SB225: Bill Text

SB225,7,23 218.162 Termination of dealer agreement. (1) (a) A manufacturer or distributor, directly or through any officer, agent, or employee, may terminate, cancel, or fail to renew a model, line-make, or entire dealer agreement only with good cause, and, upon renewal, may not require additional inventory stocking requirements or increased retail sales targets in excess of the market growth in the dealer's area of sales responsibility.

SB225,8,2 (b) A manufacturer or distributor has the burden of showing good cause for terminating, canceling, or failing to renew a model, line-make, or dealer agreement with a dealer. For purposes of determining whether there is good cause for the proposed action, any of the following factors may be considered:

SB225,8,4 1. The extent of the affected dealer's penetration in the relevant market area for the relevant model or line-make.

SB225,8,5 2. The nature and extent of the dealer's investment in its business.

SB225,8,7 3. The adequacy of the dealer's service facilities, equipment, parts, supplies, and personnel.

SB225,8,8 4. The effect of the proposed action on the community.

SB225,8,10 5. The extent and quality of the dealer's service under recreational vehicle warranties.

SB225,8,13 6. The failure to follow agreed-upon, reasonable procedures or standards related to the overall operation of the dealership consistent with the law and the dealer agreement.

SB225,8,14 7. The dealer's performance under the terms of its dealer agreement.

SB225,8,17 (c) 1. Except as provided in this paragraph, a manufacturer or distributor shall provide a dealer with at least 120 days' prior written notice of termination, cancellation, or nonrenewal of a model, line-make, or entire dealer agreement.

SB225,9,2 2. The notice under subd. 1. shall state all reasons for the proposed termination, cancellation, or nonrenewal and shall state that if, within 30 days following receipt of the notice, the dealer provides to the manufacturer or distributor a written notice of intent to cure all claimed deficiencies, the dealer will then have 120 days following receipt of the notice to rectify the deficiencies. If the deficiencies are rectified within 120 days, the manufacturer's or distributor's notice is voided. If the dealer fails to provide the notice of intent to cure the deficiencies in the prescribed period, the termination, cancellation, or nonrenewal takes effect 30 days after the dealer's receipt of the notice unless the dealer has new and untitled inventory on hand that may be disposed of as provided under sub. (3).

SB225,9,4 3. The notice period under subd. 1. may be reduced to 30 days if the grounds for termination, cancellation, or nonrenewal are due to any of the following:

SB225,9,5 a. A dealer or one of its owners being convicted of a felony.

SB225,9,8 b. The abandonment or closing of the business operations of the dealer for 10 consecutive business days unless the closing is due to an act of God, strike, labor difficulty, or other cause over which the dealer has no control.

SB225,9,10 c. A significant misrepresentation by the dealer materially affecting the business relationship.

SB225,9,12 d. A suspension of, revocation of, or refusal to renew the dealer's license by the department.

SB225,9,15 4. The notice provisions of this paragraph do not apply if the reason for termination, cancellation, or nonrenewal is insolvency, the occurrence of an assignment for the benefit of creditors, or bankruptcy.

SB225,9,21 (2) A dealer may terminate, cancel, or fail to renew a model, line-make, or entire dealer agreement with a manufacturer or distributor with or without good cause at any time by giving 30 days' written notice to the manufacturer. If the termination, cancellation, or nonrenewal is for good cause, the dealer has the burden of showing good cause. Any of the following items, among others, may be deemed good cause for the proposed action by a dealer:

SB225,9,22 (a) A manufacturer being convicted of a felony.

SB225,9,25 (b) The business operations of the manufacturer have been abandoned or closed for 10 consecutive business days, unless the closing is due to an act of God, strike, labor difficulty, or other cause over which the manufacturer has no control.

SB225,10,2 (c) A significant misrepresentation by the manufacturer materially affecting the business relationship.

SB225,10,4 (d) A material violation of this subchapter that is not cured within 30 days after written notice by the dealer.

SB225,10,6 (e) A declaration by the manufacturer of insolvency, the occurrence of an assignment for the benefit of creditors, or bankruptcy.

SB225,10,8 (f) A manufacturer's material violation of the dealer agreement that is not cured within 120 days after written notice by the dealer.

SB225,10,9 (g) Manufacturer coercion of the dealer under s. 218.166.

SB225,10,11 (h) Manufacturer violation of area of sales responsibility protections or allowing other dealers to violate these protections.

SB225,10,15 (3) If the dealer agreement is terminated, canceled, or not renewed by the dealer for good cause, the manufacturer shall, at the election of the dealer and within 45 days after termination, cancellation, or nonrenewal, repurchase all of the following:

SB225,11,2 (a) All new, untitled recreational vehicles that were acquired from the manufacturer or distributor within 18 months before the date of the notice of termination, cancellation, or nonrenewal that have not been used, except for demonstration purposes, and that have not been altered or damaged, at 100 percent of the net invoice cost, including transportation, less applicable rebates and discounts to the dealer. If any of the recreational vehicles repurchased is damaged, the amount due to the dealer shall be reduced by the cost to repair the damaged recreational vehicle. Damage prior to delivery to the dealer will not disqualify repurchase under this subsection. Any repurchased recreational vehicle must be paid for in full before the recreational vehicle is removed from the dealer's premises. Upon payment under this paragraph, recreational vehicles must be immediately surrendered to the manufacturer.

SB225,11,7 (b) All undamaged accessories or proprietary parts sold to the dealer for resale within the 12 months prior to termination, cancellation, or nonrenewal, if accompanied by the original invoice, at 105 percent of the original net price paid to the manufacturer or distributor to compensate the dealer for handling, packing, and shipping the parts.

SB225,11,14 (c) Any properly functioning diagnostic equipment, special tools, current signage, or other equipment and machinery at 100 percent of the dealer's net cost plus freight, destination, delivery, and distribution charges and sales taxes, if any, if the equipment, tools, signage, or machinery was purchased by the dealer within 5 years before termination, cancellation, or nonrenewal and upon the manufacturer's or distributor's request and can no longer be used in the normal course of the dealer's ongoing business.

SB225,11,18 (4) If a dealer agreement is terminated, canceled, or not renewed by the manufacturer or distributor without good cause in violation of sub. (1), the manufacturer or distributor shall repurchase dealer recreational vehicles, accessories, and other equipment in the manner provided in sub. (3).

SB225,11,21 (5) (a) A dealer is not prohibited from selling any remaining in-stock inventory of a particular model or line-make after a dealer agreement has been terminated, cancelled, or not renewed by the manufacturer.

SB225,12,2 (b) If recreational vehicles of a model or line-make subject to a terminated agreement are not repurchased or required to be repurchased by the manufacturer or distributor, the dealer may continue to sell recreational vehicles that are subject to the terminated dealer agreement and are currently in stock until those recreational vehicles are no longer in the dealer's inventory.

SB225,12,6 (6) When taking on an additional line-make, a dealer shall notify in writing any manufacturer with whom the dealer has a dealer agreement of the same line-make at least 30 days prior to entering into a dealer agreement with the manufacturer of the additional line-make.

SB225,21 Section 21. 218.163 of the statutes is created to read:

SB225,12,15 218.163 Transfer of ownership. (1) If a dealer desires to make a change in ownership by the sale of business assets, stock transfer, or otherwise, the dealer shall give the manufacturer or distributor written notice at least 10 business days before the closing, along with all supporting documentation as may be reasonably required by the manufacturer or distributor to determine if an objection to the sale may be made. In the absence of a breach by the selling dealer of its dealer agreement or this subchapter, the manufacturer or distributor may not object to the proposed change in ownership unless any of the following applies to the prospective transferee:

SB225,12,17 (a) The transferee has previously been terminated for cause by the manufacturer.

SB225,12,19 (b) The transferee has been convicted of a felony or any crime of fraud, deceit, or moral turpitude.

SB225,12,20 (c) The transferee lacks any license required by law.

SB225,12,22 (d) The transferee does not have an active line of credit sufficient to purchase a manufacturer's product.

SB225,12,25 (e) The transferee has undergone in the last 10 years bankruptcy, insolvency, a general assignment for the benefit of creditors, or the appointment of a receiver, trustee, or conservator to take possession of the transferee's business or property.

SB225,13,6 (2) If a manufacturer or distributor objects to a proposed change in ownership, the manufacturer or distributor shall give written notice of its reasons to the dealer within 7 business days after receipt of the dealer's notification and complete documentation. The manufacturer or distributor has the burden of proof with regard to its objection. If the manufacturer or distributor does not give timely notice of its objection, the change, sale, or transfer shall be approved.

SB225,13,14 (3) (a) A manufacturer or distributor shall provide a dealer an opportunity to designate, in writing, a family member as a successor to the dealership in the event of the death, incapacity, or retirement of the dealer. A manufacturer or distributor may not prevent or refuse to honor the succession unless the manufacturer or distributor has provided to the dealer written notice of its objections within 10 business days after receipt of the dealer's modification of the dealer's succession plan. In the absence of a breach of the dealer agreement, the manufacturer may object to the succession only for any of the following reasons:

SB225,13,16 1. Conviction of the successor of a felony or any crime of fraud, deceit, or moral turpitude.

SB225,13,17 2. Bankruptcy or insolvency of the successor during the past 10 years.

SB225,13,19 3. Prior termination by the manufacturer of the successor for breach of a dealer agreement.

SB225,13,21 4. The lack of an active line of credit for the successor sufficient to purchase the manufacturer's product.

SB225,13,22 5. The lack of any license for the successor required by law.

SB225,14,2 (b) The manufacturer or distributor has the burden of proof regarding its objection. A family member may not succeed to a dealership if the succession involves, without the manufacturer's or distributor's consent, a relocation of the business or an alteration of the terms and conditions of the dealer agreement.

SB225,22 Section 22. 218.164 of the statutes is created to read:

SB225,14,5 218.164 Warranty obligation. (1) Each warrantor shall do all of the following:

SB225,14,8 (a) Specify, in writing, to each of the warrantor's dealers, the dealer's obligations, if any, for preparation, delivery, and warranty service on the warrantor's products.

SB225,14,10 (b) Compensate the dealer for warranty service performed by the dealer that is covered by the warrantor's own warranty.

SB225,14,18 (c) Provide the dealer with the schedule of compensation to be paid and the time allowances for the performance of any work and service. The schedule of compensation shall include reasonable compensation for diagnostic work as well as warranty labor. If the schedule of compensation required by this paragraph does not include a particular repair, the warrantor shall reimburse the dealer for warranty service for the actual time expended unless the warrantor demonstrates that the actual time was not reasonable. If the warrantor demonstrates that the actual time was not reasonable, the dealer shall be paid a reasonable sum.

SB225,14,23 (2) Time allowances for the diagnosis and performance of warranty labor shall be reasonable for the work to be performed. The compensation of a dealer for warranty labor may not be less than the lowest retail labor rate actually charged by the dealer in the ordinary course of business for like nonwarranty labor as long as the rate is reasonable.

SB225,15,6 (3) The warrantor shall reimburse the dealer for any warranty part at actual wholesale cost plus a minimum 30 percent handling charge and the cost, if any, of freight to return such part to the warrantor. If a part is sent to the dealer at no cost, the dealer is entitled to payment of 30 percent of the wholesale cost of the part from warrantor as a handling charge. The maximum handling charge for a part shall not exceed $300. If the warrantor requires the dealer to return a warranty part, accessory, or complete component, the warrantor shall reimburse the dealer the cost of freight to return the part, accessory, or component.

SB225,15,11 (4) Warranty audits of dealer records may be conducted by the warrantor on a reasonable basis, and dealer claims for warranty compensation may not be denied except for cause, including performance of nonwarranty repairs, material noncompliance with the warrantor's published policies and procedures, lack of material documentation, fraud, or misrepresentation.

SB225,15,13 (5) A dealer shall submit warranty claims within 45 days after completing work.

SB225,15,16 (6) A dealer shall notify the warrantor as soon as is reasonably possible, verbally or in writing, if the dealer is unable or unwilling to perform material or repetitive warranty repairs.

SB225,15,20 (7) A warrantor shall disapprove warranty claims in writing within 45 days after the date of submission by the dealer in the manner and form prescribed by the warrantor. Claims not specifically disapproved in writing within 45 days shall be construed to be approved and must be paid within 60 days.

SB225,15,21 (8) No warrantor may do any of the following:

SB225,15,23 (a) Fail to perform any of its warranty obligations with respect to its warranted products.

SB225,16,5 (b) Fail to include, in written notices of factory campaigns to recreational vehicle owners and dealers, the expected date by which necessary parts and equipment, including tires and chassis or chassis parts, will be available to dealers to perform the factory campaign work. A warrantor may ship parts to the dealer to affect the factory campaign work, and, if parts provided are in excess of the dealer's requirements, the dealer may return unused parts to the warrantor for credit after completion of the campaign.

SB225,16,8 (c) Fail to compensate any of its dealers for authorized repairs effected by the dealer of merchandise damaged in manufacture or transit to the dealer if the carrier is designated by the warrantor, factory branch, distributor, or distributor branch.

SB225,16,11 (d) Fail to compensate any of its dealers for authorized warranty service in accordance with the time allowances set forth in the schedule of compensation under sub. (1) (c) if performed in a timely and competent manner.

SB225,16,14 (e) Intentionally misrepresent in any way to purchasers of recreational vehicles that warranties with respect to the manufacture, performance, or design of the vehicle are made by the dealer as warrantor or co-warrantor.

SB225,16,16 (f) Require the dealer to make warranties to customers in any manner related to the manufacture of the recreational vehicle.

SB225,16,17 (9) No dealer may do any of the following:

SB225,16,19 (a) Fail to perform predelivery inspection functions, as specified by the warrantor, in a competent and timely manner.

SB225,16,23 (b) Fail to perform warranty service work authorized by the warrantor in a reasonably competent and timely manner on any transient customer's vehicle of the same line-make unless the dealer determines that the customer is acting in a manner detrimental to its business.

SB225,16,25 (c) Fail to track actual time expended to perform warranty work not governed by time allowances in the schedule of compensation under sub. (1) (c).

SB225,17,1 (d) Claim an agency relationship with the warrantor or manufacturer.

SB225,17,2 (e) Misrepresent the terms of any warranty.

SB225,17,4 (10) Notwithstanding the terms of any dealer agreement, all of the following apply:

SB225,17,13 (a) A warrantor shall indemnify, defend, and hold harmless its dealer against any losses or damages to the extent such losses or damages are caused by the negligence or willful misconduct of the warrantor. A dealer may not be denied indemnification or a defense for failing to discover, disclose, or remedy a defect in the design or manufacturing of the recreational vehicle. A dealer shall provide to the warrantor a copy of any suit in which allegations are made under this section within 10 days after receiving the suit. This paragraph shall continue to apply even after the recreational vehicle is titled. Indemnification shall include court costs, reasonable attorney fees, and expert witness fees incurred by the dealer.

SB225,17,20 (b) A dealer shall indemnify, defend, and hold harmless its warrantor against any losses or damages to the extent such losses or damages are caused by the negligence or willful misconduct of the dealer. The warrantor shall provide to the dealer a copy of any suit in which allegations are made under this section within 10 days after receiving the suit. This paragraph shall continue to apply even after the recreational vehicle is titled. Indemnification must include court costs, reasonable attorney fees, and expert witness fees incurred by the warrantor.

SB225,23 Section 23. 218.165 of the statutes is created to read:

SB225,18,2 218.165 Inspection of recreational vehicles. (1) Whenever a new recreational vehicle is damaged prior to transit to the dealer or is damaged in transit to the dealer when the carrier or means of transportation has been selected by the manufacturer or distributor, the dealer shall notify the manufacturer or distributor of the damage within the time frame specified in the dealer agreement and do any of the following:

SB225,18,4 (a) Request from the manufacturer or distributor authorization to replace the components, parts, and accessories damaged or otherwise correct the damage.

SB225,18,5 (b) Reject the vehicle within the time frame set forth in sub. (4).

SB225,18,9 (2) If a manufacturer or distributor refuses or fails to authorize repair of damage described under sub. (1) within 10 days after receipt of notification under sub. (1) or if the dealer rejects the recreational vehicle because of damage, ownership of the new recreational vehicle reverts to the manufacturer or distributor.

SB225,18,12 (3) A dealer shall exercise due care in custody of a damaged recreational vehicle, but the dealer shall have no other obligations, financial or otherwise, with respect to that recreational vehicle.

SB225,18,15 (4) The time frame for inspection and rejection by the dealer shall be part of the dealer agreement and may not be less than 2 business days after the physical delivery of the recreational vehicle.

SB225,24 Section 24. 218.166 of the statutes is created to read:

SB225,18,20 218.166 Coercion. (1) In this section, “coerce” includes threatening to terminate, cancel, or not renew a dealer agreement without good cause or threatening to withhold product lines or delay product delivery as an inducement to amending the dealer agreement.

SB225,18,22 (2) A manufacturer or distributor may not coerce or attempt to coerce a dealer to do any of the following:

SB225,18,23 (a) Purchase a product that the dealer did not order.

SB225,18,24 (b) Enter into an agreement with the manufacturer or distributor.

SB225,18,25 (c) Take any action that is unfair or unreasonable to the dealer.