THE  PARTS
AND/OR  LABOR  CALCULATIONS  AND THE FRANCHISOR'S REIMBURSEMENT REQUIRE-
MENTS UNDER THIS SECTION: (A) PARTS SOLD AT WHOLESALE;  (B)  TIRES;  (C)
ROUTINE  MAINTENANCE NOT COVERED UNDER ANY RETAIL CUSTOMER WARRANTY SUCH
AS FLUIDS, FILTERS AND BELTS NOT PROVIDED IN THE COURSE OF REPAIRS;  (D)
ENGINE  ASSEMBLIES AND TRANSMISSION ASSEMBLIES; (E) VEHICLE RECONDITION-
ING; AND (F) BATTERIES. IF THE FRANCHISOR  REJECTS  THE  DECLARATION  OR
ATTEMPTS  TO  REBUT  THE DECLARATION BECAUSE OF AN ERROR IN THE DEALER'S
SUBMISSION, THE FRANCHISOR SHALL IDENTIFY WITH  SPECIFICITY  THE  REASON
FOR REJECTION AND IDENTIFY THE ERROR OR ERRORS WITHIN THE SUBMISSION. IN
THE EVENT THE FRANCHISOR REJECTS OR REBUTS THE DEALER'S INITIAL DECLARA-
TION,  THE  DEALER SHALL HAVE THE OPPORTUNITY TO CURE THE DECLARATION BY
ADDRESSING THE ALLEGED ERROR OR ERRORS IDENTIFIED BY THE FRANCHISOR, BUT
THE FRANCHISOR SHALL NOT REQUIRE  THE  DEALER  TO  RESUBMIT  THE  ENTIRE
DECLARATION.  THE  FRANCHISOR  SHALL  RESPOND TO THE DEALER'S ATTEMPT TO
CURE WITHIN THIRTY DAYS OF RECEIVING THE DEALER'S SUBMISSION AND ATTEMPT
TO CURE. FOR THE PURPOSES OF CURING THE  DECLARATION,  THE  ONE  HUNDRED
EIGHTY  DAY  REQUIREMENT  FOR THE REPAIR ORDERS SHALL BE STAYED FROM THE
DATE OF INITIAL SUBMISSION. IF  THE  DEALER  DOES  NOT  AGREE  WITH  THE
FRANCHISOR'S  RESPONSE  AFTER ITS ATTEMPT TO CURE, THE DEALER MAY FILE A
PROTEST NOT LATER THAN THIRTY DAYS AFTER RECEIPT OF THAT RESPONSE BY THE
FRANCHISOR. IN ANY HEARING HELD PURSUANT TO THIS SUBDIVISION, THE  FRAN-
CHISOR  SHALL  HAVE  THE BURDEN OF PROVING THAT THE RATE DECLARED BY THE
DEALER WAS UNFAIR AND UNREASONABLE AS DESCRIBED IN THIS SUBDIVISION  AND
THAT  THE  PROPOSED  ADJUSTMENT  OF  THE  AVERAGE  PERCENTAGE  MARKUP OR
REJECTION OF THE SUBMISSION IS  FAIR  AND  REASONABLE  PURSUANT  TO  THE
PROVISIONS OF THIS SUBDIVISION.
  S  14.  Subdivisions  3,  4, 6 and 7 of section 465 of the vehicle and
traffic law, as added by chapter 490 of the laws of 2008, are amended to
read as follows:
  3. No franchisor shall conduct an audit or charge  back  any  warranty
[or] PAYMENT, OR ANY sales [incentive payment], ADVERTISING OR MARKETING
INCENTIVE  PAYMENT ("INCENTIVE PAYMENTS") or otherwise hold a franchised
motor vehicle dealer liable for charges more  than  one  year,  or  five
years  in  the  case  of  fraud, after the date the franchisor made such
payment to the dealer.
  (A) IF THE FRANCHISOR DOES NOT PROVIDE THE  DEALER-PRINCIPALS  OR  THE
DEALER-PRINCIPALS' DESIGNEES WITH A REPORT NOTING SPECIFICALLY ANY DEFI-
CIENCIES  OR  ERRORS  IN  THE  DEALER'S CLAIMS OR SUBMISSIONS IN ANY SIX
MONTH PERIOD, THE FRANCHISOR SHALL NOT DENY OR CHARGE BACK ANY INCENTIVE
PAYMENT OR WARRANTY CLAIM FOR THAT SIX MONTH PERIOD OR ANY EARLIER PERI-
OD. THE FRANCHISOR SHALL NOT DENY OR CHARGE BACK ANY  INCENTIVE  PAYMENT
OR WARRANTY CLAIM ON ANY SUBSEQUENT AUDIT IF THE DEALER HAS SUBSTANTIAL-

S. 5725                            10

LY  COMPLIED  WITH  THE  FRANCHISOR'S REASONABLE RECORDKEEPING OR CLAIMS
PROCEDURE.
  (B)  IN CONNECTION WITH A CLAIM FOR WARRANTY REIMBURSEMENTS, THE DEAL-
ER'S FAILURE TO DOCUMENT PROPERLY ONE PART OF  A  WARRANTY  REPAIR  THAT
CONTAINS  MORE  THAN  ONE PART SHALL NOT BE THE BASIS TO CHARGE BACK THE
ENTIRE REPAIR. THE FRANCHISOR SHALL NOT DENY OR CHARGE BACK  A  WARRANTY
CLAIM  FOR WORK THAT IS PERFORMED OR PARTS THAT ARE REPLACED IN SUBSTAN-
TIAL COMPLIANCE WITH THE FRANCHISOR'S REASONABLE RECORDKEEPING OR CLAIMS
PROCEDURES EVEN IF DOCUMENTATION FOR ANY WORK PERFORMED AND/OR FOR PARTS
THAT ARE REPLACED IN THE SAME REPAIR MAY NOT SUBSTANTIALLY  COMPLY  WITH
THE FRANCHISOR'S REASONABLE RECORDKEEPING OR CLAIMS PROCEDURES.
  4.  A  franchisor  shall  not  charge  a dealer back subsequent to the
payment of a warranty [or], sales [incentive], ADVERTISING OR  MARKETING
INCENTIVE  claim  unless  a  representative of the franchisor has met in
person at the dealership, or by telephone, with an officer  or  employee
of the dealer designated by the dealer and explained in detail the basis
for  each of the proposed charge backs and thereafter given the dealer's
representative a reasonable opportunity at the meeting,  or  during  the
telephone call, to explain the dealer's position relating to each of the
proposed charge backs. In the event the dealer was selected for audit or
review  on the basis that some or all of the dealer's claims were viewed
as excessive in comparison to average, mean or  aggregate  data  accumu-
lated  by  the franchisor, or in relation to claims submitted by a group
of other franchisees, the franchisor shall, at or prior to  the  meeting
or  telephone  call with the dealer's representative, provide the dealer
with a written statement containing the basis or methodology upon  which
the dealer was selected for audit or review.
  6.  A  franchisor  shall  not deny or charge back a sales [incentive],
ADVERTISING OR MARKETING INCENTIVE payment made to a dealer  unless  the
claim  was materially false or fraudulent or [that] the dealer failed to
reasonably substantiate  the  claim  [either]  in  accordance  with  the
manufacturer's reasonable procedures.
  7.  After  all  internal dispute resolution processes provided through
the franchisor have been resolved, the franchisor shall give  notice  to
the  dealer  of  the  final  amount  of  a proposed warranty [or], sales
[incentive], ADVERTISING OR MARKETING  INCENTIVE  charge  back.  If  the
dealer  institutes an action pursuant to this article within thirty days
of receipt of such notice, the proposed charge  back  shall  be  stayed,
without  bond,  during  the  pendency of such action and until the final
judgment has been rendered in an adjudicatory proceeding  or  action  as
provided  in section four hundred sixty-nine of this article.  THE FRAN-
CHISOR SHALL NOT IMPOSE THE CHARGEBACK, DEBIT THE DEALER'S  ACCOUNT,  OR
OTHERWISE  SEEK  TO  OBTAIN ALL OR ANY PART OF THE CHARGEBACK FUNDS FROM
THE DEALER DURING THE THIRTY-DAY PERIOD IN  WHICH  THE  DEALER  HAS  THE
OPPORTUNITY TO FILE AN ACTION AS SET FORTH ABOVE.
  S  15. Section 467 of the vehicle and traffic law, as amended by chap-
ter 490 of the laws of 2008, is amended to read as follows:
  S 467. Dealership facilities assistance upon termination, cancellation
or nonrenewal. Upon a permitted termination, cancellation or  nonrenewal
by  the  franchisor, unless such termination, cancellation or nonrenewal
is for a reason or reasons set forth in subparagraph three of  paragraph
(d) of subdivision two of section four hundred sixty-three of this arti-
cle,  the  franchisor  shall assume the obligations for any lease of the
dealership facilities or arrange for  a  new  lease  of  the  dealership
facilities  or  pay the dealer the lease payments for one year, whatever
is less, or negotiate a lease termination for the dealership  facilities

S. 5725                            11

at  the  franchisor's  expense. If the facilities are owned by the fran-
chised motor vehicle dealer, REGARDLESS OF WHETHER  THE  FACILITIES  ARE
HELD  IN  THE  NAME  OF  THE FRANCHISED MOTOR VEHICLE DEALER ENTITY, THE
DEALER-OPERATOR  PERSONALLY, OR ANOTHER ENTITY CONTROLLED BY THE DEALER-
OPERATOR, the franchisor shall pay such dealer a sum equivalent  to  the
reasonable  rental  value  of  the  dealership  facility  for  one year,
provided the franchised motor vehicle dealer shall mitigate  damages  in
the case of an owned facility.
  S  16.  Severability.  If  any clause, sentence, paragraph, section or
part of this act shall be adjudged by any court of  competent  jurisdic-
tion  to be invalid and after exhaustion of all further judicial review,
the judgment shall not affect, impair or invalidate the remainder there-
of, but shall be confined in its  operation  to  the  clause,  sentence,
paragraph,  section or part of this act directly involved in the contro-
versy in which the judgment shall have been rendered.
  S 17. This act shall take effect immediately.

Co-Sponsors

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S5725A (ACTIVE) - Bill Details

See other versions of this Bill:
S6797
, A7844A
Current Committee:
Law Section:
Vehicle and Traffic Law
Laws Affected:
Amd §§415, 463 & 465, V & T L

S5725A (ACTIVE) - Bill Texts

view summary

Relates to automobile manufacturers and unfair practices by franchisors.

view sponsor memo
BILL NUMBER:S5725A

TITLE OF BILL: An act to amend the vehicle and traffic law, in
relation to automobile manufacturers and business practices by
franchisors

PURPOSE OR GENERAL IDEA OF BILL: To update provisions of the state's
automobile dealer franchise law so as to protect automobile dealers
from certain demands by manufacturers.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subdivision 5 of section 415 of the vehicle and
traffic law by adding a new paragraph b-2 to clarify the extent of the
interest that a franchisor, including a manufacturer or distributor
and other listed entities, may have in an automobile dealer.

Section 2 amends paragraph f of Subdivision 7 of section 415 of the
vehicle and traffic law to clarify the intent of Chapter 490 of the
Laws of 2008, which afforded a key protection to the automobile dealer
industry and its consumers by preventing deleterious competitive
effects that would result from the operation of manufacturer owned
dealership businesses, Specifically, section two provides that the
commissioner of the department of motor vehicles shall not issue an
automobile dealer registration to a franchisor, including a
manufacturer or distributor and other listed entities, or an entity
controlled by such an entity, except in the limited circumstances that
are currently permitted.

Section 3 amends subdivision 1 of section 463 of the vehicle and
traffic law by adding a new paragraph e to allow dealers to sell
extended service contracts of their choice and not necessarily those
offered by a franchisor.

Section 4 makes a technical change to paragraph b of subdivision 2 of
section 463 of the vehicle and traffic law.

Section 5 amends paragraph c of subdivision 2 of section 463 of the
vehicle and traffic law by adding new subparagraphs 2, 3 and 4 to
prohibit franchisors from forcing dealers to perform repeated facility
upgrades or rejecting materials or services that are chosen by dealers
that are substantially similar to those required by franchisors for
construction or upgrade projects.

Section 5 also adds a new subparagraph 5 under paragraph c of
subdivision 2 of section 463 that prohibits a franchisor from
requiring a dealer to operate dealership facilities that are exclusive
to a particular line make, unless such a restriction is justified by
current and reasonably expected future economic conditions in the area
of the dealership.

Section 5 also adds a new subparagraph 6 under paragraph c of
subdivision 2 of section 463 that would prohibit a franchisor from
requiring a site control provision that would survive or continue
after the termination of a dealership if the termination is due to the
discontinuation of the line-make.


Section 6 amends paragraph o of subdivision 2 of Section 463 of the
vehicle and traffic law to require franchisors to repurchase signage
and other items upon termination; reimbursement of facilities upgrades
occurring within three years of a termination without cause; and
reimbursement for liability on Dealer Management System contracts in
the event of a termination.

Section 7 amends paragraph z of subdivision 2 of section 463 of the
vehicle and traffic law to require notice prior to assessing
charge-backs for exported vehicles.

Section 8 amends subdivision 2 of section 463 of the vehicle and
traffic law is amended by adding, a new paragraph ii to require
franchisors to give credit to dealers, for inventory allocation
purposes, for sales of new motor vehicles to persons from areas
outside a franchisees assigned sales territory.

Section 9 amends subdivision 2 of section 463 by adding new paragraphs
jj and kk to require fair vehicle allocations, disclosure, upon
request, to dealers of the franchisor's vehicle allocation methodology
and transparency of the actual allocations to dealers.

Section 10 amends subdivision 1 of section 465 of the vehicle and
traffic law to address issues that arose with the warranty
reimbursement provision of the law since its amendment in 2008.

Section 11 amends subdivisions 3 of section 465 of the vehicle and
traffic law to require franchisors to provide dealers with either a
system or a process that provides a franchised motor vehicle dealer
particularized information where the dealer may have been making
errors in warranty and sales submissions if the franchisor intends to
audit the same.

Section 12 amends subdivisions 4. 6 and 7 of section 465 of the
vehicle and traffic law to include sales and marketing payments into
existing chargeback protections.

Section 13 provides that if any provision of the bill is determined to
be invalid that such determination shall not invalidate the remainder
of the bill.

JUSTIFICATION: In 1983, the state Legislature passed the Franchised
Motor Vehicle Dealer Act (Chapter 815). In passing the Act, the
Legislature found that the distribution of motor vehicles within the
state vitally affects its general economy and therefore it is
necessary to regulate motor vehicle manufacturers, distributors and
factory or distributor representatives. The Act has been amended
several times since 1983, including comprehensive amendments in 2008.
The provisions of this bill are necessary to clarify the intent of the
2008 Act, add to it several provisions that have become necessary
following restructuring efforts by several automobile manufacturers'
as a result of the Automotive industry crisis of 2008-2010, and to
further minimize the possibility of arbitrary or unfair demands in the
franchisor-franchisee relationship so as to maintain the health and
vitality of the retail automobile industry.

PRIOR LEGISLATIVE HISTORY: New Legislation.


FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5725--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 7, 2013
                               ___________

Introduced  by  Sen.  ZELDIN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Transportation --  commit-
  tee  discharged, bill amended, ordered reprinted as amended and recom-
  mitted to said committee

AN ACT to amend the vehicle and traffic law, in relation  to  automobile
  manufacturers and business practices by franchisors

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 5 of section 415 of the vehicle and traffic law
is amended by adding a new paragraph b-2 to read as follows:
  B-2. A STATEMENT INDICATING ANY INTEREST IN THE APPLICANT'S  FRANCHISE
ENTITY  BY  A  PERSON  OR ENTITY DESCRIBED IN PARAGRAPH F OF SUBDIVISION
SEVEN OF THIS SECTION.
  S 2. Paragraph f of subdivision 7 of section 415 of  the  vehicle  and
traffic  law, as added by chapter 490 of the laws of 2008, is amended to
read as follows:
  f. EXCEPT AS PROVIDED IN PARAGRAPH (BB) OF SUBDIVISION TWO OF  SECTION
FOUR HUNDRED SIXTY-THREE OF THIS TITLE:
  (I)  The  commissioner shall not issue any certificate of registration
authorized by this section to any franchisor, MANUFACTURER,  DISTRIBUTOR
BRANCH OR FACTORY BRANCH, as such [term is] TERMS ARE defined in section
four hundred sixty-two of this title, OR TO ANY SUBSIDIARY, AFFILIATE OR
CONTROLLED  ENTITY  THEREOF, except that the commissioner may renew such
certificate previously issued or otherwise  approved  to  operate  to  a
franchisor prior to [May second, two thousand two] JULY FIRST, TWO THOU-
SAND  SIX.  NOTHING  IN THIS SECTION SHALL PRECLUDE THE ESTABLISHMENT OF
SUCH FACILITIES NECESSARY TO CONTINUE THE ONGOING OPERATION OF ANY HOLD-
ER OF A CERTIFICATE OF REGISTRATION AUTHORIZED BY THIS SECTION OR OTHER-
WISE APPROVED TO OPERATE TO A FRANCHISOR PROVIDED SUCH ORIGINAL  CERTIF-
ICATE OR APPROVAL WAS GRANTED PRIOR TO JULY FIRST, TWO THOUSAND SIX.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11010-04-3

S. 5725--A                          2

  (II)  ON OR AFTER THE EFFECTIVE DATE OF THIS SUBPARAGRAPH, THE COMMIS-
SIONER SHALL NOT ISSUE ANY CERTIFICATE OF  REGISTRATION,  OR  RENEW  ANY
CERTIFICATE,  UNLESS  THE  ORIGINAL  CERTIFICATE  WAS ISSUED BEFORE JULY
FIRST, TWO THOUSAND SIX, TO ANY MOTOR VEHICLE DEALER IN WHICH A FRANCHI-
SOR, MANUFACTURER, DISTRIBUTOR, DISTRIBUTOR BRANCH OR FACTORY BRANCH, AS
SUCH  TERMS ARE DEFINED IN SECTION FOUR HUNDRED SIXTY-TWO OF THIS TITLE,
OR ANY SUBSIDIARY, AFFILIATE OR CONTROLLED ENTITY THEREOF, HAS ACQUIRED,
OR POSSESSES, A CONTROLLING INTEREST IN THE FRANCHISE ENTITY EXCEPT:
  (1) WHEN OPERATING SUCH FRANCHISE  FOR  A  TEMPORARY  PERIOD,  NOT  TO
EXCEED ONE YEAR, DURING THE TRANSITION FROM ONE OWNER OF THE MOTOR VEHI-
CLE DEALERSHIP TO ANOTHER, PROVIDED, HOWEVER, THAT SUCH TEMPORARY PERIOD
MAY BE EXTENDED ONCE FOR AN ADDITIONAL PERIOD NOT TO EXCEED ONE YEAR FOR
GOOD  CAUSE.  PROVIDED THAT FOR FRANCHISORS OF HOUSE COACHES, THE PERIOD
OF TEMPORARY OWNERSHIP OF A FRANCHISED HOUSE  COACH  DEALERSHIP  MAY  BE
EXTENDED  IN  ONE  YEAR INCREMENTS FOR GOOD CAUSE SHOWN, EXCEPT THAT THE
AGGREGATE OF SUCH EXTENSIONS SHALL NOT EXCEED FIVE YEARS; OR
  (2) WHEN OPERATING SUCH FRANCHISE TEMPORARILY UNDER  A  PLAN  WITH  AN
INDEPENDENT INDIVIDUAL WHO IS OBLIGATED TO MAKE A SIGNIFICANT INVESTMENT
IN  THE DEALERSHIP THAT IS SUBJECT TO LOSS AND HAS AN OWNERSHIP INTEREST
OR EXPECTS TO ACQUIRE  FULL  OWNERSHIP  IN  A  REASONABLE  PERIOD  UNDER
REASONABLE TERMS AND CONDITIONS, PROVIDED THAT A REASONABLE PERIOD SHALL
BE PRESUMED TO NOT EXCEED EIGHT YEARS.
  S  3.  Subdivision  1 of section 463 of the vehicle and traffic law is
amended by adding a new paragraph (e) to read as follows:
  (E) TO  SELL,  OR  SELL  EXCLUSIVELY  AN  EXTENDED  SERVICE  CONTRACT,
EXTENDED MAINTENANCE PLAN OR SIMILAR PRODUCT, INCLUDING, BUT NOT LIMITED
TO, GAP PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR BY THE
FOLLOWING MEANS:
  (1)  BY  A STATEMENT MADE BY THE FRANCHISOR THAT FAILURE TO DO SO WILL
SUBSTANTIALLY AND ADVERSELY IMPACT THE DEALER; OR
  (2) BY A PROVISION IN A FRANCHISE AGREEMENT THAT THE DEALER  SELL,  OR
SELL EXCLUSIVELY AN EXTENDED SERVICE CONTRACT, EXTENDED MAINTENANCE PLAN
OR SIMILAR PRODUCT OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR; OR
  (3) BY MEASURING THE DEALER'S PERFORMANCE UNDER THE FRANCHISE BASED ON
THE  SALE  OF  EXTENDED SERVICE CONTRACTS, EXTENDED MAINTENANCE PLANS OR
SIMILAR PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE  MANUFACTURER  OR
DISTRIBUTOR; OR
  (4)  BY  REQUIRING  THE  DEALER  TO  EXCLUSIVELY  PROMOTE  THE SALE OF
EXTENDED  SERVICE  CONTRACTS,  EXTENDED  MAINTENANCE  PLANS  OR  SIMILAR
PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR.
  NOTHING IN THIS SECTION SHALL PROHIBIT A FRANCHISOR FROM:
  (A) PROVIDING INCENTIVES TO A DEALER THAT MAKES THE VOLUNTARY DECISION
TO SELL OR SELL EXCLUSIVELY AN EXTENDED SERVICE CONTRACT, EXTENDED MAIN-
TENANCE  PLAN  OR  SIMILAR  PRODUCT,  INCLUDING, BUT NOT LIMITED TO, GAP
PRODUCTS OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR, OR
  (B) REQUIRING THAT A DEALER THAT SELLS AN EXTENDED  SERVICE  CONTRACT,
EXTENDED  MAINTENANCE  PLAN,  OR  SIMILAR  PRODUCT  THAT IS NOT OFFERED,
ENDORSED OR SPONSORED BY THE FRANCHISOR, DISCLOSE TO  THE  CONSUMER  THE
DISCLOSURES  REQUIRED  UNDER SECTION SEVEN THOUSAND NINE HUNDRED FIVE OF
THE INSURANCE LAW, AND A SEPARATE STATEMENT, ACKNOWLEDGED BY THE CONSUM-
ER, THAT THE EXTENDED SERVICE CONTRACT,  EXTENDED  MAINTENANCE  PLAN  OR
SIMILAR PRODUCT IS NOT OFFERED, ENDORSED OR SPONSORED BY THE FRANCHISOR,
IF THAT IS THE CASE.
  S  4. Paragraph (b) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:

S. 5725--A                          3

  (b)  To  directly  or indirectly coerce or attempt to coerce any fran-
chised motor vehicle dealer to enter into any agreement with such  fran-
chisor  or  officer, agent or other representative thereof, or to do any
other act prejudicial to the monetary interests or  property  rights  of
said  dealer  by threatening to [cancel any unexpired contractual agree-
ment existing  between  such  franchisor  and]  TERMINATE  said  dealer.
Provided,  however, that good faith notice to any franchised motor vehi-
cle dealer of said dealer's violation of any terms or provisions of such
franchise shall not constitute a violation of this article.
  S 5. Paragraph (c) of subdivision 2 of section 463 of the vehicle  and
traffic  law,  as amended by chapter 490 of the laws of 2008, is amended
to read as follows:
  (c) (1) To condition the renewal or extension  of  a  franchise  on  a
franchised motor vehicle dealer's substantial renovation of the dealer's
place  of  business  or  on  the  construction, purchase, acquisition or
rental of a new place of business by the franchised motor vehicle dealer
unless the franchisor has advised the franchised motor vehicle dealer in
writing of its intent to impose such a  condition  within  a  reasonable
time  prior  to  the  effective  date of the proposed date of renewal or
extension (but in no  case  less  than  one  hundred  eighty  days)  and
provided  the  franchisor  demonstrates  the need for such change in the
place of business and the reasonableness of such demand in view  of  the
need  to  service the public and the economic conditions existing in the
automobile industry at the time such action would  be  required  of  the
franchised motor vehicle dealer. As part of any such condition the fran-
chisor  shall  agree, in writing, to supply the dealer with a reasonable
quantity and mix of additional new motor vehicles which,  as  determined
by a reasonable analysis of market conditions, are projected to meet the
sales levels necessary to support the increased overhead incurred by the
franchised   motor   vehicle   dealer  by  reason  of  such  renovation,
construction, purchase, acquisition or rental of a new  place  of  busi-
ness.
  (2)  TO  REQUIRE  A FRANCHISED MOTOR VEHICLE DEALER TO PURCHASE GOODS,
BUILDING MATERIALS, OR SERVICES FOR  THE  DEALER'S  PLACE  OF  BUSINESS,
INCLUDING, BUT NOT LIMITED TO, OFFICE FURNITURE, DESIGN FEATURES, FLOOR-
ING,  AND  WALL  COVERINGS,  FROM  A  VENDOR CHOSEN BY THE FRANCHISOR IF
GOODS, BUILDING MATERIALS, OR SERVICES OF SUBSTANTIALLY SIMILAR  QUALITY
AND DESIGN ARE AVAILABLE FROM OTHER SOURCES, PROVIDED, HOWEVER, THAT THE
GOODS  OR  BUILDING MATERIALS ARE NOT SUBJECT TO THE FRANCHISOR'S INTEL-
LECTUAL PROPERTY OR TRADEMARK RIGHTS AND THE  FRANCHISED  MOTOR  VEHICLE
DEALER HAS RECEIVED THE FRANCHISOR'S APPROVAL, WHICH APPROVAL MAY NOT BE
UNREASONABLY WITHHELD. NOTHING IN THIS SUBDIVISION SHALL BE CONSTRUED TO
ALLOW  A  FRANCHISED  MOTOR  VEHICLE  DEALER  TO  IMPAIR  OR ELIMINATE A
FRANCHISOR'S INTELLECTUAL PROPERTY OR TRADEMARK RIGHTS AND  TRADE  DRESS
USAGE  GUIDELINES,  OR  TO  IMPAIR OTHER INTELLECTUAL PROPERTY INTERESTS
OWNED OR CONTROLLED BY THE FRANCHISOR.
  (3) EXCEPT AS NECESSARY TO COMPLY WITH A HEALTH OR SAFETY LAW,  OR  TO
COMPLY  WITH  A  TECHNOLOGY  REQUIREMENT,  WHICH IS NECESSARY TO SELL OR
SERVICE A MOTOR VEHICLE THAT THE  FRANCHISED  MOTOR  VEHICLE  DEALER  IS
AUTHORIZED  OR LICENSED BY THE FRANCHISOR TO SELL OR SERVICE, TO REQUIRE
A FRANCHISED MOTOR VEHICLE DEALER TO CONSTRUCT A NEW DEALER FACILITY  OR
SUBSTANTIALLY  ALTER  OR  REMODEL AN EXISTING DEALER FACILITY BEFORE THE
DATE THAT IS TEN YEARS AFTER THE DATE THE CONSTRUCTION OF THE NEW DEALER
FACILITY OR SUCH ALTERATION OR REMODELING AT THAT LOCATION WAS COMPLETED
AND SHALL CONTINUE WITH ANY SUCCESSOR OWNER PROVIDED SUCH OWNER HAS BEEN
DESIGNATED AND APPROVED BY THE FRANCHISOR IN  THE  FRANCHISE  AGREEMENT,

S. 5725--A                          4

AND  SUCH  CONSTRUCTION, ALTERATION OR REMODELING SUBSTANTIALLY COMPLIED
WITH THE FRANCHISOR'S BRAND IMAGE STANDARDS OR PLANS THAT THE FRANCHISOR
PROVIDED AT THE TIME THE CONSTRUCTION,  ALTERATION,  OR  REMODELING  WAS
COMPLETED.
  (I) AS USED IN THIS SUBPARAGRAPH, "SUBSTANTIALLY ALTER":
  (A)  REFERS  TO AN ALTERATION THAT HAS A MAJOR IMPACT ON THE ARCHITEC-
TURAL FEATURES, CHARACTERISTICS, OR INTEGRITY OF A STRUCTURE OR LOT; AND
  (B) DOES NOT INCLUDE ROUTINE MAINTENANCE, SUCH AS  INTERIOR  PAINTING,
REASONABLY  NECESSARY TO KEEP A DEALERSHIP FACILITY IN ATTRACTIVE CONDI-
TION.
  (II) NOTHING IN THIS PARAGRAPH (C) SHALL PROHIBIT A FRANCHISOR FROM:
  (A) CONTINUING A FACILITY IMPROVEMENT PROGRAM THAT IS IN EFFECT AS  OF
THE EFFECTIVE DATE OF THIS PARAGRAPH WITH MORE THAN ONE FRANCHISED MOTOR
VEHICLE DEALER IN THE STATE OR TO RENEWING OR MODIFYING SUCH PROGRAM; OR
  (B)  PROVIDING  LUMP  SUM  OR REGULARLY-SCHEDULED PAYMENTS TO ASSIST A
FRANCHISED MOTOR  VEHICLE  DEALER  IN  MAKING  A  FACILITY  IMPROVEMENT,
INCLUDING  CONSTRUCTION, ALTERATION OR REMODELING, OR INSTALLING SIGNAGE
OR A FRANCHISOR IMAGE ELEMENT;
  (C) PROVIDING REIMBURSEMENT TO A FRANCHISED MOTOR  VEHICLE  DEALER  ON
REASONABLE,  WRITTEN TERMS FOR A PORTION OF THE FRANCHISED MOTOR VEHICLE
DEALER'S COST OF MAKING A FACILITY IMPROVEMENT, INCLUDING  CONSTRUCTION,
ALTERATION  OR  REMODELING, THE PURCHASE OF GOODS, BUILDING MATERIALS OR
SERVICES, OR INSTALLING SIGNAGE OR A FRANCHISOR IMAGE ELEMENT.
  (4) TO DENY A FRANCHISED  MOTOR  VEHICLE  DEALER  A  FRANCHISOR  IMAGE
ELEMENT  PAYMENT, INCENTIVE OR ALLOWANCE IF THE FRANCHISED MOTOR VEHICLE
DEALER, WITH THE FRANCHISOR'S APPROVAL, BEGAN CONSTRUCTION,  ALTERATIONS
OR  REMODELING  INTENDED  TO  COMPLY WITH THE FRANCHISOR'S IMAGE ELEMENT
PROGRAM BEFORE THE FRANCHISOR SUBSTANTIALLY CHANGED  OR  TERMINATED  THE
PROGRAM PRIOR TO THE PROGRAM'S SCHEDULED ENDING DATE PROVIDED THE DEALER
IS  OTHERWISE ELIGIBLE FOR PROGRAM PAYMENTS AND PROVIDED THAT AFTER SUCH
SUBSTANTIAL CHANGE OR TERMINATION, THE COMPENSATION PAYABLE TO THE DEAL-
ER SHALL BE LIMITED TO IMAGE ELEMENT PAYMENTS, INCENTIVES OR  ALLOWANCES
THAT  THE  DEALER  WOULD  HAVE EARNED THROUGH PROGRAM'S SCHEDULED ENDING
DATE, PROVIDED THAT THE DEALER COMPLIES WITH ALL  PROGRAM  REQUIREMENTS,
AND  PROVIDED,  FURTHER, THAT SUCH PROGRAM OR PAYMENTS ARE NOT OTHERWISE
PROHIBITED BY LAW OR REGULATION.
  (5) TO REQUIRE OR ATTEMPT TO REQUIRE A FRANCHISED MOTOR VEHICLE DEALER
TO ESTABLISH OR MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES  UNLESS  JUSTI-
FIED  BY  CURRENT  AND  REASONABLY  EXPECTED  FUTURE ECONOMIC CONDITIONS
EXISTING IN THE DEALER'S RELEVANT MARKET AREA AT THE  TIME  THE  REQUEST
FOR  EXCLUSIVE FACILITIES IS MADE; PROVIDED THAT THE FOREGOING SHALL NOT
RESTRICT THE TERMS AND CONDITIONS OF ANY AGREEMENT FOR WHICH THE  DEALER
HAS  VOLUNTARILY ACCEPTED VALUABLE CONSIDERATION SEPARATE FROM THE FRAN-
CHISED MOTOR VEHICLE DEALER'S RIGHT TO SELL AND SERVICE  MOTOR  VEHICLES
FOR THE FRANCHISOR. THE FACT THAT LOCAL MARKET SHARE, FACING COMPETITIVE
BRAND  DEALERSHIPS HAVE EXCLUSIVE DEALERSHIP FACILITIES SHALL CONSTITUTE
EVIDENCE THAT CURRENT ECONOMIC CONDITIONS MAY JUSTIFY THE REQUIREMENT TO
ESTABLISH AND MAINTAIN EXCLUSIVE DEALERSHIP FACILITIES.
  (6) TO REQUIRE A SITE CONTROL PROVISION REGARDING THE  DEALER'S  PLACE
OF  BUSINESS  TO SURVIVE OR CONTINUE AFTER THE TERMINATION OF SUCH DEAL-
ER'S FRANCHISE IF THE TERMINATION IS DUE TO THE DISCONTINUATION  OF  THE
LINE-MAKE THAT WAS THE SUBJECT OF THE AGREEMENT.
  S  6. Paragraph (o) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:

S. 5725--A                          5

  (o)  (1)  Upon  a  termination of a franchise by a franchisor or fran-
chised motor vehicle dealer under this article, to refuse  to  accept  a
return of new and unused current model motor vehicle inventory which has
been acquired from the franchisor, new and unused noncurrent model motor
vehicle inventory which has been acquired from the franchisor within one
hundred  [twenty]  EIGHTY days of the effective date of the termination;
supplies, parts, equipment,  SIGNAGE,  SPECIAL  TOOLS,  and  furnishings
purchased  from  the  franchisor  or  its  approved sources [and special
tools]. The obligation of the franchisor, EXCEPT WITH RESPECT TO SIGNAGE
shall be limited to the repurchase of the above property which is  unal-
tered  and undamaged, in good and useable condition, and, in the case of
supplies, parts and equipment to those items which are currently  listed
in  the  franchisor's  supplies and parts list.  IN THE CASE OF SIGNAGE,
THE FRANCHISOR SHALL BE OBLIGATED TO REPURCHASE ANY FRANCHISOR  REQUIRED
SIGNAGE, PURCHASED WITHIN THE FIVE YEARS PRECEDING TERMINATION AND WHICH
IS  IN  GOOD AND USEABLE CONDITION LESS DEPRECIATION AS SET FORTH IN THE
INTERNAL REVENUE CODE OF ONE-FIFTEENTH OF  THE  INITIAL  COST  PER  YEAR
STARTING  THE  YEAR  FOLLOWING  THE  DEALER'S  ACQUISITION  OF THE ITEM.
Furthermore, the obligation of the  franchisor  to  repurchase  supplies
upon  a  termination,  cancellation  or nonrenewal by a franchised motor
vehicle dealer shall be limited to supplies mandated by the  franchisor.
Parts eligible for repurchase shall include parts which have been renum-
bered  in  the  current parts list but which are identical in design and
material to the currently numbered part. The return rights afforded  the
franchised  motor  vehicle  dealer under the provisions of the paragraph
shall be in addition to those, if any, provided in the franchise  agree-
ment.
  (2)  The franchisor shall pay fair and reasonable compensation for the
above described property upon repurchase. In the case of new motor vehi-
cle inventory, accessories and parts, fair and  reasonable  compensation
shall  in no instance be less than the net acquisition price paid by the
franchised motor vehicle dealer to the franchisor or its approved sourc-
es. Upon a termination of a franchise by  a  franchisor,  within  thirty
days  of  such  termination, the franchisor shall send to the franchised
motor vehicle dealer instructions on the methodology by which the  fran-
chised  motor  vehicle  dealer must ship the above described property to
the franchisor; the franchisor shall then remit payment for such proper-
ty to the franchised  motor  vehicle  dealer  within  sixty  days  after
receipt of such property.
  (3)  Upon  a  termination of a franchise by a franchised motor vehicle
dealer where the franchise consists primarily of  the  distribution  and
sale of house coaches, the franchisor's repurchase obligations set forth
in this paragraph shall not apply.
  (4)  IN ADDITION TO ANY OTHER REQUIREMENTS OF THIS SUBDIVISION, IN THE
EVENT A FRANCHISOR TERMINATES A FRANCHISE DUE TO TERMINATION OF  A  LINE
MAKE,  THE  FRANCHISOR  SHALL  COMPENSATE  THE DEALER FOR ANY FRANCHISOR
REQUIRED  FACILITY   CONSTRUCTION,   ALTERATIONS   OR   REMODELING,   OR
CONSTRUCTION,  ALTERATIONS  OR  REMODELING REQUIRED FOR PARTICIPATION IN
ANY INCENTIVE PROGRAMS WHICH WERE COMPLETED BY THE DEALER  WITHIN  THREE
YEARS  OF  THE DATE THE FRANCHISOR ANNOUNCED THE TERMINATION OF THE LINE
MAKE.  FOR THE PURPOSES OF THIS SECTION, COMPLETION SHALL BE  DEEMED  TO
OCCUR   AT   THE  LATER  OF  THE  FRANCHISOR'S  FINAL  APPROVAL  OF  THE
CONSTRUCTION, ALTERATIONS, OR REMODELING OR THE ISSUANCE  OF  A  CERTIF-
ICATE  OF  OCCUPANCY. THE COMPENSATION REQUIRED UNDER THIS SECTION SHALL
BE IN AN AMOUNT EQUAL TO THE DEALER'S COST  FOR  THE  FACILITY  UPGRADES
LESS  ANY  ASSISTANCE  PROVIDED  TO THE DEALER WITHIN THREE YEARS OF THE

S. 5725--A                          6

DATE THE FRANCHISOR ANNOUNCED THE TERMINATION OF THE LINE  MAKE  BY  THE
MANUFACTURER OR DISTRIBUTOR, AND LESS THE AMOUNT FOR DEPRECIATION AS SET
FORTH  IN INTERNAL REVENUE CODE OF ONE THIRTY-NINTH OF THE TOTAL INITIAL
COST  OF SUCH CONSTRUCTION, ALTERATIONS, OR REMODELING PER YEAR STARTING
THE YEAR FOLLOWING THE DEALER'S COMPLETION OF THE FACILITY CONSTRUCTION,
ALTERATIONS, OR REMODELING.
  (5) IN ADDITION TO THE REQUIREMENTS OF SUBPARAGRAPH FOUR OF THIS PARA-
GRAPH, IN THE EVENT A FRANCHISOR TERMINATES A FRANCHISE DUE TO A  TERMI-
NATION  OF A LINE MAKE, THE FRANCHISOR SHALL COMPENSATE THE DEALER IN AN
AMOUNT EQUAL TO THE AMOUNT REMAINING ON THE TERMINATED DEALER'S  MANAGE-
MENT  COMPUTER  SYSTEM LEASE OR CONTRACT, OR ONE YEAR OF LEASE PAYMENTS,
WHICHEVER IS LESS IF THE DEALER MANAGEMENT COMPUTER SYSTEM WILL NO LONG-
ER BE UTILIZED AS  A  RESULT  OF  THE  TERMINATION  AND  THE  FRANCHISOR
REQUIRED THE DEALER TO UTILIZE THE PARTICULAR DEALER MANAGEMENT COMPUTER
SYSTEM.
  S  7. Paragraph (z) of subdivision 2 of section 463 of the vehicle and
traffic law, as amended by chapter 490 of the laws of 2008,  is  amended
to read as follows:
  (z)  To [charge back or otherwise hold liable a franchised motor vehi-
cle dealer for sales incentives or charges related to a] REFUSE TO ALLO-
CATE, SELL, OR DELIVER  MOTOR  VEHICLES,  TO  CHARGE  BACK  OR  WITHHOLD
PAYMENTS  OR OTHER THINGS OF VALUE FOR WHICH THE FRANCHISEE IS OTHERWISE
ELIGIBLE, OR TO TAKE OR THREATEN TO TAKE ANY ADVERSE  ACTION  AGAINST  A
FRANCHISED  MOTOR  VEHICLE  DEALER, IN CONNECTION WITH OR AS A RESULT OF
ANY new motor vehicle sold by the franchised motor  vehicle  dealer  and
subsequently  exported,  providing  such  dealer can demonstrate that he
exercised due diligence and that the sale was made in  good  faith  [and
without knowledge] INCLUDING THAT THE DEALER DID NOT KNOW NOR REASONABLY
SHOULD HAVE KNOWN of the purchaser's intention to export the motor vehi-
cle[,  or that such dealer reasonably relied on approvals from the fran-
chisor to complete a sale]. A  franchised  motor  vehicle  dealer  which
causes  a  new  motor  vehicle  to  be  registered in this state or in a
foreign state and causes to be collected the appropriate sales  and  use
tax,  OR THAT REASONABLY RELIED ON A FRANCHISOR TO COMPLETE A SALE shall
be presumed to have exercised GOOD FAITH AND  due  diligence.  PRIOR  TO
TAKING  AN  ADVERSE  ACTION,  INCLUDING A CHARGE BACK, AS A RESULT OF AN
EXPORT, A FRANCHISOR SHALL PROVIDE  WRITTEN  NOTICE  TO  THE  FRANCHISED
MOTOR  VEHICLE  DEALER OF THE ADVERSE ACTION, AND, IF A CHARGE BACK, THE
SPECIFIC AMOUNT OF THE CHARGE BACK,  AND  THE  VEHICLE  OR  VEHICLES  AT
ISSUE. A DEALER SHALL NOT BE LIABLE FOR THE DELIVERY OF ANY VEHICLE SOLD
THROUGH  A FRANCHISOR'S FLEET PROGRAM FOR ANY SUCH DELIVERY IN WHICH THE
SALE OR LEASE WAS NOT INITIATED OR NEGOTIATED  BY  THE  DEALER  AND  ITS
FUNCTION WAS TO PROVIDE DELIVERY ON BEHALF OF THE FRANCHISOR.
  S  8.  Subdivision  2 of section 463 of the vehicle and traffic law is
amended by adding three new paragraphs (ii), (jj) and (kk)  to  read  as
follows:
  (II)  TO  ALLOCATE  NEW  MOTOR  VEHICLES TO A FRANCHISED MOTOR VEHICLE
DEALER BASED ON A PROGRAM THAT DIFFERENTIATES BETWEEN VEHICLE SALES BY A
FRANCHISED MOTOR VEHICLE DEALER WITHIN A TERRITORY  OR  GEOGRAPHIC  AREA
ASSIGNED  TO  SUCH DEALER AND VEHICLE SALES OUTSIDE OF SUCH TERRITORY OR
GEOGRAPHIC AREA.
  (JJ) TO UTILIZE A DISCRIMINATORY, UNREASONABLE,  ARBITRARY  OR  UNFAIR
SYSTEM OF ALLOCATION OF NEW MOTOR VEHICLE INVENTORY.  A FRANCHISOR SHALL
COMMUNICATE  ITS  SYSTEM OF ALLOCATION IN WRITING IN A CLEAR AND CONCISE
MANNER TO ALL SAME LINE-MAKE DEALERS LOCATED IN THIS STATE.

S. 5725--A                          7

  (KK) TO REFUSE TO DISCLOSE TO ANY FRANCHISED MOTOR VEHICLE DEALER  THE
MANNER  AND  MODE  OF  DISTRIBUTION  OF VEHICLES IN THE FRANCHISED MOTOR
VEHICLE DEALER'S LINE MAKE WITHIN THE STATE, AND AN EXPLANATION  OF  THE
ALLOCATION  SYSTEM,  INCLUDING  THE  METHODOLOGY  USED,  IN  A CLEAR AND
COMPREHENSIBLE FORM.
  S  9.  Subdivision 1 of section 465 of the vehicle and traffic law, as
amended by chapter 490 of the laws  of  2008,  is  amended  to  read  as
follows:
  1.  Every  franchisor  shall  properly  fulfill any warranty agreement
and/or franchisor's service contract and shall compensate  each  of  its
franchised motor vehicle dealers for warranty parts and labor in amounts
which  reflect  [fair  and]  reasonable  compensation for such work. All
warranty claims and/or claims under a franchisor's service contract made
by franchised motor vehicle dealers shall be  paid  within  thirty  days
following  their  approval.  For  parts reimbursement, other than compo-
nents,  systems,  fixtures,  appliances,  furnishings,  accessories  and
features  of a house coach that are designed, used and maintained prima-
rily for nonvehicular residential purposes, and for labor reimbursement,
[fair and] reasonable compensation shall not be less than the price  and
rate charged by the franchised motor vehicle dealer for like services to
non-warranty and/or non-service contract customers. For purposes of this
section,  the  price  and  rate  charged by the franchised motor vehicle
dealer for parts may be established by submitting to the franchisor  one
hundred  sequential  nonwarranty  customer-paid service repair orders or
the number of sequential nonwarranty customer-paid service repair orders
written within a ninety day period, whichever is less, covering  repairs
made  no  more  than  one hundred eighty days before the submission, and
declaring the price and rate, including average  markup  for  the  fran-
chised motor vehicle dealer as its reimbursement rate. The reimbursement
rate so declared shall go into effect thirty days following the declara-
tion  and shall be presumed to be [fair and] reasonable, however a fran-
chisor may rebut such presumption by showing that such  rate  so  estab-
lished  is  [unfair  and]  unreasonable in light of the practices of all
other franchised motor vehicle dealers in the vicinity offering the same
line make. The franchised motor  vehicle  dealer  shall  not  request  a
change  in  the  reimbursement rate more often than [twice] ONCE in each
calendar year. In establishing the labor reimbursement rate,  the  fran-
chisor  shall not require a franchised motor vehicle dealer to establish
said rate by a methodology, or by requiring information, that is  unduly
burdensome  or time consuming to provide, including, but not limited to,
a transaction by transaction calculation.   FOR  THE  PURPOSES  OF  THIS
SECTION,  THE FOLLOWING PARTS OR TYPES OF REPAIRS SHALL BE EXCLUDED FROM
THE PARTS AND/OR LABOR CALCULATIONS AND THE  FRANCHISOR'S  REIMBURSEMENT
REQUIREMENTS UNDER THIS SECTION: (A) PARTS SOLD AT WHOLESALE; (B) TIRES;
(C)  ROUTINE  MAINTENANCE NOT COVERED UNDER ANY RETAIL CUSTOMER WARRANTY
SUCH AS FLUIDS, FILTERS AND BELTS NOT PROVIDED IN THE COURSE OF REPAIRS;
(D) VEHICLE RECONDITIONING; AND (E) BATTERIES  REPLACED  AS  PART  OF  A
ROUTINE MAINTENANCE OPERATION. IF THE FRANCHISOR REJECTS THE DECLARATION
OR ATTEMPTS TO REBUT THE DECLARATION BECAUSE OF AN ERROR IN THE DEALER'S
SUBMISSION,  THE  FRANCHISOR  SHALL IDENTIFY WITH SPECIFICITY THE REASON
FOR REJECTION AND IDENTIFY THE ERROR OR ERRORS WITHIN THE SUBMISSION. IN
THE EVENT THE FRANCHISOR REJECTS OR REBUTS THE DEALER'S INITIAL DECLARA-
TION, THE DEALER SHALL HAVE THE OPPORTUNITY, WITHIN SIXTY DAYS TO RESUB-
MIT THE FULL AND CORRECTED DECLARATION ADDRESSING THE  ALLEGED  ERROR(S)
IDENTIFIED BY THE FRANCHISOR.  THE FRANCHISOR SHALL RESPOND WITHIN SIXTY
DAYS. THE ONE HUNDRED EIGHTY DAY REQUIREMENT FOR THE REPAIR ORDERS SHALL

S. 5725--A                          8

BE STAYED FROM THE DATE OF INITIAL SUBMISSION. IN ANY ACTION OR PROCEED-
ING  HELD  PURSUANT  TO  THIS SUBDIVISION, THE FRANCHISOR SHALL HAVE THE
BURDEN OF PROVING THAT THE RATE DECLARED BY THE DEALER WAS  UNREASONABLE
AS DESCRIBED IN THIS SUBDIVISION AND THAT THE PROPOSED ADJUSTMENT OF THE
AVERAGE  PERCENTAGE  MARKUP OR REJECTION OF THE SUBMISSION IS REASONABLE
PURSUANT TO THE PROVISIONS OF THIS SUBDIVISION.
  S 10. Subdivisions 3, 4, 6 and 7 of section 465  of  the  vehicle  and
traffic law, as added by chapter 490 of the laws of 2008, are amended to
read as follows:
  3.  No  franchisor  shall conduct an audit or charge back any warranty
[or] PAYMENT, OR ANY sales [incentive payment], ADVERTISING OR MARKETING
INCENTIVE PAYMENT ("INCENTIVE PAYMENTS") or otherwise hold a  franchised
motor  vehicle  dealer  liable  for  charges more than one year, or five
years in the case of fraud, after the  date  the  franchisor  made  such
payment  to the dealer, WITHOUT PROVIDING A NOTICE TO A FRANCHISED MOTOR
VEHICLE DEALER OF, OR A MECHANISM THAT MAKES AVAILABLE TO  A  FRANCHISED
MOTOR  VEHICLE  DEALER, INFORMATION REGARDING ERRORS OR ISSUES REGARDING
SUCH DEALER'S WARRANTY, SALES, ADVERTISING OR MARKETING INCENTIVE CLAIMS
THAT ARE THE SUBJECT OF THE AUDIT OR CHARGEBACK. NOTHING IN THIS SECTION
SHALL BE DEEMED TO GRANT A DEALER THE RIGHT TO ACCESS ANY FILE  HELD  BY
THE  MANUFACTURER EVALUATING SUCH DEALER. IN CONNECTION WITH A CLAIM FOR
WARRANTY REIMBURSEMENTS, THE DEALER'S FAILURE TO DOCUMENT  PROPERLY  ONE
PART  OF A WARRANTY REPAIR THAT CONTAINS MORE THAN ONE PART SHALL NOT BE
THE SOLE BASIS TO CHARGE BACK THE ENTIRE REPAIR.  A  MANUFACTURER  SHALL
NOT DENY A CLAIM SUBMITTED UNDER THIS SECTION BASED SOLELY ON A DEALER'S
INCIDENTAL  FAILURE  TO COMPLY WITH A SPECIFIC CLAIM PROCESSING REQUIRE-
MENT, A CLERICAL ERROR, OR OTHER ADMINISTRATIVE  TECHNICALITY,  PROVIDED
THAT THE FAILURE DOES NOT CALL INTO QUESTION THE LEGITIMACY OF THE CLAIM
AND  THAT  THE  DEALER CORRECTS THE CLAIM ACCORDING TO FRANCHISOR GUIDE-
LINES.
  4. A franchisor shall not charge  a  dealer  back  subsequent  to  the
payment  of a warranty [or], sales [incentive], ADVERTISING OR MARKETING
INCENTIVE claim unless a representative of the  franchisor  has  met  in
person  at  the dealership, or by telephone, with an officer or employee
of the dealer designated by the dealer and explained in detail the basis
for each of the proposed charge backs and thereafter given the  dealer's
representative  a  reasonable  opportunity at the meeting, or during the
telephone call, to explain the dealer's position relating to each of the
proposed charge backs. In the event the dealer was selected for audit or
review on the basis that some or all of the dealer's claims were  viewed
as  excessive  in  comparison to average, mean or aggregate data accumu-
lated by the franchisor, or in relation to claims submitted by  a  group
of  other  franchisees, the franchisor shall, at or prior to the meeting
or telephone call with the dealer's representative, provide  the  dealer
with  a written statement containing the basis or methodology upon which
the dealer was selected for audit or review.
  6. A franchisor shall not deny or charge  back  a  sales  [incentive],
ADVERTISING  OR  MARKETING INCENTIVE payment made to a dealer unless the
claim was materially false or fraudulent or [that] the dealer failed  to
reasonably  substantiate  the  claim  [either]  in  accordance  with the
manufacturer's reasonable procedures.
  7. After all internal dispute resolution  processes  provided  through
the  franchisor  have been resolved, the franchisor shall give notice to
the dealer of the final  amount  of  a  proposed  warranty  [or],  sales
[incentive],  ADVERTISING  OR  MARKETING  INCENTIVE  charge back. If the
dealer institutes an action pursuant to this article within thirty  days

S. 5725--A                          9

of  receipt  of  such  notice, the proposed charge back shall be stayed,
without bond, during the pendency of such action  and  until  the  final
judgment  has  been  rendered in an adjudicatory proceeding or action as
provided  in section four hundred sixty-nine of this article.  THE FRAN-
CHISOR SHALL NOT IMPOSE THE CHARGEBACK, DEBIT THE DEALER'S  ACCOUNT,  OR
OTHERWISE  SEEK  TO  OBTAIN ALL OR ANY PART OF THE CHARGEBACK FUNDS FROM
THE DEALER DURING THE THIRTY-DAY PERIOD IN  WHICH  THE  DEALER  HAS  THE
OPPORTUNITY TO FILE AN ACTION AS SET FORTH ABOVE.
  S  11.  Severability.  If  any clause, sentence, paragraph, section or
part of this act shall be adjudged by any court of  competent  jurisdic-
tion  to be invalid and after exhaustion of all further judicial review,
the judgment shall not affect, impair or invalidate the remainder there-
of, but shall be confined in its  operation  to  the  clause,  sentence,
paragraph,  section or part of this act directly involved in the contro-
versy in which the judgment shall have been rendered.
  S 12. This act shall take effect immediately.

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