Legislation

Search OpenLegislation Statutes
This entry was published on 2014-09-22
The selection dates indicate all change milestones for the entire volume, not just the location being viewed. Specifying a milestone date will retrieve the most recent version of the location before that date.
SECTION 465
Procedures relating to warranties and sales incentives
Vehicle & Traffic (VAT) CHAPTER 71, TITLE 4, ARTICLE 17-A
§ 465. Procedures relating to warranties and sales incentives. 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 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 components, systems,
fixtures, appliances, furnishings, accessories and features of a house
coach that are designed, used and maintained primarily for nonvehicular
residential purposes, and for labor reimbursement, 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 franchised motor
vehicle dealer as its reimbursement rate. The reimbursement rate so
declared shall go into effect thirty days following the declaration and
shall be presumed to be reasonable, however a franchisor may rebut such
presumption by showing that such rate so established is 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 once 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 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 declaration, the dealer shall
have the opportunity, within sixty days to resubmit the full and
corrected declaration addressing the alleged error or errors identified
by the franchisor. The franchisor shall respond within sixty days. The
one hundred eighty day requirement for the repair orders shall be stayed
from the date of initial submission. In any action or proceeding 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.

2. All warranty or sales incentive claims shall be either approved or
disapproved within thirty days after their receipt. When any such claim
is disapproved the franchised motor vehicle dealer shall be notified in
writing of its disapproval within said period. Each such notice shall
state the specific grounds upon which the disapproval is based. Failure
to disapprove a claim within thirty days shall be deemed approval.

3. No franchisor shall conduct an audit or charge back any warranty
payment, or any sales, 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 requirement, 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 guidelines.

4. A franchisor shall not charge a dealer back subsequent to the
payment of a warranty, sales, 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
accumulated 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.

5. A franchisor shall not deny or charge back a payment for warranty
work claimed by the dealer unless the franchisor satisfies its burden of
proof that the dealer did not make a good faith effort to comply with
the reasonable written procedures of the franchisor or that the dealer
did not actually perform the work.

6. A franchisor shall not deny or charge back a sales, advertising or
marketing incentive payment made to a dealer unless the claim was
materially false or fraudulent or the dealer failed to reasonably
substantiate the claim 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, sales,
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 franchisor 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.