Section 28-4460 - Factories; competition or unfair discrimination prohibited; definitionsA. A factory shall not directly or indirectly compete with or unfairly discriminate among its dealers.B. Competing with or unfair discrimination includes any one of the following:1. The factory having an ownership interest or franchise interest in, or operating or acting in the capacity of, a new motor vehicle dealer or a used motor vehicle dealer, except that:(a) A factory is not prohibited from owning or operating as a new motor vehicle dealer for a temporary period if either of the following applies: (i) The temporary period is not more than twelve months during the transition from one dealer to another dealer if the dealership is for sale and is being actively marketed by the factory at a bona fide reasonable price and on reasonable terms and conditions to any independent qualified buyer.(ii) The factory submits evidence that disposition of its interest will result in financial loss to the factory or dealership. The temporary period may be extended in one year increments if either of the requirements of this subdivision are met.
(b) A factory is not prohibited from temporarily owning a dealership while in a bona fide relationship with a qualified person. A bona fide relationship with a person who is qualified requires that:(i) The total sales price of the dealership is not less than an amount that is consistent with standard business practices.(ii) The independent qualified person make a substantial unencumbered bona fide initial investment in the dealership that is reasonable and consistent with standard business practices.(iii) The bona fide initial investment of the qualified person is subject to potential loss. The qualified person's percentage share of any potential dealership losses shall not be less than the person's percentage share of ownership of the dealership at the time of the loss.(iv) The qualified person buy substantial portions of the factory's remaining ownership interest in substantial regular periodic payments throughout the acquisition period.(v) The qualified person can expect to acquire and retain full and complete ownership of the dealership within a reasonable period of time that is not longer than ten years and on reasonable terms and conditions that are consistent with standard business practices. The ten-year acquisition period may be extended for good cause shown by the qualified person.(vi) During the acquisition period if the qualified person is paid a management fee, the management fee shall be reasonable and consistent with standard business practices for an individual managing a franchise of similar size and volume of sales and leases of vehicles or products.(c) A factory is not prohibited from owning on a permanent basis a minority interest in a dealership if all of the following conditions are satisfied:(i) The interest owned by the factory is not more than forty-five percent or the percentage interest actually owned by the factory on January 1, 2000, whichever is less.(ii) Any dealership in which the factory owns the interest shall not be less than seventy-five miles from the nearest dealership of the same line-make in which the factory does not own the interest.(iii) All dealerships in which the factory owns the interest shall not sell or lease more than one of the line-makes of new motor vehicles and parts manufactured by the factory.(iv) All dealerships in which the factory owns the interest shall sell or lease the same line-make of new motor vehicles and parts manufactured by the factory. The dealerships may also sell or lease new motor vehicles and parts of a line-make manufactured by a factory that does not have an ownership interest in the dealership.(v) The factory or an entity in which the factory has the interest must have been licensed in this state as a new motor vehicle dealer on January 1, 2000 selling the line-make of new motor vehicle manufactured by the factory.(vi) The factory must have owned the interest in at least one dealership selling the line-make manufactured by the factory on January 1, 2000.(vii) The factory or an entity in which the factory has the interest shall not sell any line-make of new motor vehicle that it was not selling in this state before January 1, 2000.(viii) All automotive related services and financing related to the line-make or the factory owning the interest shall be sold or provided only to owners of vehicles of the line-make, regardless of where the vehicle was purchased, or to any purchasers of any new or used motor vehicles purchased from a dealership in which the factory has an interest. This item shall not preclude that dealership from selling or providing any nonwarranty repairs or maintenance on motor vehicles of any line-make or warranty repairs or maintenance of any line-make of new motor vehicles sold by the dealership and not manufactured by the factory.(ix) All used motor vehicles of a line-make manufactured by the factory, other than the line-make that the dealership sells or leases new, acquired by the dealership, directly or indirectly from the factory, shall be acquired only at wholesale auction open to dealers of all line-makes manufactured by the factory.2. The factory selling, leasing, providing or updating, or offering to sell, lease, provide or update, a vehicle or product, service or financing to any retail consumer or lead, including a subscription service for a motor vehicle feature that uses components and hardware that is already installed on the motor vehicle at the time of purchase or lease and would function after activation without ongoing cost to or support by the dealer, manufacturer, factory, distributor or third-party service provider. This paragraph does not:(a) Prohibit a factory from advertising to sell, lease or provide a vehicle or product, service or financing through its dealers.(b) Prohibit a factory from selling, leasing, providing or updating or offering to sell, lease, provide or update a vehicle or product, service or financing through its dealers.(c) Prohibit a factory from providing a vehicle or product or service for occasional promotional or charitable uses.(d) Prohibit a factory from selling, leasing or providing a vehicle or product, service or financing to an agency of the federal government.(e) Prohibit a factory from selling or leasing a vehicle or product, service or financing through its dealers to retail consumers who qualify for any reasonable factory sponsored factory employee, factory retiree or factory vendor new vehicle purchase program or any other reasonable similar factory related new vehicle purchase program.(f) Prohibit a factory from providing financing to retail consumers through any used motor vehicle dealer or new motor vehicle dealer of any line-make.(g) Prohibit a factory from providing a loan directly to a person or entity if the loan is for a purpose unrelated to the ownership or leasing of a new motor vehicle or a used motor vehicle not for resale.(h) Prohibit a factory from providing loans directly to used motor vehicle dealers or new motor vehicle dealers of any line-make for any purpose, including working capital, real estate, construction or motor vehicle or parts inventories.(i) Prohibit a factory from arranging or providing emergency roadside service.(j) Prohibit a factory from offering factory sponsored extended service contracts to purchasers of new motor vehicles, provided that:(i) Such offers shall not take place less than ninety days after the date the retail consumer takes delivery of the new motor vehicle.(ii) Such offers are made to retail consumers only at the manufacturer's suggested retail price.(k) Prohibit a factory from selling a lease vehicle to the original lessee pursuant to a purchase option set forth in the lease. Such sale may be a credit sale with the factory as the credit seller and may include the direct sale of extended service contracts at the manufacturer's suggested retail price.(l) Prohibit a factory, at the request of a motor vehicle lessee, from extending a lease of a motor vehicle.(m) Prohibit a factory from offering and approving a retail consumer credit application for the financing or leasing of a motor vehicle if both of the following apply: (i) The final transaction takes place through a licensed motor vehicle dealer.(ii) The factory does not establish or quote any interest rate, finance rate or lease rate in association with a credit application.(n) Prohibit a factory from renewing or charging any subscription or connection fees for any in-vehicle electronic wireless communication, information or entertainment services such as navigation system updates, satellite radio, roadside assistance, software-dependent driver assistance or driver automation features and vehicle-connected services that rely on cellular or other data networks for continued operation.3. The factory controlling any aspect of the final amount charged, the final sales price or the final lease price for any vehicle or product, trade-in or service offered to retail consumers in a dealer's area of responsibility without the written consent of the dealer. The dealer's consent may be withdrawn on forty-five days' notice without retribution or the threat of retribution from the factory. This paragraph does not prohibit a factory from: (a) Changing dealer cost or establishing any of the following: (i) Manufacturer's suggested retail price pursuant to 15 United States Code section 1232.(ii) Factory's suggested retail price for parts.(iii) Factory's suggested retail price for service.(b) Establishing from time to time reasonable sales, lease or financing promotions of reasonable and limited duration. Programs up to a year are presumed to be of reasonable and limited duration.(c) Establishing reasonable standard feature option packages or vehicle option content in any way.(d) Establishing the terms of any vehicle warranty.(e) Establishing reasonable sales, lease or financing terms through its dealers to retail consumers who qualify for any reasonable factory sponsored factory employee, factory retiree or factory vendor new vehicle purchase program or any other reasonable similar factory related new vehicle purchase program.(f) Linking the factory's internet site to internet sites maintained by its dealers or third parties, or to internet sites maintained jointly by the factory and its dealers and made available to all of the factory's dealers of the same line-make, provided that the factory shall not dictate, limit, establish, set or endorse as a basis for a retail transaction any price other than the manufacturer's suggested retail price.(g) Establishing the price at which the lessee of a motor vehicle may purchase or re-lease that motor vehicle on expiration or termination of that lessee's lease.(h) Operating or facilitating a program or system through which individual dealers may provide quotes or offers to individual consumers.4. The factory refusing to unconditionally offer and provide to its same line-make dealers all models, series and editions of new motor vehicles that are publicly advertised for that line-make in this state. The failure to deliver any new motor vehicles shall not be considered a violation of this paragraph if the failure is caused by a lack of manufacturing capacity, labor strike, shortage of materials or trade embargo or any other condition over which the factory has no control. A factory may require a dealer to purchase reasonable quantities of advertising materials, purchase reasonable quantities of special tools required to properly service a motor vehicle and undertake reasonable salesperson or service person training related to the motor vehicle as a condition of receiving a motor vehicle. This paragraph does not: (a) Apply to recreational vehicle manufacturers.(b) Prohibit a factory from providing monetary, financial or optional equipment incentives to fleet purchasers for new motor vehicles not for resale.5. The factory denying to any dealer any price reduction, rebate, incentive payment or similar pricing device relating to the sale or offer to sell a new motor vehicle to a dealer, pursuant to a program that discriminates among dealers of the same line-make in this state, when the dealer cannot qualify or receive the benefits of the program for reasons other than the dealer's failure to use reasonable effort to qualify and the terms of the program are such that a failure to qualify or receive its benefits would constitute the constructive termination of the dealer.6. The factory failing to provide or direct a lead relating to a particular line-make either: (a) To the dealer with whom the lead has a preexisting relationship.(b) To the dealer of the same line-make that is located closest to where the lead resides, or to the local business address if the lead is a business.(c) To the dealer of the same line-make in whose assigned area of responsibility the lead resides, or the local business address if the lead is a business.(d) According to the lead's voluntary preference.7. The factory implementing or modifying a vehicle reservation system for the sale or lease of motor vehicles that does not comply with the following requirements: (a) A vehicle reservation system designed, implemented or controlled by the factory that allocates vehicles to dealers shall use customer dealer selection or other objective criteria to allocate the vehicles.(b) At least thirty days before implementing a vehicle reservation system, a factory shall make available to its dealers a description of the reservation program rules and requirements through the system, as applicable. Notice of a material change to the rules and requirements shall be provided by the factory to its dealers at least thirty days before the changes becoming effective.C. Under subsection B, paragraph 6 of this section:1. The factory need not provide or direct a lead to a dealer who does not sell the vehicle or product, service or financing in which the lead expresses an interest.2. The factory is responsible only for providing to the dealer information that it possesses concerning the lead.3. The factory is not precluded from providing or directing leads to any other dealer of the same line-make.4. All leads are provided or directed in a fair, nondiscriminatory, equitable and timely manner to dealers and, except as provided in subsection D of this section, without charging a fee for those leads.D. Subsection B, paragraph 6 of this section does not apply to any factory sponsored internet-based program specifically designed to provide retail consumers with internet access to dealer quotations on vehicles, products, financing or services if: 1. Fees for the program are reasonable and consistent with industry standards.2. Dealer participation is not conditioned on participation in any other program or on ratings derived from customer surveys.E. A manufacturer or distributor may not recover all or any portion of its costs for compensating a dealer for warranty parts and service, including parts and service associated with vehicle recalls, either by reduction in the amount due the dealer or by separate charge, surcharge, administrative fee or other imposition. This subsection does not prohibit a manufacturer or distributor from increasing the wholesale price of a vehicle or part in the ordinary course of business.F. For the purposes of this section:1. "Controlling" means dictating, limiting, establishing, setting or endorsing as a basis for a retail transaction any price other than the manufacturer's suggested retail price.2. "Dealer" or "dealership" means a new motor vehicle dealer or franchisee.3. "Factory": (a) Means a manufacturer, importer or distributor or any legal entity in which a manufacturer, importer or distributor owns a majority interest or has direct or indirect power to direct or cause the direction of the management whether through voting securities, contract or otherwise.(b) Includes successors in interest to all entities described in subdivision (a) of this paragraph that continue retail operations selling or servicing the same line-make as any motor vehicle dealer that has, as of the effective date of such succession, a franchise to sell and service such line-make, including successors that acquire the interests by purchase, merger or conversion.(c) Excludes any new motor vehicle dealer, used motor vehicle dealer or trailer manufacturer.(d) Excludes any agent, affiliate, representative or subsidiary that is primarily engaged in the business of rental of passenger and commercial motor vehicles and industrial and construction equipment and activities incidental to that business if all of the following conditions are satisfied:(i) Passenger and commercial motor vehicles sold by the agent, affiliate, representative or subsidiary are limited to used passenger and commercial motor vehicles that have been previously used exclusively and regularly by the agent, affiliate, representative or subsidiary in the conduct of business and used passenger and commercial motor vehicles traded in on motor vehicles sold by the agent, affiliate, representative or subsidiary.(ii) Warranty repairs performed by the agent, affiliate, representative or subsidiary on passenger and commercial motor vehicles are limited to those passenger and commercial motor vehicles that it owns, previously owned or takes in trade.(iii) Motor vehicle financing provided by the agent, affiliate, representative or subsidiary to retail consumers for passenger and commercial motor vehicles is limited to vehicles sold by the agent, affiliate, representative or subsidiary in the conduct of business.4. "Financing":(a) Means the financial service of providing retail consumers the ability to pay for a purchase or lease of a new or used motor vehicle, parts or services over an extended period of time.(b) Does not include the furnishing of credit cards capable of general use in retail transactions or the provision of any loans secured by real estate.5. "Motor vehicle feature" means a convenience or safety function included on a motor vehicle, such as heated seats or driver assistance, that typically is offered to a consumer as an upgrade at the time of purchase or lease of the motor vehicle.6. "Parts": (a) Means all items that are designed to be incorporated within or attached to or used to operate, maintain or service a motor vehicle.(b) Does not include any of the following:(i) Parts purchased or provided for use by professional racing enterprises.(ii) Parts no longer included in the current factory price schedule.(iii) Specialized parts for research vehicles or other similar uses of limited application.(iv) Owners' manuals or repair manuals.(v) Parts that are provided by an automotive recycler in the normal course of business for an automotive recycler.7. "Service" means either of the following: (a) Motor vehicle warranty and nonwarranty repairs or maintenance, including both parts and labor.(b) Extended warranties, vehicle mechanical maintenance insurance and similar vehicle repair service contracts.8. "Subscription service": (a) Means a service that is provided in exchange for a recurring payment, including a weekly, monthly or annual payment that is charged to and made by a consumer.(b) Does not include a consumer's recurring payment made pursuant to a retail installment contract as defined in section 44-281 or lease as defined in section 47-2A103.9. "Vehicle or product" means a new motor vehicle, a used motor vehicle or parts.10. "Vehicle reservation system" means a process that is used to hold open the opportunity for a specified consumer to place an order for the purchase or lease of a new motor vehicle.Amended by L. 2024, ch. 94,s. 4, eff. 9/14/2024.Amended by L. 2018, ch. 182,s. 2, eff. 8/3/2018.Amended by L. 2016, ch. 193,s. 2, eff. 8/5/2016.