1

The Committee on Regulated Industries (Aronberg) recommended the

2

following amendment:

3

4

     Senate Amendment (with title amendment)

5

     Delete everything after the enacting clause

6

and insert:

7

     Section 1.  Subsections (10), (18), (22), (25), (26), and

8

(30) of section 320.64, Florida Statutes, are amended to read:

9

     320.64  Denial, suspension, or revocation of license;

10

grounds.--A license of a licensee under s. 320.61 may be denied,

11

suspended, or revoked within the entire state or at any specific

12

location or locations within the state at which the applicant or

13

licensee engages or proposes to engage in business, upon proof

14

that the section was violated with sufficient frequency to

15

establish a pattern of wrongdoing, and a licensee or applicant

16

shall be liable for claims and remedies provided in ss. 320.695

17

and 320.697 for any violation of any of the following provisions.

18

A licensee is prohibited from committing the following acts:

19

     (10)(a) The applicant or licensee has attempted to enter,

20

or has entered, into a franchise agreement with a motor vehicle

21

dealer who does not, at the time of the franchise agreement, have

22

proper facilities to provide the services to his or her

23

purchasers of new motor vehicles which are covered by the new

24

motor vehicle warranty issued by the applicant or licensee.

25

Notwithstanding any provision of a franchise , a licensee may not

26

require a motor vehicle dealer, by agreement, program, policy,

27

standard or otherwise, to relocate, to make substantial changes,

28

alterations, or remodeling to, or to replace a motor vehicle

29

dealer's sales or service facilities unless the licensee's

30

requirements are reasonable and justifiable in light of the

31

current and reasonably foreseeable projections of economic

32

conditions, financial expectations and the motor vehicle dealer's

33

market for the licensee's motor vehicles.

34

     (b) A license may, however, provide to a motor vehicle

35

dealer a commitment to allocate additional vehicles or a loan or

36

grant of money as an inducement for the motor vehicle dealer to

37

relocate, expand, improve, remodel, alter, or renovate its

38

facilities if the licensee delivers an assurance to the dealer

39

that it will offer to supply to the dealer a sufficient quantity

40

of new motor vehicles, consistent with its allocation obligations

41

at law and to its other same line-make motor vehicle dealers,

42

that will economically justify such relocation, expansion,

43

improvement, remodeling, renovation, or alteration, in light of

44

reasonably current and reasonably projected market and economic

45

conditions. The provisions of the increase in vehicle allocation,

46

the loan or grant and the assurance, and the basis for them must

47

be contained in a written agreement voluntarily entered into by

48

the dealer and must be made available, on substantially similar

49

terms, to any of the licensee's other same line-make dealers in

50

this state with whom the licensee offers to enter into such an

51

agreement.

52

     (c) A licensee shall not withhold a bonus, incentive, or

53

other benefit that is available to its other same line-make

54

franchised dealers in this state from, or take or threaten to

55

take any action that is unfair or adverse to a dealer who does

56

not enter into an agreement with the licensee pursuant to

57

paragraph (b).

58

     (d) A licensee may not refuse to offer a program, bonus,

59

incentive, or other benefit, in whole or in part, to a dealer in

60

this state which it offers to its other same line-make dealers

61

nationally or in the licensee's zone or region in which this

62

state is included. Neither may it discriminate against a dealer

63

in this state with respect to any program, bonus, incentive, or

64

other benefit. For purposes of this chapter, a licensee may not

65

establish this state alone as a zone, region, or territory by any

66

other designation.

67

     (e) Paragraphs (a) or (b) do not affect any contract

68

between a licensee and any of its dealers regarding relocation,

69

expansion, improvement, remodeling, renovation, or alteration

70

which exists on the effective date of this act.

71

     (f) Any portion of a licensee-offered program for a

72

bonus, incentive, or other benefit that, in whole or in part, is

73

based upon or aimed at inducing a dealer's relocation, expansion,

74

improvement, remodeling, renovation, or alteration is void for

75

each of the licensee's dealers in this state who nevertheless are

76

eligible for the entire amount of the bonus, incentive, or

77

benefit offered in the program upon compliance with the other

78

bases or eligibility provisions in the program.

79

     (g) A licensee may set and uniformly apply reasonable

80

standards for a motor vehicle dealer's sales and service

81

facilities which are related to upkeep, repair, and cleanliness.

82

     (18)  The applicant or licensee has established a system

83

of motor vehicle allocation or distribution or has implemented a

84

system of allocation or distribution of motor vehicles to one or

85

more of its franchised motor vehicle dealers which reduces or

86

alters allocations or supplies of new motor vehicles to the

87

dealer to achieve, directly or indirectly, a purpose that is

88

prohibited by ss. 320.60-320.70, or which otherwise is unfair,

89

inequitable, unreasonably discriminatory, or not supportable by

90

reason and good cause after considering the equities of the

91

affected motor vehicles dealer or dealers. An applicant or

92

licensee shall maintain for 3 years records that describe its

93

methods or formula of allocation and distribution of its motor

94

vehicles and records of its actual allocation and distribution of

95

motor vehicles to its motor vehicle dealers in this state. As

96

used in this subsection, "unfair" includes, without limitation,

97

the refusal or failure to offer to any dealer an equitable supply

98

of new vehicles under its franchise, by model, mix, or colors as

99

the licensee offers or allocates to its other same line-make

100

dealers in the state.

101

     (22)  The applicant or licensee has refused to deliver, in

102

reasonable quantities and within a reasonable time, to any duly

103

licensed motor vehicle dealer who has an agreement with such

104

applicant or licensee for the retail sale of new motor vehicles

105

and parts for motor vehicles sold or distributed by the applicant

106

or licensee, any such motor vehicles or parts as are covered by

107

such agreement. Such refusal includes the failure to offer to its

108

same line-make franchised motor vehicle dealers all models

109

manufactured for that line-make, or requiring a dealer to pay any

110

extra fee, require a dealer to execute a separate franchise

111

agreement, purchase unreasonable advertising displays or other

112

materials, or relocate, expand, improve, remodel, renovate, or

113

recondition, or alter the dealer's existing facilities, or

114

provide exclusive facilities as a prerequisite to receiving a

115

model or series of vehicles. However, the failure to deliver any

116

motor vehicle or part will not be considered a violation of this

117

section if the failure is due to an act of God, work stoppage, or

118

delay due to a strike or labor difficulty, a freight embargo,

119

product shortage, or other cause over which the applicant or

120

licensee has no control. An applicant or licensee may impose

121

reasonable requirements on the motor vehicle dealer, other than

122

the items listed above, including, but not limited to, the

123

purchase of special tools required to properly service a motor

124

vehicle and the undertaking of sales person or service person

125

training related to the motor vehicle.

126

     (25)  The applicant or licensee has undertaken an audit of

127

warranty payments or incentive payments payment previously paid

128

to a motor vehicle dealer in violation of this section or has

129

failed to comply with any of its obligations under s. 320.696. An

130

applicant or licensee may reasonably and periodically audit a

131

motor vehicle dealer to determine the validity of paid claims as

132

provided in s. 320.696. Audit of warranty payments shall only be

133

for the 1-year period immediately following the date the claim

134

was paid. Audit of incentive payments shall only be for an 18-

135

month period immediately following the date the incentive was

136

paid. An applicant or licensee shall not deny a claim or charge a

137

motor vehicle dealer back subsequent to the payment of the claim

138

unless the applicant or licensee can show that the claim was

139

false or fraudulent or that the motor vehicle dealer failed to

140

substantially comply with the reasonable written and uniformly

141

applied procedures of the applicant or licensee for such repairs

142

or incentives. An applicant or licensee may not charge a motor

143

vehicle dealer back subsequent to the payment of a claim unless a

144

representative of the applicant or licensee first meets in

145

person, by telephone, or by video teleconference with an officer

146

or employee of the dealer designated by the motor vehicle dealer.

147

At such meeting the applicant or licensee must provide a detailed

148

explanation, with supporting documentation, as to the basis for

149

each of the claims for which the applicant or licensee proposed a

150

charge-back to the dealer and a written statement containing the

151

basis upon which the motor vehicle dealer was selected for audit

152

or review. Thereafter, the applicant or licensee must provide the

153

motor vehicle dealer's representative a reasonable period after

154

the meeting within which to respond to the proposed charge-backs,

155

with such period to be commensurate with the volume of claims

156

under consideration, but in no case less than 45 days after the

157

meeting. The applicant or licensee is prohibited from changing or

158

altering the basis for each of the proposed charge-backs as

159

presented to the motor vehicle dealer's representative following

160

the conclusion of the audit unless the applicant or licensee

161

receives new information affecting the basis for one or more

162

charge-backs. If the applicant or licensee claims the existence

163

of new information, the dealer must be given the same right to a

164

meeting and right to respond as when the charge-back was

165

originally presented.

166

     (26)  Notwithstanding the terms of any franchise

167

agreement, including any licensee's program, policy, or

168

procedure, the applicant or licensee has refused to allocate,

169

sell, or deliver motor vehicles; charged back or withheld

170

payments or other things of value for which the dealer is

171

otherwise eligible under a sales promotion, program, or contest;

172

or prevented a the motor vehicle dealer from participating in any

173

promotion, program, or contest; or has taken or threatened to

174

take any adverse action against a dealer, including charge backs,

175

reducing vehicle allocations, or terminating or threatening to

176

terminate a franchise because the dealer sold or leased a motor

177

vehicle to a customer who exported the vehicle to a foreign

178

country or who resold the vehicle, unless the licensee proves

179

that the dealer had actual knowledge that the customer intended

180

to export or resell the motor vehicle. There is a conclusive

181

presumption that the dealer had no actual knowledge if the

182

vehicle is titled or registered in any state in this country for

183

selling a motor vehicle to a customer who was present at the

184

dealership and the motor vehicle dealer did not know or should

185

not have reasonably known that the vehicle would be shipped to a

186

foreign country. There will be a rebuttable presumption that the

187

dealer did not know or should not have reasonably known that the

188

vehicle would be shipped to a foreign country if the vehicle is

189

titled in one of the 50 United States.

190

     (30)  The applicant or licensee has conducted or

191

threatened to conduct any audit of a motor vehicle dealer in

192

order to coerce or attempt to coerce the dealer to forego any

193

rights or remedies granted to the dealer under ss. 320.60-320.70

194

or under the agreement between the licensee and the motor vehicle

195

dealer. Nothing in this section shall prohibit an applicant or

196

licensee from reasonably and periodically auditing a dealer to

197

determine the validity of paid claims, as permitted under this

198

chapter, if the licensee complies with the provisions of ss.

199

320.60-320.70 applicable to such audits.

200

201

A motor vehicle dealer who can demonstrate that a violation of,

202

or failure to comply with, any of the preceding provisions by an

203

applicant or licensee will or can adversely and pecuniarily

204

affect the complaining dealer, shall be entitled to pursue all of

205

the remedies, procedures, and rights of recovery available under

206

ss. 320.695 and 320.697.

207

     Section 2.  Section 320.6412, Florida Statutes, is created

208

to read:

209

     320.6412 Franchise termination based on fraud; standard

210

of proof.--

211

     Notwithstanding the provisions of any franchise agreement,

212

a franchise agreement of a motor vehicle dealer may not be

213

terminated, canceled, discontinued, or not renewed by a licensee

214

on the basis of misrepresentation or fraud, or the filing of any

215

false or fraudulent statements or claims with the licensee,

216

unless the licensee proves by a preponderance of the evidence

217

before a trier of fact either that the majority owner, or if

218

there is no majority owner, the person designated as the dealer-

219

principal in the franchise agreement, knew of such acts at the

220

time they allegedly were committed, or that the licensee provided

221

written notice detailing such alleged acts to the majority owner

222

or dealer-principal who, within a reasonable time after receipt

223

of such written notice, failed to take actions reasonably

224

calculated to prevent such acts from continuing or recurring.

225

     Section 3.  Section 320.696, Florida Statutes, is amended

226

to read:

227

     (Substantial rewording of section. See      s. 320.696, F.S.,

228

for present text.)     

229

     320.696 Warranty responsibility.--

230

     (1)(a) A licensee shall timely compensate a motor vehicle

231

dealer who performs work to maintain or repair a licensee's

232

product under a warranty or maintenance plan, extended warranty,

233

certified pre-owned warranty, or a service contract, issued by

234

the licensee or its common entity, unless issued by an entity

235

that is not under common ownership or control of the maker of the

236

motor vehicle; to fulfill a licensee's delivery or preparation

237

procedures; or to repair a motor vehicle as a result of a

238

licensee's or common entity's recall, campaign service,

239

authorized goodwill, directive, or bulletin.

240

     (b) As used in this section, the terms "compensate" and

241

"compensation" shall include all labor and parts included in the

242

work as provided in this section. The term "labor" shall include

243

time spent by employees for diagnosis and repair of a vehicle.

244

The term "parts" shall include replacement parts and accessories.

245

The term "retail customer repair" means work, including parts and

246

labor, performed by a dealer which does not come within the

247

provisions of a licensee's or its common entity's warranty,

248

extended warranty, certified pre-owned warranty, service

249

contract, or maintenance plan, and excludes parts and labor

250

described in paragraphs (3)(b) and (4)(c).

251

     (c) Compensation not paid to a motor vehicle dealer

252

within 30 days after receipt of a claim is not timely. A licensee

253

shall not establish or implement a term, policy, or procedure

254

different from those described in this section for any motor

255

vehicle dealer to obtain compensation under this section, and

256

shall not pay a motor vehicle dealer less than amounts due

257

pursuant to this section.

258

     (2) A licensee shall not take or threaten to take adverse

259

action against a motor vehicle dealer who seeks to obtain

260

compensation pursuant to this section. As used in this

261

subsection, the term "adverse action" includes, without

262

limitation, acting or failing to act, other than in good faith;

263

creating or implementing an obstacle or process that is

264

inconsistent with the licensee's obligations to the dealer under

265

this section; hindering, delaying, or rejecting the proper and

266

timely payment of compensation due under this section to a

267

dealer; establishing, implementing, enforcing, or applying any

268

policy, standard, rule, program, or incentive regarding

269

compensation due under this section other than in a uniform and

270

nondisparate manner among the licensee's dealers in this state;

271

conducting or threatening to conduct any warranty, retail

272

customer repair, or other service-related audit more frequently

273

than once each calendar year; or denying, reducing, or charging

274

back a warranty claim because of a dealer's failure to comply

275

with all of the licensee's requirements for describing or

276

processing a claim.

277

     (3)(a) A licensee shall compensate a motor vehicle dealer

278

for parts used in any work described in subsection (1). The

279

compensation may be an agreed percentage markup over the

280

licensee's dealer cost, but if an agreement is not reached within

281

30 days after a dealer's written request, compensation for the

282

parts is the greater of:

283

     1. The dealer's arithmetical mean percentage markup over

284

dealer cost for all parts charged by the dealer in 50 consecutive

285

retail customer repairs made by the dealer within a 3-month

286

period before the dealer's written request for a change in

287

reimbursement pursuant to this section, or all of the retail

288

customer repair orders over that 3 month period if there are

289

fewer than 50 retail customer repair orders in that period. The

290

motor vehicle dealer shall give the licensee 10 days written

291

notice that it intends to make a written request to the licensee

292

for a warranty parts reimbursement increase and permit the

293

licensee, within that 10 day period, to select the initial retail

294

customer repair for the consecutive repair orders that will be

295

attached to the written request used for the markup computation,

296

provided that if the licensee fails to provide a timely

297

selection, the dealer may make that selection. No repair order

298

shall be excluded from the markup computation because it contains

299

both warranty, extended warranty, certified pre-owned warranty,

300

maintenance, recall, campaign service, or authorized goodwill

301

work and a retail customer repair. However, only the retail

302

customer repair portion of the repair order shall be included in

303

the computation and the parts described in paragraph (b) shall be

304

excluded from the computation;

305

     2. The licensee's highest suggested retail or list price

306

for the parts; or

307

     3. An amount equal to the dealer's markup over dealer

308

cost that results in the same gross profit percentage for parts

309

used in work done under subsection (1) as the dealer receives for

310

parts used in the customer retail repairs, as evidenced by the

311

average of said dealer's gross profit percentage in the dealer's

312

financial statements for the two months preceding the dealer's

313

request.

314

315

If a licensee reduces the suggested retail or list price for any

316

replacement part or accessory, it also shall reduce, by at least

317

the same percentage, the cost to the dealer for the part or

318

accessory. The dealer's markup or gross profit percentage shall

319

be uniformly applied to all of the licensee's parts used by the

320

dealer in performing work covered by subsection (1).

321

     (b) In calculating the compensation to be paid for parts

322

by the arithmetic mean percentage markup over dealer cost method

323

in paragraph (a), parts discounted by a dealer for repairs made

324

in group, fleet, insurance, or other third-party payer service

325

work; parts used in repairs of government agencies' repairs for

326

which volume discounts have been negotiated; parts used in

327

special event, specials, or promotional discounts for retail

328

customer repairs; parts sold at wholesale; parts used for

329

internal repairs; engine assemblies and transmission assemblies;

330

parts used in retail customer repairs for routine maintenance,

331

such as fluids, filters and belts; nuts, bolts, fasteners, and

332

similar items that do not have an individual part number; and

333

tires shall be excluded in determining the percentage markup over

334

dealer cost.

335

     (c) If a licensee furnishes a part or component to a

336

motor vehicle dealer at no cost to use in performing repairs

337

under a recall, campaign service action, or warranty repair, the

338

licensee shall compensate the dealer for the part or component in

339

the same manner as warranty parts compensation under this

340

subsection, less the dealer cost for the part or component as

341

listed in the licensee's price schedule.

342

     (d) A licensee shall not establish or implement a special

343

part or component number for parts used in predelivery, dealer

344

preparation, warranty, extended warranty, certified pre-owned

345

warranty, recall, campaign service, authorized goodwill, or

346

maintenance-only applications if that results in lower

347

compensation to the dealer than as calculated in this subsection.

348

     (4)(a) A licensee shall compensate a motor vehicle dealer

349

for labor performed in connection with work described in

350

subsection (1) as calculated in this subsection.

351

     (b) Compensation paid by a licensee to a motor vehicle

352

dealer may be an agreed hourly labor rate. If, however, an

353

agreement is not reached within 30 days after the dealer's

354

written request, the dealer may choose to be paid the greater of:

355

     1. The dealer's hourly labor rate for retail customer

356

repairs, determined by dividing the amount of the dealer's total

357

labor sales for retail customer repairs by the number of total

358

labor hours that generated those sales for the month preceding

359

the request, excluding the work in paragraph (c); or

360

     2. An amount equal to the dealer's markup over dealer

361

cost that results in the same gross profit percentage for labor

362

hours preformed in work covered by subsection (1) as the dealer

363

receives for labor preformed in its customer retail repairs, as

364

evidenced by the average of said dealer's gross profit

365

percentage in the dealer's financial statements provided to the

366

licensee for the two months preceding the dealer's written

367

request, if the dealer provides in the written request the

368

arithmetical mean of the hourly wage paid to all of its

369

technicians during that preceding month. The arithmetical mean

370

shall be the dealer cost used in that calculation.

371

372

After an hourly labor rate is agreed or determined, the licensee

373

shall uniformly apply and pay that hourly labor rate for all

374

labor used by the dealer in performing work under subsection (1).

375

However, a licensee shall not pay an hourly labor rate less than

376

the hourly rate it was paying to the dealer for work done under

377

subsection (1) on January 2, 2008. A licensee shall not eliminate

378

flat-rate times from, or establish an unreasonable flat-rate time

379

in its warranty repair manual, warranty time guide, or any other

380

similarly named document. A licensee shall establish reasonable

381

flat-rate labor times in its warranty repair manuals and warranty

382

time guides for newly introduced model motor vehicles which are

383

at least consistent with its existing documents. As used in this

384

subsection, the terms "retail customer repair" and "similar work"

385

are not limited to a repair to the same model vehicle or model

386

year, but include prior repairs that resemble but are not

387

identical to the repair for which the dealer is making a claim

388

for compensation.

389

     (c) In determining the hourly labor rate calculated under

390

subparagraph (b)1., a dealer's labor charges for internal vehicle

391

repairs; vehicle reconditioning; repairs performed for group,

392

fleet, insurance, or other third party payers; discounted repairs

393

of motor vehicles for government agencies; labor used in special

394

events, specials, express service; and promotional discounts

395

shall not be included as retail customer repairs and shall be

396

excluded from such calculations.

397

     (5) A licensee shall not review, change, or fail to pay a

398

motor vehicle dealer for parts or labor determined under this

399

section unless the dealer has requested a change, or the action

400

is pursuant to the licensee's written, predetermined schedule for

401

increasing parts or labor compensation that is not contrary to

402

any provision of this section. A dealer may make written requests

403

for changes in compensation for parts or labor performed under

404

this section not more than semiannually. The dealer shall attach

405

supporting documentation to each written request. Any increase in

406

parts or labor reimbursement determined thereafter to be owed to

407

the dealer shall be paid pursuant to this section retroactively

408

for all claims filed by a dealer 15 days after the date of the

409

licensee's receipt of the dealer's written request.

410

     (6)  A licensee shall not recover or attempt to recover,

411

directly or indirectly, any of its costs for compensating a motor

412

vehicle dealer under this section, including by decreasing or

413

eliminating solely in this state or as it relates to any of its

414

dealers, any bonuses or other incentive that the licensee has in

415

effect nationally, regionally, or in a territory by any other

416

designation; by reducing the dealer's gross margin for any of the

417

licensee's products or services where the wholesale price charged

418

to the dealer is determined by the licensee and the reduction is

419

not in effect nationally or regionally; by imposing a separate

420

charge or surcharge to the wholesale price paid by a dealer in

421

this state for any product or service offered to or supplied by a

422

licensee under a franchise agreement with the dealer; or by

423

passing on to the dealer any charge or surcharge of a common

424

entity of the licensee.

425

     (7) A licensee shall not require, influence, or attempt

426

to influence a motor vehicle dealer to implement or change the

427

prices for which it sells parts or labor in retail customer

428

repairs. A licensee shall not implement or continue a policy,

429

procedure, or program to any of its dealers in this state for

430

compensation under this section which is inconsistent with this

431

section.

432

     (8) If a court determines with finality that any

433

provision of this section is void or unenforceable, the remaining

434

provisions shall not be affected but shall remain in effect.

435

Section 4.  This act shall take effect upon becoming a law.

436

437

================ T I T L E  A M E N D M E N T ================

438

And the title is amended as follows:

439

     Delete everything before the enacting clause

440

and insert:

441

A bill to be entitled

442

An act relating to motor vehicle dealers; amending s.

443

320.64, F.S.; prohibiting licensees from certain actions

444

intended to coerce a dealer to improve its facilities

445

after the licensee has approved those facilities; allowing

446

licensees to offer certain loan or grant programs to

447

induce the dealer to relocate or improve the existing

448

facilities, if such inducement is not discriminatory or

449

designed to force the dealer to do so; prohibiting certain

450

adverse actions against a dealer who does not participate

451

in such programs; declaring certain inducement programs

452

void; authorizing a licensee to set reasonable standards

453

for dealer sales and facilities; prohibiting licensees

454

from altering allocations or supplies of new vehicles to

455

achieve goals that are prohibited in this state by

456

statute; clarifying a provision relating to a prohibition

457

against a dealer selling a motor vehicle to a customer who

458

exported or resold the vehicle; requiring the licensee to

459

prove the dealer had actual knowledge of the customer's

460

intent to export or resell the vehicle; creating a

461

conclusive presumption that the dealer had no actual

462

knowledge if the vehicle was titled or registered in this

463

country; authorizing licensees to audit dealers to

464

determine the validity of paid claims if the licensee

465

complies with applicable statutory requirements; creating

466

s. 320.6412, F.S.; providing a burden of proof in actions

467

to terminate a motor vehicle dealer franchise based on

468

fraud or misrepresentation; amending s. 320.696, F.S.;

469

substantially revising provisions relating to the

470

licensee's responsibility to timely and reasonably

471

compensate a dealer who performs warranty, service

472

contract maintenance plan, or other vehicle preparation

473

work; providing methods of determining the cost for parts

474

and labor to be paid to a dealer as compensation for

475

performing warranty repairs and vehicle preparation for

476

the licensee; prohibiting the licensee from taking certain

477

adverse actions against a dealer for seeking to obtain

478

compensation for such work; prohibiting certain acts by a

479

licensee to reduce the amount of compensation to be paid

480

to a dealer or to offset or recover from the dealer

481

compensation previously received; providing severability;

482

providing an effective date.

4/14/2008  5:15:00 PM     RI.RI.07483