2009-2010 Bill 3888: Motor Vehicle Dealers - South Carolina Legislature Online

1 South Carolina General Assembly 2 118th Session, 2009-2010 3 4 H. 3888 5 6 STATUS INFORMATION 7 8 General Bill 9 Sponsors: Reps. Harrison, Cato, Sandifer, Rice, Owens, Huggins, Toole, D.C. Moss, Duncan, Forrester, 10 Sottile, Harvin, Bowers, Vick, Bannister, T.R. Young, G.A. Brown, Barfield, Littlejohn, Frye, Spires, 11 Hiott, Wylie, Stringer, Gambrell, Willis, Neilson, Hayes, G.M. Smith, Weeks, M.A. Pitts, Lowe, 12 Clemmons, Jennings, Erickson, Crawford, Brady, D.C. Smith, Ott, Whitmire, Anderson, Hutto, Horne, 13 Whipper and R.L. Brown 14 Document Path: l:\council\bills\swb\5861cm09.docx 15 Companion/Similar bill(s): 630 16 17 Introduced in the House on April 2, 2009 18 Currently residing in the House Committee on Labor, Commerce and Industry 19 20 Summary: Motor vehicle dealers 21 22 23 HISTORY OF LEGISLATIVE ACTIONS 24 25 Date Body Action Description with journal page number 26 4/2/2009 House Introduced and read first time HJ124 27 4/2/2009 House Referred to Committee on Labor, Commerce and Industry HJ124 28 4/21/2009 House Member(s) request name added as sponsor: Rice, Owens, Huggins, Toole, 29 D.C.Moss, Duncan, Forrester, Sottile, Harvin, Bowers, Vick, Bannister, 30 T.R.Young, G.A.Brown, Barfield 31 4/21/2009 House Member(s) request name removed as sponsor: Bedingfield 32 4/22/2009 House Member(s) request name added as sponsor: Littlejohn, Frye, Spires, Hiott, Wylie, 33 Stringer, Gambrell, Willis, Neilson, Hayes, G.M.Smith, Weeks, M.A.Pitts, Lowe, 34 Clemmons, Jennings, Erickson 35 4/23/2009 House Member(s) request name added as sponsor: Crawford 36 4/28/2009 House Member(s) request name added as sponsor: Brady, D.C.Smith, Ott, Whitmire, 37 Anderson 38 4/29/2009 House Member(s) request name added as sponsor: Hutto 39 5/12/2009 House Member(s) request name added as sponsor: Horne 40 5/14/2009 House Member(s) request name added as sponsor: Whipper, R.L.Brown 41 42 43 VERSIONS OF THIS BILL 44 45 4/2/2009 46 1 2 3 4 5 6 7 8 9 A BILL 10 11 TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 12 1976, BY ADDING SECTION 561565 SO AS TO PROHIBIT 13 MOTOR VEHICLE MANUFACTURERS OR DISTRIBUTORS 14 FROM REQUIRING DEALERS TO RELOCATE OR MAKE 15 ALTERATIONS TO THEIR DEALERSHIPS UNLESS 16 CERTAIN REQUIREMENTS ARE MET; BY ADDING 17 SECTION 561575 SO AS TO PROHIBIT MOTOR VEHICLE 18 MANUFACTURERS OR DISTRIBUTORS FROM 19 PREVENTING DEALERS FROM INVESTING IN, 20 MANAGING, OR ACQUIRING ANY OTHER LINEMAKE OF 21 NEW MOTOR VEHICLES OR RELATED PRODUCTS IF 22 CERTAIN REQUIREMENTS ARE MET; AND TO AMEND 23 SECTION 561590, RELATING TO MOTOR VEHICLE 24 DEALERS, SO AS TO PROVIDE CERTAIN FACTORS THAT 25 MUST BE CONSIDERED IN CALCULATING THE FAIR AND 26 REASONABLE COMPENSATION FOR THE VALUE OF A 27 MOTOR VEHICLE DEALERSHIP. 28 29 Be it enacted by the General Assembly of the State of South 30 Carolina: 31 32 SECTION 1. Article 1, Chapter 15, Title 56 of the 1976 Code is 33 amended by adding: 34 35 “Section 561565. It is unlawful for a manufacturer, distributor, 36 factory representative, or distributor representative to require, 37 coerce, or attempt to coerce a motor vehicle dealer to change the 38 location of a motor vehicle dealership or to make any substantial 39 alterations to the dealer’s premises or facilities unless: 40 (1) the manufacturer demonstrates that the change or alteration 41 is reasonable in light of the current market and economic 42 conditions; and

[3888] 2 1 (2) the motor vehicle dealer has been provided written 2 assurance from the manufacturer or distributor of a sufficient 3 supply of motor vehicles to justify the change or alteration.” 4 5 SECTION 2. Article 1, Chapter 15, Title 56 of the 1976 Code is 6 amended by adding: 7 8 “Section 561575. It is unlawful for a manufacturer, distributor, 9 factory branch, distributor branch, factory representative, or 10 distributor representative to require, coerce, or attempt to coerce a 11 motor vehicle dealer to refrain from participation in the 12 management of, investment in, or acquisition of another make or 13 line of new motor vehicles or related products if: 14 (1) the requirements are unreasonable considering current 15 economic conditions and are not otherwise justified by reasonable 16 business considerations; 17 (2) the motor vehicle dealer has maintained a reasonable line 18 of credit for each make or line of new motor vehicle; and 19 (3) the motor vehicle dealer remains in compliance with 20 reasonable capital standards and reasonable facilities requirements 21 specified by the manufacturer. 22 Reasonable facilities requirements shall not include any 23 requirement that a motor vehicle dealer establish or maintain 24 exclusive facilities, personnel, or display space, unless the 25 manufacturer or distributor establishes by clear and convincing 26 evidence that the requirements are justified by current economic 27 conditions or reasonable business considerations.” 28 29 SECTION 3. Section 561590 of the 1976 Code is amended to 30 read: 31 32 “Section 561590. (A) Anything to the contrary, 33 notwithstanding, it shall be unlawful for the manufacturer, 34 wholesaler, distributor, or franchisor, without due cause, to fail to 35 renew on terms then equally available to all its motor vehicle 36 dealers, to terminate a franchise or to restrict the transfer of a 37 franchise unless the franchise franchisee shall receive fair and 38 reasonable compensation for the value of the business and 39 compensation for its dealership facilities or location as provided in 40 subsection (C). 41 (B) In determining the fair and reasonable compensation for a 42 business, pursuant to subsection (A) or (D), the value of the 43 business shall include, but not be limited to:

[3888] 3 1 (1) all new untitled motor vehicle in ventory purchased from 2 the manufacturer or from another dealer; 3 (2) supplies and parts purchased from t he manufacturer or its 4 approved sources; 5 (3) equipment, furnishings, and signage purchased fr om the 6 manufacturer or its approved sources; 7 (4) special tools purchased from the manufact urer or its 8 approved sources; and 9 (5) all return shipping and handling charges incurred as a 10 result of returning such items. 11 If the new motor vehicle dealer has clear title to the inventory 12 and other items and is in a position to convey that title to the 13 manufacturer, the fair and reasonable compensation for the value 14 of the business shall not be less than the acquisition price and must 15 be paid by the manufacturer within sixty days of the effective date 16 of the termination, nonrenewal, or the restriction of the transfer of 17 a franchise. 18 (C) Within sixty days of the termination, cancellation, or 19 nonrenewal of a franchise by a manufacturer, wholesaler, 20 distributor, or franchisor, such party shall pay the franchisee an 21 amount equal to: 22 (1) the franchisee’s reasonable cost to rent or lease its 23 dealership facility or location for one year or the unexpired term of 24 the lease or rental period, whichever is less; or 25 (2) the reasonable rental value of the facilities or location for 26 one year if the franchisee owns the facility or location. 27 If more than one franchise is being terminated, canceled, or not 28 renewed, the reimbursement shall be prorated equally among the 29 different manufacturers , wholesalers, distributors, and franchisors . 30 (D) If a franchisee terminates the franchise agreement with the 31 manufacturer, wholesaler, distributor, or franchisor, then it is 32 unlawful for the manufacturer , wholesaler, distributor, or 33 franchisor to not abide by the provisions included in subsection (B) 34 in determining fair and reasonable compensation to the dealer. ” 35 36 SECTION 4. This act takes effect upon approval by the 37 Governor. 38 XX 39

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