Section 818.310 - Unlawful acts by manufacturers or distributors(a)Unlawful coercive acts.--It shall be a violation for any manufacturer, factory branch, distributor, field representative, officer, agent or any representative whatsoever of such manufacturer, factory branch or distributor licensed under this chapter to require, attempt to require, coerce or attempt to coerce any new vehicle dealer in this Commonwealth to: (1) Order or accept delivery of any new vehicle, part or accessory thereof, equipment or any other commodity not required by law which shall not have been voluntarily ordered by the new vehicle dealer, except that this paragraph is not intended to modify or supersede any terms or provisions of the franchise requiring new vehicle dealers to market a representative line of those vehicles which the manufacturer or distributor is publicly advertising.(2) Order or accept delivery of any new vehicle with special features, accessories or equipment not included in the list price of such vehicles as publicly advertised by the manufacturer or distributor.(3) Participate monetarily in an advertising campaign or contest or to purchase unnecessary or unreasonable quantities of any promotional materials, training materials, showroom or other display decorations or materials at the expense of the new vehicle dealer.(4) Enter into any agreement with the manufacturer or to do any other act prejudicial to the new vehicle dealer by threatening to terminate or not renew a franchise or any contractual agreement existing between the dealer and the manufacturer or distributor, except that this paragraph is not intended to preclude the manufacturer or distributor from insisting on compliance with the reasonable terms or provisions of the franchise or other contractual agreement and notice in good faith to any new vehicle dealer of the new vehicle dealer's violation of such terms or provisions shall not constitute a violation of this chapter.(5) Change the capital structure of the new vehicle dealer or the means by or through which the new vehicle dealer finances the operation of the dealership, provided that the new vehicle dealer at all times meets any reasonable capital standards determined by the manufacturer or distributor in accordance with uniformly applied criteria, and also provided that no change in the capital structure shall cause a change in the principal management or have the effect of a sale of the franchise without the consent of the manufacturer or distributor. The consent shall be granted or denied within 60 days of receipt of a written request from the new vehicle dealer.(6)(i) Refrain from participation in the management of, investment in or the acquisition of any other line of new vehicle or related products. This paragraph does not apply unless the new vehicle dealer maintains a reasonable line of credit for each make or line of new vehicle, the new vehicle dealer remains in compliance with the reasonable terms of the franchise agreement and any reasonable facilities requirements of the manufacturer or distributor, and no change is made in the principal management of the new vehicle dealer. The reasonable facilities requirements shall not include any requirement that a new vehicle dealer establish or maintain exclusive facilities, personnel or display space when such requirements or any of them would be unreasonable in light of economic conditions and would not otherwise be justified by reasonable business considerations.(ii)(A) Nothing in this paragraph shall permit the dualing or relocation and addition of a line-make to the dealership facilities without the new vehicle dealer providing written certification to the manufacturer or distributor that the new vehicle dealer, with the addition of a line-make by the new vehicle dealer, will maintain a reasonable line of credit for each make or line of new vehicle and the new vehicle dealer will remain in compliance with the reasonable terms of the franchise agreement and any reasonable facilities requirements of the manufacturer or distributor, excluding any exclusive facility or nondualing requirements.(B) The dealer shall provide the following information: (I) the address of the proposed new location, if applicable;(II) a brief description of the proposed facility; and(III) the owner of the proposed new location.(C) Any objection by the manufacturer or distributor with regard to the dualing or relocation and dualing of two or more franchises shall be delivered to the dealer within 45 days of receipt of the written certification from the new vehicle dealer. Failure on the part of the manufacturer or distributor to timely respond to a dualing or relocation and dualing certification shall be deemed to be an approval of the new vehicle dealer's certification notice of dualing or relocation and dualing of two or more franchises. The manufacturer or distributor shall execute and deliver a franchise reflecting the relocated address of the dealership facilities to the new vehicle dealer within 30 days of the date of the deemed approval.(iii) A dealer may file a complaint, petition or protest, or bring an action in a court of competent jurisdiction against a manufacturer or distributor, based on a denial of a request by a dealer to dual or relocate and dual two or more franchises without first going through mediation required under section 309. If a dualing or relocation and dualing denial protest is filed with the board, a hearing shall be held within 45 days of the protest's filing and a final determination issued by the board within 90 days of the protest filing. The burden of proof shall be on the manufacturer or distributor to show that the dualing or relocation and dualing is unreasonable. No automobile, motorcycle or truck manufacturer or distributor may limit or restrict the addition of a line-make to the dealership facilities if the new vehicle dealer maintains a reasonable line of credit for each make or line of new vehicle and the new vehicle dealer remains in compliance with the reasonable terms of the franchise agreement and any reasonable facilities requirements of an automobile, motorcycle or truck manufacturer or distributor. This paragraph shall also apply if the dealer seeks to dual two or more line-makes and no relocation will occur. This paragraph shall not impair the rights of another dealer of the same line-make to protest a proposed relocation under section 326.(7) Prospectively assent to a release, assignment, novation, waiver or estoppel which would relieve any person from liability to be imposed by this chapter or to require any controversy between a new vehicle 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, if such referral would be binding upon the new vehicle dealer. A dealer and the manufacturer, distributor or representative, by themselves or through their respective counsel, are permitted to agree to execute a written agreement or to arbitrate in a binding or nonbinding manner after a controversy arises.(8) Expand, construct or significantly modify facilities before a date that is ten years after the date of the construction of the facility or the alteration or remodeling at that location was completed and without assurances that the manufacturer or distributor will provide a reasonable supply of new vehicles within a reasonable time so as to justify such an expansion in light of the market and economic conditions. This paragraph shall not apply if the expansion, construction or significant modification is necessary to comply with a health or safety law or to comply with a technology requirement, which is necessary to sell or service a vehicle that the new vehicle dealer is licensed by the manufacturer to sell or service. this section shall apply to any successor dealer provided the dealer has been designated and approved by the manufacturer in the franchise agreement and the construction, alteration or remodeling substantially complied with the manufacturer's brand image standards or plans that the manufacturer provided at the time the construction, alteration or remodeling was completed. Nothing in this paragraph shall prohibit a manufacturer from:(i) Continuing a facility improvement program that is in effect as of the effective date of this subparagraph with more than one new vehicle dealer in this Commonwealth or to renewing or modifying the facility improvement program.(ii) Providing lump sum or regularly scheduled payments to assist a new vehicle dealer in making a facility improvement, including construction, alteration or remodeling or installing signage or an image element.(iii) Providing reimbursement to a new vehicle dealer on reasonable, written terms for a portion of the new vehicle dealer's cost of making a facility improvement, including construction, alteration or remodeling, the purchase of goods, building materials or services or installing signage or an image element.(8.1) Unreasonably expand, construct or significantly modify facilities in light of the market and economic conditions or require a separate facility for the sale or service of a line-make of a new vehicle if the market and economic conditions do not clearly justify the separate facility.(8.2)(i) Purchase a good or service from a vendor selected, identified or designated by a manufacturer, factory branch, distributor, distributor branch or an affiliate of a manufacturer, factory branch, distributor, distributor branch by agreement, program, incentive provision or other method if expanding, constructing or significantly modifying a facility without allowing the dealer the option to obtain a good or service of substantially similar quality from a vendor chosen by the dealer and approved by the manufacturer, which approval may not be unreasonably withheld.(ii) Nothing under this paragraph shall be construed to: (A) Allow a dealer or vendor to eliminate or impair a manufacturer's intellectual property rights, including a manufacturer's intellectual property rights in a trademark.(B) Permit a dealer to erect or maintain signs that do not conform to the intellectual property usage guidelines of the manufacturer.(9) Agree as a condition to granting or renewing a franchise to waive, limit or disclaim a right that the dealer may have to protest the establishment or relocation of another vehicle dealer in the relevant market area as provided in section 326, unless such agreement is voluntary.(10)(i) Sell, offer to sell or sell exclusively an extended service contract, extended maintenance plan or similar product, such as gap products, offered, endorsed or sponsored by the manufacturer or distributor by the following means: (A) By an act or statement that the manufacturer or distributor will in any manner impact the dealer, whether it is express or implied or made directly or indirectly.(B) By a contract, or an express or implied offer of contract, made to the dealer on the condition that the dealer shall sell, offer to sell or sell exclusively an extended service contract, extended maintenance plan or similar product offered, endorsed or sponsored by the manufacturer or distributor.(C) By measuring the dealer's performance under the franchise based on the sale of extended service contracts, extended maintenance plans or similar products offered, endorsed or sponsored by the manufacturer or distributor.(D) By requiring the dealer to actively promote the sale of extended service contracts, extended maintenance plans or similar products offered, endorsed or sponsored by the manufacturer or distributor.(ii) Nothing in this paragraph shall prohibit a manufacturer or distributor from providing incentive programs to a new vehicle dealer who makes the voluntary decision to offer to sell, sell or sell exclusively an extended service contract, extended maintenance plan or similar product offered, endorsed or sponsored by the manufacturer or distributor.(b)Violations.--It shall be a violation of this chapter for any manufacturer, factory branch, distributor, field representative, officer, agent or any representative whatsoever of such manufacturer, factory branch or distributor licensed under this chapter to: (1) Delay, refuse or fail to deliver new vehicles or new vehicle parts or accessories in a reasonable time and in reasonable quantity relative to the new vehicle dealer's facilities and sales potential after acceptance of an order from a new vehicle dealer having a franchise for the retail sale of any new vehicle sold or distributed of an order from a new vehicle dealer having a franchise for the retail sale of any new vehicle sold or distributed by the manufacturer or distributor as are covered by such franchise, if such vehicle, parts or accessories are publicly advertised as being available for immediate delivery. There is no violation if the failure is caused by acts or causes beyond the control of the manufacturer or distributor.(2) Unfairly discriminate among its new vehicle dealers with respect to warranty, recall, service contract or any other service required by the manufacturer or distributor with regard to labor or parts reimbursement.(3) Unreasonably withhold consent to the sale, transfer or exchange of the franchise to a qualified buyer capable of being licensed as a new vehicle dealer in this Commonwealth who meets the manufacturer's or distributor's reasonable requirements for appointment as a dealer.(4) Unreasonably withhold consent to the relocation of an existing new vehicle dealer. If the relocation involves dualing of two or more franchises, the requirements of subsection (a)(6)(ii) and (iii) shall apply and paragraph (5) shall not apply.(5) Fail to respond in writing to a request for consent as specified in paragraphs (3) and (4) within 60 days of receipt of a written request on the forms, if any, generally utilized by the manufacturer or distributor for such purposes and containing the information required. The failure to respond within the time period set forth in this paragraph shall be deemed to be approval of the request, and the manufacturer or distributor shall execute and deliver a franchise to the applicant within 30 days of the expiration of this time period. A manufacturer or distributor shall acknowledge in writing to the applicant the receipt of the forms, and, if the manufacturer or distributor requires additional information to complete its review, the manufacturer or distributor shall notify the applicant within 15 days of the receipt of the forms. If the manufacturer or distributor fails to request additional information from the applicant within 15 days after receipt of the initial forms, the 60-day time period for approval shall be deemed to run from the initial receipt date. Otherwise, the 60-day time period for approval shall run from receipt of the supplemental requested information. In no event shall the total time period for approval exceed 75 days from the date of the receipt of the initial forms.(6) Prevent or attempt to prevent by contract or otherwise, any new vehicle dealer from changing the executive management control of the new vehicle dealer unless the manufacturer or distributor, having the burden of proof, can show that such change of executive management will result in executive management or control by a person or persons who are not of good moral character or who do not meet reasonable, preexisting, and, with consideration given to the volume of sales and service of the dealership, uniformly applied minimum business experience standards. Where the manufacturer or distributor rejects a proposed change in executive management control, the manufacturer or distributor shall give written notice of its reasons to the dealer within 60 days of notice to the manufacturer by the dealer of the proposed change; otherwise the change in the executive management of the new vehicle dealer shall be presumptively deemed approved.(7) Offer in connection with a sale of a new vehicle or vehicles to the Federal Government, the Commonwealth or any political subdivision thereof, any discounts, refunds or any other type of inducement to any new vehicle dealer without making the same offer or offers available to all other of its new vehicle dealers within this Commonwealth. This paragraph shall not be construed to prevent the offering of incentive programs or other discounts if the discounts are equally available to all franchised vehicle dealers in this Commonwealth on a proportionally equal basis.(8) Fail to indemnify its franchised dealers, notwithstanding the terms of any franchise agreement, against any judgment for damages or settlement approved in writing by the manufacturer or distributor, including, but not limited to, court costs and reasonable attorney fees of the new vehicle dealer, arising out of complaints, claims or lawsuits, including, but not limited to, strict liability, negligence, misrepresentation, express or implied warranty or rescission of the sale as defined in 13 Pa.C.S. § 2608 (relating to revocation of acceptance in whole or in part) to the extent that the judgment or settlement relates solely to the alleged defective or negligent functions by the manufacturer or distributor beyond the control of the dealer.(9) Sell or exchange with a second or final stage manufacturer, retail consumer or end user except through a licensed new vehicle dealer. This paragraph shall not apply to manufacturer or distributor sales of new vehicles to the Federal Government, charitable organizations and employees of the manufacturer.(10) Modify a franchise during the term of the franchise or upon its renewal if the modification substantially and adversely affects the new vehicle dealer's rights, obligations, investment or return on investment without giving 60 days' written notice of the proposed modification to the new vehicle dealer unless the modification is required by law, court order or the board. Within the 60-day notice period, the new vehicle dealer may file with the board and serve notice upon the manufacturer or distributor a protest requesting a determination of whether there is just cause for permitting the proposed modification. The board shall promptly schedule a hearing and decide the matter within 180 days from the date the protest is filed. Multiple protests pertaining to the same proposed modification shall be consolidated for hearing. The proposed modification shall not take effect pending the determination of the matter. In determining whether there is just cause for permitting a proposed modification, the board shall consider any relevant factors, including, but not limited to: (i) The reasons for the proposed modification.(ii) Whether the proposed modification is applied to or affects all new vehicle dealers in a nondiscriminatory manner.(iii) Whether the proposed modification will have a substantial and adverse effect upon the new vehicle dealer's investment or return on investment.(iv) Whether the proposed modification is in the public interest.(v) Whether the proposed modification is necessary to the orderly and profitable distribution of products by the manufacturer or distributor.(vi) Whether the proposed modification is offset by other modifications beneficial to the new vehicle dealer. (11) Fail or refuse to offer to its new vehicle dealers all new model vehicles manufactured for that line-make franchise or require any of its new vehicle dealers to pay an unreasonable fee, unreasonably remodel or renovate the new vehicle dealer's existing facilities, unreasonably purchase or construct a new facility, unreasonably purchase parts, supplies, tools, equipment, operational services, other merchandise or unreasonably participate in training programs in order to receive any new model vehicles, parts or accessories. It shall not be a violation of this paragraph if the manufacturer or distributor fails to supply new vehicle dealers with model vehicles, parts or accessories due to circumstances beyond the control of the manufacturer or distributor, including, but not limited to, strike or labor difficulty, shortage of materials, freight embargo or temporary lack of capacity.(12) Operate a system for the allocation of new vehicles which is not reasonable or fair to a new vehicle dealer. Upon the written request of any of its new vehicle dealers, a manufacturer or distributor shall disclose to the new vehicle dealer the method on which new vehicles are allocated among the new vehicle dealers of the same line-make. The manufacturer distributor has the burden of establishing the fairness of its allocation.(13) Own, operate or control, either directly or indirectly, any vehicle warranty facility. Nothing in this subsection shall prohibit any manufacturer or distributor from owning, operating or controlling any warranty facility for warranty repairs on vehicles owned or operated by the manufacturer or distributor.(14) Compel a dealer through a finance subsidiary of the manufacturer or distributor to agree to unreasonable operating requirements or to directly or indirectly terminate a new vehicle dealer through the actions of a finance subsidiary of the manufacturer or distributor. This paragraph shall not limit the right of a financing entity to engage in business practices in accordance with the trade of retail or wholesale vehicle financing.(15) Use any subsidiary corporation, affiliated corporation or any other controlled corporation, partnership, association, entity or person to accomplish what would otherwise be illegal conduct under this chapter on the part of the manufacturer or distributor.(16) Release to any third party any customer information which has been provided by the new vehicle dealer to the manufacturer or distributor if the customer objects in writing to releasing the information, unless the information is necessary for the manufacturer or distributor to meet its obligations to customers or new vehicle dealers under requirements imposed by Federal or State law.(17) Require or coerce or attempt to require or coerce a new vehicle dealer to pay attorney fees of the manufacturer or distributor related to hearings and appeals brought under this chapter.(18) Vary the price charged to any of its new vehicle dealers, which has the effect of causing a difference in the price of any similarly equipped new vehicle to its new vehicle dealers or to the ultimate purchaser. This paragraph shall not be construed to prevent the offering of incentive programs or other discounts if the incentive or discounts are available to all competing new vehicle dealers of the same line-make in this Commonwealth on a proportionately equal basis.(19) Directly or indirectly condition any of the following actions on a dealer, prospective dealer or owner of an interest in a dealership franchise or facility to enter into a site-control agreement or exclusive use agreement: (i) awarding of a franchise to a prospective dealer;(ii) adding of a line-make or franchise to an existing dealer's franchise or facility;(iii) renewing of an existing dealer's franchise;(iv) approving of the relocation of an existing dealer's franchise or facility; or(v) approving of the sale or transfer of a dealer's ownership of a franchise or facility. Nothing in this paragraph prohibits a dealer, prospective dealer or owner of an interest in a dealership franchise or facility from voluntarily entering into such an agreement for other consideration. However, a provision contained in an agreement which is not voluntarily entered into by a dealer, prospective dealer or owner of an interest in a dealership franchise or facility on or after the effective date of this paragraph that is inconsistent with the provisions of this section shall be a violation of this chapter.
(c)Restriction on ownership of dealer.-- (1) Except as otherwise provided in this subsection, a manufacturer or distributor shall not:(i) own or hold an interest, other than a passive, minority interest in a publicly traded dealer held for investment purposes, in a dealer licensed under this chapter which is engaging in the business of buying, selling or exchanging vehicles; or(ii) operate or control a dealer licensed under this chapter which is engaging in the business of buying, selling or exchanging vehicles.(2) A manufacturer or distributor may own or hold an interest in a dealer or otherwise operate or control a dealer for a period not to exceed 12 months from the date the manufacturer or distributor acquires an interest in the dealer if: (i) The person from whom the manufacturer or distributor acquired the dealer was a franchised dealer.(ii) The dealer is for sale by the manufacturer or distributor at a reasonable price and on reasonable terms and conditions.(3) On a showing by a manufacturer or distributor of just cause, the board may extend the time limit set forth in paragraph (2). An extension under this paragraph may not exceed 12 months. Where an extension under this paragraph is sought, the manufacturer or distributor shall provide notice delivered 30 days before the extension request is filed with the board to all the same line-make dealers within a ten-mile radius of the manufacturer or distributor owned, operated or controlled dealer. An application for an extension is subject to protest by a dealer of the same line-make who is within the ten-mile radius of the manufacturer or distributor owned, operated or controlled dealer.(4) For the primary purpose of broadening the diversity of its dealer body and enhancing opportunities for qualified persons who are part of a group who have historically been underrepresented in its dealer body or other qualified persons who lack the resources to purchase a dealer outright, a manufacturer or distributor may temporarily own an interest in a dealer if the manufacturer's or distributor's participation in the dealer is in a bona fide relationship with a franchised dealer who:(i) At or prior to the time the prospective dealer takes an equity interest in the dealer, the prospective dealer is obligated to make a significant investment in the dealer, subject to loss.(ii) Has an ownership interest in the dealer.(iii) Operates the dealer under a written agreement to acquire full ownership of the dealer within a reasonable time and under reasonable terms and conditions.(5) A manufacturer or distributor shall not unfairly discriminate or compete in terms of any sales, service or operational activities with a new vehicle dealer of the same line-make when a manufacturer or distributor operates a new vehicle dealer under this subsection.(6) The following shall apply:(i) A manufacturer or distributor may own, operate or control not more than five new vehicle dealerships trading solely in electric vehicles, as defined in 75 Pa.C.S. § 102 (relating to definitions), that are not sold as new vehicles by a licensed independent new vehicle dealer pursuant to an existing franchise with a manufacturer or distributor, if each of the following conditions are met: (A) Each of the new vehicle dealerships selling the manufacturer's new motor vehicles in this Commonwealth trade exclusively in the manufacturer's line-make.(B) Each of the new vehicle dealerships selling the manufacturer's motor vehicles in this Commonwealth are determined to be in compliance with this chapter.(C) Either of the following apply:(I) The manufacturer, distributor or a subsidiary, affiliate or controlled entity has not acquired, nor does it hold a controlling interest in another manufacturer or distributor, required to be licensed under this chapter.(II) If a controlling interest is acquired, the manufacturer, distributor or a subsidiary, affiliate or controlled entity may not continue to operate or control a new vehicle dealership under this subsection for a period not more than 12 months from the date it acquired the controlling interest.(D) Either of the following apply:(I) A controlling interest in the original manufacturer, distributor or any subsidiary, affiliate or controlled entity was not transferred, sold or conveyed to another manufacturer, distributor, person or entity required to be licensed under this chapter.(II) If a controlling interest is transferred, sold or conveyed to another manufacturer, distributor, person or entity required to be licensed under this chapter, the entity may not continue to operate or control a new vehicle dealership under this subsection for a period not more than 12 months from the date it acquired the controlling interest.(E) The manufacturer shall have continuously offered electric vehicles for sale for a period of not less than 12 months prior to the effective date of this clause.(ii) Nothing under this chapter shall prohibit a manufacturer operating or controlling a new vehicle dealership under this paragraph from owning, operating or controlling a warranty facility for warranty repairs on the manufacturer's line-make of vehicles.(7) Nothing under this subsection shall prohibit the sale or lease of used vehicles obtained as a result of a trade or return of a vehicle during the purchase of a new vehicle under paragraph (6) at a manufacturer's licensed location.(d) Applicability.--(1) Subsections (b)(11) through (17) and (c) shall not apply to manufacturers, distributors or dealers of manufactured housing .(1.1) This section shall not apply to manufacturers, distributors or dealers of recreational vehicles.(2) Subsections (b)(13) and (15) and (c) shall not apply to the ownership or activities of a manufacturer in the operation of a licensed dealer or a licensed dealer that fulfills the following conditions: (i) The manufacturer maintains an ownership interest in, operates or controls a licensed dealer whose primary business purpose is the rental of vehicles.(ii) Vehicles sold by the licensed dealer primarily engaged in the business of rental vehicles are limited to those vehicles used for rental purposes or vehicles obtained in trade for such vehicles.(iii) Any warranty repairs are limited to those repairs conducted on the vehicles used in the vehicle rental business or vehicles sold by the licensed dealer.Amended and Renumbered by P.L. TBD 2018 No. 134, § 12, eff. 10/24/2019.Amended by P.L. TBD 2018 No. 59, § 3, eff. 8/27/2018.Amended by P.L. 1050 2014 No. 125, § 1, eff. 7/9/2014.Amended by P.L. 675 2013 No. 84, § 2, eff. 12/31/2013.1983, Dec. 22, P.L. 306, No. 84, §9 [ 63 P.S. § 818.9], effective Jan. 1, 1984. Amended 1984 , June 8, P.L. 380, No. 78, § 2, retroactive effective Jan. 1, 1984; 1991, Dec. 20, P.L. 387, No. 41, § 4, effective in 60 days. Renumbered as § 12 [63 P.S. § 818.12] and amended 1996 , April 19, P.L. 104, No. 27, § 9, effective in 60 days. Amended 2000, Oct. 18, P.L. 577, No. 75, § 4, effective in 60 days; 2009, Sept. 3, P.L. 378, No. 41, § 3, effective in 60 days [Nov. 2, 2009]; 2010, Oct. 27, P.L. 958, No. 100, § 2, effective in 60 days [Dec. 27, 2010].