2013 Kentucky Revised Statutes CHAPTER 190 - MOTOR VEHICLE SALES 190.070 Prohibited practices on the part of a manufacturer, distributor, factory branch, or factory representative.
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190.070 Prohibited practices on the part of a manufacturer, distributor,
factory branch, or factory representative.
(1)
It shall be a violation of this section for any manufacturer, distributor, factory
branch, or factory representative licensed under this chapter to require any
new motor vehicle dealer in the Commonwealth:
(a) To order or accept delivery of any motor vehicle, part or accessory
thereof, appliances, equipment, or any other product not required by law,
which shall not have been voluntarily ordered by the new motor vehicle
dealer; except that this section is not intended to modify or supersede any
terms or provisions of the franchise requiring new motor vehicle dealers to
market a representative line of those motor vehicles which the
manufacturer or distributor is publicly advertising.
(b) To order or accept delivery of any new motor vehicle with special
features, appliances, accessories, or equipment not included in the list
price of the motor vehicle, as publicly advertised by the manufacturer or
distributor.
(c) To order for any person any parts, accessories, equipment, machinery
tools, appliance, or any commodity whatsoever not required in connection
with a recall campaign.
(d) To participate monetarily in an advertising campaign or contest, any
promotional materials, training materials, showroom or other display
decorations, or materials, at the expense of the dealer, without the
consent of the dealer.
(e) To enter into any agreement with the manufacturer, distributor, factory
branch, or factory representative, or to do any other act prejudicial to the
new motor vehicle dealer by threatening to cancel a franchise or any
contractual agreement existing between the dealer and the manufacturer,
distributor, factory branch, or factory representative. Notice in good faith
to any dealer of the dealer's violation of any terms or provisions of the
dealer's franchise, or contractual agreement shall not constitute a
violation of this law.
(f) To change the capital structure of the dealership, or the means by or
through which the dealer finances the operation of the dealership,
provided that the dealership at all times meets any reasonable capital
standards agreed to by the dealer, excluding any entity engaged primarily
in providing financing or insurance on motor vehicles.
(g) To refrain from participation in the management or investment in, or the
acquisition of any other line of new motor vehicle or related products;
provided, however, that this section does not apply unless the new motor
vehicle dealer maintains a reasonable line of credit for each make or line
of new motor vehicles, and that the new motor vehicle dealer remains in
substantial compliance with the terms and conditions of the franchise and
with any reasonable facility requirements of the manufacturer, and no
change is made in the principal management of the new motor vehicle
dealership.
(h) To change location of the dealership, or to, during the course of the
(2)
agreement, make any substantial alterations to the dealership premises,
when to do so, would be unreasonable in light of the current economic,
political, and social considerations.
(i) To prospectively assent to a release, assignment, novation, waiver, or
estoppel which would relieve any person from liability to be imposed by
this law, or to require any controversy between a dealer and a
manufacturer, distributor, or representative, to be referred to any person
other than the duly constituted courts of the Commonwealth or the United
States of America, or to the commissioner, if the referral would be binding
upon the dealer.
(j) To establish or maintain exclusive facilities, personnel, display space, or
signage for a new motor vehicle make or line.
(k) To expand facilities without making available a sufficient supply of new
motor vehicles to support the expansion in light of the market and
economic conditions.
It shall be a violation of this section for any manufacturer, distributor, factory
branch, or factory representative:
(a) To delay, refuse, or fail to deliver motor vehicles, or vehicle parts or
accessories in reasonable quantities relative to the new motor vehicle
dealer's facilities and sales potential in the new motor vehicle dealer's
relevant market area, and within a reasonable time, but in any case no
more than sixty (60) days, after receipt of an order from a dealer having a
franchise for the retail sale of any new vehicle sold or distributed by the
manufacturer or distributor, any new vehicle, parts, or accessories to new
vehicles as are covered by the franchise, if the vehicle, parts, or
accessories are publicly advertised as being available for delivery or
actually being delivered. The delivery to another dealer of a motor vehicle
of the same model and similarly equipped as the vehicle ordered by a
motor vehicle dealer who has not received delivery thereof, but who had
placed his written order for the vehicle prior to the order of the dealer
receiving the vehicle, shall be prima facie evidence of a delayed delivery
of, or refusal to deliver, a new motor vehicle to a motor vehicle dealer
within sixty (60) days, without cause. This section is not violated,
however, if the failure is caused by acts or causes beyond the control of
the manufacturer, distributor, factory branch, or factory representative.
(b) To refuse to disclose to any new motor vehicle dealer, handling the same
line make, the manner and mode of distribution of that line make within
the relevant market areas.
(c) To prevent or attempt to prevent a dealer from receiving fair and
reasonable compensation for the value of the franchised business. There
shall not be a transfer or assignment of the dealer's franchise without the
consent of the manufacturer or distributor, which consent shall not be
unreasonably withheld.
(d) To obtain money, goods, service, or any other benefit from any other
person with whom the dealer does business, on account of, or in relation
to, the transaction between the dealer and the other person, other than for
compensation for services rendered, unless the benefit is promptly
(e)
(f)
(g)
(h)
(i)
(j)
accounted for, and transmitted to, the dealer, excluding any entity
engaged primarily in providing financing or insurance on motor vehicles.
To increase prices of motor vehicles which the dealer had ordered for
private retail customers prior to the dealer's receipt of the written official
price increase notification, a sales contract signed by a private retail
consumer shall constitute evidence of each order, provided that the
vehicle is in fact delivered to the customer. In the event of manufacturer
price reductions, the amount of a reduction received by a dealer shall be
passed on to the private retail consumer by the dealer, if the retail price
was negotiated on the basis of the previous higher price to the dealer.
Price reductions shall apply to all vehicles in the dealer's inventory which
were subject to the price reduction. Price differences applicable to new
model or series motor vehicles at the time of the introduction of new
models or series shall not be considered a price increase or price
decrease. Price changes caused by the following shall not be subject to
the provisions of this section:
1.
The addition to a motor vehicle of required or optional equipment
pursuant to state or federal law;
2.
Revaluation of the United States dollar, in the case of foreign-make
vehicles or components; or
3.
Increased transportation charges due to an increase in the rate
charged by common carrier or transporter.
To offer any refunds or other types of inducements to any person for the
purchase of new motor vehicles of a certain line make to be sold to the
state or any political subdivision thereof, without making the same offer,
upon written request, to all other dealers in the same line make within the
relevant market area.
To release to any outside party, except under subpoena, any
administrative, judicial or arbitration proceedings, or any business,
financial, or personal information which may be, from time to time,
provided by the dealer to the manufacturer, without the express written
consent of the dealer.
To deny any dealer the right of free association with any other dealer for
any lawful purpose.
To establish or maintain a relationship, on the part of a manufacturer,
distributor, factory branch, or factory representative, where the voting
rights exceed a simple majority.
To own, operate, or control any motor vehicle dealership in the
Commonwealth; however, this subsection shall not prohibit:
1.
The operation by any manufacturer of a dealership for a temporary
period, not to exceed one (1) year, during the transition from one (1)
owner to another;
2.
The ownership or control of a dealership by a manufacturer while
the dealership is being sold under a bona fide contract or purchase
option to the operator of the dealership; or
3.
The ownership, operation, or control of a dealership by a
(3)
manufacturer if the licensor determines after a hearing at the
request of any party, that there is not a dealer who is independent of
the manufacturer available in the community or trade area to own
and operate the franchise in a manner consistent with the public
interest.
(k) To compete without good faith with a new motor vehicle dealer in the
same line make, operating under an agreement or franchise from the
aforementioned manufacturer, distributor, factory branch, or factory
representative in the relevant market area. A manufacturer, distributor,
factory branch, or factory representative shall not, however, be deemed to
be competing when operating a dealership, either temporarily for a
reasonable period, not to exceed one (1) year, or in a bona fide retail
operation which is for sale to any qualified independent person at a fair
and reasonable price, or in a bona fide relationship in which an
independent person has made a significant investment, subject to loss in
the dealership, and can reasonably expect to acquire full ownership of
such dealership on reasonable terms and conditions.
(l) To unfairly discriminate among its new motor vehicle dealers with respect
to warranty reimbursement or authority granted its new motor vehicle
dealers to make warranty adjustment with retail customers.
(m) To fail to give consent to the sale, transfer, or exchange of the franchise
to a qualified buyer capable of being licensed as a new motor vehicle
dealer in this state; provided that consent may be withheld when in light of
other circumstances, granting the consent would be unreasonable.
(n) To fail to be licensed as provided in this chapter, and to maintain a bond
in an amount as determined by this chapter.
It shall be unlawful for a manufacturer, either directly or indirectly, or in
combination with or through any subsidiary or affiliated entity, to discriminate in
favor of one (1) dealer against another dealer holding a franchise for the same
line make of motor vehicle by furnishing to only one (1) dealer any of the
following:
(a) Any vehicle, part, or other product that is not available to each dealer at
the same price, including discounts, rebates, incentives, or other
payments or allowances affecting the net price of the product;
(b) Any vehicle, part, or other product that is not made available to each
dealer in quantities proportionate to the demand for the vehicle, part, or
other product;
(c) Any vehicle, part, or other product that is not made available to each
dealer on comparable delivery terms, including time of delivery after
placement of an order;
(d) Any promotional or advertising payment or allowance that is not made
available to each dealer on proportionally equal terms;
(e) Any opportunity to purchase or lease from the manufacturer the dealer's
facility that is not made available to each dealer on terms proportionate to
the respective values of its facilities;
(f) Any personnel training that is not made available to each dealer on
(4)
(5)
proportionally equal terms;
(g) Any inventory or other financing that is not made available to each dealer
on proportionally equal terms, except that a manufacturer, subsidiary, or
affiliated entity shall not be obligated to make available financing to a
dealer who does not meet reasonable credit standards uniformly applied
by the manufacturer, subsidiary, or affiliated entity;
(h) Any opportunity to perform work for which the dealer is entitled to be
compensated under this chapter that is not made available to each dealer
under uniformly applied standards;
(i) Any opportunity to sell products or services distributed by the
manufacturer for resale in connection with the line make of the motor
vehicle covered by the franchise that is not made available to each dealer
on proportionally equal terms;
(j) Any opportunity to establish an additional sales, service, or parts outlet
that is not made available to each dealer in whose relevant market area
the sales, service, or parts outlet will be located;
(k) Any information concerning the manufacturer's products, prices or other
terms of sale, or promotional programs that is not contemporaneously
furnished to the dealer;
(l) Any improvement to, or payment to the dealer for an improvement to, the
dealer's facilities that is not made available to each dealer on
proportionally equal terms;
(m) Any opportunity to sell or assign retail installment contracts or consumer
leases to the manufacturer or the manufacturer's sales finance company
subsidiary that is not made available to each dealer on proportionally
equal terms, except that a manufacturer or sales finance company shall
not be obligated to purchase any retail installment contract or consumer
lease that does not meet reasonable credit terms uniformly applied by the
manufacturer or sales finance company subsidiary;
(n) Any product assistance, service, or facility in connection with the
franchise that is not made available to each dealer on proportionally equal
terms; or
(o) Any payment for any service or facility in connection with the franchise
that is not made available to each dealer on proportionally equal terms.
It shall not be a defense to an alleged violation of subsection (3) of this section,
that an item or opportunity was offered to a dealer if the offer was conditioned
upon the dealer meeting one (1) or more requirements that are not reasonable
and necessary to fulfill the dealer's obligations under the franchise. The
manufacturer shall have the burden of proving that any requirement upon
which an offer was conditioned was reasonable and necessary to fulfill the
dealer's obligations under the franchise when the offer was made. A
requirement shall not be found to be reasonable and necessary to fulfill the
dealer's obligations under the franchise if the manufacturer cannot prove that it
was within the control of each dealer to meet the requirement imposed on the
dealer as a condition of the offer.
A dealer who alleges a good faith belief that the dealer has been, or is being,
(6)
(7)
discriminated against in violation of subsection (3) of this section, may demand
in writing that the manufacturer furnish the dealer with pertinent information
reasonably necessary for the dealer to determine if discrimination exists. If the
manufacturer fails to furnish the dealer with the information demanded within
thirty (30) days of the manufacturer's receipt of the dealer's written demand, the
manufacturer shall have, in any subsequent legal proceeding, the burden of
proving that the alleged violation has not occurred.
Any dealer who is discriminated against by a manufacturer in violation of
subsection (3) of this section shall recover three (3) times an amount equal to
the value of what the dealer would have received if the manufacturer had
complied with subsection (3) of this section upon furnishing any item or
opportunity to another dealer.
A change in ownership of a manufacturer or distributor that contemplates a
continuation of that line make in the state shall not directly or indirectly, through
actions of any parent of the manufacturer or distributor, subsidiary of the
manufacturer or distributor, or common entity cause a termination, cancellation,
or nonrenewal of a dealer agreement by a present or previous manufacturer or
distributor of an existing agreement unless the manufacturer or distributor
offers the new vehicle dealer an agreement substantially similar to that offered
to other dealers of the same line make.
Effective:July 15, 2008
History: Amended 2008 Ky. Acts ch. 17, sec. 1, effective July 15, 2008. -Amended 2000 Ky. Acts ch. 23, sec. 6, effective February 22, 2000. -- Amended
1982 Ky. Acts ch. 373, sec. 13, effective July 15, 1982. -- Created 1956 Ky. Acts
ch. 161, sec. 7, effective May 18, 1956.
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