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SECTION 463
Unfair business practices by franchisors
Vehicle & Traffic (VAT) CHAPTER 71, TITLE 4, ARTICLE 17-A
§ 463. Unfair business practices by franchisors. 1. It shall be
unlawful for any franchisor to directly or indirectly coerce or attempt
to coerce any franchised motor vehicle dealer:

(a) To order or accept delivery of any motor vehicle or vehicles,
appliances, tools, machinery, equipment, parts or accessories therefor
or any other commodity or commodities which shall not have been
voluntarily ordered by said franchised motor vehicle dealer except any
such items required by a recall campaign.

(b) To order or accept delivery of any motor vehicle with special
features, appliances, accessories or equipment not included in the list
price of said motor vehicle as publicly advertised by the franchisor.

(c) To contribute or pay money or anything of value into any
cooperative or other advertising program or fund unless such program or
fund shall be controlled by a dealer or group of dealers.

(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. Nothing in this paragraph shall be deemed to prohibit any
training program located within a dealer's own principal place of
business.

(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
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, and a separate statement, acknowledged by the
consumer, 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.

2. It shall be unlawful for any franchisor, notwithstanding the terms
of any franchise contract:

(a) To refuse to deliver in reasonable quantity and within a
reasonable time after receipt of a dealer's order to any franchised
motor vehicle dealer any vehicle covered by such franchise which is
publicly advertised by such franchisor to be available for immediate
delivery. Provided, however, the failure to deliver any motor vehicle
shall not be considered a violation of this article if such failure be
due to acts of God, work stoppages or delays due to strikes or labor
difficulties, freight embargoes, shortage of materials, a lack of
manufacturing capacity or other causes over which the franchisor shall
have no control.

(b) To directly or indirectly coerce or attempt to coerce any
franchised motor vehicle dealer to enter into any agreement with such
franchisor 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 terminate said dealer. Provided,
however, that good faith notice to any franchised motor vehicle dealer
of said dealer's violation of any terms or provisions of such franchise
shall not constitute a violation of this article.

(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
franchisor 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 business.

(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,
flooring, 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
intellectual 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,
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
architectural 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
condition.

(ii) Nothing in this paragraph 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
dealer 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
justified 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
franchised 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
dealer's franchise if the termination is due to the discontinuation of
the line-make that was the subject of the agreement.

(d) (1) To terminate, cancel or refuse to renew the franchise of any
franchised motor vehicle dealer except for due cause, regardless of the
terms of the franchise. A franchisor shall notify a franchised motor
vehicle dealer, in writing, of its intention to terminate, cancel or
refuse to renew the franchise of such dealer at least ninety days before
the effective date thereof, stating the specific grounds for such
termination, cancellation or refusal to renew. In no event shall the
term of any such franchise expire without the written consent of the
franchised motor vehicle dealer involved prior to the expiration of at
least ninety days following such written notice except as hereinafter
provided.

(2) A change in ownership of a manufacturer or distributor that
contemplates a continuation of that line make in the state shall not
directly or indirectly, through actions of any parent of the
manufacturer or distributor, subsidiary of the manufacturer or
distributor, or common entity cause a termination, cancellation, or
nonrenewal of a dealer agreement by a present or previous manufacturer
or distributor of an existing agreement unless the manufacturer or
distributor offers the new vehicle dealer an agreement substantially
similar to that offered to other dealers of the same line make.

(3) The provisions of subparagraphs one and two of this paragraph
notwithstanding, a franchisor may terminate its franchise with a
franchised motor vehicle dealer upon at least fifteen days written
notice upon the occurrence of any of the following: (i) conviction of a
franchised motor vehicle dealer, or one of its principal owners, of a
felony or a crime punishable by imprisonment which substantially
adversely affects the business of the franchisor, or (ii) the failure of
the franchised motor vehicle dealer to conduct its customary sales and
service operations for a continuous period of seven business days,
except for acts of God or circumstances beyond the direct control of the
franchised motor vehicle dealer or when any license required by the
franchised motor vehicle dealer is suspended for a period of thirty days
or less, or (iii) insolvency of the franchised motor vehicle dealer, or
filing of any petition by or against the franchised motor vehicle dealer
under any bankruptcy or receivership law.

(e) (1) Any franchised motor vehicle dealer who receives a written
notice of termination or a written notice of a franchisor's demand that
the dealer substantially renovate an existing place of business, or buy,
construct or rent a new place of business as a condition of franchise
renewal or extension may have a review of the demand to change the place
of business or the threatened termination by instituting an action, as
provided in section four hundred sixty-nine of this article. If such
action is commenced within four months of receipt of notice, such action
shall serve to stay, without bond, the proposed termination or
renovation or demand to change the place of business until the final
judgment has been rendered in an adjudicatory proceeding or action, as
provided in section four hundred sixty-nine of this article.

(2) The issues to be determined in an action commenced pursuant to
subparagraph one of this paragraph are whether the franchisor's notice
of termination was issued with due cause and in good faith. The burden
of proof shall be upon the franchisor to prove that due cause and good
faith exist. The franchisor shall also have the burden of proving that
all portions of its current or proposed sales and service requirements
for the protesting franchised new motor vehicle dealer are reasonable.

The determination of due cause shall be that there exists a material
breach by a new motor vehicle dealer of a reasonable and necessary
provision of a franchise if the breach is not cured within a reasonable
time after written notice of the breach has been received from the
manufacturer or distributor.

(3) The franchisor shall provide notification in writing to the dealer
that the dealer has one hundred eighty days to correct dealer sales and
service performance deficiencies or breaches and that the franchise is
subject to termination under this section if the dealer does not correct
those deficiencies or breaches. If the termination is based upon
performance of the dealer in sales and service then there shall be no
due cause if the dealer substantially complies with the reasonable
performance provisions of the franchise during such cure period and, no
due cause if the failure to demonstrate such substantial compliance was
due to factors which were beyond the control of such dealer.

(f) To intentionally resort to or use any false or misleading
advertisements.

(g) To sell or offer to sell any new motor vehicle to any franchised
motor vehicle dealer at a lower actual price therefor than the actual
price offered to any other franchised motor vehicle dealer for the same
model vehicle similarly equipped or to utilize any device including, but
not limited to, sales promotion plans or programs which result in such
lesser actual price. Provided, however, the provisions of this paragraph
shall not apply to sales to a franchised motor vehicle dealer for: (i)
resale to any unit of government; or (ii) donation or use by said dealer
in a driver education program. This paragraph shall not be construed to
prevent the offering of incentive programs or other discounts provided
such incentives or discounts are reasonably available to all franchised
motor vehicle dealers in this state on a proportionately equal basis.

(h) To sell or offer to sell any new motor vehicle to any person,
except a distributor, at a lower actual price therefor than the actual
price offered and charged to a franchised motor vehicle dealer for the
same model vehicle similarly equipped or to utilize any device which
results in such lesser actual price.

(i) To sell or offer to sell parts and/or accessories to any
franchised motor vehicle dealer at a lower actual price therefor than
the actual price offered to any other franchised motor vehicle dealer
for similar parts and/or accessories for use in his own business.
Provided, however, that nothing herein contained shall be construed to
prevent a manufacturer or distributor, or any agent thereof, from
selling to a franchised motor vehicle dealer, who operates and serves as
a wholesaler of parts and accessories, such parts and accessories as may
be ordered by such franchised motor vehicle dealer for resale to retail
outlets at a lower actual price than the actual price offered a
franchised motor vehicle dealer who does not operate or serve as a
wholesaler of parts and accessories. This paragraph shall not be
construed to prevent the offering of incentive programs or other
discounts provided the franchisor demonstrates that such incentives or
discounts are reasonably available to all franchised motor vehicle
dealers in the state on a proportionately equal basis.

(j) To prevent or attempt to prevent, by contract or otherwise, any
franchised motor vehicle dealer from changing the capital structure of
its dealership, or the means by or through which it finances the
operation of its dealership, or finances the acquisition or retention of
inventory, provided the dealer at all times meets any capital standards
agreed to between the dealer and the franchisor and as applied by the
franchisor to all other comparable franchised motor vehicle dealers of
the franchisor located within the state.

(k) To unreasonably withhold consent to the sale or transfer of an
interest, in whole or in part, to any other person or party by any
franchised motor vehicle dealer or any partner or stockholder of any
franchised motor vehicle dealer. If such consent to sale or transfer
shall be withheld by the franchisor, the franchisor shall provide
specific reasons for its withholding of consent within sixty days of
receipt of the request for such consent provided such request is
accompanied by proper documentation as may reasonably be required by the
franchisor. Upon receipt of notice and reasons for the franchisor's
withholding of consent, the franchised motor vehicle dealer may within
one hundred twenty days have a review of the manufacturer's decision as
provided in section four hundred sixty-nine of this article.

(l) To require a franchised motor vehicle dealer to assent to a
release, assignment, novation, waiver or estoppel which would relieve
any person from liability imposed under this article, provided that this
paragraph shall not be construed to prevent a franchised motor vehicle
dealer from entering into a valid release or settlement agreement with a
franchisor.

(m) (1) To deny to the surviving spouse or heirs of an individual
franchised motor vehicle dealer or of a partner of an unincorporated
franchised motor vehicle dealer or of a stockholder of a corporate
franchised motor vehicle dealer the right to succeed to the interest of
the decedent in such franchised motor vehicle dealership enterprise or
directly or indirectly to interfere with, hinder or prevent the
continuance of the business of the franchised motor vehicle dealer by
reason of such succession to the interest of the decedent. Provided,
however, that the continuation of the business of the franchised motor
vehicle dealer shall be conducted under competent management acceptable
to the franchisor, whose acceptance shall not be unreasonably withheld.

(2) Notwithstanding the foregoing, in the event the franchised motor
vehicle dealer and franchisor have duly executed an agreement concerning
succession rights prior to the individual dealer's, partner's or
stockholder's death and if such agreement has not been revoked by the
franchised motor vehicle dealer, such agreement shall be observed, even
if it designates an individual other than the surviving spouse or heirs
of the decedent.

(n) To fail to indemnify and hold harmless its franchised motor
vehicle dealers against any losses or damages including, but not limited
to, court costs and attorneys' fees arising out of actions, claims or
proceedings including, but not limited to, those based upon strict
liability, negligence, misrepresentation, warranty (expressed or
implied) or revocation as described in section 2-608 of the uniform
commercial code, where the action, claim or proceeding directly relates
to the manufacture, assembly or design of new motor vehicles, parts or
accessories or other functions of the franchisor including, without
limitation, the selection by the franchisor of parts or components for
the vehicle or any damages to merchandise or vehicles occurring in
transit where the carrier is designated by the franchisor,
notwithstanding the terms of any franchise. If the action, claim or
proceeding includes independent allegations against the franchised motor
vehicle dealer, the franchisor shall bear only that portion of the
costs, fees and judgment which is directly related to the manufacture,
assembly or design of the vehicle, parts or accessories, or other
function of the franchisor beyond the control of the franchised motor
vehicle dealer.

(o) (1) Upon a termination of a franchise by a franchisor or
franchised 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 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. 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, 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 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
addition 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
vehicle 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 sources. 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 franchised motor vehicle dealer must ship the above described
property to the franchisor; the franchisor shall then remit payment for
such property 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
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 any assistance provided to the dealer within three years
of the 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
paragraph, in the event a franchisor terminates a franchise due to a
termination of a line make, the franchisor shall compensate the dealer
in an amount equal to the amount remaining on the terminated dealer's
management computer system lease or contract, or one year of lease
payments, whichever is less if the dealer management computer system
will no longer be utilized as a result of the termination and the
franchisor required the dealer to utilize the particular dealer
management computer system.

(p) To refuse to repurchase for cost, including transportation
charges, a new vehicle which has been substantially damaged by the
franchisor or its agent; or to sell or transfer to a franchised motor
vehicle dealer a new motor vehicle which has been subjected to repairs
with a retail value in excess of five percent of the lesser of the
manufacturer's or distributor's suggested retail price where such
repairs are performed after shipment from the franchisor including
damage to the vehicle while in transit without so notifying the
franchised motor vehicle dealer to whom such new motor vehicle so
repaired is sold or transferred. Such notice shall be in writing, advise
of such repairs, and be provided prior to the receipt of any payment for
such motor vehicle. If the franchisor shall fail to provide such notice,
any franchised motor vehicle dealer suffering a loss by reason of such
failure shall be entitled to reimbursement from the franchisor who
failed to provide such notice.

(q) To provide directly or to grant to any person the right to perform
warranty or recall service on any new motor vehicle line other than a
house coach line but deny to said person the right to purchase the motor
vehicles of that line for resale to consumers in this state as new motor
vehicles provided, however, that this paragraph shall not prohibit a
franchisor from:

(1) authorizing warranty service by employees of a fleet operator or
governmental entity on owned vehicles; or

(2) authorizing such other persons to perform warranty service as the
franchisor deems necessary to protect its interests as they may be
affected by section one hundred ninety-eight-a of the general business
law.

A "fleet operator" shall be required to own for its own use or for the
use of others the minimum number of vehicles of the current or preceding
model year manufactured or sold by the same franchisor as determined by
the standards of such franchisor applied on a general and consistent
basis to substantially all fleet operators. Notwithstanding the
preceding, a franchisor which withdraws from the United States market
shall continue to allow its former franchised motor vehicle dealers to
continue servicing and supplying parts, including service and parts
supplied under the franchisor's warranty to vehicle owners, for a period
of at least five years after such withdrawal from the United States
market.

(r) To establish or attempt to establish the actual resale price for
any new motor vehicle, part or accessory charged by a franchised motor
vehicle dealer in the state, provided, however, nothing contained herein
shall prohibit publication of recommended resale prices or historical
information by a franchisor.

(s) To grant a commission to any person other than a franchised motor
vehicle dealer within the state involved in the sale of a new motor
vehicle by such franchised motor vehicle dealer without said franchised
motor vehicle dealer's written consent. This prohibition shall not apply
to sales incentive programs for employees of franchised motor vehicle
dealers as long as the payments are made by the franchisor to such
employees and not charged to the dealer.

(t) To require or attempt to require by the terms of the franchise
that any dispute arising out of or in connection with the
interpretation, performance or nonperformance of the parties to the
franchise or in any way related to the franchise be determined through
the application of any other state's laws.

(u) To use any subsidiary corporation, affiliated corporation, captive
finance source or any other controlled corporation, partnership,
association or person to accomplish what would otherwise be unlawful
conduct under this article on the part of the franchisor.

(v) To use a CSI (customer satisfaction index) or other system
measuring a customer's degree of satisfaction with a franchised motor
vehicle dealer as a sale or service provider unless any such system is
designed and implemented in such a way that it is fair and equitable to
both the franchisor and the franchised motor vehicle dealer. In any
dispute between a franchisor and a franchised motor vehicle dealer the
party claiming the benefit of the system as justification for acts in
relation to the franchise shall have the burden of demonstrating the
fairness and equity of the system both in design and implementation in
relation to the pending dispute. Upon request of any franchised motor
vehicle dealer, a franchisor shall disclose in writing to such dealer a
description of how that system is designed and all relevant information
pertaining to such dealer used in the application of that system to such
dealer.

(w) To withhold from a franchised motor vehicle dealer a new motor
vehicle product of the same line make which the franchised motor vehicle
dealer is authorized to sell under its franchise. Provided that the
failure to deliver any motor vehicle shall not be considered to be a
violation of this article if such failure is due to an act of God, work
stoppages or delays due to strikes or labor difficulties, freight
embargoes, shortages of materials, a lack of manufacturing capacity, or
other causes over which the franchisor shall have no control. A
franchised motor vehicle dealer shall be entitled to sell and service
all the manufacturer's new motor vehicles which the franchised motor
vehicle dealer is authorized to sell pursuant to the franchise,
provided, however, a franchisor may impose reasonable facility, capital,
training, tools and parts inventory requirements as a condition to the
franchised motor vehicle dealer being permitted to sell such new motor
vehicle products. Conditions imposed by the franchisor shall be
reasonably applied to all of its franchised motor vehicle dealers.
Franchised motor vehicle dealers who are presently parties to a
franchise with the franchisor shall be offered the right to sell and
service any new motor vehicle product of the same line make owned or
generally distributed by such franchisor's franchised motor vehicle
dealer within such franchised motor vehicle dealer's designated area of
responsibility designated in the franchise agreement before any person
not a party to such a franchise for the sale of motor vehicles within
such area of responsibility is offered or granted a franchise to sell
such new motor vehicle product from a location within such area of
responsibility.

(x) To require a franchised motor vehicle dealer to agree to a term or
condition in a franchise, or as a condition to the offer, grant or
renewal of the franchise, lease or agreement, which:

(1) unless preempted by federal law, requires the franchised motor
vehicle dealer to waive trial by jury in actions involving the
franchisor; or

(2) unless preempted by federal law, specifies the jurisdiction,
venues or tribunals in which disputes arising with respect to the
franchise, lease or agreement shall or shall not be submitted for
resolution or otherwise prohibits a franchised motor vehicle dealer from
bringing an action in a particular forum otherwise available.

(y) Subject to the provisions of paragraph (w) of this subdivision, to
sell or offer to sell or lease or offer to lease a motor vehicle other
than to a franchised motor vehicle dealer in this state; provided,
however, that this paragraph shall not apply to sales or leases of new
motor vehicles made by a franchisor to its employees, immediate family
members of employees, retirees or immediate family members of retirees
which are hereby authorized notwithstanding the provisions of section
four hundred fifteen of this title. Nothing in this paragraph shall
prohibit a franchisor from utilizing direct marketing designed to
generate leads via mail, phone, or any other medium, provided that leads
developed thereby are referred to the franchised motor vehicle dealers
in this state and in proximity to the consumer pursuant to a fair and
equitable system of allocating such leads or to the franchised motor
vehicle dealer as specified by the consumer. The provisions of this
paragraph shall not apply to franchisors of house coaches when the
franchisor does not have any franchised house coach dealers in this
state.

(z) To refuse to allocate, 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 including that the dealer did not know nor reasonably
should have known of the purchaser's intention to export the motor
vehicle. 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.

(aa) To: (1) sell directly to a franchised motor vehicle dealer or, to
or through a franchised motor vehicle dealer in which the franchisor
owns any interest or controls the management, directly or indirectly,
motor vehicles, parts, warranties, or services at a price that is lower
than the price which the franchisor charges to all other franchised
motor vehicle dealers; or

(2) sell directly to a consumer at retail new original equipment
manufacturer's parts (OEM) at a price that is lower than the price which
the franchisor makes available to franchised motor vehicle dealers; or

(3) otherwise provide a franchised motor vehicle dealer in which the
franchisor owns any interest or controls the management, directly or
indirectly, goods or services at a price that is lower than the price
charged to all other franchised motor vehicle dealers.

(bb) On and after the effective date of this paragraph, to acquire any
interest in any additional motor vehicle dealer in this state, with the
exception of stock in a publicly held dealer when ownership is passive
and for investment purposes only; provided, however, that nothing in
this paragraph shall prohibit a franchisor and its affiliates that own
an interest in a franchised motor vehicle dealership that operates or is
approved to operate, within one hundred twenty days after the effective
date of this paragraph, from selling or servicing a new line make of the
franchisor or its affiliates that was not distributed in this state as
of the effective date of this paragraph. Provided, further, that nothing
in this paragraph shall prohibit a franchisor from acquiring any
interest in any franchised motor vehicle dealership:

(1) when operating such franchise for a temporary period, not to
exceed one year, during the transition from one owner of the motor
vehicle 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; provided, however, that the
exception provided in this subparagraph shall not apply to any
franchisor, manufacturer, distributor, distributor branch or factory
branch that holds a certificate or registration pursuant to subparagraph
(iii) of paragraph f of subdivision seven of section four hundred
fifteen of this title.

(cc)(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 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 entitled 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 relocation 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.

(2) This subdivision shall not apply to:

(i) the relocation or replacement, other than a replacement of a
dealer who has moved within such area, of an existing new motor vehicle
dealer within that dealer's own existing relevant market area, provided
that the relocation not be to a site within the relevant market area of
a licensed new motor vehicle dealer for the same line make of motor
vehicle, unless such existing franchise was previously located within
such new motor vehicle dealer's relevant market area; or

(ii) the addition of a new motor vehicle dealer or the establishment
of a replacement new motor vehicle dealer, other than a replacement of a
dealer who has moved within such area, at or within two miles of a
location at which a former licensed new motor vehicle dealer for the
same line make of new motor vehicle had ceased operating within the
previous two years; or

(iii) the relocation of an existing new motor vehicle dealer within
two miles of the existing site of the new motor vehicle dealership if
the franchise has been operating on a regular basis from the existing
site for a minimum of three years immediately preceding the relocation;
or

(iv) the relocation of a new motor vehicle dealer of the same line
make if that dealer or replacement dealer is moving further away from a
motor vehicle dealer of of the same line make.

(3) In determining whether good cause has been established for not
entering into or relocating an additional new motor vehicle dealer for
the same line make, there shall be individual findings with respect to
the following:

(i) the permanency of the investment of both the existing and proposed
additional new motor vehicle dealers;

(ii) growth or decline in population, density of population, and new
car registrations in the area;

(iii) effect on the consuming public in the area;

(iv) whether it is injurious or beneficial to the public welfare for
an additional new motor vehicle dealer to be established;

(v) whether the new motor vehicle dealers of the same line make in
that area are providing adequate competition and convenient customer
care for the motor vehicles of the same line make including the adequacy
of motor vehicle sales and service facilities, equipment, supply of
motor vehicle parts, and qualified service personnel;

(vi) whether the establishment of an additional new motor vehicle
dealer or relocation of an existing new motor vehicle dealer in the
relevant market area would increase competition in a manner beneficial
to the long-term public interest;

(vii) the effect on the dealer that proposed to relocate; and

(viii) any other factor which may be deemed material by the finder of
fact to the unique facts and circumstances presented.

(dd) To unreasonably prevent or refuse to approve the relocation of a
dealership to another site within that dealership's relevant market
area. The dealership must provide prior written notice providing the
address of the proposed new location and a site plan of the proposed
facility. The franchisor must, within sixty days of receipt of such
information, grant or deny the dealer's relocation request. Failure to
timely deny the request shall be deemed consent to the relocation.

(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. For the purposes of this paragraph, 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.

(ff)(1) To modify the franchise of any franchised motor vehicle dealer
unless the franchisor notifies the franchised motor vehicle dealer, in
writing, of its intention to modify the franchise of such dealer at
least ninety days before the effective date thereof, stating the
specific grounds for such modification.

(2) For purposes of this paragraph, the term "modify" or
"modification" 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.

(3) If any franchised motor vehicle dealer who receives a written
notice of modification institutes an action within one hundred twenty
days of receipt of such notice as provided in section four hundred
sixty-nine of this article to have a review of the threatened
modification, such action shall serve to stay, without bond, the
proposed modification until a final judgment has been rendered in an
adjudicatory proceeding or action as provided in section four hundred
sixty-nine of this article. A modification is deemed unfair if it is not
undertaken in good faith; is not undertaken for good cause; or would
adversely and substantially alter the rights, obligations, investment or
return on investment of the franchised motor vehicle dealer under an
existing franchise agreement. In any action brought by the dealer, the
franchisor shall have the burden of proving that such modification is
fair and not prohibited.

(gg) To use an unreasonable, arbitrary or unfair sales or other
performance standard in determining a franchised motor vehicle dealer's
compliance with a franchise agreement. Before applying any sales,
service or other performance standard to a franchised motor vehicle
dealer, a franchisor shall communicate the performance standard in
writing in a clear and concise manner.

(hh) To require that a franchised motor vehicle dealer contribute
monetarily to any program or promotion without first receiving the
written consent of the franchised motor vehicle dealer to participate in
such program or promotion. For purposes of this paragraph, the written
consent specific to the particular program or promotion must be
executed, by means of handwritten, typed or electronic signature, within
sixty days prior to the start of the particular program or promotion,
provided, however, that consent shall not be required to continue
participation in a program or promotion to which the dealer has given
written consent to renewal, and provided further, that the dealer shall
be able to terminate such renewal upon reasonable written notice within
thirty days following the start or renewal of the program or promotion.

(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.

(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.

2-a. On and after the effective date of this subdivision, if a
franchisor notifies a franchised motor vehicle dealer, in writing, of
its decision to monitor the continued viability of the dealership, the
franchisor shall include in such notice the specific reasons upon which
the franchisor's decision is based.

2-b. It shall be unlawful for any franchisor to provide financial
information particular to a franchised motor vehicle dealer, including
but not limited to, selling prices and sales margins, that has been
collected from such franchised motor vehicle dealer to any other
franchised motor vehicle dealer including a franchised motor vehicle
dealer in which the franchisor owns any interest or controls, directly
or indirectly, the management thereof. Nothing contained in this
subdivision shall be deemed to prevent any franchisor from collecting
and distributing any such financial information in an aggregate manner
provided that the information from any motor vehicle dealer has been
combined with the information from one or more franchised motor vehicle
dealers such that the financial information from a particular dealer is
no longer identifiable to such dealer.

3. In any action or proceeding instituted pursuant to the provisions
of this section, there shall be available to the franchisor all of the
defenses provided for under section thirteen-b of title fifteen, United
States code, known as the Robinson-Patman Act.