CS/HB 1269

A bill to be entitled
2An act relating to motor vehicle dealers; amending s.
3320.64, F.S.; revising prohibitions against actions by a
4licensed motor vehicle manufacturer, factory branch,
5distributor, or importer; prohibiting certain actions by a
6licensee relating to relocating, expanding, improving,
7remodeling, renovating, or altering certain approved
8facilities of a motor vehicle dealer; providing for the
9licensee to offer certain inducements for such changes
10under certain conditions; prohibiting certain adverse
11actions and certain acts of discrimination against a
12dealer; prohibiting establishing the state as a zone,
13region, or territory for certain purposes; providing for
14application of specified provisions to existing contracts;
15specifying that a licensee may set and uniformly apply
16certain standards for a motor vehicle dealer's sales and
17service facilities; revising a prohibition against certain
18changes in supply to a dealer; prohibiting adverse action
19against a dealer who sold or leased a motor vehicle to a
20customer who exported the vehicle to a foreign country, or
21who resold the vehicle, unless the licensee proves actual
22knowledge; revising prohibitions against certain audits;
23creating s. 320.6412, F.S.; providing that no franchise
24agreement shall be terminated, canceled, discontinued, or
25not renewed on the basis of misrepresentation, fraud, or
26filing false or fraudulent statements or claims unless the
27licensee proves actual knowledge or has provided the
28dealer with written notice and a reasonable time to cure
29the fraudulent actions; amending s. 320.696, F.S.;
30revising provisions for responsibilities of a licensee for
31work performed pursuant to warranty, preparation
32procedures, or recall, directive, or bulletin; providing
33definitions; providing requirements for compensation to a
34motor vehicle dealer for such work; providing procedures
35for determining compensation amounts; providing for
36changes in compensation amounts; prohibiting certain acts
37to recover compensation costs; prohibiting certain acts of
38discrimination against a dealer; providing for
39severability; providing an effective date.
41Be It Enacted by the Legislature of the State of Florida:
43     Section 1.  Subsections (10), (18), (22), (25), (26), and
44(30) of section 320.64, Florida Statutes, are amended to read:
45     320.64  Denial, suspension, or revocation of license;
46grounds.--A license of a licensee under s. 320.61 may be denied,
47suspended, or revoked within the entire state or at any specific
48location or locations within the state at which the applicant or
49licensee engages or proposes to engage in business, upon proof
50that the section was violated with sufficient frequency to
51establish a pattern of wrongdoing, and a licensee or applicant
52shall be liable for claims and remedies provided in ss. 320.695
53and 320.697 for any violation of any of the following
54provisions. A licensee is prohibited from committing the
55following acts:
56     (10)(a)  The applicant or licensee has attempted to enter,
57or has entered, into a franchise agreement with a motor vehicle
58dealer who does not, at the time of the franchise agreement,
59have proper facilities to provide the services to his or her
60purchasers of new motor vehicles which are covered by the new
61motor vehicle warranty issued by the applicant or licensee.
62Notwithstanding any provision of a franchise agreement, after a
63licensee has approved the sales and service facilities of a
64motor vehicle dealer, the licensee shall not require, by
65agreement, program, policy, or standard, the dealer to relocate,
66expand, improve, remodel, renovate, or alter any part of those
68     (b)  A licensee may, however, provide a one-time increase
69in vehicle allocation, a loan, or a grant of money to a motor
70vehicle dealer as an inducement to relocate, expand, improve,
71remodel, alter, or renovate its facilities if the licensee
72delivers an assurance to the dealer that it will supply a
73sufficient quantity of new motor vehicles to the dealer,
74consistent with its allocation obligations at law and its
75allocation obligations to its other same line-make motor vehicle
76dealers, which will economically justify such relocation,
77expansion, improvement, remodeling, renovation, or alteration in
78light of reasonably current and reasonably projected market and
79economic conditions. The provisions of the one-time increase in
80vehicle allocation, loan, or grant and assurance, and the basis
81for them, must be in a written agreement voluntarily entered
82into by the dealer and must be made available, on equal terms,
83to the licensee's other same line-make dealers in this state.
84     (c)  Except as provided in paragraph (b), a licensee shall
85not withhold a bonus, incentive, or other benefit that is
86available to its other same line-make franchised dealers in this
87state from, or take or threaten to take any action that is
88unfair or adverse to, a dealer who does not enter into an
89agreement with the licensee pursuant to paragraph (b).
90     (d)  A licensee shall not refuse to offer a program for a
91bonus, incentive, or other benefit, in whole or in part, to a
92dealer in this state which it offers to its other same line-make
93dealers nationally or in the licensee's zone or region in which
94this state is included or otherwise discriminate against a
95Florida dealer with respect to any such program. For purposes of
96this chapter, no licensee shall establish Florida alone as a
97zone, region, or territory by any other designation.
98     (e)  Nothing contained in paragraph (a) or paragraph (b)
99shall affect any contract between a licensee and any of its
100dealers regarding relocation, expansion, improvement,
101remodeling, renovation, or alteration which exists on the
102effective date of this act.
103     (f)  Any portion of a licensee-offered program for a bonus,
104incentive, or other benefit that, in whole or in part, is based
105upon or aimed at inducing a dealer's relocation, expansion,
106improvement, remodeling, renovation, or alteration is void for
107each of the licensee's dealers in this state who nevertheless
108are eligible for the entire amount of the bonus, incentive, or
109benefit offered in the program upon compliance with the other
110bases or eligibility provisions in the program.
111     (g)  A licensee may set and uniformly apply reasonable
112standards for a motor vehicle dealer's sales and service
113facilities which are related to upkeep, repair, and cleanliness.
114     (18)  The applicant or licensee has established a system of
115motor vehicle allocation or distribution or has implemented a
116system of allocation or distribution of motor vehicles to one or
117more of its franchised motor vehicle dealers which reduces or
118alters allocations or supplies of new motor vehicles to the
119dealer to achieve, directly or indirectly, a purpose that is
120prohibited by ss. 320.60-320.70 or which otherwise is unfair,
121inequitable, unreasonably discriminatory, or not supportable by
122reason and good cause after considering the equities of the
123affected motor vehicles dealer or dealers. An applicant or
124licensee shall maintain for 3 years records that describe its
125methods or formula of allocation and distribution of its motor
126vehicles and records of its actual allocation and distribution
127of motor vehicles to its motor vehicle dealers in this state. As
128used in this subsection, the term "unfair" includes, without
129limitation, the refusal or failure to offer to any dealer an
130equitable supply of new vehicles under its franchise, by model,
131mix, or colors, as the licensee offers or allocates to its other
132same line-make dealers in the state.
133     (22)  The applicant or licensee has refused to deliver, in
134reasonable quantities and within a reasonable time, to any duly
135licensed motor vehicle dealer who has an agreement with such
136applicant or licensee for the retail sale of new motor vehicles
137and parts for motor vehicles sold or distributed by the
138applicant or licensee, any such motor vehicles or parts as are
139covered by such agreement. Such refusal includes the failure to
140offer to its same line-make franchised motor vehicle dealers all
141models manufactured for that line-make, or requiring a dealer to
142pay any extra fee, require a dealer to execute a separate
143franchise agreement, purchase unreasonable advertising displays
144or other materials, or relocate, expand, improve, remodel,
145renovate, or recondition, or alter the dealer's existing
146facilities, or provide exclusive facilities as a prerequisite to
147receiving a model or series of vehicles. However, the failure to
148deliver any motor vehicle or part will not be considered a
149violation of this section if the failure is due to an act of
150God, work stoppage, or delay due to a strike or labor
151difficulty, a freight embargo, product shortage, or other cause
152over which the applicant or licensee has no control. An
153applicant or licensee may impose reasonable requirements on the
154motor vehicle dealer, other than the items listed above,
155including, but not limited to, the purchase of special tools
156required to properly service a motor vehicle and the undertaking
157of sales person or service person training related to the motor
159     (25)  The applicant or licensee has undertaken an audit of
160warranty payments or incentive payments payment previously paid
161to a motor vehicle dealer in violation of this section or has
162failed to comply with any of its obligations under s. 320.696.
163An applicant or licensee may reasonably and periodically audit a
164motor vehicle dealer to determine the validity of paid claims as
165provided in s. 320.696. Audit of warranty payments shall only be
166for the 1-year period immediately following the date the claim
167was paid. Audit of incentive payments shall only be for an 18-
168month period immediately following the date the incentive was
169paid. An applicant or licensee shall not deny a claim or charge
170a motor vehicle dealer back subsequent to the payment of the
171claim unless the applicant or licensee can show that the claim
172was false or fraudulent or that the motor vehicle dealer failed
173to substantially comply with the reasonable written and
174uniformly applied procedures of the applicant or licensee for
175such repairs or incentives. An applicant or licensee may not
176charge a motor vehicle dealer back subsequent to the payment of
177a claim unless a representative of the applicant or licensee
178first meets in person, by telephone, or by video teleconference
179with an officer or employee of the dealer designated by the
180motor vehicle dealer. At such meeting the applicant or licensee
181must provide a detailed explanation, with supporting
182documentation, as to the basis for each of the claims for which
183the applicant or licensee proposed a charge-back to the dealer
184and a written statement containing the basis upon which the
185motor vehicle dealer was selected for audit or review.
186Thereafter, the applicant or licensee must provide the motor
187vehicle dealer's representative a reasonable period after the
188meeting within which to respond to the proposed charge-backs,
189with such period to be commensurate with the volume of claims
190under consideration, but in no case less than 45 days after the
191meeting. The applicant or licensee is prohibited from changing
192or altering the basis for each of the proposed charge-backs as
193presented to the motor vehicle dealer's representative following
194the conclusion of the audit unless the applicant or licensee
195receives new information affecting the basis for one or more
196charge-backs. If the applicant or licensee claims the existence
197of new information, the dealer must be given the same right to a
198meeting and right to respond as when the charge-back was
199originally presented.
200     (26)  Notwithstanding the terms of any franchise agreement,
201including any licensee's program, policy, or procedure, the
202applicant or licensee has refused to allocate, sell, or deliver
203motor vehicles; charged back or withheld payments or other
204things of value for which the dealer is otherwise eligible under
205a sales promotion, program, or contest; or prevented a the motor
206vehicle dealer from participating in any promotion, program, or
207contest; or has taken or threatened to take any adverse action
208against a dealer, including charge backs, reducing vehicle
209allocations, or terminating or threatening to terminate a
210franchise because the dealer sold or leased a motor vehicle to a
211customer who exported the vehicle to a foreign country, or who
212resold the vehicle, unless the licensee proves that the dealer
213had actual knowledge that the customer intended to export or
214resell the motor vehicle. There is a conclusive presumption that
215the dealer had no actual knowledge if the vehicle is titled or
216registered in any state in this country for selling a motor
217vehicle to a customer who was present at the dealership and the
218motor vehicle dealer did not know or should not have reasonably
219known that the vehicle would be shipped to a foreign country.
220There will be a rebuttable presumption that the dealer did not
221know or should not have reasonably known that the vehicle would
222be shipped to a foreign country if the vehicle is titled in one
223of the 50 United States.
224     (30)  The applicant or licensee has conducted or threatened
225to conduct any audit of a motor vehicle dealer in order to
226coerce or attempt to coerce the dealer to forego any rights or
227remedies granted to the dealer under ss. 320.60-320.70 or under
228the agreement between the licensee and the motor vehicle dealer.
229Nothing in this section shall prohibit an applicant or licensee
230from reasonably and periodically auditing a dealer to determine
231the validity of paid claims, as permitted under this chapter, if
232the licensee complies with the provisions of ss. 320.60-320.70
233applicable to such audits.
234     Section 2.  Section 320.6412, Florida Statutes, is created
235to read:
236     320.6412  Franchise termination based on fraud; standard of
237proof.--Notwithstanding the provisions of any franchise
238agreement, a franchise agreement of a motor vehicle dealer shall
239not be terminated, canceled, discontinued, or not renewed by a
240licensee on the basis of any misrepresentation or fraud, or the
241filing of false or fraudulent statements or claims with the
242licensee, unless the licensee proves by clear and convincing
243evidence at a hearing that the majority owner or, if there is no
244majority owner, the person designated as dealer-principal in the
245franchise agreement either had actual knowledge of such acts at
246the time they allegedly were committed, or that the licensee
247provided written notice to the majority owner or dealer-
248principal detailing such alleged acts, and that the majority
249owner or dealer-principal, within a reasonable time after
250receipt of such written notice, failed to take actions
251reasonably calculated to prevent such acts from continuing or
253     Section 3. Section 320.696, Florida Statutes, is amended to
255     320.696  Warranty responsibility.--
256     (1)(a)  A licensee shall timely compensate a motor vehicle
257dealer who performs work to maintain or repair a licensee's
258product under a warranty or maintenance plan, extended warranty,
259certified pre-owned warranty, or service contract issued by the
260licensee or its common entity; to fulfill a licensee's delivery
261or preparation procedures; or to repair a motor vehicle as a
262result of a licensee's or common entity's recall, directive, or
264     (b)  As used in this section, the term:
265     1.  "Compensate" and "compensation" include all labor and
266parts included in the work as provided in this section.
267     2.  "Labor" includes time spent by employees for diagnosis
268and repair of a vehicle.
269     3.  "Parts" includes replacement parts and accessories.
270     4.  "Retail customer repair" means work, including parts
271and labor, performed by a dealer which does not come within the
272provisions of a licensee's or its common entity's warranty,
273extended warranty, service contract, or maintenance plan and
274excludes parts and labor described in paragraphs (3)(b) and
276     (c)  Compensation not paid to a motor vehicle dealer within
27730 days after receipt of a claim is not timely. A licensee shall
278not establish or implement a term, policy, or procedure
279different from those described in this section for any motor
280vehicle dealer to obtain compensation under this section and
281shall not pay a motor vehicle dealer less than amounts due
282pursuant to this section.
283     (2)  A licensee shall not take or threaten to take adverse
284action against a motor vehicle dealer who seeks to obtain
285compensation pursuant to this section. As used in this
286subsection, the term "adverse action" includes, without
287limitation, acting or failing to act, other than in good faith;
288creating or implementing an obstacle or process that is
289inconsistent with the licensee's obligations to the dealer under
290this section; hindering, delaying, or rejecting the proper and
291timely payment of compensation due under this section to a
292dealer; establishing, implementing, enforcing, or applying any
293policy, standard, rule, program, or incentive regarding
294compensation due under this section other than in a uniform and
295nondisparate manner among the licensee's dealers in this state;
296conducting or threatening to conduct any warranty, retail
297customer repair, or other service-related audit more frequently
298than once each calendar year; or denying, reducing, or charging
299back a warranty claim because of a dealer's failure to comply
300with all of the licensee's requirements for describing or
301processing a claim.
302     (3)(a)  A licensee shall compensate a motor vehicle dealer
303for parts used in any work described in subsection (1). The
304compensation shall be an agreed percentage markup over the
305licensee's dealer cost, but if an agreement is not reached
306within 30 days after a dealer's written request, compensation
307for the parts is the greater of:
308     1.  The dealer's arithmetical mean percentage markup over
309dealer cost for all parts charged by the dealer in 25
310consecutive retail customer repair orders made and selected by
311the dealer within the 3-month period before the written request,
312or all retail customer repair orders over the previous 3 months
313if there are fewer than 25 retail customer repair orders in that
314period. A repair order shall not be excluded from the
315computation because it contains both warranty or maintenance
316work and retail customer repairs. However, only the retail
317customer repair portion of the repair order shall be included in
318the computation and the parts described in paragraph (b) shall
319be excluded from the computation;
320     2.  The licensee's highest suggested retail or list price
321for the parts; or
322     3.  An amount equal to the dealer's markup over dealer cost
323that results in the same gross profit percentage for parts used
324in work done under subsection (1) as the dealer receives for
325parts used in the customer retail repairs, as evidenced by the
326dealer's financial statement for the month preceding the
327dealer's request. If a licensee reduces the suggested retail or
328list price for any replacement part or accessory, it shall also
329reduce, by at least the same percentage, the cost to the dealer
330for the part or accessory. The dealer's markup or gross profit
331percentage shall be uniformly applied to all of the licensee's
332parts used by the dealer in performing work covered by
333subsection (1).
334     (b)  In calculating the compensation to be paid for parts
335by the arithmetic mean percentage markup over dealer cost method
336in paragraph (a), parts discounted by a dealer for repairs made
337in group, fleet, insurance, or other third-party payor service
338work; parts used in repairs of government agencies' repairs for
339which volume discounts have been negotiated; parts used in
340special event, specials, or promotional discounts for retail
341customer repairs; parts sold at wholesale; parts used for
342internal repairs; engine assemblies and transmission assemblies;
343parts used in retail customer repairs for routine maintenance,
344such as fluids, filters, and belts; nuts, bolts, fasteners, and
345similar items that do not have an individual part number; and
346tires shall be excluded in determining the percentage markup
347over dealer cost.
348     (c)  If a licensee furnishes a part or component to a motor
349vehicle dealer at no cost to use in performing repairs under a
350recall, service action, or warranty repair, the licensee shall
351compensate the dealer for the part or component in the same
352manner as warranty parts compensation under this subsection,
353less the dealer cost for the part or component as listed in the
354licensee's price schedule.
355     (d)  A licensee shall not establish or implement a special
356part or component number for parts used in predelivery, dealer
357preparation, warranty, or maintenance-only applications if that
358results in lower compensation to the dealer than as calculated
359in this subsection.
360     (4)(a)  A licensee shall compensate a motor vehicle dealer
361for labor performed in connection with work described in
362subsection (1) as calculated in this subsection.
363     (b)  Compensation paid by a licensee to a motor vehicle
364dealer may be an agreed hourly labor rate. If, however, an
365agreement is not reached within 30 days after the dealer's
366written request, the dealer may choose to be paid the greater
368     1.  The dealer's hourly labor rate for retail customer
369repairs, determined by dividing the amount of the dealer's total
370labor sales for retail customer repairs by the number of total
371labor hours that generated those sales for the month preceding
372the request, excluding the work in paragraph (c); or
373     2.  An amount equal to the dealer's markup over dealer cost
374that results in the same gross profit percentage for labor hours
375in work covered by subsection (1) as the dealer receives for
376labor used in its customer retail repairs, as evidenced by the
377dealer's financial statement provided to the licensee for the
378month preceding the dealer's written request, if the dealer
379provides in the written request the arithmetical mean of the
380hourly wage paid to all of its technicians during that preceding
381month. The arithmetical mean shall be the dealer cost used in
382that calculation.
384After an hourly labor rate is agreed or determined, the licensee
385shall uniformly apply and pay that hourly labor rate for all
386labor used by the dealer in performing work under subsection
387(1). However, a licensee shall not pay an hourly labor rate less
388than the hourly rate it was paying to the dealer for work done
389under subsection (1) on January 1, 2008. A licensee shall not
390eliminate flat-rate times from or establish an unreasonable
391flat-rate time in its warranty repair manual, warranty time
392guide, or any other similarly named document. A licensee shall
393establish reasonable flat-rate labor times in its warranty
394repair manuals and warranty time guides for newly introduced
395model motor vehicles which are at least consistent with its
396existing documents. As used in this subsection, the terms
397"retail customer," "repair," and "similar work" are not limited
398to a repair to the same model vehicle or model year but include
399prior repairs that resemble but are not identical to the repair
400for which the dealer is making a claim for compensation.
401     (c)  In determining the hourly labor rate calculated under
402subparagraph (b)1., a dealer's labor charges for internal
403vehicle repairs; vehicle reconditioning; repairs performed for
404group, fleet, insurance, or other third-party payors; discounted
405repairs of motor vehicles for government agencies; labor used in
406special events, specials, and express service; and promotional
407discounts shall not be included as retail customer repairs and
408shall be excluded from such calculations.
409     (5)  A licensee shall not review, change, or fail to pay a
410motor vehicle dealer for parts or labor determined under this
411section unless the dealer has requested a change or the action
412is pursuant to the licensee's written, predetermined schedule
413for increasing parts or labor compensation that is not contrary
414to any provision of this section. A dealer may make written
415requests for changes in compensation for parts or labor
416performed under this section not more than semiannually. The
417dealer shall attach supporting documentation to each written
418request. The request for changes in parts or labor compensation
419shall be deemed accepted unless the licensee, within 30 days
420after receipt of the request, in writing, disputes with
421specificity the supporting documentation in the request. Any
422increase in parts or labor reimbursement determined thereafter
423to be owed to the dealer shall be paid retroactively to the date
424of the licensee's receipt of the written request.
425     (6)  A licensee shall not recover or attempt to recover,
426directly or indirectly, any of its costs for compensating a
427motor vehicle dealer under this section, including by decreasing
428or eliminating solely in this state, or as relates to any of its
429dealers, any bonus or incentive that it has in effect
430nationally, regionally, or in a territory by any other
431designation; by reducing the dealer's gross margin for any of
432the licensee's products or services when the wholesale price
433charged to the dealer is determined by the licensee and the
434reduction is not in effect nationally or regionally; by imposing
435a separate charge or surcharge to the wholesale price paid by a
436dealer in this state for any product or service offered to or
437supplied by a licensee under a franchise agreement with the
438dealer; or by passing on to the dealer any charge or surcharge
439of a common entity of the licensee.
440     (7)  A licensee shall not require, influence, or attempt to
441influence a motor vehicle dealer to implement or change the
442prices for which it sells parts or labor in retail customer
443repairs. A licensee shall not implement or continue a policy,
444procedure, or program to any of its dealers in this state for
445compensation under this section which is less favorable to its
446dealers in this state than is applicable to its dealers
447nationally or regionally or, if there is no such national or
448regional policy, to its dealers in a majority of states.
449     (8)  If a court determines with finality that any provision
450of this section is void or unenforceable, the remaining
451provisions shall not be affected but shall remain in effect. The
452licensee shall reasonably and timely compensate any authorized
453motor vehicle dealer who performs work, including labor and
454parts, to rectify the licensee's product or warranty defects or
455fulfills delivery and preparation obligations. In the
456determination of what constitutes reasonable compensation under
457this section, the factors to be given consideration shall
458include, among others, the compensation being paid by other
459licensees to their dealers, the prevailing wage rate being paid
460by the dealers, and the prevailing labor rate being charged by
461the dealers, in the city or community in which the dealer is
462doing business. For the purpose of this section, reasonable
463compensation for work, including labor and parts, by a motor
464vehicle dealer for warranty repairs or service, including labor
465and parts, on behalf of a licensee shall be determined to be
466equal to the amount charged by the dealer for like work to
467retail customers for nonwarranty repairs and service, including
468labor and parts, unless the licensee has demonstrated and
469established in a proceeding before the department that the
470dealer's retail charges for labor and parts are improper in
471light of all economic circumstances. Compensation not paid
472within 30 days after receipt or notice of billing is presumed
473untimely. A licensee may not otherwise recover, or seek to
474recover, any of its costs for compensating a motor vehicle
475dealer for warranty work, including labor and parts, by imposing
476on a motor vehicle dealer any charge or surcharge to the
477wholesale price paid by a motor vehicle dealer to the licensee
478for any product, including motor vehicles and parts.
479     Section 4.  This act shall take effect upon becoming a law.

CODING: Words stricken are deletions; words underlined are additions.