2019 Kentucky Revised Statutes Chapter 190 - Motor vehicle sales 190.046 Compensation to dealer for work performed under warranty -- "Reasonable compensation" -- Submission, determination, and payment of dealer's claims -- Compensation to dealer for sponsored sales or service promotion events -- Audits -- Fraud.
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190.046
Compensation to dealer for work performed under warranty -"Reasonable compensation" -- Submission, determination, and payment of
dealer's claims -- Compensation to dealer for sponsored sales or service
promotion events -- Audits -- Fraud.
(1)
(2)
(3)
Notwithstanding the terms of any franchise agreement, each motor vehicle
manufacturer or distributor, doing business within this Commonwealth, shall
assume all responsibility for and shall defend, indemnify, and hold harmless its
motor vehicle dealers against any loss, damages, and expenses, including legal
costs, arising out of complaints, claims, recall repairs or modifications or factory
authorized or directed repairs, or lawsuits resulting from warranty defects, which
shall include structural or production defects; defects in the assembly; or design of
motor vehicles, parts, accessories; or other functions beyond the control of the
dealer, including without limitation, the selection of parts or components for the
vehicle. Each manufacturer or distributor shall pay reasonable compensation to any
authorized dealer who performs work to repair defects, or to repair any damage to
the manufacturer's or distributor's product sustained while the product is in transit to
the dealer, when the carrier or the means of transportation is designated by the
manufacturer or distributor. Each manufacturer or distributor shall provide to its
dealers with each model year a schedule of time allowances for the performance of
warranty repair work and services, which shall include time allowances for the
diagnosis and performance of warranty work and service time, and shall be
reasonable and adequate for the work to be performed.
In the determination of what constitutes "reasonable compensation" under this
section, the principal factor to be considered shall be the amount of money that the
dealer is charging its other customers for the same type service or repair work.
Other factors may be considered, including the compensation being paid by other
manufacturers or distributors to their dealers for work; and the prevailing amount of
money being paid or charged by the dealers in the city or community in which the
authorized dealer is doing business. "Reasonable compensation" shall include
diagnosing the defect; repair service; labor; parts and administrative and clerical
costs. The compensation of a dealer shall not be less than the amount charged by the
dealer for like services and parts, which minimum compensation for parts shall be
dealer cost plus thirty percent (30%) gross profit, to retail customers for
nonwarranty service and repairs, or less than the amounts indicated for work on the
schedule of warranty compensation required to be filed by the manufacturer with
the commission as a part of the manufacturer's license application by KRS 190.030.
A manufacturer or distributor shall not require unreasonable proof to establish
"reasonable compensation."
(a) A manufacturer or distributor shall not require a dealer to submit a claim
authorized under this section sooner than thirty (30) days after the dealer
completes the preparation, delivery, or warranty service authorizing the claim
for preparation, delivery, or warranty service.
(b) All claims made by a dealer under this section shall be paid within thirty (30)
days after their approval.
(c)
(4)
(5)
(6)
(7)
All claims shall be either approved or disapproved by the manufacturer or
distributor within thirty (30) days after their receipt on a completed form
supplied or approved by the manufacturer or distributor.
(d) Any claims not specifically disapproved in writing within thirty (30) days after
the receipt of the form shall be considered to be approved and payment shall
be made within thirty (30) days thereafter.
(e) A dealer shall not be required to maintain defective parts for more than thirty
(30) days after payment of a claim.
(f) Any dispute between the dealer and the manufacturer or distributor shall be
subject to the provisions of KRS 190.057.
A manufacturer or distributor shall compensate the dealer for manufacturersponsored or distributor-sponsored sales or service promotion events, including but
not limited to rebates, programs, or activities in accordance with established written
guidelines for such events, programs, or activities, which the manufacturer or
distributor shall provide to each dealer.
(a) A manufacturer or distributor shall not require a dealer to submit a claim
authorized under subsection (4) of this section sooner than thirty (30) days
after the dealer becomes eligible to submit the claim.
(b) All claims made by a dealer pursuant to subsection (4) of this section for
promotion events, including but not limited to rebates, programs, or activities,
shall be paid within thirty (30) days after their approval.
(c) All claims shall be either approved or disapproved by the manufacturer or
distributor within thirty (30) days after their receipt on a completed form
supplied or approved by the manufacturer or distributor.
(d) Any claim not specifically disapproved in writing within thirty (30) days after
the receipt of this form shall be considered to be approved and payment shall
be made within thirty (30) days.
If a dealer submits any claim under this section to a manufacturer or distributor that
is incomplete, inaccurate, or lacking any information usually required by the
manufacturer or distributor, or if incomplete, inaccurate, or missing information is
discovered during an audit, then the manufacturer or distributor shall promptly
notify the dealer, and the time limit to submit the claim shall be extended for a
reasonable length of time, not less than five (5) business days following notice by
the manufacturer or distributor to the dealer, for the dealer to provide the complete,
accurate, or lacking information to the manufacturer or distributor. A dealer's failure
to comply with the specific requirements of the manufacturer or distributor for
processing a claim may not constitute grounds for denial of the claim or reduction
of the amount of compensation paid to the dealer if the dealer presents reasonable
documentation or other evidence to substantiate the claim.
(a) A manufacturer or distributor may only audit warranty, sales, or incentive
claims for a period of twelve (12) months following payment, or the end of a
program which does not exceed one (1) year in length, whichever is later,
subject to all of the provisions of this section.
(b)
(c)
(d)
A manufacturer or distributor shall not require documentation for warranty,
sales, or incentive claims more than twelve (12) months after the claim was
paid or the end of a program which does not exceed one (1) year in length,
whichever is later.
Prior to requiring any charge-back, reimbursement, or credit against a future
transaction arising out of an audit, the manufacturer or distributor shall submit
written notice to the dealer along with a copy of its audit and the detailed
reason for each intended charge-back, reimbursement, or credit.
The limitations of this subsection do not apply if the manufacturer or
distributor can prove fraud on a claim.
Effective: June 8, 2011
History: Amended 2011 Ky. Acts ch. 3, sec. 1, effective June 8, 2011. -- Amended
2000 Ky. Acts ch. 23, sec. 4, effective February 22, 2000. -- Amended 1992 Ky. Acts
ch. 452, sec. 5, effective July 14, 1992. -- Amended 1982 Ky. Acts ch. 373, sec. 7,
effective July 15, 1982. -- Amended 1978 Ky. Acts ch. 182, sec. 2, effective June 17,
1978. -- Amended 1974 Ky. Acts ch. 107, sec. 1. -- Created 1972 Ky. Acts ch. 75,
sec. 2.
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