2007 California Vehicle Code Article 5. Hearings On Recreational Vehicle Franchise Modification, Replacement, Termination, Refusal To Continue, Establishment, And Relocation, And Consumer Complaints

CA Codes (veh:3070-3079)

VEHICLE CODE

SECTION 3070-3079




3070.  (a) Notwithstanding Section 20999.1 of the Business and
Professions Code or the terms of any franchise, a franchisor of a
dealer of new recreational vehicles, as defined in subdivision (a) of
Section 18010 of the Health and Safety Code, except a dealer who
deals exclusively in truck campers, may not terminate or refuse to
continue a franchise unless all of the following conditions are met:

   (1) The franchisee and the board have received written notice from
the franchisor as follows:
   (A) Sixty days before the effective date thereof setting forth the
specific grounds for termination or refusal to continue.
   (B) Fifteen days before the effective date thereof setting forth
the specific grounds with respect to any of the following:
   (i) Transfer of any ownership or interest in the franchise without
the consent of the franchisor, which consent may not be unreasonably
withheld.
   (ii) Misrepresentation by the franchisee in applying for the
franchise.
   (iii) Insolvency of the franchisee, or filing of any petition by
or against the franchisee under any bankruptcy or receivership law.
   (iv) Any unfair business practice after written warning thereof.
   (v) Failure of the dealer to conduct its customary sales and
service operations during its customary hours of business for seven
consecutive business days, giving rise to a good faith belief on the
part of the franchisor that the recreational vehicle dealer is in
fact going out of business, except for circumstances beyond the
direct control of the recreational vehicle dealer or by order of the
department.
   (C) The written notice shall contain, on the first page thereof in
at least 12-point bold type and circumscribed by a line to segregate
it from the rest of the text, one of the following statements,
whichever is applicable:
   (i) To be inserted when a 60-day notice of termination is given:
   "NOTICE TO DEALER: You have the right to file a protest with the
NEW MOTOR VEHICLE BOARD in Sacramento and have a hearing in which you
may protest the termination of your franchise under provisions of
the California Vehicle Code.  You must file your protest with the
board within 30 calendar days after receiving this notice or within
30 days after the end of any appeal procedure provided by the
franchisor or your protest right will be waived."
   (ii) To be inserted when a 15-day notice of termination is given:

   "NOTICE TO DEALER: You have the right to file a protest with the
NEW MOTOR VEHICLE BOARD in Sacramento and have a hearing in which you
may protest the termination of your franchise under provisions of
the California Vehicle Code.  You must file your protest with the
board within 10 calendar days after receiving this notice or within
10 days after the end of any appeal procedure provided by the
franchisor or your protest right will be waived."
   (2) Except as provided in Section 3050.7, the board finds that
there is good cause for termination or refusal to continue, following
a hearing called pursuant to Section 3066.  The franchisee may file
a protest with the board within 30 days after receiving a 60-day
notice, satisfying the requirements of this section, or within 30
days after the end of any appeal procedure provided by the
franchisor, or within 10 days after receiving a 15-day notice,
satisfying the requirements of this section, or within 10 days after
the end of any appeal procedure provided by the franchisor.  When a
protest is filed, the board shall advise the franchisor that a timely
protest has been filed, that a hearing is required pursuant to
Section 3066, and that the franchisor may not terminate or refuse to
continue until the board makes its findings.
   (3) The franchisor has received the written consent of the
franchisee, or the appropriate period for filing a protest has
elapsed.
   (b) (1) Notwithstanding Section 20999.1 of the Business and
Professions Code or the terms of any franchise, a franchisor of a
dealer of recreational vehicles may not modify or replace a franchise
with a succeeding franchise if the modification or replacement would
substantially affect the franchisee's sales or service obligations
or investment, unless the franchisor has first given the board and
each affected franchisee written notice thereof at least 60 days in
advance of the modification or replacement.  Within 30 days of
receipt of a notice satisfying the requirements of this section, or
within 30 days after the end of any appeal procedure provided by the
franchisor, a franchisee may file a protest with the board and the
modification or replacement does not become effective until there is
a finding by the board that there is good cause for the modification
or replacement.  If, however, a replacement franchise is the
successor franchise to an expiring or expired term franchise, the
prior franchise shall continue in effect until resolution of the
protest by the board.  In the event of multiple protests, hearings
shall be consolidated to expedite the disposition of the issue.
   (2) The written notice shall contain, on the first page thereof in
at least 12-point bold type and circumscribed by a line to segregate
it from the rest of the text, the following statement:
   "NOTICE TO DEALER: Your franchise agreement is being modified or
replaced.  If the modification or replacement will substantially
affect your sales or service obligations or investment, you have the
right to file a protest with the NEW MOTOR VEHICLE BOARD in
Sacramento and have a hearing in which you may protest the proposed
modification or replacement of your franchise under provisions of the
California Vehicle Code.  You must file your protest with the board
within 30 calendar days of your receipt of this notice or within 30
days after the end of any appeal procedure provided by the franchiser
or your protest rights will be waived."



3071.  In determining whether good cause has been established for
modifying, replacing, terminating, or refusing to continue a
franchise of a dealer of new recreational vehicles, the board shall
take into consideration the existing circumstances, including, but
not limited to, all of the following:
   (a) The amount of business transacted by the franchisee, as
compared to the business available to the franchisee.
   (b) The investment necessarily made and obligations incurred by
the franchisee to perform its part of the franchise.
   (c) The permanency of the investment.
   (d) Whether it is injurious or beneficial to the public welfare
for the franchise to be modified or replaced or the business of the
franchisee disrupted.
   (e) Whether the franchisee has adequate new recreational vehicle
sales and, if required by the franchise, service facilities,
equipment, vehicle parts, and qualified service personnel, to
reasonably provide for the needs of the consumers of the recreational
vehicles handled by the franchisee and has been and is rendering
adequate services to the public.
   (f) Whether the franchisee fails to fulfill the warranty
obligations agreed to be performed by the franchisee in the
franchise.
   (g) The extent of franchisee's failure to comply with the terms of
the franchise.



3072.  (a) (1) Except as otherwise provided in subdivision (b), if a
franchisor seeks to enter into a franchise establishing an
additional motor vehicle dealership within a relevant market area
where the same recreational vehicle line-make is then represented, or
seeks to relocate an existing motor vehicle dealership, the
franchisor shall, in writing, first notify the board and each
franchisee in that recreational vehicle line-make in the relevant
market area of the franchisor's intention to establish an additional
dealership or to relocate an existing dealership within or into that
market area.  Within 20 days of receiving the notice, satisfying the
requirements of this section, or within 20 days after the end of any
appeal procedure provided by the franchisor, any franchisee required
to be given the notice may file with the board a protest to
establishing or relocating the dealership.  If, within this time, a
franchisee files with the board a request for additional time to file
a protest, the board or its secretary, upon a showing of good cause,
may grant an additional 10 days to file the protest. When a protest
is filed, the board shall inform the franchisor that a timely protest
has been filed, that a hearing is required pursuant to Section 3066,
and that the franchisor shall not establish or relocate the proposed
dealership until the board has held a hearing as provided in Section
3066, nor thereafter, if the board has determined that there is good
cause for not permitting the dealership.  In the event of multiple
protests, hearings may be consolidated to expedite the disposition of
the issue.
   (2) The written notice shall contain, on the first page thereof in
at least 12-point bold type and circumscribed by a line to segregate
it from the rest of the text, the following statement:
   "NOTICE TO DEALER:  You have the right to file a protest with the
NEW MOTOR VEHICLE BOARD in Sacramento and have a hearing on your
protest under the terms of the California Vehicle Code if you oppose
this action.  You must file your protest with the board within 20
days of your receipt of this notice, or within 20 days after the end
of any appeal procedure that is provided by us to you.  If, within
this time, you file with the board a request for additional time to
file a protest, the board or its secretary, upon a showing of good
cause, may grant you an additional 10 days to file the protest."
   (b) Subdivision (a) does not apply to any of the following:
   (1) The relocation of an existing dealership to any location that
is both within the same city as, and within one mile of, the existing
dealership location.
   (2) The establishment at any location that is both within the same
city as, and within one-quarter mile of, the location of a
dealership of the same recreational vehicle line-make that has been
out of operation for less than 90 days.
   (3) A display of vehicles at a fair, exposition, or similar
exhibit if no actual sales are made at the event and the display does
not exceed 30 days. This paragraph may not be construed to prohibit
a new vehicle dealer from establishing a branch office for the
purpose of selling vehicles at the fair, exposition, or similar
exhibit, even though that event is sponsored by a financial
institution, as defined in Section 31041 of the Financial Code, or by
a financial institution and a licensed dealer.  The establishment of
these branch offices, however, shall be in accordance with
subdivision (a) where applicable.
   (4) An annual show sponsored by a national trade association of
recreational vehicle manufacturers that complies with all of the
requirements of subdivision (d) of Section 11713.15.
   (5) A motor vehicle dealership protesting the location of another
dealership with the same recreational vehicle line-make within its
relevant market area, if the dealership location subject to the
protest was established on or before January 1, 2004.
   (c) For the purposes of this section, the reopening of a
dealership that has not been in operation for one year or more shall
be deemed the establishment of an additional motor vehicle
dealership.
   (d) For the purposes of this section and Section 3073, a "motor
vehicle dealership" or "dealership" is any authorized facility at
which a franchisee offers for sale or lease, displays for sale or
lease, or sells or leases new recreational vehicles, as defined in
subdivision (a) of Section 18010 of the Health and Safety Code.  A
"motor vehicle dealership" or "dealership" does not include a dealer
who deals exclusively in truck campers.



3072.5.  For the purposes of this article, a "recreational vehicle
line-make" is a group or groups of recreational vehicles defined by
the terms of a written agreement that complies with Section 331.



3073.  In determining whether good cause has been established for
not entering into or relocating an additional franchise for the same
recreational vehicle line-make, the board shall take into
consideration the existing circumstances, including, but not limited
to, all of the following:
   (a) The permanency of the investment.
   (b) The effect on the retail recreational vehicle business and the
consuming public in the relevant market area.
   (c) Whether it is injurious to the public welfare for an
additional franchise to be established.
   (d) Whether the franchisees of the same recreational vehicle
line-make in that relevant market area are providing adequate
competition and convenient consumer care for the motor vehicles of
the recreational vehicle line-make in the market area.  In making
this determination, the board shall consider the adequacy of
recreational vehicle sales and, if required by the franchise, service
facilities, equipment, supply of vehicle parts, and qualified
service personnel.
   (e) Whether the establishment of an additional franchise would
increase competition and therefore be in the public interest.



3074.  (a) A franchisor shall specify to its franchisees the
delivery and preparation obligations of the franchisees prior to
delivery of new recreational vehicles to retail buyers.  A copy of
the delivery and preparation obligations, which shall constitute the
franchisee's only responsibility for product liability between the
franchisee and the franchisor but which shall not in any way affect
the franchisee's responsibility for product liability between the
purchaser and either the franchisee or the franchisor, and a schedule
of compensation to be paid franchisees for the work and services
they shall be required to perform in connection with the delivery and
preparation obligations shall be filed with the board by
franchisors, and shall constitute the compensation as set forth on
the schedule.  The schedule of compensation shall be reasonable, with
the reasonableness thereof being subject to the approval of the
board, providing a franchisee files a notice of protest with the
board.  In determining the reasonableness of the schedules, the board
shall consider all relevant circumstances, including, but not
limited to, the time required to perform each function that the
dealer is obligated to perform and the appropriate labor rate.
   (b) Upon delivery of the vehicle, the franchisee shall give a copy
of the delivery and preparation obligations to the purchaser and a
written certification that he or she has fulfilled these obligations.




3075.  (a) A franchisor shall properly fulfill every warranty
agreement made by it and adequately and fairly compensate each of its
franchisees for labor and parts used to fulfill that warranty when
the franchisee has fulfilled warranty obligations of repair and
servicing and shall file a copy of its warranty reimbursement
schedule or formula with the board.  The warranty reimbursement
schedule or formula shall be reasonable with respect to the time and
compensation allowed the franchisee for the warranty work and all
other conditions of the obligation.  The reasonableness of the
warranty reimbursement schedule or formula shall be determined by the
board if a franchisee files a notice of protest with the board.
   (b) In determining the adequacy and fairness of the compensation,
the franchisee's effective labor rate charged to its various retail
customers may be considered together with other relevant criteria.
   (c) If a franchisor disallows a franchisee's claim for a defective
part, alleging that the part, in fact, is not defective, the
franchisor shall return the part alleged not to be defective to the
franchisee at the expense of the franchisor, or the franchisee shall
be reimbursed for the franchisee's cost of the part, at the
franchisor's option.
   (d) All claims made by franchisees pursuant to this section shall
be either approved or disapproved within 30 days after their receipt
by the franchisor.  A claim not specifically disapproved in writing
within 30 days from receipt by the franchisor shall be deemed
approved on the 30th day.  When a claim is disapproved, the
franchisee who submits it shall be notified in writing of its
disapproval within the required period, and the notice shall state
the specific grounds upon which the disapproval is based.  All claims
made by franchisees under this section and Section 3074 for labor
and parts shall be paid within 30 days following approval.  Failure
to approve or pay within the above specified time limits, in
individual instances for reasons beyond the reasonable control of the
franchisor, do not constitute a violation of this article.
   (e) Audits of franchisee warranty records may be conducted by the
franchisor on a reasonable basis, and for a period of 12 months after
a claim is paid or credit issued.  Franchisee claims for warranty
compensation shall not be disapproved except for good cause,
including, but not limited to, performance of nonwarranty repairs,
lack of material documentation, or fraud.  Any chargeback to a
franchisee for warranty parts or service compensation shall be made
within 90 days of the completion of the audit.  If a false claim was
submitted by a franchisee with intent to defraud the franchisor, a
longer period for audit and any resulting chargeback may be permitted
if the franchisor obtains an order from the board.



3076.  (a) All claims made by a franchisee for payment under the
terms of a franchisor incentive program shall be either approved or
disapproved within 30 days after receipt by the franchisor.  When a
claim is disapproved, the franchisee who submits it shall be notified
in writing of its disapproval within the required period, and each
notice shall state the specific grounds upon which the disapproval is
based.  A claim not specifically disapproved in writing within 30
days from receipt shall be deemed approved on the 30th day.
Following the disapproval of a claim, a franchisee shall have one
year from receipt of the notice of disapproval in which to appeal the
disapproval to the franchisor and file a protest with the board.
All claims made by franchisees under this section shall be paid
within 30 days following approval.  Failure to approve or pay within
the above specified time limits, in individual instances for reasons
beyond the reasonable control of the franchisor, do not constitute a
violation of this article.
   (b) Audits of franchisee incentive records may be conducted by the
franchisor on a reasonable basis, and for a period of 18 months
after a claim is paid or credit issued.  Franchisee claims for
incentive program compensation shall not be disapproved except for
good cause, such as ineligibility under the terms of the incentive
program, lack of material documentation, or fraud.  Any chargeback to
a franchisee for incentive program compensation shall be made within
90 days of the completion of the audit.  If a false claim was
submitted by a franchisee with the intent to defraud the franchisor,
a longer period for audit and any resulting chargeback may be
permitted if the franchisor obtains an order from the board.




3077.  (a) In addition to fees imposed under Sections 3016 and
11723, the department shall impose a one-time additional fee on those
dealers subject to this article for the issuance or renewal of a
license, in an amount determined by the department to be sufficient
to cover the costs incurred by the department and the board in the
implementation of this article for the first year, or in an amount
sufficient to cover costs of not more than three hundred fifty
thousand dollars (0,000), whichever amount is less.
   (b) The fee authorized under subdivision (a) may not be imposed on
and after January 1, 2005.
   (c) All funds derived from the imposition of the fee required
under subdivision (a) shall be deposited in the Motor Vehicle Account
in the State Transportation Fund and shall be available, upon
appropriation, for expenditure to cover the costs incurred by the
department and the board in the initial implementation of this
article.


3078.  (a) If the board receives a complaint from a member of the
public seeking a refund involving the sale or lease of, or a
replacement of, a recreational vehicle, as defined in subdivision (a)
of Section 18010 of the Health and Safety Code, from a motor vehicle
dealership, as defined in paragraph (1) of subdivision (e) of
Section 3072, the board shall recommend that the complainant consult
with the Department of Consumer Affairs.
   (b) Nothing in this chapter affects a person's rights regarding a
transaction involving a recreational vehicle as defined in
subdivision (a), to maintain an action under any other statute,
including, but not limited to, applicable provisions of Title 1.7
(commencing with Section 1790) of Part 4 of Division 3 of the Civil
Code.


3079.  This article applies only to a franchise entered into or
renewed on or after January 1, 2004.

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