GNYADA July 2014 Newsletter

Dealers’ Full Court Press Wins Victory with New Franchise Law

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Dealers now have many new protec- tions with the passage of the fran- chise law amendments in June. The bill, adds more than 20 significant dealer protections to the franchise law. Dealers’ expanded rights in key areas are described below.

fully crafted by a committee of GNYADA dealers representing virtually every linemake, with the final bill being hammered out with auto manufacturers in 18 months of meetings.

and weighed in on this bill, pushed it forward, even when resistance from Tesla and other groups threatened the bill’s progress. GNYADA thanks Governor Cuomo, the Senate and Assembly Leadership for their leadership and support.

A full court press by dealers across the state who contacted legislators

The bill’s broad coverage was care-

2014 Dealer Franchise Law Amendments

New Factory Stores Prohibited: The bill prevents DMV registering a dealership owned or controlled in any manner by a manufacturer. Pre-existing EV only stores are permitted to continue, but may only be transfered to a franchised dealer, and may not use the dealer development exceptions of the law. Facility Improvements: Dealers have substantial new protections including a new 10-year moratori- um once a dealer has completed renovations. Dealers can use com- petitive, alternative suppliers for many items. OEMs cannot discon- tinue incentive payments once a dealer has complied with an incen- tive program for renovations. Warranty Reimbursement: Expanding the 2009 enhancements to the Franchise Law, certain non- warranty-like repairs are now specifically excluded from the cal- culations (such as tires, recondi- tioning, wholesale parts, routine maintenance, batteries). The new law also improves procedures fol- lowing submissions of claims. OEMs have the burden to show that the dealer’s requested rate is unreasonable.

Audits: Franchisors must provide specific information before audit- ing dealers concerning claimed errors in warranty and sales sub- missions. A dealer’s failure to doc- ument part of a job properly cannot be a basis to deny the entire claim. Dealers must have a chance to cor- rect clerical or administrative errors. OEM must meet with dealer before chargebacks. No charge- backs are allowed unless claim was materially false or fraudulent or until the dealer has had a chance to commence a challenge. Allocations: Manufacturers must disclose their methodology for allo- cation in a clear manner. OEMs cannot use any unfair, unreason- able, or discriminatory allocation formula. Extended Service Contracts: Dealers can sell extended war- ranties from their choice of vendors and not be penalized by the OEM for doing so. Exclusivity: This amendment adds further protections from manufac- turers forcing dealers to maintain exclusive facilities. Site Control: OEMs may not exercise site control where the linemake has terminated (i.e., Oldsmobile, Mercury, Saturn, Plymouth).

Exports/Chargebacks: OEM may not penalize a dealer for exported cars if the dealer demonstrates due diligence and good faith. Registering a vehicle and collecting sales tax raises a presumption of good faith. OEM must provide notice and specifics before taking action. Dealer has no liability for courtesy deliveries or fleet sales that are exported. Manufacturers must provide dealers with notice prior to a chargeback for exported vehicles. Sales Outside the RMA: The new law requires franchisors to give credit to dealers for inventory allocation purposes for sales of new motor vehicles to buyers from areas inside and outside a franchisee’s assigned sales territory (PMA, AOR, etc.). Chargebacks: “Sales and marketing payments” are now subject to the existing charge back protections. Termination: Amendments enhance dealer protections in the event of a termination – adding reimbursement for purchased signs, furniture and special tools, or cer- tain leased items, like signs. The law also protects dealers who hold theirreal estate in a different entity than the dealership.

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Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • July 2014 3

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