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A bill to be entitled

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An act relating to motor vehicle dealers; amending s.

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

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intended to coerce a dealer to improve its facilities

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after the licensee has approved those facilities; allowing

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licensees to offer certain loan or grant programs to

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induce the dealer to relocate or improve the existing

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facilities, if such inducement is not discriminatory or

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designed to force the dealer to do so; prohibiting certain

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adverse actions against a dealer who does not participate

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in such programs; declaring certain inducement programs

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void; authorizing a licensee to set reasonable standards

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for dealer sales and facilities; prohibiting licensees

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from altering allocations or supplies of new vehicles to

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achieve goals that are prohibited in this state by

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statute; clarifying a provision relating to a prohibition

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against a dealer selling a motor vehicle to a customer who

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exported or resold the vehicle; requiring the licensee to

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prove the dealer had actual knowledge of the customer's

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intent to export or resell the vehicle; creating a

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conclusive presumption that the dealer had no actual

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knowledge if the vehicle was titled or registered in this

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country; authorizing licensees to audit dealers to

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determine the validity of paid claims if the licensee

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complies with applicable statutory requirements; creating

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

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to terminate a motor vehicle dealer franchise based on

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

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substantially revising provisions relating to the

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licensee's responsibility to timely and reasonably

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compensate a dealer who performs warranty or vehicle

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preparation work; providing methods of determining the

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cost for parts and labor to be paid to a dealer as

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compensation for performing warranty repairs and vehicle

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preparation for the licensee; prohibiting the licensee

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from taking certain adverse actions against a dealer for

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seeking to obtain compensation for such work; prohibiting

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certain acts by a licensee to reduce the amount of

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compensation to be paid to a dealer or to offset or

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recover from the dealer compensation previously received;

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providing severability; providing an effective date.

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Be It Enacted by the Legislature of the State of Florida:

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

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

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     320.64  Denial, suspension, or revocation of license;

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

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

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location or locations within the state at which the applicant or

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licensee engages or proposes to engage in business, upon proof

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that the section was violated with sufficient frequency to

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establish a pattern of wrongdoing, and a licensee or applicant

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

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

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A licensee is prohibited from committing the following acts:

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

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

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

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proper facilities to provide the services to his or her

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purchasers of new motor vehicles which are covered by the new

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motor vehicle warranty issued by the applicant or licensee.

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Notwithstanding any provision of a franchise agreement, after a

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licensee has approved the sales and service facilities of a motor

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vehicle dealer, the licensee shall not require, by agreement,

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policy, or standard, the dealer to relocate, expand, improve,

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remodel, renovate, or alter any part of those facilities.

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     (b) A licensee may, however, provide a loan or grant of

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money to a motor vehicle dealer as an inducement to relocate,

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expand, improve, remodel, or renovate its facilities if the

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licensee delivers an assurance to the dealer that it will supply

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a sufficient quantity of new motor vehicles, consistent with its

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allocation obligations at law and its allocation obligations to

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its other same line-make motor vehicle dealers, to the dealer

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which will economically justify such relocation, expansion,

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improvement, remodeling, or renovation, in light of reasonably

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current and reasonably projected market and economic conditions.

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The provisions of the loan or grant and assurance, and the bases

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for them, must be in a written agreement voluntarily entered into

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by the dealer and the loan or grant must be made available, on

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equal terms, to the licensee's other dealers in this state.

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     (c) A licensee shall not withhold a benefit that is

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available to its other franchised dealers in this state from, or

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take or threaten to take any action that is unfair or adverse to,

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a dealer who does not enter into an agreement with the licensee

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pursuant to paragraph (b).

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     (d) A licensee shall not refuse to offer a program for a

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

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dealer in this state which it offers to its other dealers

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

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state is included.

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     (e) Any portion of a licensee-offered program for a bonus,

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

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

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improvement, remodeling, renovation, or alteration, is void for

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

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

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benefit offered in the program upon compliance with the other

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bases or eligibility provisions in the program.

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     (f) A licensee may set and uniformly apply reasonable

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standards for a motor vehicle dealer's sales and service

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

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     (18)  The applicant or licensee has established a system of

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motor vehicle allocation or distribution or has implemented a

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system of allocation or distribution of motor vehicles to one or

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more of its franchised motor vehicle dealers which reduces or

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alters allocations or supplies of new motor vehicles to the

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

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

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inequitable, unreasonably discriminatory, or not supportable by

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reason and good cause after considering the equities of the

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affected motor vehicles dealer or dealers. An applicant or

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licensee shall maintain for 3 years records that describe its

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methods or formula of allocation and distribution of its motor

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vehicles and records of its actual allocation and distribution of

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

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

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

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

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

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dealers in the state.

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

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reasonable quantities and within a reasonable time, to any duly

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licensed motor vehicle dealer who has an agreement with such

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applicant or licensee for the retail sale of new motor vehicles

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and parts for motor vehicles sold or distributed by the applicant

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

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

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same line-make franchised motor vehicle dealers all models

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

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extra fee, require a dealer to execute a separate franchise

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agreement, purchase unreasonable advertising displays or other

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

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

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provide exclusive facilities as a prerequisite to receiving a

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

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

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

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

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product shortage, or other cause over which the applicant or

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licensee has no control. An applicant or licensee may impose

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reasonable requirements on the motor vehicle dealer, other than

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

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purchase of special tools required to properly service a motor

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vehicle and the undertaking of sales person or service person

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training related to the motor vehicle.

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

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warranty payments or incentive payments payment previously paid

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

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

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applicant or licensee may reasonably and periodically audit a

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motor vehicle dealer to determine the validity of paid claims as

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

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

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

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month period immediately following the date the incentive was

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

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motor vehicle dealer back subsequent to the payment of the claim

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unless the applicant or licensee can show that the claim was

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false or fraudulent or that the motor vehicle dealer failed to

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substantially comply with the reasonable written and uniformly

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applied procedures of the applicant or licensee for such repairs

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

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

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representative of the applicant or licensee first meets in

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

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

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At such meeting the applicant or licensee must provide a detailed

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explanation, with supporting documentation, as to the basis for

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

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

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basis upon which the motor vehicle dealer was selected for audit

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

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motor vehicle dealer's representative a reasonable period after

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

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with such period to be commensurate with the volume of claims

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

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meeting. The applicant or licensee is prohibited from changing or

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

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presented to the motor vehicle dealer's representative following

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the conclusion of the audit unless the applicant or licensee

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receives new information affecting the basis for one or more

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

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

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

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originally presented.

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     (26)  Notwithstanding the terms of any franchise agreement,

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including any licensee's program, policy, or procedure, the

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applicant or licensee has refused to allocate, sell, or deliver

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motor vehicles; charged back or withheld payments or other things

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of value for which the dealer is otherwise eligible under a sales

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promotion, program, or contest; or prevented a the motor vehicle

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dealer from participating in any promotion, program, or contest;

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or has taken or threatened to take any adverse action against a

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dealer, including terminating or threatening to terminate a

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franchise because the dealer sold or leased a motor vehicle to a

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customer who exported the vehicle to a foreign country or who

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resold the vehicle, unless the licensee proves that the dealer

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had actual knowledge that the customer intended to export or

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resell the motor vehicle. There is a conclusive presumption that

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the dealer had no actual knowledge if the vehicle is titled or

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registered in any state in this country for selling a motor

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vehicle to a customer who was present at the dealership and the

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motor vehicle dealer did not know or should not have reasonably

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known that the vehicle would be shipped to a foreign country.

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There will be a rebuttable presumption that the dealer did not

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know or should not have reasonably known that the vehicle would

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be shipped to a foreign country if the vehicle is titled in one

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of the 50 United States.

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     (30)  The applicant or licensee has conducted or threatened

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to conduct any audit of a motor vehicle dealer in order to coerce

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or attempt to coerce the dealer to forego any rights or remedies

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

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agreement between the licensee and the motor vehicle dealer.

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Nothing in this section shall prohibit an applicant or licensee

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from reasonably and periodically auditing a dealer to determine

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the validity of paid claims, as permitted under this chapter, if

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the licensee complies with the provisions of ss. 320.60-320.70

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applicable to such audits.

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

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

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applicant or licensee will or can adversely and pecuniarily

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

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the remedies, procedures, and rights of recovery available under

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ss. 320.695 and 320.697.

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     Section 2.  Section 320.6412, Florida Statutes, is created

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to read:

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     320.6412 Franchise termination based on fraud; standard of

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proof.--Notwithstanding the provisions of any franchise

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agreement, a franchise agreement of a motor vehicle dealer shall

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

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licensee on the basis of misrepresentation, fraud, or filing

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false or fraudulent statements or claims unless the licensee

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proves by clear and convincing evidence at a hearing that the

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majority owner, or if there is no majority owner, the person

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designated as dealer-operator or dealer-principal in the

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franchise agreement, had actual knowledge of such acts at the

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time the conduct was allegedly perpetrated on a customer or a

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licensee, and did not, within a reasonable time after being so

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advised, take actions reasonably calculated to prevent such acts

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from continuing or reoccurring.

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     Section 3.  Section 320.696, Florida Statutes, is amended to

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read:

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     (Substantial rewording of section. See

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     s. 320.696, F.S., for present text.)

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     320.696 Warranty responsibility.--

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

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

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product under a warranty or maintenance plan, extended warranty,

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

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licensee or its common entity; to fulfill a licensee's delivery

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or preparation procedures; or to repair a motor vehicle as a

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result of a licensee's or common entity's recall, directive, or

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bulletin.

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

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

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

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

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

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

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

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

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extended warranty, service contract, or maintenance plan, and

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excludes parts and labor described in paragraphs (3)(b) and

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(4)(c).

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     (c) Compensation not paid to a motor vehicle dealer within

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

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

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from those described in this section for any motor vehicle dealer

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to obtain compensation under this section, and shall not pay a

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motor vehicle dealer less than amounts due pursuant to this

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section.

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

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action against a motor vehicle dealer who seeks to obtain

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compensation pursuant to this section. As used in this

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subsection, the term "adverse action" includes, without

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

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creating or implementing an obstacle or process that is

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inconsistent with the licensee's obligations to the dealer under

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

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timely payment of compensation due under this section to a

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dealer; establishing, implementing, enforcing, or applying any

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policy, standard, rule, program, or incentive regarding

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compensation due under this section other than in a uniform and

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

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conducting or threatening to conduct any warranty, retail

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customer repair, or other service-related audit more frequently

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

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

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with all of the licensee's requirements for describing or

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processing a claim.

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

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

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compensation shall be an agreed percentage markup over the

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

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

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parts is the greater of:

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     1. The dealer's arithmetical mean percentage markup over

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dealer cost for all parts charged by the dealer in 25 consecutive

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retail customer repair orders made and selected by the dealer

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within in the 3-month period before the written request, or all

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retail customer repair orders over the previous 3 months if there

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are fewer than 25 retail customer repair orders in that period. A

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repair order shall not be excluded from the computation because

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it contains both warranty or maintenance work and retail customer

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repairs. However, only the retail customer repair portion of the

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repair order shall be included in the computation and the parts

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described in paragraph (b) shall be excluded from the

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computation;

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

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for the parts; or

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

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that results in the same gross profit percentage for parts used

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

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

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dealer's financial statement for the month preceding the dealer's

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request.

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

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

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

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

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

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dealer in performing work covered by subsection (1).

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

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the arithmetic mean percentage markup over dealer cost method in

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

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group, fleet, insurance, or other third-party payer service work;

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parts used in repairs of government agencies' repairs for which

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volume discounts have been negotiated; parts used in special

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event, specials, or promotional discounts for retail customer

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repairs; parts sold at wholesale; parts used for internal

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repairs; engine assemblies and transmission assemblies; nuts,

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bolts, fasteners, and similar items that do not have an

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individual part number; and tires shall be excluded in

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determining the percentage markup over dealer cost.

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

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vehicle dealer at no cost to use in performing repairs under a

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recall, service action, or warranty repair, the licensee shall

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compensate the dealer for the part or component in the same

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manner as warranty parts compensation under this subsection, less

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the dealer cost for the part or component as listed in the

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licensee's price schedule.

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

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part or component number for parts used in predelivery, dealer

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preparation, warranty, or maintenance-only applications if that

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results in lower compensation to the dealer than as calculated in

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this subsection.

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

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for labor performed in connection with work described in

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subsection (1) as calculated in this subsection.

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

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

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

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

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

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

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labor sales for retail customer repairs by the number of total

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labor hours that generated those sales for the month preceding

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

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

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that results in the same gross profit percentage for labor hours

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in work covered by subsection (1) as the dealer receives for

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labor used in its customer retail repairs, evidenced by the

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dealer's financial statement provided to the licensee for the

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month preceding the dealer's written request, if the dealer

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provides in the written request the arithmetical mean of the

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hourly wage paid to all of its technicians during that preceding

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month. The arithmetical mean shall be the dealer cost used in

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that calculation.

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

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shall uniformly apply and pay that hourly labor rate for all

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

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

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

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

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

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

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similarly named document. A licensee shall establish reasonable

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

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time guides for newly introduced model motor vehicles which are

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at least consistent with its existing documents. A dealer who

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disputes as unreasonable a flat-rate time established by the

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licensee or its common entity may bring an action for relief

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against the licensee or common entity in the circuit court for

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the county in which the dealer's principal place of business is

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located. As used in this subsection, the terms "retail customer

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repair" and "similar work" are not limited to a repair to the

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same model vehicle or model year, but include prior repairs that

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resemble but are not identical to the repair for which the dealer

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is making a claim for compensation.

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     (c) In determining the hourly labor rate calculated under

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

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repairs; vehicle reconditioning; repairs performed for group,

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

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of motor vehicles for government agencies; labor used in special

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events, specials, express service; and promotional discounts

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shall not be included as retail customer repairs and shall be

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excluded from such calculations.

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

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motor vehicle dealer for parts or labor determined under this

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

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

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increasing parts or labor compensation. A dealer may make written

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requests for changes in compensation for parts or labor performed

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under this section not more than semiannually. The dealer shall

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attach supporting documentation to each written request. The

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request for changes in parts or labor compensation shall be

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deemed accepted unless the licensee, within 30 days after receipt

411

of the request, in writing, disputes with specificity the

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supporting documentation in the request. A dealer whose request

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for increased compensation is disputed may bring an action

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against the licensee in a court of competent jurisdiction in the

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county in which the dealer's principal place of business is

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located for a declaratory judgment to approve its change request,

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for an injunction precluding the licensee from refusing to

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compensate it, and for damages. In calculating compensatory

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damages, any increase in parts or labor determined to be owed to

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the dealer shall be ordered paid retroactively to the date of the

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licensee's receipt of the written request.

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

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

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vehicle dealer under this section, including by decreasing or

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eliminating solely in this state at any of its dealers, any bonus

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or incentive that it has in effect nationally or regionally; by

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reducing only in this state at any of its dealers, the dealer's

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gross margin for any of the licensee's products or services or

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limiting where the wholesale price charged to the dealer is

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determined by the licensee and the reduction is not in effect

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nationally or regionally; by imposing a separate charge or

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surcharge to the wholesale price paid by a dealer in this state

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for any product or service offered to or supplied by a licensee

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under a franchise agreement with the dealer; or by passing on to

435

the dealer any charge or surcharge of a common entity of the

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licensee.

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

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influence a motor vehicle dealer to implement or change the

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prices for which it sells parts or labor in retail customer

440

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

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

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compensation under this section which is less favorable to its

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dealers in this state than is applicable to its dealers

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nationally or regionally, or, if there is no such national or

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regional policy, to its dealers in a majority of states.

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     (8) If a court determines with finality that any provision

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of this section is void or unenforceable, the remaining

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provisions shall not be affected but shall remain in effect.

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