650.020 Liability of franchise seller; defenses; amount of recovery; attorney fees; joint and several liability; limitation on action; indemnification of corporation; right of contribution

(Administration)

650.050 Rules

650.055 General duties and powers of director

650.057 Orders issued under ORS 650.055

650.060 Investigative powers of director; protection against unreasonable investigation; contempt

650.065 Injunctive relief; attorney fees; appointment of receiver or conservator; conditions of awarding damages and injunctive relief

650.070 Director as agent for service of process

650.075 Manner of executing service of process; effect of initial service

650.080 When personal service of process required

650.085 Other civil or criminal remedies unaffected

650.095 Civil penalties

650.100 Disposition of civil penalties

MOTOR VEHICLE DEALERSHIPS

650.120 Definitions for ORS 650.120 to 650.170

650.130 Prohibited conduct by manufacturer, distributor or importer

650.140 Good cause required for terminating dealer franchise; protest of termination; notice before termination

650.145 Compensation due dealer upon termination of franchise

650.150 Enjoining establishment of certain franchises or relocation of existing dealership in same market area; complaint; determination of good cause; notice to existing dealerships; attorney fees

650.153 Liability of franchisor for repair of motor vehicle that becomes inoperative prior to sale to consumer

650.155 Liability of manufacturer for damages to vehicles before delivery to carrier

650.158 Predelivery preparation and warranty service; notice to dealers; schedule of compensation; claims by dealers

650.162 Transfer, assignment or sale of interest in dealership or franchise; notices; approval of franchisor; right of first refusal

650.165 Prohibited franchise conditions

650.167 Violation of ORS 650.140 or 650.150 as irreparable injury

650.170 Dealer’s remedy

MOTOR FUEL FRANCHISES

650.200 Definitions for ORS 650.200 to 650.250

650.205 Prohibited conduct by franchisor

650.210 Rights and prohibitions governing relationship between franchisor and franchisee

650.215 Prohibited conduct in offer, sale or purchase of franchise

650.220 Consent of franchisor to sale, assignment or transfer of franchise; conditions for trial franchise

650.225 Death of franchisee; when franchisor required to enter into new franchise with designee of franchisee; notice; qualifications; possession of franchise premises

650.230 Transfer of franchise to corporation in which franchisee has controlling interest; conditions

650.235 Franchisor prohibited from requiring operation of service station in excess of 16 hours per day; exceptions

650.240 When transfer of motor fuel a sale in commerce

650.245 Principle of good faith

650.250 Injunctive relief or damages; limitation on commencement of action; attorney fees

RECREATIONAL VEHICLE FRANCHISES

650.300 Definitions for ORS 650.300 to 650.480

650.310 Good cause; determination

650.320 Dealership agreement

650.330 Comparable terms and conditions; grantor sales to public

650.340 Termination, cancellation or failure to renew; notice; grounds

650.350 Dealer’s rights upon termination, cancellation or failure to renew

650.360 Coercion prohibited

650.370 Transfer by dealer

650.380 Dealer’s successor

650.390 Dealer compensation for warranty service; disapproval of warranty service claims; recall notice requirements

650.400 Recalls

650.410 Dealer’s warranty obligations

650.420 Required disclosures

650.430 Damaged or defective vehicles

650.440 Grantor’s ownership, operation or control of dealership

650.450 Indemnification; grantor and dealer

650.460 Indemnification; warrantor and dealer

650.470 Remedies; grantor and dealer; attorney fees

650.480 Remedies; warrantor and dealer; attorney fees

GOODS AND SERVICES

(Generally)

650.005 Definitions for ORS 650.005 to 650.100. As used in ORS 650.005 to 650.100, unless the context requires otherwise:

(1) “Area franchise” means a contract or agreement between a franchisor and a subfranchisor whereby the subfranchisor is granted the right, for a valuable consideration, to sell or negotiate the sale of franchises in the name or on behalf of the franchisor.

(2) “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(3) “Director” means Director of the Department of Consumer and Business Services.

(4) “Franchise” means a contract or agreement, whether oral or written, by which:

(a) A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor;

(b) The operation of the franchisee’s business pursuant to such plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor of such plan or system; and

(c) The franchisee is required to give to the franchisor a valuable consideration for the right to transact business pursuant to the plan or system. Payment for trading stamps in itself is not consideration for the right to transact business pursuant to a plan or system.

(5) “Franchisee” means a person to whom a franchise is sold by a franchisor.

(6) “Franchisor” means a person, including a subfranchisor, who sells a franchise for $100 or more to a franchisee or subfranchisor.

(7) “Offer” or “offer to sell” includes every attempt to offer to dispose of, or solicitation of an offer to buy, a franchise or interest in a franchise for value.

(8) “Sale” or “sell” includes every contract or agreement of sale of, contract to sell, or disposition of a franchise or interest in a franchise for value, but does not include the renewal or extension of an existing franchise without any material change in the terms thereof if there is no interruption in the operation of the franchised business by the franchisee.

(9) “Subfranchisor” means a person to whom an area franchise is sold by a franchisor. [1973 c.509 §1; 1987 c.414 §77; 1993 c.744 §16]

650.010 Franchise sellers required to maintain books and records; filings with director. Every person who offers to sell a franchise in this state shall maintain a complete set of books, records and accounts of any such sale and the disposition of the proceeds thereof, and shall, at such times as the Director of the Department of Consumer and Business Services may require, file in the office of the director a report, stating the names of each person to whom a franchise has been sold by the person filing the report, the amount of the proceeds derived and the disposition. [1973 c.509 §3]

650.015 When franchise sale or offer for sale is made in this state. (1) A sale or offer to sell a franchise is made in this state when an offer to sell is made in this state, or an offer to buy is accepted in this state, or, if the franchisee is domiciled in this state, the franchised business is or will be operated in this state.

(2) An offer to sell a franchise is made in this state when the offer either originates from this state or is directed by the offeror to this state and received at the place to which it is directed. An offer to sell is accepted in this state when acceptance is communicated to the offeror in this state. Acceptance is communicated to the offeror in this state when the offeree directs it to the offeror in this state reasonably believing the offeror to be in this state and it is received at the place to which it is directed.

(3) An offer to sell a franchise is not made in this state merely because:

(a) The publisher circulates or there is circulated on behalf of the publisher in this state any bona fide newspaper or other publication of general, regular and paid circulation outside this state during the past 12 months; or

(b) A radio or television program originating outside this state is received in this state. [1973 c.509 §2]

650.020 Liability of franchise seller; defenses; amount of recovery; attorney fees; joint and several liability; limitation on action; indemnification of corporation; right of contribution. (1) Any person who sells a franchise is liable as provided in subsection (3) of this section to the franchisee if the seller:

(a) Employs any device, scheme or artifice to defraud; or

(b) Makes any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

(2) It shall be an affirmative defense to any action for legal or equitable remedies brought under subsection (1) of this section if the franchisee knew of the untruth or omission.

(3) The franchisee may recover any amounts to which the franchisee would be entitled upon an action for a rescission. Except as provided in subsection (4) of this section, the court may award reasonable attorney fees to the prevailing party in an action under this section.

(4) The court may not award attorney fees to a prevailing defendant under the provisions of subsection (3) of this section if the action under this section is maintained as a class action pursuant to ORCP 32.

(5) Every person who directly or indirectly controls a franchisor liable under subsection (1) of this section, every partner, officer or director of the franchisor, every person occupying a similar status or performing similar functions, and every person who participates or materially aids in the sale of a franchise is also liable jointly and severally to the same extent as the franchisor, unless the nonseller did not know, and, in the exercise of reasonable care, could not have known, of the existence of the facts on which the liability is based.

(6) An action may not be commenced under this section more than three years after the sale.

(7) A corporation which is liable under ORS 650.005 to 650.100 shall have a right of indemnification against any of its principal executive officers, directors and controlling persons whose willful violation of any provision of ORS 650.005 to 650.100 gave rise to the liability. All persons liable under ORS 650.005 to 650.100 shall have a right of contribution against all other persons similarly liable, based upon each person’s proportionate share of the total liability, except:

(a) A person willfully misrepresenting or failing to disclose shall not have any right of contribution against any other person guilty merely of a negligent violation; and

(b) A principal executive officer, director, or controlling person shall not have any right of contribution against the corporation to which the person sustains that relationship. [1973 c.509 §4; 1979 c.284 §185; 1995 c.696 §40]

(Administration)

650.050 Rules. In accordance with this section and ORS chapter 183, the Director of the Department of Consumer and Business Services may from time to time make, amend and rescind such rules as are necessary to carry out the provisions of ORS 650.005 to 650.100. [1973 c.509 §5]

650.055 General duties and powers of director. The Director of the Department of Consumer and Business Services may:

(1) Undertake the investigations, including investigations outside this state, that the director considers necessary to:

(a) Determine whether a person:

(A) Has failed to comply with ORS 650.010;

(B) Has engaged in, is engaging in or is about to engage in an act or practice that would give rise to liability under ORS 650.020; or

(b) Aid in the enforcement of ORS 650.005 to 650.100 or in the formulation of rules and forms that carry out ORS 650.005 to 650.100.

(2) Require a person to file a statement in writing, under oath or otherwise, concerning the matter being investigated.

(3) When the director has reason to believe that a person has failed to comply with ORS 650.010, issue an order to comply.

(4) When the director has reason to believe that a person has engaged in, is engaging in or is about to engage in an act or practice that would give rise to liability under ORS 650.020, issue an order to cease and desist from the act or practice.

(5) When the director has reason to believe that a person has violated, is violating or is about to violate a rule of the director adopted under ORS 650.050, issue an order to cease and desist from the violation.

(6) Publish information concerning any:

(a) Failure to comply with ORS 650.010;

(b) Act or practice that gives rise to liability under ORS 650.020;

(d) Person who:

(A) Fails to comply with ORS 650.010;

(B) Commits an act or practice that gives rise to liability under ORS 650.020; or

650.057 Orders issued under ORS 650.055. (1) The Director of the Department of Consumer and Business Services shall serve an order under ORS 650.055 on the person named in the order.

(2) An order issued under ORS 650.055 becomes effective upon service on the person named in the order.

(3) ORS 183.413 to 183.470 apply to orders issued under ORS 650.055.

(4) Notwithstanding subsection (3) of this section, a person may not obtain a hearing on the order unless the person requests the hearing within 20 days of service of the order.

(5) A person who does not request a contested case hearing may not obtain judicial review of the order.

(6) The director may vacate or modify an order issued under ORS 650.055 at any time. A modified order is effective upon service on the person named in the order. [2005 c.339 §3]

650.060 Investigative powers of director; protection against unreasonable investigation; contempt. (1) For the purpose of any investigation or proceeding under ORS 650.005 to 650.100, the Director of the Department of Consumer and Business Services or any officer designated by the director may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, agreements, or other documents or records which the director considers relevant or material to the investigation or proceeding.

(2) Any person who is served with a subpoena or is subject to an order to give testimony orally or in writing or to produce books, papers, correspondence, memoranda, agreements or other documents or records as provided in ORS 650.005 to 650.100 may apply to any circuit court in Oregon for protection against abuse or hardship in the manner provided in ORCP 36 C.

(3) Except to the extent judicial relief may have been granted under subsection (2) of this section, if any person disobeys a subpoena issued under subsection (1) of this section, or if any witness refuses to testify or produce evidence before the director on any matter on which the witness may be lawfully interrogated, the circuit court of any county, upon application of the director, shall compel obedience by proceedings for contempt as in the case of disobedience of the requirements of a subpoena issued from such court or a refusal to testify therein. [1973 c.509 §7; 1977 c.358 §10; 1979 c.284 §186]

650.065 Injunctive relief; attorney fees; appointment of receiver or conservator; conditions of awarding damages and injunctive relief. (1) Whenever the Director of the Department of Consumer and Business Services determines that any person has engaged in, or is about to engage in, any act or practice which the director believes would give rise to liability under ORS 650.020, the director may bring suit in the name of the State of Oregon in any circuit court of this state to enjoin the acts or practices. Upon a proper showing, the court shall grant a permanent or temporary injunction or restraining order and may appoint a receiver or conservator for the defendant or the defendant’s assets. The court shall not require the director to post a bond. The court may award reasonable attorney fees to the director if the director prevails in an action under this section. The court may award reasonable attorney fees to a defendant who prevails in an action under this section if the court determines that the director had no objectively reasonable basis for asserting the claim or no reasonable basis for appealing an adverse decision of the trial court.

(2) The director may include in any suit authorized by subsection (1) of this section a claim for any amount the franchisee could recover under ORS 650.020 or a claim for damages on behalf of other persons injured by any act or practice against which an injunction or restraining order is sought. The court may award appropriate relief to the franchisee or such other persons if the court finds that enforcement of the right of the franchisee or other persons by private civil action or suit, whether by class action or otherwise, would be so burdensome or expensive as to be impractical. [1973 c.509 §8; 1981 c.897 §85; 1995 c.696 §41]

650.070 Director as agent for service of process. Except as provided in ORS 650.080, the Director of the Department of Consumer and Business Services is an agent for the service of any process, notice or demand required to be served in a proceeding under ORS 650.005 to 650.100 for:

(1) Every person who sells or offers to sell a franchise in this state; and

(2) Every person, whether a resident or nonresident of this state, who has engaged in conduct that is subject to a proceeding under ORS 650.020. [1973 c.509 §9]

650.075 Manner of executing service of process; effect of initial service. (1) The service referred to in ORS 650.070 shall be made by:

(a) Serving the Director of the Department of Consumer and Business Services or a clerk on duty at the Department of Consumer and Business Services a copy of the process, notice or demand, with any papers required by law to be delivered in connection with the service, or by mailing to the department a copy of the process, notice or demand by certified or registered mail, and a fee of $2 for each party being served;

(b) Transmittal of notice of the service on the director, together with one copy of each of the papers required by law to be delivered in connection with the service, by certified mail to the person being served:

(A) At such person’s address, if any, as it appears in the records of the director; and

(B) At any address the use of which the person initiating the proceedings knows or, on the basis of reasonable inquiry, has reason to believe is most likely to result in actual notice to the person to be served; and

(c) Filing with the appropriate court or other body, as part of the return of service, the return mailing receipt and an affidavit of the person initiating the proceedings that there has been compliance with this section and ORS 650.070.

(2) After completion of initial service upon the director, no additional documents need be served upon the director to maintain jurisdiction in the same proceeding or to give notice of any motion or provisional process. [1973 c.509 §10; 1987 c.603 §27]

650.080 When personal service of process required. The method of service referred to in ORS 650.075 may not be used if personal service can be used. [1973 c.509 §11]

650.085 Other civil or criminal remedies unaffected. Nothing in ORS 650.005 to 650.100 limits any statutory or common-law rights of a person to bring an action in any court for an act involved in the sale of franchises, or the right of the state to punish a person for a violation of any law. [1973 c.509 §12]

650.095 Civil penalties. (1) In addition to any other liability or penalty provided by law, the Director of the Department of Consumer and Business Services may impose a civil penalty on a person for violation of a rule adopted under ORS 650.050 or an order issued under ORS 650.055.

(2)(a) The director shall impose a civil penalty under this section in the manner provided in ORS 183.745.

(b)(A) The civil penalty may not exceed $10,000 for each violation.

(B) In the case of a continuing violation:

(i) Each day that the violation continues is a separate violation.

(ii) The civil penalty may not exceed $50,000. [2005 c.339 §4]

650.100 Disposition of civil penalties. All penalties recovered under ORS 650.095 shall be paid into the State Treasury and credited to the General Fund and are available for general government expenses. [2005 c.339 §5]

MOTOR VEHICLE DEALERSHIPS

650.120 Definitions for ORS 650.120 to 650.170. For the purposes of ORS 650.120 to 650.170:

(1) “Dealer” means any person who has been issued a vehicle dealer certificate under ORS 822.020 and pursuant to a franchise from a manufacturer, distributor or importer engages in buying, selling, leasing or exchanging new motor vehicles.

(2) “Dealership” means the location from which a dealer buys, sells, leases, trades, stores, takes on consignment or in any other manner deals in new motor vehicles.

(3) “Distributor” means a person who sells or distributes motor vehicles other than motor homes to motor vehicle dealers.

(4) “Fleet owner” means a person in this state who at one time buys or leases for use in a business:

(a) 15 or more motor vehicles with a gross vehicle weight rating of less than 8,500 pounds; or

(b) 50 or more vehicles with a gross vehicle weight rating of 8,500 pounds or more.

(5) “Franchise” means a contract or agreement under which:

(a) The franchisee is granted the right to sell, lease and exchange new motor vehicles manufactured, distributed or imported by the franchisor;

(b) The franchise is an independent business operating as a component of a distribution or marketing system prescribed in substantial part by the franchisor;

(c) The franchisee’s business is substantially associated with the trademark, trade name, commercial symbol or advertisements designating the franchisor or the products distributed by the franchisor;

(d) The franchisee’s business is substantially reliant on the franchisor for a continued supply of motor vehicles, parts and accessories;

(e) The franchisee is granted the right to perform warranty repairs authorized by the franchisor; and

(f) The franchisee is granted the right to sell, install and exchange parts, equipment and accessories manufactured, distributed or imported by the franchisor for use in or on motor vehicles.

(6) “Franchisee” means a dealer to whom a franchise is granted.

(7) “Franchisor” means a manufacturer, distributor or importer who grants a franchise to a dealer.

(8) “Importer” means a person who transports or arranges for the transportation of any foreign manufactured new motor vehicle into the United States for sale in this state.

(9) “Manufacturer” means a person who manufactures or assembles motor vehicles or who manufactures or installs on previously assembled truck chassis special bodies or equipment, other than motor homes, that when installed forms an integral part of the motor vehicle and constitutes a major manufacturing alteration and which completed unit is owned by the manufacturer.

(10) “Manufacturer’s suggested retail price” means the retail price of the new motor vehicle suggested by the manufacturer, including the retail delivered price suggested by the manufacturer for each accessory or item of optional equipment physically attached to the new motor vehicle at the time of delivery to the dealer that is not included within the retail price suggested by the manufacturer for the new motor vehicle without the accessory or optional equipment.

(11) “Motor home” means a motor vehicle that is designed to provide temporary living quarters and is built into an integral part of, or is permanently attached to, a self-propelled motor vehicle chassis or van. The vehicle must contain permanently installed independent life support systems and provide at least four of the following facilities:

(a) Cooking;

(b) Refrigeration or ice box;

(d) Heating or air conditioning;

(e) A potable water supply system including a faucet and sink; or

(f) A separate 110-120 volt electrical power supply or liquid petroleum gas supply.

(12) “Motor vehicle” means:

(a) A self-propelled device, other than a motor home, used:

(A) For transportation of persons or property upon a public highway; or

(B) In construction; or

(b) A trailer with a gross vehicle weight rating of 20,000 pounds or more that is used for commercial transportation on a public highway.

(13) “Qualified vendor” means a person with a contract or agreement to sell goods or services to a manufacturer, distributor or importer.

(14) “Relevant market area” means:

(a) For a dealer primarily of motor vehicles with a gross vehicle weight rating of less than 8,500 pounds, a circular area around an existing dealership of:

(A) Not less than a 10-mile radius from the dealership site;

(B) Not less than a 15-mile radius from the dealership site if the population is less than 250,000 within a 10-mile radius from the existing dealership and 150,000 or more within a 15-mile radius from the existing dealership;

(C) Not less than a 20-mile radius from the dealership site if the population is less than 150,000 within a 15-mile radius from the existing dealership; or

(D) The area of sales and service responsibility determined under the franchise agreement if the area is larger than the areas provided for in this paragraph.

(b) For a dealer primarily of motor vehicles with a gross vehicle weight rating of 8,500 pounds or more, a circular area around an existing dealership of:

(A) Not less than a 25-mile radius from the dealership site; or

(B) The area of sales and service responsibility determined under the franchise agreement if the area is larger than the area provided for in subparagraph (A) of this paragraph.

(15) “Replacement dealer” means any person who, at a dealership where the former dealer was franchised by the same manufacturer, distributor or importer, has been issued a vehicle dealer certificate under ORS 822.020 and pursuant to a franchise from a manufacturer, distributor or importer engages in buying, selling, leasing or exchanging new motor vehicles. [1980 c.3 §1; 1993 c.216 §1; 1999 c.660 §1; 2001 c.216 §1; 2001 c.825 §1; 2003 c.411 §1; 2005 c.211 §1]

650.130 Prohibited conduct by manufacturer, distributor or importer. Notwithstanding the terms of any franchise or other agreement, a manufacturer, distributor or importer may not:

(1) Require or attempt to require a dealer to accept delivery of any motor vehicle, part, accessory or any other commodity not voluntarily ordered by the dealer. This subsection does not apply to recall safety and emissions campaign parts not voluntarily ordered by the dealer or any vehicle features, parts, accessories or other components mandated by federal, state or local law.

(2) Coerce or attempt to coerce a dealer to enter any agreement or sales promotion program by threatening to cancel the franchise of the dealer.

(3) Refuse or fail to deliver, within a reasonable time and in a reasonable quantity, any new motor vehicle, part or accessory covered by the franchise if the vehicle, part or accessory is advertised as being available for delivery or is being delivered to another dealer. This subsection does not apply if the failure to deliver is the result of a cause beyond the control of the manufacturer, distributor or importer.

(4) Prevent or attempt to prevent a dealer from making reasonable changes in the capital structure of a dealership or the means by which the dealership is financed, provided that the dealer meets any reasonable capital requirement of the manufacturer, distributor or importer.

(5) Unreasonably refuse to compensate the dealer for work or services performed and expenses incurred in accordance with the dealer’s delivery, preparation and warranty obligations under the terms of a franchise or agreement.

(6) Coerce or attempt to coerce a dealer to participate monetarily in any advertising campaign or contest, or purchase any promotional materials, display devices or display decorations or materials at the expense of the dealer.

(7) Establish a maximum price a dealer may charge for motor vehicles with a gross vehicle weight rating of less than 8,500 pounds.

(8) Initiate an audit to determine the validity of paid claims for dealer compensation or any charge-backs for warranty parts or service compensation more than one year following the date of payment unless the manufacturer, distributor or importer has reasonable grounds to believe that the dealer submitted a fraudulent claim. If a manufacturer, distributor or importer initiates an audit more than one year following the date of payment, the manufacturer, distributor or importer may charge back to the dealer only the amount of a claim that the manufacturer, distributor or importer proves was fraudulent. Parties shall cooperate to ensure that permitted audits are concluded within 60 days of initiation.

(9) Initiate an audit to determine the validity of paid claims for dealer compensation or any charge-backs for consumer or dealer incentives more than one year following the date of payment unless the manufacturer, distributor or importer has reasonable grounds to believe that the dealer submitted a fraudulent claim. If a manufacturer, distributor or importer initiates an audit more than one year following the date of payment, the manufacturer, distributor or importer may charge back to the dealer only the amount of a claim that the manufacturer, distributor or importer proves was fraudulent. Parties shall cooperate to ensure that permitted audits are concluded within 60 days of initiation.

(10) Unfairly compete with a dealer in any matters governed by the franchise including, but not limited to, the sale or allocation of vehicles or other franchisor products, or the execution of dealer programs or benefits. This subsection applies if the manufacturer, distributor or importer has an ownership interest in, operates or controls, directly or indirectly, a business that is a dealer in this state.

(11) Have an ownership interest in, operate or control, directly or indirectly, a business that sells or leases a motor vehicle to a person in Oregon except to a franchisee of the manufacturer, distributor or importer. It is not a violation of this subsection if:

(a) A manufacturer, distributor or importer:

(A) Has an ownership interest in, operates or controls, directly or indirectly, a business that is a dealership in this state and is a business that:

(i) A franchisee owned, operated or controlled before the manufacturer, distributor or importer acquired the ownership interest in or began to operate or control the business;

(ii) The manufacturer, distributor or importer maintains an ownership interest in, operates or controls for no more than two years; and

(iii) While the manufacturer, distributor or importer maintains an ownership interest in, operates or controls the business, the manufacturer, distributor or importer offers the business for sale to any qualified independent person at a fair and reasonable price.

(B) Has a part ownership interest in, operates or controls, directly or indirectly, a business that is a dealership in this state and another person:

(i) Manages the day-to-day operations and business of the dealership;

(ii) Has made, or is obligated to make within 12 months, a significant capital investment in the dealership that is subject to loss;

(iii) Has an ownership interest in the dealership; and

(iv) Operates the dealership under a franchise through which the person will within 15 years acquire full ownership of the dealership under reasonable terms and conditions.

(C) As of January 1, 2000, had an ownership interest in, operated or controlled, directly or indirectly, a business that is a dealership in this state that sells motor vehicles with a gross vehicle weight rating of 8,500 pounds or more.

(D) Has an ownership interest in, operates or controls, directly or indirectly, a business that primarily leases or rents motor vehicles for a period of 12 months or less and the only motor vehicles that the business sells are motor vehicles that have been:

(i) Owned by the business for 180 days or more; or

(ii) Driven more than 10,000 miles while owned by the business.

(E)(i) Has an ownership interest in, operates or controls, directly or indirectly, a business that finances the sale or lease of motor vehicles; and

(ii) Is a business that sells or leases motor vehicles to retail lessees in Oregon.

(F) Has an ownership interest in, operates or controls, directly or indirectly, a business that makes a sale or lease of a motor vehicle that is not a violation of subsection (12) of this section.

(b) A manufacturer has a part ownership interest in, operates or controls, directly or indirectly, a business that is a dealership in this state that buys, sells, leases, trades, stores, takes on consignment or in any other manner deals exclusively in a single line-make of the manufacturer and:

(A) The manufacturer has, directly or indirectly, no more than 45 percent of the ownership interest in the dealership;

(B) When the manufacturer acquires an ownership interest in the dealership, the distance from the manufacturer’s dealership to the dealership of a dealer that buys, sells, leases, trades, stores, takes on consignment or in any other manner deals in the single line-make of the manufacturer and in which the manufacturer has no ownership interest is not less than 15 miles;

(D) The manufacturer’s franchises authorize a dealer of the single line-make of the manufacturer to operate as many dealerships within a defined geographic area as the dealer and manufacturer agree on; and

(E) On January 1, 2000:

(i) There were no more than four dealers in the state of the manufacturer’s single line-make; and

(ii) Of the dealers in this state of the manufacturer’s single line-make, at least one was a franchisee that owned and operated at least two dealerships within the geographic area authorized by franchises with the manufacturer.

(12) Sell or lease a motor vehicle to a person in this state other than to a business described in subsection (11) of this section or to a franchisee of the manufacturer, distributor or importer. It is not a violation of this subsection if:

(a) The manufacturer, distributor or importer sells or leases a motor vehicle to:

(A) An employee, retired employee or family member of an employee or retired employee of the manufacturer, distributor or importer;

(B) A driver training program;

(D) A qualified vendor;

(E) A public agency as defined in ORS 537.515;

(F) A current retail lessee;

(G) A fleet owner;

(H) A business acting as a vehicle dealer under ORS chapter 822 that sells motor vehicles only to other vehicle dealers; or

(I) The customers of a business acting as a vehicle dealer under ORS chapter 822 that sells motor vehicles only to other vehicle dealers.

(b) The sale or lease is by a business in this state that primarily leases or rents motor vehicles for a period of 12 months or less and the only motor vehicles that the business sells are motor vehicles that have been:

(A) Owned by the business for 180 days or more; or

(B) Driven more than 10,000 miles while owned by the business.

(c) The sale or lease is by a subsidiary of a manufacturer, distributor or importer that finances the sale or lease of motor vehicles and the sale or lease is to a person who previously leased the vehicle from the subsidiary.

(13)(a) Own, operate or control a business or enter into any contract, agreement or other written instrument permitting a person that is not a dealer to be compensated by the manufacturer, distributor or importer for performing warranty repairs and services if the business is located within a dealer’s relevant market area.

(b) Paragraph (a) of this subsection does not apply to:

(A) Warranty repairs and services performed on motor vehicles with a gross vehicle weight rating of less than 8,500 pounds provided for commercial or government fleets; or

(B) Warranty repairs and services performed on motor vehicles with a gross vehicle weight rating of 8,500 pounds or more if, after January 1, 2002, a manufacturer, distributor or importer of only motor vehicles with a gross vehicle weight rating of 8,500 pounds or more has:

(i) Obtained written permission from the dealers in the relevant market area to perform the repairs or services; or

(ii) Authorized the repairs or services to be performed by a person who owns or leases the motor vehicles for use in the person’s business.

(14) Terminate, cancel, fail to renew or fail to approve the sale, transfer or assignment of any franchise agreement because the dealer owns, has an investment in, participates in the management of or holds a franchise agreement with another manufacturer, distributor or importer at a different dealership site, or has franchises with more than one manufacturer, distributor or importer sharing the same dealership site, facilities, personnel or display space before October 23, 1999. [1980 c.3 §2; 1989 c.716 §5; 1999 c.660 §2; 2001 c. 216 §2; 2001 c.825 §2; 2003 c.411 §2]

650.140 Good cause required for terminating dealer franchise; protest of termination; notice before termination. (1) Notwithstanding the terms of any franchise or other agreement, it shall be unlawful for any manufacturer, distributor or importer to cancel, terminate or refuse to continue any franchise without showing good cause, provided the dealer protests such termination by filing a complaint in court of competent jurisdiction within the time period specified in subsection (3) of this section.

(2) In determining if good cause exists pursuant to subsection (1) of this section, the court shall consider such factors as:

(a) The amount of business transacted by the dealer as compared to the amount of business available to the dealer.

(b) The investment necessarily made and obligations necessarily incurred by the franchisee in performance of the franchise.

(d) The adequacy of the franchisee’s new motor vehicle sales and service facilities, equipment and parts.

(e) The qualifications of the management, sales and service personnel to provide the consumer with reasonably good service and care of new motor vehicles.

(f) The failure of the franchisee to substantially comply in good faith with those requirements of the franchise that are reasonable.

(3) Notwithstanding the terms of any franchise or other agreement, a franchisor shall give a franchisee 60 days’ written notice stating the specific reasons for cancellation, termination or noncontinuance of a franchise, provided that a franchisor need only give 30 days’ written notice concerning the following reasons:

(a) Misrepresentation by the franchisee in applying for the franchise.

(b) Insolvency of the franchisee, or filing of any petition by or against the franchisee, under any bankruptcy or receivership law.

(c) Conviction of a felony, provided that conviction after a plea nolo contendere shall be considered a conviction for purposes of this subsection.

(d) Failure of the dealer to maintain its operation open for business for seven consecutive business days or for eight business days out of any 15-business-day period. [1980 c.3 §3]

650.145 Compensation due dealer upon termination of franchise. (1) As used in subsection (2) of this section, “fair and reasonable compensation” means the amount originally paid by the dealer minus any incentive payments, model close-out allowances or any other programs applicable to the vehicles.

(2) Upon the termination, cancellation, nonrenewal or discontinuance of any franchise, the dealer shall be allowed fair and reasonable compensation by the manufacturer, distributor or importer for the following:

(a) All new current model year motor vehicle inventory with a gross vehicle weight rating of less than 8,500 pounds purchased from the manufacturer, distributor or importer that has not been materially altered, substantially damaged or driven for more than 300 miles;

US Laws, Codes, Statutes & Cases

Oregon Chapter 650

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