2021 Texas Statutes
Occupations Code
Title 14 - Regulation of Motor Vehicles and Transportation
Subtitle A - Regulations Related to Motor Vehicles
Chapter 2301 - Sale or Lease of Motor Vehicles
Subchapter J. Manufacturers, Distributors, and Representatives
Section 2301.4651. Additional Payment to Franchised Dealer in Certain Situations
Sec. 2301.4651. ADDITIONAL PAYMENT TO FRANCHISED DEALER IN CERTAIN SITUATIONS. (a) This section applies to a manufacturer, distributor, or representative that terminates or discontinues a franchise by:
(1) discontinuing a line-make;
(2) ceasing to do business in this state; or
(3) changing the distributor or method of distribution of its products in this state.
(b) In addition to the duties placed on a manufacturer, distributor, or representative by Section 2301.465, a manufacturer, distributor, or representative to whom this section applies shall pay to the franchised dealer the following amounts as applicable:
(1) either:
(A) the dealer's construction costs for a new dealership completed in the two years preceding the date of the termination or discontinuance described by Subsection (a); or
(B) if the dealer does not have any costs described by Paragraph (A), the fair monthly rental value of the dealership payable in cash each month beginning on the first day of the first month following the date of the termination or discontinuance described by Subsection (a) and ending on the earlier of:
(i) the first anniversary of the termination or discontinuance date; or
(ii) the date on which the dealer no longer owns the dealership;
(2) the dealer's costs for upgrading or substantially altering a dealership if the upgrades or alterations were completed or added in the two years preceding the date of the termination or discontinuance described by Subsection (a); and
(3) an amount equal to the value of the goodwill associated with the franchise as it existed on the day before the earlier of:
(A) the date of the termination or discontinuance described by Subsection (a); or
(B) the date on which the manufacturer, distributor, or representative announced its intention to terminate or discontinue the franchise in a manner described by Subsection (a).
(c) A franchised dealer receiving money under Subsection (b)(1)(B) shall:
(1) make a reasonable effort to earn income from a dealership after a termination or discontinuance described by Subsection (a); and
(2) inform the manufacturer, distributor, or representative of the dealer's efforts under Subdivision (1) and of any income earned from the dealership.
(d) The amounts to be paid under Subsection (b)(1) or (2) to the dealer by a manufacturer, distributor, or representative shall be based on the percentage of the total square footage of the dealership attributable to sales, service, and parts suggested by a manufacturer or distributor and allocated to the franchise being terminated or discontinued at the time of the termination or discontinuance.
(e) A franchised dealer receiving money under Subsection (b)(1) or (2) shall mitigate damages by listing the dealership for lease or sublease with a real estate broker licensed under Chapter 1101 not later than the 30th day after the effective date of the termination or discontinuance described by Subsection (a) and shall reasonably cooperate with the broker in the performance of the broker's duties.
(f) A manufacturer, distributor, or representative may reduce the amount of a payment made to a franchised dealer under Subsection (b)(1)(B) by the amount of any income earned by the dealer from the dealership during the month preceding the payment.
(g) The manufacturer, distributor, or representative, as appropriate, shall pay any amount described by Subsection (b)(1)(A), (b)(2), or (b)(3) not later than the 90th day after the date of the termination or discontinuance described by Subsection (a).
(h) An amount payable under Subsection (b)(1)(A) or (b)(2) does not include any tax depreciation benefit received by the franchised dealer or any amount previously paid to the franchised dealer by the manufacturer, distributor, or representative to subsidize the costs incurred by the dealer in performing the activities described by Subsection (b)(1)(A) or (b)(2).
Added by Acts 2011, 82nd Leg., R.S., Ch. 137 (S.B. 529), Sec. 4, eff. September 1, 2011.
Amended by:
Acts 2013, 83rd Leg., R.S., Ch. 1135 (H.B. 2741), Sec. 18, eff. September 1, 2013.
