AB 759, as introduced, Linder. Recreational vehicles.
(1) Existing law establishes a New Motor Vehicle Board that regulates the activities or practices of a new motor vehicle dealer, manufacturer, manufacturer branch, distributor, distributor branch, or representative, as specified. Existing law regulates the terms and enforcement of recreational vehicle franchise agreements. Existing law requires a franchisor seeking to enter into a franchise establishing an additional motor vehicle dealership within a relevant market area where the same recreational vehicle line-make is represented, or seeking to relocate an existing motor vehicle dealership, to notify the board of that intention. Existing law allows franchisees in that recreational vehicle line-make in the relevant market area to file with the board a protest to establishing or relocating the dealership.
This bill would revise these provisions and would clarify that the above provisions apply to a franchisor seeking to enter into a franchise establishing an additional recreational vehicle dealership, or seeking to relocate an existing recreational vehicle dealership, that has a relevant market area within which the same recreation vehicle line-make is represented.
(2) Existing law generally requires a manufacturer, manufacturer branch, remanufacturer, remanufacturer branch, distributor, distributor branch, transporter, or dealer of vehicles to be licensed by the Department of Motor Vehicles. Existing law allows the department to suspend or revoke a license issued to a dealer upon determining that the person to whom the license was issued has willfully violated specified requirements imposed on new motor vehicle franchisors relating to providing specified information and compensation to franchisees.
This bill would make the above provisions applicable to a recreational vehicle franchisor.
(3) Existing law makes it a violation, punishable as an infraction, for the holder of a dealer’s license to, among other things, advertise or sell a new vehicle of a line-make for which the dealer does not hold a franchise. Under existing law, this prohibition does not apply to a recreational vehicle, as defined.
This bill would make the above prohibitions applicable to recreational vehicles. By increasing the scope of a crime, this bill would impose a state-mandated local program.
(4) Existing law makes it a violation, punishable as an infraction, for a licensed manufacturer or distributor to modify, replace, enter into, relocate, terminate, or refuse to renew a franchise in violation of specified provisions of law.
This bill would make this prohibition subject to additional provisions of law relating to recreational vehicle manufacturers and distributors. By expanding the scope of a crime, this bill would impose a state-mandated local program.
(5) Existing law prohibits a recreational vehicle manufacturer or distributor from selling a new recreational vehicle through a recreational vehicle dealer without having first entered into a written recreational vehicle franchise.
This bill would, following the termination, cancellation, or non-renewal of a recreational vehicle franchise, allow the sale of any new recreational vehicle inventory that was purchased by the recreational vehicle dealer, or shipped by a manufacturer or distributor, during the period that the written recreational vehicle franchise was in effect.
(6) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Section 3010 of the Vehicle Code is amended to
Five members of the board shall constitute a quorum for
4the transaction of business, for the performance of any duty or the
5exercise of any power or authority of the board, except that three
6members of the board, who are not new motor vehicle dealers,
7shall constitute a quorum for the purposes of Article 4
8(commencing with Section 3060) and the consideration of a petition pursuant to
10subdivision (c) of Section 3050 that involves a dispute between a
11franchisee and franchisor.
Section 3066 of the Vehicle Code is amended to read:
(a) Upon receiving a protest pursuant to Section 3060,
143062, 3064, 3065,
begin delete 3065.1, 3070, 3072, 3074, 3075, or 3076end delete, the board shall fix a time within 60 days of the order, and
16place of hearing, and shall send by
begin delete registeredend delete mail a copy
17of the order to the franchisor, the protesting franchisee, and all
18individuals and groups that have requested notification by the
19board of protests and decisions of the board. Except in a case
20involving a franchisee who deals exclusively in motorcycles, the
21board or its executive director may, upon a showing of good cause,
22accelerate or postpone the date initially established for a hearing,
23but the hearing
begin delete mayend delete not be rescheduled more than 90 days
24after the board’s initial order. For the purpose of accelerating or
25postponing a hearing date, “good cause” includes, but is not limited
26to, the effects upon, and any irreparable harm to, the parties or
27interested persons or groups if the request for a change in hearing
28date is not granted. The board or an administrative law judge
29designated by the board shall hear and consider the oral and
30documented evidence introduced by the parties and other interested
31individuals and groups, and the board shall make its decision solely
32on the record so made. Chapter 4.5 (commencing with Section
3311400) of Part 1 of Division 3 of Title 2 of the Government Code
P4 1and Sections 11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513,
211514, 11515, and 11517 of the Government Code apply to these
4(b) In a hearing on a protest filed pursuant to Section 3060
begin delete, the franchisor shall have the burden
53062, 3070, or 3072,end delete
6of proof to establish that there is good cause to modify, replace,
7terminate, or refuse to continue a franchise. The franchisee shall
8have the burden of proof to establish that there is good cause not
9to enter into a franchise establishing
begin delete or relocatingend delete an additional
10motor vehicle dealership.
12(c) Except as otherwise provided in this chapter, in a hearing
13on a protest alleging a violation of, or filed pursuant to, Section
begin delete, 3065.1, 3074, 3075, or 3076,end delete the franchisee
15shall have the burden of proof, but the franchisor has the burden
16of proof to establish that a franchisee acted with intent to defraud
begin delete whereend delete that issue is material to a protest filed
18pursuant to Section 3065
begin delete, 3065.1, 3075, or 3076end delete.
19(d) A member of the board who is a new motor vehicle dealer
20may not participate in, hear, comment, or advise other members
21upon, or decide, a matter involving a protest filed pursuant to this
22article unless all parties to the protest stipulate otherwise.
Section 3067 of the Vehicle Code is amended to read:
(a) The decision of the board shall be in writing and
25shall contain findings of fact and a determination of the issues
26presented. The decision shall sustain, conditionally sustain,
27overrule, or conditionally overrule the protest. Conditions imposed
28by the board shall be for the purpose of assuring performance of
29binding contractual agreements between franchisees and franchisors
30or otherwise serving the purposes of this
begin delete article or Article 5 If the board fails to act
31(commencing with Section 3070).end delete
32within 30 days after the hearing, within 30 days after the board
33receives a proposed decision
begin delete whereend delete the case is heard before
34an administrative law judge alone, or within a period necessitated
35by Section 11517 of the Government Code, or as may be mutually
36agreed upon by the parties, then the proposed action shall be
37deemed to be approved. Copies of the board’s decision shall be
38delivered to the parties personally or sent to them by
begin delete registeredend delete
39 mail, as well as to all individuals and groups that have
40requested notification by the board of protests and decisions by
P5 1the board. The board’s decision shall be final upon its delivery or
2mailing and a reconsideration or rehearing is not permitted.
3(b) Notwithstanding subdivision (c) of Section 11517 of the
4Government Code, if a protest is heard by an administrative law
5judge alone, 10 days after receipt by the board of the administrative
6law judge’s proposed decision, a copy of the proposed decision
7shall be filed by the board as a public record and a copy shall be
8served by the board on each party and his or her attorney.
Section 3068 of the Vehicle Code is amended to read:
Either party may seek judicial review of final decisions
11of the board. Time for filing for
begin delete suchend delete review shall not be more
12than 45 days from the date on which the final order of the board
13is made public and is delivered to the parties personally or is sent
14 them by
begin delete registeredend delete
Section 3072 of the Vehicle Code is amended to read:
(a) (1) Except as otherwise provided in subdivision (b),
17if a franchisor seeks to enter into a franchise establishing an
begin delete motorend delete vehicle dealership begin delete withinend delete a
20relevant market area
begin delete whereend delete the same recreational vehicle
begin delete then represented, or seeks to relocate an existing motor the franchisor shall, in writing,
22vehicle dealership,end delete
23first notify the board and each franchisee in that recreational vehicle
24line-make in the relevant market area of the franchisor’s intention
25to establish an additional dealership or to relocate an existing
begin delete dealership within or into that market area.end delete Within 20
27days of receiving the notice, satisfying the requirements of this
28section, or within 20 days after the end of any appeal procedure
29provided by the franchisor, any franchisee required to be given
30the notice may file with the board a protest to
begin delete establishing or . If, within this
31relocating the dealershipend delete
33time, a franchisee files with the board a request for additional time
34to file a protest, the board or its
begin delete secretaryend delete, upon
35a showing of good cause, may grant an additional 10 days to file
36the protest. When a protest is filed, the board shall inform the
37franchisor that a timely protest has been filed, that a hearing is
38required pursuant to Section
begin delete 3066end delete, and that the franchisor
39shall not establish
begin delete or relocateend delete
the proposed dealership until the board has held a hearing as
P6 1provided in Section
begin delete 3066end delete, nor thereafter, if the board has
2determined that there is good cause for not permitting the
3 dealership. In the
5event of multiple protests, hearings may be consolidated to expedite
6the disposition of the issue.
7(2) The written notice shall contain, on the first page thereof in
8at least 12-point bold type and circumscribed by a line to segregate
9it from the rest of the text, the following statement:
10“NOTICE TO DEALER: You have the right to file a protest
11with the NEW MOTOR VEHICLE BOARD in Sacramento and
12have a hearing on your protest under the terms of the California
13Vehicle Code if you oppose this action. You must file your protest
14with the board within 20 days of your receipt of this notice, or
15within 20 days after the end of any appeal procedure that is
16provided by us to you. If, within this time, you file with the board
17a request for additional time to file a protest, the board or its
begin delete secretaryend delete, upon a showing of good cause, may
19grant you an additional 10 days to file the protest.”
20(b) Subdivision (a) does not apply to any of the following:
21(1) The relocation of an existing dealership to any location that
22is both within the same city as, and within one mile of, the existing
24(2) The establishment at any location that is both within the
25same city as, and within one-quarter mile of, the location of a
26dealership of the same recreational vehicle line-make that has been
27out of operation for less than 90 days.
28(3) A display of vehicles at a fair, exposition, or similar exhibit
29if no actual sales are made at the event and the display does not
30exceed 30 days. This paragraph may not be construed to prohibit
31a new vehicle dealer from establishing a branch office for the
32purpose of selling vehicles at the fair, exposition, or similar exhibit,
33even though that event is sponsored by a financial institution, as
34defined in Section 31041 of the Financial Code, or by a financial
35institution and a licensed dealer. The establishment of these branch
36offices, however, shall be in accordance with subdivision (a) where
38(4) An annual show sponsored by a national trade association
39of recreational vehicle manufacturers that complies with all of the
40requirements of subdivision (d) of Section 11713.15.
P7 1(5) A motor vehicle dealership protesting the location of another
2dealership with the same recreational vehicle line-make within its
3relevant market area, if the dealership location subject to the protest
4was established on or before January 1, 2004.
5(c) For the purposes of this section, the reopening of a dealership
6that has not been in operation for one year or more shall be deemed
7the establishment of an additional
begin delete motorend delete vehicle
9(d) For the purposes of this section and Section 3073, a
begin delete “motorend delete
10 vehicle dealership” or “dealership” is any authorized
11facility at which a franchisee offers for sale or lease, displays for
12sale or lease, or sells or leases new recreational vehicles, as defined
13in subdivision (a) of Section 18010 of the Health and Safety Code.
begin delete “motorend delete vehicle dealership” or “dealership” does
15not include a dealer who deals exclusively in truck campers.
Section 3072.5 of the Vehicle Code is amended to
For the purposes of this article, a “recreational vehicle
19line-make” is a group or groups of recreational vehicles defined
20by the terms of a written agreement that complies with Section
begin delete 331end delete.
Section 3073 of the Vehicle Code is amended to read:
In determining whether good cause has been established
24for not entering into or relocating
begin delete additional franchise forend delete the same
26recreational vehicle line-make, the board shall take into
27consideration the existing circumstances, including, but not limited
28to, all of the following:
29(a) The permanency of the investment.
30(b) The effect on
the retail recreational vehicle business and the
31consuming public in the relevant market area.
32(c) Whether it is injurious to the public welfare for an additional
33 franchise to be established.
35(d) Whether the franchisees of the same recreational vehicle
begin delete thatend delete relevant market area are providing adequate
37competition and convenient consumer care for the motor vehicles
38of the recreational vehicle line-make in the market area. In making
39this determination, the board shall consider the adequacy of
40recreational vehicle sales and, if required by the franchise, service
P8 1facilities, equipment, supply of vehicle parts, and qualified service
3(e) Whether the establishment of an additional franchise would
4increase competition and therefore be in the public interest.
Section 3074 of the Vehicle Code is amended to read:
(a) A franchisor shall specify to its franchisees the
7delivery and preparation obligations of the franchisees prior to
8delivery of new recreational vehicles to retail buyers. A copy of
9the delivery and preparation obligations, which shall constitute
10the franchisee’s only responsibility for product liability between
11the franchisee and the franchisor but which shall not in any way
12affect the franchisee’s responsibility for product liability between
13the purchaser and either the franchisee or the franchisor, and a
14schedule of compensation to be paid franchisees for the work and
15services they shall be required to perform in connection with the
16delivery and preparation obligations shall be filed with the board
17by franchisors, and shall constitute the compensation as set forth
18on the schedule. The schedule of compensation shall be reasonable,
19with the reasonableness thereof being subject to the approval of
begin delete providingend delete a franchisee files a notice of protest with
21the board. In determining the reasonableness of the schedules, the
22board shall consider all relevant circumstances, including, but not
23limited to, the time required to perform each function that the
24dealer is obligated to perform and the appropriate labor rate.
25(b) Upon delivery of the vehicle, the franchisee shall give a
26copy of the delivery and preparation obligations to the purchaser
27and a written certification that
begin delete he or sheend delete has fulfilled
Section 3078 of the Vehicle Code is amended to read:
(a) If the board receives a complaint from a member of
31the public seeking a refund involving the sale or lease of, or a
32replacement of, a recreational vehicle, as defined in subdivision
33(a) of Section 18010 of the Health and Safety Code, from a
begin delete motorend delete
34 vehicle dealership, as defined in
begin delete paragraph (1) of of Section 3072, the board shall
35subdivision (e)end delete
36recommend that the complainant consult with the Department of
begin deleteNothing in this end deletechapter begin delete affectsend delete a person’s
39rights regarding a transaction involving a recreational vehicle as
40defined in subdivision (a), to maintain an action under any other
P9 1statute, including, but not limited to, applicable provisions of Title
21.7 (commencing with Section 1790) of Part 4 of Division 3 of
3the Civil Code.
Section 3079 of the Vehicle Code is amended to read:
This article applies only to a
6 franchise entered into or renewed on or after January 1, 2004.
Section 3080 is added to the Vehicle Code, to read:
(a) Upon receiving a protest pursuant to Section 3070,
93072, 3074, 3075, or 3076, the board shall fix a time and place of
10hearing within 60 days of the order, and shall send by certified
11mail a copy of the order to the franchisor, the protesting franchisee,
12and all individuals and groups that have requested notification by
13the board of protests and decisions of the board. The board or its
14executive director may, upon a showing of good cause, accelerate
15or postpone the date initially established for a hearing, but the
16hearing shall not be rescheduled more than 90 days after the board’s
17initial order. For the purpose of accelerating or postponing a
18hearing date, “good cause” includes, but is not limited to, the
19effects upon, and any irreparable harm to, the parties or interested
20persons or groups if the request for a change in hearing date is not
21granted. The board or an administrative law judge designated by
22the board shall hear and consider the oral and documented evidence
23introduced by the parties and other interested individuals and
24groups, and the board shall make its decision solely on the record
25so made. Chapter 4.5 (commencing with Section 11400) of Part
261 of Division 3 of Title 2 of the Government Code and Sections
2711507.3, 11507.6, 11507.7, 11511, 11511.5, 11513, 11514, 11515,
28and 11517 of the Government Code apply to these proceedings.
29(b) In a hearing on a protest filed pursuant to Section 3070 or
303072, the franchisor shall have the burden of proof to establish
31that there is good cause to modify, replace, terminate, or refuse to
32 continue a franchise. The franchisee shall have the burden of proof
33to establish that there is good cause not to enter into a franchise
34establishing an additional recreational vehicle dealership or
35relocating an existing recreational vehicle dealership.
36(c) Except as otherwise provided in this chapter, in a hearing
37on a protest alleging a violation of, or filed pursuant to, Section
383074, 3075, or 3076, the franchisee shall have the burden of proof,
39but the franchisor has the burden of proof to establish that a
P10 1franchisee acted with intent to defraud the franchisor when that
2issue is material to a protest filed pursuant to Section 3075 or 3076.
3(d) A member of the board who is a new motor vehicle dealer
4or recreational vehicle dealer may not participate in, hear,
5comment, or advise other members upon, or decide, a matter
6involving a protest filed pursuant to this article unless all parties
7to the protest stipulate otherwise.
Section 3081 is added to the Vehicle Code, to read:
(a) The decision of the board shall be in writing and
10shall contain findings of fact and a determination of the issues
11presented. The decision shall sustain, conditionally sustain,
12overrule, or conditionally overrule the protest. Conditions imposed
13by the board shall be for the purpose of assuring performance of
14binding contractual agreements between franchisees and franchisors
15or otherwise serving the purposes of this article. If the board fails
16to act within 30 days after the hearing, within 30 days after the
17board receives a proposed decision when the case is heard before
18an administrative law judge alone, or within a period necessitated
19by Section 11517 of the Government Code, or as may be mutually
20agreed upon by the parties, then the proposed action shall be
21deemed to be approved. Copies of the board’s decision shall be
22delivered to the parties personally or sent to them by certified mail,
23as well as to all individuals and groups that have requested
24notification by the board of protests and decisions by the board.
25The board’s decision shall be final upon its delivery or mailing
26and a reconsideration or rehearing is not permitted.
27(b) Notwithstanding subdivision (c) of Section 11517 of the
28Government Code, if a protest is heard by an administrative law
29judge alone, 10 days after receipt by the board of the administrative
30law judge’s proposed decision, a copy of the proposed decision
31shall be filed by the board as a public record and a copy shall be
32served by the board on each party and his or her attorney.
Section 3082 is added to the Vehicle Code, to read:
Either party may seek judicial review of final decisions
35of the board. Time for filing for the review shall not be more than
3645 days from the date on which the final order of the board is made
37public and is delivered to the parties personally or is sent to them
38by certified mail.
Section 11705 of the Vehicle Code is amended to
(a) The department, after notice and hearing, may
2suspend or revoke the license issued to a dealer, transporter,
3manufacturer, manufacturer branch, remanufacturer,
4remanufacturer branch, distributor, or distributor branch upon
5determining that the person to whom the license was issued is not
6lawfully entitled thereto, or has done any of the following:
7(1) Filed an application for the license using a false or fictitious
8name not registered with the proper authorities, or knowingly made
9a false statement or knowingly concealed a material fact, in the
10application for the license.
11(2) Made, or knowingly or negligently permitted, an illegal use
12of the special plates issued to the licensee.
13(3) Used a false or fictitious name, knowingly made a false
14statement, or knowingly concealed a material fact, in an application
15for the registration of a vehicle, or otherwise committed a fraud
16in the application.
17(4) Failed to deliver to a transferee lawfully entitled thereto a
18properly endorsed certificate of ownership.
19(5) Knowingly purchased, sold, or otherwise acquired or
20disposed of a stolen motor vehicle.
21(6) Failed to provide and maintain a clear physical division
22between the type of business licensed pursuant to this chapter and
23any other type of business conducted at the established place of
25(7) Willfully violated Section
begin delete 3064 or 3065end delete or any rule or regulation adopted pursuant thereto.
27(8) Violated any provision of Division 3 (commencing with
28Section 4000) or any rule or regulation adopted pursuant thereto,
29or subdivision (a) of Section 38200.
30(9) Violated any provision of Division 4 (commencing with
31Section 10500) or any rule or regulation adopted pursuant thereto.
32(10) Violated any provision of Article 1 (commencing with
33Section 11700) of Chapter 4 of Division 5 or any rule or regulation
34adopted pursuant thereto.
35(11) Violated any provision of Part 5 (commencing with Section
3610701) of Division 2 of the Revenue and Taxation Code or any
37rule or regulation adopted pursuant thereto.
38(12) Violated any provision of Chapter
begin delete 3332bend delete (commencing
39with Section 2981) of Title 14 of Part 4 of Division 3 of the Civil
40Code or any rule or regulation adopted pursuant thereto.
P12 1(13) Submitted a check, draft, or money order to the department
2for any obligation or fee due the state which was dishonored or
3refused payment upon presentation.
4(14) Has caused any person to suffer any loss or damage by
5reason of any fraud or deceit practiced on that person or fraudulent
6representations made to that person in the course of the licensed
8For purposes of this paragraph, “fraud”
includes any act or
9omission which is included within the definition of either “actual
10fraud” or “constructive fraud” as defined in Sections 1572 and
111573 of the Civil Code, and “deceit” has the same meaning as
12defined in Section 1710 of the Civil Code. In addition, “fraud”
13and “deceit” include, but are not limited to, a misrepresentation in
14any manner, whether intentionally false or due to gross negligence,
15of a material fact; a promise or representation not made honestly
16and in good faith; an intentional failure to disclose a material fact;
17and any act within Section 484 of the Penal Code.
18For purposes of this paragraph, “person” also includes a
20(15) Failed to meet the terms and conditions of an agreement
21entered into pursuant to Section 11707.
22(16) Violated Section 43151, 43152, or 43153 of, or subdivision
23(b) of Section 44072.10 of, the Health and Safety Code.
24(17) Failed to repay a claim paid by the Consumer Motor
25Vehicle Recovery Corporation as provided in subdivision (i) of
27(18) As a buy-here-pay-here dealer, violated any provision of
28Chapter 11 (commencing with Section 7500) of Divisions 3 of the
29Business and Professions Code or any rule or regulation adopted
30pursuant to those provisions.
31(b) Any of the causes specified in this chapter as a cause for
32refusal to issue a license to a transporter, manufacturer,
33manufacturer branch, remanufacturer, remanufacturer branch,
34distributor, distributor branch, or dealer applicant is cause to
35suspend or revoke a license issued to a transporter, manufacturer,
36manufacturer branch, remanufacturer, remanufacturer branch,
37distributor, distributor branch, or dealer.
38(c) Except as provided in Section 11707, every hearing provided
39for in this section shall be conducted pursuant to Chapter 5
P13 1(commencing with Section 11500) of Part 1 of Division 3 of Title
22 of the Government Code.
Section 11713.1 of the Vehicle Code is amended to
It is a violation of this code for the holder of a dealer’s
6license issued under this article to do any of the following:
7(a) Advertise a specific vehicle for sale without identifying the
8vehicle by its model, model-year, and either its license number or
9that portion of the vehicle identification number that distinguishes
10the vehicle from all other vehicles of the same make, model, and
11model-year. Model-year is not required to be advertised for current
12model-year vehicles. Year models are no longer current when
13ensuing year models are available for purchase at retail in
14California. An advertisement that offers for sale a class of new
15vehicles in a dealer’s inventory, consisting of five or more vehicles,
16that are all of the same make, model, and model-year is not required
17to include in the advertisement the vehicle identification numbers
18or license numbers of those vehicles.
19(b) Advertise the total price of a vehicle without including all
20costs to the purchaser at time of sale, except taxes, vehicle
21registration fees, the California tire fee, as defined in Section 42885
22of the Public Resources Code, emission testing charges not
23exceeding fifty dollars ($50), actual fees charged for certificates
24pursuant to Section 44060 of the Health and Safety Code, finance
25charges, and any dealer document processing charge or charge to
26electronically register or transfer the vehicle.
27(c) (1) Exclude from an advertisement of a vehicle for sale that
28there will be added to the advertised total price at the time of sale,
29charges for sales tax, vehicle registration fees, the California tire
30fee, the fee charged by the state for the issuance of a certificate of
31 compliance or noncompliance pursuant to a statute, finance
32charges, a charge to electronically register or transfer the vehicle,
33and a dealer document processing charge.
34(2) The obligations imposed by paragraph (1) are satisfied by
35adding to the advertisement a statement containing no abbreviations
36and that is worded in substantially the following form: “Plus
37government fees and taxes, any finance charges, any dealer
38document processing charge, any electronic filing charge, and any
39emission testing charge.”
P14 1(3) For purposes of paragraph (1), “advertisement” means an
2advertisement in a newspaper, magazine, or direct mail publication
3that is two or more columns in width or one column in width and
4more than seven inches in length, or on a Web page of a dealer’s
5Internet Web site that displays the price of a vehicle offered for
6sale on the Internet, as that term is defined in paragraph (6) of
7subdivision (f) of Section 17538 of the Business and Professions
9(d) Represent the dealer document processing charge, electronic
10registration or transfer charge, or emission testing charge, as a
12(e) Fail to sell a vehicle to a person at the advertised total price,
13exclusive of taxes, vehicle registration fees, the California tire fee,
14the fee charged by the state for the issuance of a certificate of
15compliance or noncompliance pursuant to a statute, finance
16charges, mobilehome escrow fees, the amount of a city, county,
17or city and county imposed fee or tax for a mobilehome, a dealer
18document processing charge, an electronic registration or transfer
19charge, and a charge for emission testing not to exceed fifty dollars
20($50) plus the actual fees charged for certificates pursuant to
21Section 44060 of the Health and Safety Code, while the vehicle
22remains unsold, unless the advertisement states the advertised total
23price is good only for a specified time and the time has elapsed.
24Advertised vehicles shall be sold at or below the advertised total
25price, with statutorily permitted exclusions, regardless of whether
26the purchaser has knowledge of the advertised total price.
27(f) (1) Advertise for sale, sell, or purchase for resale a new
28vehicle of a line-make for which the dealer does not hold a
30(2) This subdivision does not apply to a transaction involving
32(A) A mobilehome.
33(B) A recreational vehicle as defined in Section 18010 of the
34Health and Safety Code.
36 A commercial coach, as defined in Section 18001.8 of the
37Health and Safety Code.
39 An off-highway motor vehicle subject to identification as
40defined in Section 38012.
P15 1(E)end delete
2 A manufactured home.
4 A new vehicle that will be substantially altered or modified
5by a converter prior to resale.
7 A commercial vehicle with a gross vehicle weight rating of
8more than 10,000 pounds.
10 A vehicle purchased for export and exported outside the
11territorial limits of the United States without being registered with
14 A vehicle acquired in the ordinary course of business as a
15new vehicle by a dealer franchised to sell that vehicle, if all of the
17(i) The manufacturer or distributor of the vehicle files a
19(ii) The franchise agreement of the dealer is terminated,
20canceled, or rejected by the manufacturer or distributor as part of
21the bankruptcy proceedings and the termination, cancellation, or
22rejection is not a result of the revocation by the department of the
23dealer’s license or the dealer’s conviction of a crime.
24(iii) The vehicle is held in the inventory of the dealer on the
25date the bankruptcy petition is filed.
26(iv) The vehicle is sold by the dealer within six months of the
27date the bankruptcy petition is filed.
begin delete (I)end delete of paragraph (2) does not entitle a
29dealer whose franchise agreement has been terminated, canceled,
30or rejected to continue to perform warranty service repairs or
31continue to be eligible to offer or receive consumer or dealer
32incentives offered by the manufacturer or distributor.
33(g) Sell a park trailer, as specified in Section 18009.3 of the
34Health and Safety Code, without disclosing in writing to the
35purchaser that a park trailer is required to be moved by a transporter
36or a licensed manufacturer or dealer under a permit issued by the
37Department of Transportation or a local authority with respect to
38highways under their respective jurisdictions.
39(h) Advertise free merchandise, gifts, or services provided by
40a dealer contingent on the purchase of a vehicle. “Free” includes
P16 1merchandise or services offered for sale at a price less than the
2seller’s cost of the merchandise or services.
3(i) (1) Advertise vehicles, and related goods or services, at a
4specified dealer price, with the intent not to supply reasonably
5expectable demand, unless the advertisement discloses the number
6of vehicles in stock at the advertised price. In addition, whether
7or not there are sufficient vehicles in stock to supply a reasonably
8expectable demand, when phrases such as “starting at,” “from,”
9“beginning as low as,” or words of similar import are used in
10reference to an advertised price, the advertisement shall disclose
11the number of vehicles available at that advertised price.
12(2) For purposes of this subdivision, in a newspaper
13advertisement for a vehicle that is two model-years old or newer,
14the actual phrase that states the number of vehicles in stock at the
15advertised price shall be printed in a type size that is at least equal
16to one-quarter of the type size, and in the same style and color of
17type, used for the advertised price. However, in no case shall the
18phrase be printed in less than 8-point type size, and the phrase
19shall be disclosed immediately above, below, or beside the
20advertised price without intervening words, pictures, marks, or
22(3) The disclosure required by this subdivision is in addition to
23any other disclosure required by this code or any regulation
24regarding identifying vehicles advertised for sale.
25(j) Use “rebate” or similar words, including, but not limited to,
26“cash back,” in advertising the sale of a vehicle unless the rebate
27is expressed in a specific dollar amount and is in fact a rebate
28offered by the vehicle manufacturer or distributor, a finance
29company affiliated with a vehicle manufacturer or distributor, a
30regulated utility, or a governmental entity directly to the retail
31purchaser of the vehicle or to the assignee of the retail purchaser.
32(k) Require a person to pay a higher price for a vehicle and
33related goods or services for receiving advertised credit terms than
34the cash price the same person would have to pay to purchase the
35same vehicle and related goods or services. For the purpose of this
36subdivision, “cash price” has the same meaning as defined in
37subdivision (e) of Section 2981 of the Civil Code.
38(l) Advertise a guaranteed trade-in allowance.
39(m) Misrepresent the authority of a salesperson, representative,
40or agent to negotiate the final terms of a transaction.
P17 1(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
2or similar terms that refer to a dealer’s cost for a vehicle in an
3advertisement for the sale of a vehicle or advertise that the selling
4 price of a vehicle is above, below, or at either of the following:
5(A) The manufacturer’s or distributor’s invoice price to a dealer.
6(B) A dealer’s cost.
7(2) This subdivision does not apply to either of the following:
8(A) A communication occurring during face-to-face negotiations
9for the purchase of a specific vehicle if the prospective purchaser
10initiates a discussion of the vehicle’s invoice price or the dealer’s
11cost for that vehicle.
12(B) A communication between a dealer and a prospective
13commercial purchaser that is not disseminated to the general public.
14For purposes of this subparagraph, a “commercial purchaser”
15means a dealer, lessor, lessor-retailer, manufacturer,
16remanufacturer, distributor, financial institution, governmental
17entity, or person who purchases 10 or more vehicles during a year.
18(o) Violate a law prohibiting bait and switch advertising,
19including, but not limited to, the guides against bait advertising
20set forth in Part 238 (commencing with Section 238) of Title 16
21of the Code of Federal Regulations, as those regulations read on
22January 1, 1988.
23(p) Make an untrue or misleading statement indicating that a
24vehicle is equipped with all the factory-installed optional equipment
25the manufacturer offers, including, but not limited to, a false
26statement that a vehicle is “fully factory equipped.”
27(q) Affix on a new vehicle a supplemental price sticker
28containing a price that represents the dealer’s asking price that
29exceeds the manufacturer’s suggested retail price unless all of the
30 following occur:
31(1) The supplemental sticker clearly and conspicuously discloses
32in the largest print appearing on the sticker, other than the print
33size used for the dealer’s name, that the supplemental sticker price
34is the dealer’s asking price, or words of similar import, and that it
35is not the manufacturer’s suggested retail price.
36(2) The supplemental sticker clearly and conspicuously discloses
37the manufacturer’s suggested retail price.
38(3) The supplemental sticker lists each item that is not included
39in the manufacturer’s suggested retail price, and discloses the
40additional price of each item. If the supplemental sticker price is
P18 1greater than the sum of the manufacturer’s suggested retail price
2and the price of the items added by the dealer, the supplemental
3sticker price shall set forth that difference and describe it as “added
5(r) Advertise an underselling claim, including, but not limited
6to, “we have the lowest prices” or “we will beat any dealer’s price,”
7unless the dealer has conducted a recent survey showing that the
8dealer sells its vehicles at lower prices than another licensee in its
9trade area and maintains records to adequately substantiate the
10claims. The substantiating records shall be made available to the
11department upon request.
12(s) (1) Advertise an incentive offered by the manufacturer or
13distributor if the dealer is required to contribute to the cost of the
14incentive as a condition of participating in the incentive program,
15unless the dealer discloses in a clear and conspicuous manner that
16dealer participation may affect consumer cost.
17(2) For purposes of this
subdivision, “incentive” means anything
18of value offered to induce people to purchase a vehicle, including,
19but not limited to, discounts, savings claims, rebates, below-market
20finance rates, and free merchandise or services.
21(t) Display or offer for sale a used vehicle unless there is affixed
22to the vehicle the Federal Trade Commission’s Buyer’s Guide as
23required by Part 455 of Title 16 of the Code of Federal Regulations.
24(u) Fail to disclose in writing to the franchisor of a new motor
25vehicle dealer the name of the purchaser, date of sale, and the
26vehicle identification number of each new motor vehicle sold of
27the line-make of that franchisor, or intentionally submit to that
28franchisor a false name for the purchaser or false date for the date
30(v) Enter into a contract for the retail sale of a motor vehicle
31 unless the contract clearly and conspicuously discloses whether
32the vehicle is being sold as a new vehicle or a used vehicle, as
33defined in this code.
34(w) Use a simulated check, as defined in subdivision (a) of
35Section 22433 of the Business and Professions Code, in an
36advertisement for the sale or lease of a vehicle.
37(x) Fail to disclose, in a clear and conspicuous manner in at
38least 10-point boldface type on the face of a contract for the retail
39sale of a new motor vehicle that this transaction is, or is not, subject
P19 1to a fee received by an autobroker from the selling new motor
2vehicle dealer, and the name of the autobroker, if applicable.
3(y) Sell or lease a new motor vehicle after October 1, 2012,
4unless the dealer has a contractual agreement with the department
5to be a private industry partner pursuant to Section 1685. This
6subdivision does not apply to the sale or lease of a motorcycle or
7off-highway motor vehicle subject to identification under Section
838010 or a recreational vehicle as defined in Section 18010 of the
9Health and Safety Code.
10(z) As used in this section, “make” and “model” have the same
11meaning as is provided in Section 565.12 of Title 49 of the Code
12of Federal Regulations.
Section 11713.3 of the Vehicle Code is amended to
It is unlawful and a violation of this code for a
16manufacturer, manufacturer branch, distributor, or distributor
17branch licensed pursuant to this code to do, directly or indirectly
18through an affiliate, any of the following:
19(a) To refuse or fail to deliver in reasonable quantities and within
20a reasonable time after receipt of an order from a dealer having a
21franchise for the retail sale of a new vehicle sold or distributed by
22the manufacturer or distributor, a new vehicle or parts or
23accessories to new vehicles as are covered by the franchise, if the
24vehicle, parts, or accessories are publicly advertised as being
25available for delivery or actually being delivered. This subdivision
26is not violated, however, if the failure is caused by acts or causes
27beyond the control of the manufacturer, manufacturer branch,
28distributor, or distributor branch.
29(b) To prevent or require, or attempt to prevent or require, by
30contract or otherwise, a change in the capital structure of a
31dealership or the means by or through which the dealer finances
32the operation of the dealership, if the dealer at all times meets
33reasonable capital standards agreed to by the dealer and the
34manufacturer or distributor, and if a change in capital structure
35does not cause a change in the principal management or have the
36effect of a sale of the franchise without the consent of the
37manufacturer or distributor.
38(c) To prevent or require, or attempt to prevent or require, a
39dealer to change the executive management of a dealership, other
40than the principal dealership operator or operators, if the franchise
P20 1was granted to the dealer in reliance upon the personal
2qualifications of that person.
3(d) (1) Except as provided in subdivision (t), to prevent or
4require, or attempt to prevent or require, by contract or otherwise,
5a dealer, or an officer, partner, or stockholder of a dealership, the
6sale or transfer of a part of the interest of any of them to another
7person. A dealer, officer, partner, or stockholder shall not, however,
8have the right to sell, transfer, or assign the franchise, or a right
9thereunder, without the consent of the manufacturer or distributor
10except that the consent shall not be unreasonably withheld.
11(2) (A) For the transferring franchisee to fail, prior to the sale,
12transfer, or assignment of a franchisee or the sale, assignment, or
13transfer of all, or substantially all, of the assets of the franchised
14business or a controlling interest in the franchised business to
15another person, to notify the manufacturer or distributor of the
16franchisee’s decision to sell, transfer, or assign the franchise. The
17notice shall be in writing and shall include all of the following:
18(i) The proposed transferee’s name and address.
19(ii) A copy of all of the agreements relating to the sale,
20assignment, or transfer of the franchised business or its assets.
21(iii) The proposed transferee’s application for approval to
22become the successor franchisee. The application shall include
23forms and related information generally utilized by the
24manufacturer or distributor in reviewing prospective franchisees,
25if those forms are readily made available to existing franchisees.
26As soon as practicable after receipt of the proposed transferee’s
27application, the manufacturer or distributor shall notify the
28franchisee and the proposed transferee of information needed to
29make the application complete.
30(B) For the manufacturer or distributor, to fail, on or before 60
31days after the receipt of all of the information required pursuant
32to subparagraph (A), or as extended by a written agreement
33between the manufacturer or distributor and the franchisee, to
34notify the franchisee of the approval or the disapproval of the sale,
35transfer, or assignment of the franchise. The notice shall be in
36writing and shall be personally served or sent by certified mail,
37return receipt requested, or by guaranteed overnight delivery
38service that provides verification of delivery and shall be directed
39to the franchisee. A proposed sale, assignment, or transfer shall
40be deemed approved, unless disapproved by the franchisor in the
P21 1manner provided by this subdivision. If the proposed sale,
2assignment, or transfer is disapproved, the franchisor shall include
3in the notice of disapproval a statement setting forth the reasons
4for the disapproval.
5(3) In an action in which the manufacturer’s or distributor’s
6withholding of consent under this subdivision or subdivision (e)
7is an issue, whether the withholding of consent was unreasonable
8is a question of fact requiring consideration of all the existing
10(e) To prevent, or attempt to prevent, a dealer from receiving
11fair and reasonable compensation for the value of the franchised
12business. There shall not be a transfer or assignment of the dealer’s
13franchise without the consent of the manufacturer or distributor,
14which consent shall not be unreasonably withheld or conditioned
15upon the release, assignment, novation, waiver, estoppel, or
16modification of a claim or defense by the dealer.
17(f) To obtain money, goods, services, or another benefit from
18a person with whom the dealer does business, on account of, or in
19relation to, the transaction between the dealer and that other person,
20other than for compensation for services rendered, unless the
21benefit is promptly accounted for, and transmitted to, the dealer.
22(g) (1) Except as provided in paragraph (3), to obtain from a
23dealer or enforce against a dealer an agreement, provision, release,
24assignment, novation, waiver, or estoppel that does any of the
26(A) Modifies or disclaims a duty or obligation of a manufacturer,
27manufacturer branch, distributor, distributor branch, or
28representative, or a right or privilege of a dealer, pursuant to
29Chapter 4 (commencing with Section 11700) of Division 5 or
30Chapter 6 (commencing with Section 3000) of Division 2.
31(B) Limits or constrains the right of a dealer to file,
32submit evidence in connection with a protest before the board.
33(C) Requires a dealer to terminate a franchise.
34(D) Requires a controversy between a manufacturer,
35manufacturer branch, distributor, distributor branch, or
36representative and a dealer to be referred to a person for a binding
37determination. However, this subparagraph does not prohibit
38arbitration before an independent arbitrator, provided that whenever
39a motor vehicle franchise contract provides for the use of arbitration
40to resolve a controversy arising out of, or relating to, that contract,
P22 1arbitration may be used to settle the controversy only if, after the
2controversy arises, all parties to the controversy consent in writing
3to use arbitration to settle the controversy. For the purpose of this
4subparagraph, the terms “motor vehicle” and “motor vehicle
5franchise contract” shall have the same meaning as defined in
6Section 1226 of Title 15 of the United States Code. If arbitration
7is elected to settle a dispute under a motor vehicle franchise
8contract, the arbitrator shall provide the parties to the arbitration
9with a written explanation of the factual and legal basis for the
11(2) An agreement, provision, release, assignment, novation,
12waiver, or estoppel prohibited by this subdivision shall be
13unenforceable and void.
14(3) This subdivision does not do any of the following:
15(A) Limit or restrict the terms upon which parties to a protest
16before the board, civil action, or other proceeding can settle or
17resolve, or stipulate to evidentiary or procedural matters during
18the course of, a protest, civil action, or other proceeding.
19(B) Affect the
enforceability of any stipulated order or other
20order entered by the board.
21(C) Affect the enforceability of any provision in a contract if
22the provision is not prohibited under this subdivision or any other
24(D) Affect the enforceability of a provision in any contract
25entered into on or before December 31, 2011.
26(E) Prohibit a dealer from waiving its right to file a protest
27pursuant to Section 3065.1 if the waiver agreement is entered into
28after a franchisor incentive program claim has been disapproved
29by the franchisor and the waiver is voluntarily given as part of an
30agreement to settle that claim.
31(F) Prohibit a voluntary agreement supported by valuable
32consideration, other than granting or renewing a franchise, that
33does both of the following:
34(i) Provides that a dealer establish or maintain exclusive
35facilities, personnel, or display space or provides that a dealer
36make a material alteration, expansion, or addition to a dealership
38(ii) Contains no waiver or other provision prohibited by
39subparagraph (A), (B), (C), or (D) of paragraph (1).
P23 1(G) Prohibit an agreement separate from the franchise agreement
2that implements a dealer’s election to terminate the franchise if
3the agreement is conditioned only on a specified time for
4termination or payment of consideration to the dealer.
5(H) (i) Prohibit a voluntary waiver agreement, supported by
6valuable consideration, other than the consideration of renewing
7a franchise, to waive the right of a dealer to file a protest under
8Section 3062 for the proposed establishment or relocation of a
9specific proposed dealership, if the waiver agreement provides all
10of the following:
11(I) The approximate address at which the proposed dealership
12will be located.
13(II) The planning potential used to establish the proposed
14dealership’s facility, personnel, and capital requirements.
15(III) An approximation of projected vehicle and parts sales, and
16number of vehicles to be serviced at the proposed dealership.
17(IV) Whether the franchisor or affiliate will hold an ownership
18interest in the proposed dealership or real property of the proposed
19dealership, and the approximate percentage of any franchisor or
20affiliate ownership interest in the proposed dealership.
21(V) The line-makes to be operated at the proposed dealership.
22(VI) If known at the time the waiver agreement is executed, the
23identity of the dealer who will operate the proposed dealership.
24(VII) The date the waiver agreement is to expire, which may
25not be more than 30 months after the date of execution of the
27(ii) Notwithstanding the provisions of a waiver agreement
28entered into pursuant to the provisions of this subparagraph, a
29dealer may file a protest under Section 3062 if any of the
30information provided pursuant to clause (i) has become materially
31inaccurate since the waiver agreement was executed. Any
32determination of the enforceability of a waiver agreement shall be
33determined by the board and the franchisor shall have the burden
34 of proof.
35(h) To increase prices of motor vehicles that the dealer had
36ordered for private retail consumers prior to the dealer’s receipt
37of the written official price increase notification. A sales contract
38signed by a private retail consumer is evidence of the order. In the
39event of manufacturer price reductions, the amount of the reduction
40received by a dealer shall be passed on to the private retail
P24 1consumer by the dealer if the retail price was negotiated on the
2basis of the previous higher price to the dealer. Price reductions
3apply to all vehicles in the dealer’s inventory that were subject to
4the price reduction. Price differences applicable to new model or
5series motor vehicles at the time of the introduction of new models
6or series shall not be considered a price increase or price decrease.
7This subdivision does not apply to price changes caused by either
8of the following:
9(1) The addition to a motor vehicle of required or optional
10equipment pursuant to state or federal law.
11(2) Revaluation of the United States dollar in the case of a
13(i) To fail to pay to a dealer, within a reasonable time following
14receipt of a valid claim by a dealer thereof, a payment agreed to
15be made by the manufacturer or distributor to the dealer by reason
16of the fact that a new vehicle of a prior year model is in the dealer’s
17inventory at the time of introduction of new model vehicles.
18(j) To deny the widow, widower, or heirs designated by a
19deceased owner of a dealership the opportunity to participate in
20the ownership of the dealership or successor dealership under a
21valid franchise for a reasonable time after the death of the owner.
22(k) To offer refunds or other types of inducements to a person
23for the purchase of new motor vehicles of a certain line-make to
24be sold to the state or a political subdivision of the state without
25making the same offer to all other dealers in the same line-make
26within the relevant market area.
27(l) To modify, replace, enter into, relocate, terminate, or refuse
28to renew a franchise in violation of Article 4 (commencing with
29Section 3060) of
30Chapter 6 of Division 2.
31(m) To employ a person as a representative who has not been
32licensed pursuant to Article 3 (commencing with Section 11900)
33of Chapter 4 of Division 5.
34(n) To deny a dealer the right of free association with another
35dealer for a lawful purpose.
36(o) (1) To compete with a dealer in the same line-make
37operating under an agreement or franchise from a manufacturer
38or distributor in the relevant market area.
39(2) A manufacturer, branch, or distributor or an entity that
40controls or is controlled by, a manufacturer, branch, or distributor,
P25 1shall not, however, be deemed to be competing in the following
or operating a dealership for a temporary period,
4not to exceed one year at the location of a former dealership of the
5same line-make that has been out of operation for less than six
6months. However, after a showing of good cause by a
7manufacturer, branch, or distributor that it needs additional time
8to operate a dealership in preparation for sale to a successor
9independent franchisee, the board may extend the time period.
10(B) Owning an interest in a dealer as part of a bona fide dealer
11development program that satisfies all of the following
13(i) The sole purpose of the program is to make franchises
14available to persons lacking capital, training, business experience,
15or other qualities ordinarily required of prospective franchisees
16and the dealer development candidate is an individual who is
17unable to acquire the franchise without assistance of the program.
18(ii) The dealer development candidate has made a significant
19investment subject to loss in the franchised business of the dealer.
20(iii) The program requires the dealer development candidate to
21manage the day-to-day operations and business affairs of the dealer
22and to acquire, within a reasonable time and on reasonable terms
23and conditions, beneficial ownership and control of a majority
24interest in the dealer and disassociation of any direct or indirect
25ownership or control by the manufacturer, branch, or distributor.
26(C) Owning a wholly owned subsidiary corporation of a
27distributor that sells motor vehicles at retail, if, for at least three
28years prior to January 1, 1973, the subsidiary corporation has been
29a wholly owned subsidiary of the distributor and engaged in the
30sale of vehicles at retail.
31(3) (A) A manufacturer, branch, and distributor that owns or
32operates a dealership in the manner described in subparagraph (A)
33of paragraph (2) shall give written notice to the board, within 10
34days, each time it commences or terminates operation of a
35dealership and each time it acquires, changes, or divests itself of
36an ownership interest.
37(B) A manufacturer, branch, and distributor that owns an interest
38in a dealer in the manner described in subparagraph (B) of
39paragraph (2) shall give written notice to the board, annually, of
40the name and location of each dealer in which it has an ownership
P26 1interest, the name of the bona fide dealer development owner or
2owners, and the ownership interests of each owner expressed as a
4(p) To unfairly discriminate among its franchisees with respect
5to warranty reimbursement or authority granted to its franchisees
6to make warranty adjustments with retail customers.
7(q) To sell vehicles to a person not licensed pursuant to this
8chapter for resale.
9(r) To fail to affix an identification number to a park trailer, as
10described in Section 18009.3 of the Health and Safety Code, that
11is manufactured on or after January 1, 1987, and that does not
12clearly identify the unit as a park trailer to the department. The
13configuration of the identification number shall be approved by
15(s) To dishonor a warranty, rebate, or other incentive offered
16to the public or a dealer in connection with the retail sale of a new
17motor vehicle, based solely upon the fact that an autobroker
18arranged or negotiated the sale. This subdivision shall not prohibit
19the disallowance of that rebate or incentive if the purchaser or
20dealer is ineligible to receive the rebate or incentive pursuant to
21any other term or condition of a rebate or incentive program.
22(t) To exercise a right of first refusal or other right requiring a
23franchisee or an owner of the franchise to sell, transfer, or assign
24to the franchisor, or to a nominee of the franchisor, all or a material
25part of the franchised business or of the assets of the franchised
26business unless all of the following requirements are met:
27(1) The franchise authorizes the franchisor to exercise a right
28of first refusal to acquire the franchised business or assets of the
29franchised business in the event of a proposed sale, transfer, or
31(2) The franchisor gives written notice of its exercise of the
32right of first refusal no later than 45 days after the franchisor
33receives all of the information required pursuant to subparagraph
34(A) of paragraph (2) of subdivision (d).
35(3) The sale, transfer, or assignment being proposed relates to
36not less than all or substantially all of the assets of the franchised
37business or to a controlling interest in the franchised business.
38(4) The proposed transferee is neither a family member of an
39owner of the franchised business, nor a managerial employee of
40the franchisee owning 15 percent or more of the franchised
P27 1business, nor a corporation, partnership, or other legal entity owned
2by the existing owners of the franchised business. For purposes of
3this paragraph, a “family member” means the spouse of an owner
4of the franchised business, the child, grandchild, brother, sister,
5or parent of an owner, or a spouse of one of those family members.
6This paragraph does not limit the rights of the franchisor to
7disapprove a proposed transferee as provided in subdivision (d).
8(5) Upon the franchisor’s exercise of the right of first refusal,
9the consideration paid by the franchisor to the franchisee and
10owners of the franchised business shall equal or exceed all
11consideration that each of them were to have received under the
12terms of, or in connection with, the proposed sale, assignment, or
13transfer, and the franchisor shall comply with all the terms and
14conditions of the agreement or agreements to sell, transfer, or
15assign the franchised business.
16(6) The franchisor shall reimburse the proposed transferee for
17expenses paid or incurred by the proposed transferee in evaluating,
18investigating, and negotiating the proposed transfer to the extent
19those expenses do not exceed the usual, customary, and reasonable
20fees charged for similar work done in the area in which the
21 franchised business is located. These expenses include, but are not
22limited to, legal and accounting expenses, and expenses incurred
23for title reports and environmental or other investigations of real
24property on which the franchisee’s operations are conducted. The
25proposed transferee shall provide the franchisor a written
26itemization of those expenses, and a copy of all nonprivileged
27reports and studies for which expenses were incurred, if any, within
2830 days of the proposed transferee’s receipt of a written request
29from the franchisor for that accounting. The franchisor shall make
30payment within 30 days of exercising the right of first refusal.
31(u) (1) To unfairly discriminate in favor of a dealership owned
32or controlled, in whole or in part, by a manufacturer or distributor
33or an entity that controls or is controlled by the manufacturer or
34distributor. Unfair discrimination includes, but is not limited to,
36(A) The furnishing to a franchisee or dealer that is owned or
37controlled, in whole or in part, by a manufacturer, branch, or
38distributor of any of the following:
39(i) A vehicle that is not made available to each franchisee
40pursuant to a reasonable allocation formula that is applied
P28 1uniformly, and a part or accessory that is not made available to all
2franchisees on an equal basis when there is no reasonable allocation
3formula that is applied uniformly.
4(ii) A vehicle, part, or accessory that is not made available to
5each franchisee on comparable delivery terms, including the time
6of delivery after the placement of an order. Differences in delivery
7terms due to geographic distances or other factors beyond the
8control of the manufacturer, branch, or distributor shall not
9constitute unfair competition.
10(iii) Information obtained from a franchisee by the manufacturer,
11branch, or distributor concerning the business affairs or operations
12of a franchisee in which the manufacturer, branch, or distributor
13does not have an ownership interest. The information includes,
14but is not limited to, information contained in financial statements
15and operating reports, the name, address, or other personal
16information or buying, leasing, or service behavior of a dealer
17customer, and other information that, if provided to a franchisee
18or dealer owned or controlled by a manufacturer or distributor,
19would give that franchisee or dealer a competitive advantage. This
20clause does not apply if the information is provided pursuant to a
21subpoena or court order, or to aggregated information made
22available to all franchisees.
23(iv) Sales or service incentives, discounts, or promotional
24programs that are not made available to all California franchises
25of the same line-make on an equal basis.
26(B) Referring a prospective purchaser or lessee to a dealer in
27which a manufacturer, branch, or distributor has an ownership
28interest, unless the prospective purchaser or lessee resides in the
29area of responsibility assigned to that dealer or the prospective
30purchaser or lessee requests to be referred to that dealer.
31(2) This subdivision does not prohibit a franchisor from granting
32a franchise to prospective franchisees or assisting those franchisees
33during the course of the franchise relationship as part of a program
34or programs to make franchises available to persons lacking capital,
35training, business experience, or other qualifications ordinarily
36required of prospective franchisees.
37(v) (1) To access, modify, or
extract information from a
38confidential dealer computer record, as defined in Section
3911713.25, without obtaining the prior written consent of the dealer
40and without maintaining administrative, technical, and physical
P29 1safeguards to protect the security, confidentiality, and integrity of
3(2) Paragraph (1) does not limit a duty that a dealer may have
4to safeguard the security and privacy of records maintained by the
6(w) (1) To use electronic, contractual, or other means to prevent
7or interfere with any of the following:
8(A) The lawful efforts of a dealer to comply with federal and
9state data security and privacy laws.
10(B) The ability of a dealer to do either of the following:
11(i) Ensure that specific data accessed from the dealer’s computer
12system is within the scope of consent specified in subdivision (v).
13(ii) Monitor specific data accessed from or written to the dealer’s
15(2) Paragraph (1) does not limit a duty that a dealer may have
16to safeguard the security and privacy of records maintained by the
18(x) (1) To unfairly discriminate against a franchisee selling a
19service contract, debt cancellation agreement, maintenance
20agreement, or similar product not approved, endorsed, sponsored,
21or offered by the manufacturer, manufacturer branch, distributor,
22or distributor branch or affiliate. For purposes of this subdivision,
23unfair discrimination includes, but is not limited to, any of the
25(A) Express or implied statements that the dealer is under an
26obligation to exclusively sell or offer to sell service contracts, debt
27cancellation agreements, or similar products approved, endorsed,
28sponsored, or offered by the manufacturer, manufacturer branch,
29distributor, or distributor branch or affiliate.
30(B) Express or implied statements that selling or offering to sell
31service contracts, debt cancellation agreements, maintenance
32agreements, or similar products not approved, endorsed, sponsored,
33or offered by the manufacturer, manufacturer branch, distributor,
34or distributor branch or affiliate, or the failure to sell or offer to
35sell service contracts, debt cancellation agreements, maintenance
36agreements, or similar products approved, endorsed, sponsored,
37or offered by the manufacturer, manufacturer branch, distributor,
38or distributor branch or affiliate will have any negative
39consequences for the dealer.
P30 1(C) Measuring a dealer’s performance under a franchise
2agreement based upon the sale of service contracts, debt
3cancellation agreements, or similar products approved, endorsed,
4sponsored, or offered by the manufacturer, manufacturer branch,
5distributor, or distributor branch or affiliate.
6(D) Requiring a dealer to actively promote the sale of service
7contracts, debt cancellation agreements, or similar products
8approved, endorsed, sponsored, or offered by the manufacturer,
9manufacturer branch, distributor, or distributor branch or affiliate.
10(E) Conditioning access to vehicles or parts, or vehicle sales or
11service incentives upon the sale of service contracts, debt
12cancellation agreements, or similar products approved, endorsed,
13sponsored, or offered by the manufacturer, manufacturer branch,
14distributor, or distributor branch or affiliate.
15(2) Unfair discrimination does not include, and nothing shall
16prohibit a manufacturer from, offering an incentive program to
17vehicle dealers who voluntarily sell or offer to sell service
18contracts, debt cancellation agreements, or similar products
19approved, endorsed, sponsored, or offered by the manufacturer,
20manufacturer branch, distributor, or distributor branch or affiliate,
21if the program does not provide vehicle sales or service incentives.
22(3) This subdivision does not prohibit a manufacturer,
23manufacturer branch, distributor, or distributor branch from
24requiring a franchisee that sells a used vehicle as “certified” under
25a certified used vehicle program established by the manufacturer,
26manufacturer branch, distributor, or distributor branch to provide
27a service contract approved, endorsed, sponsored, or offered by
28the manufacturer, manufacturer branch, distributor, or distributor
30(4) Unfair discrimination does not include, and nothing shall
31prohibit a franchisor from requiring a franchisee to provide, the
32following notice prior to the sale of the service contract if the
33service contract is not provided or backed by the franchisor and
34the vehicle is of the franchised line-make:
36“Service Contract Disclosure
37The service contract you are purchasing is not provided or backed
38by the manufacturer of the vehicle you are purchasing. The
39manufacturer of the vehicle is not responsible for claims or repairs
40under this service contract.
2Signature of Purchaser”
4(y) To take or threaten to take any adverse action against a dealer
5pursuant to an export or sale-for-resale prohibition because the
6dealer sold or leased a vehicle to a customer who either exported
7the vehicle to a foreign country or resold the vehicle in violation
8of the prohibition, unless the export or sale-for-resale prohibition
9policy was provided to the dealer in writing prior to the sale or
10lease, and the dealer knew or reasonably should have known of
11the customer’s intent to export or resell the vehicle in violation of
12the prohibition at the time of sale or lease. If the dealer causes the
13vehicle to be registered in this or any other state, and collects or
14causes to be collected any applicable sales or use tax due to this
15state, a rebuttable presumption is established that the dealer did
16not have reason to know of the customer’s intent to export or resell
18(z) As used in this section, “area of responsibility” is a
19geographic area specified in a franchise that is used by the
20franchisor for the purpose of evaluating the franchisee’s
21performance of its sales and service obligations.
Section 11713.23 of the Vehicle Code is amended to
(a) A recreational vehicle manufacturer,
25manufacturer branch, distributor, or distributor branch licensed
26under this code shall not sell a new recreational vehicle in this
27state to or through a recreational vehicle dealer without having
28first entered into a written recreational vehicle franchise with that
29recreational vehicle dealer, that complies with the requirements
30of Section 331.3 and that has been signed by both parties.
31(b) A recreational vehicle dealer shall not sell a new recreational
32vehicle in this state without having first entered into a written
33recreational vehicle franchise, that complies with the requirements
34of Section 331.3, with a recreational vehicle manufacturer,
35manufacturer branch, distributor, or distributor branch licensed
36under this code, that has been signed by both parties.
37(c) (1) A recreational vehicle manufacturer, manufacturer
38branch, distributor, or distributor branch shall not ship a new
39recreational vehicle to a recreational dealer on or after January 1,
P32 12009, without a recreational vehicle franchise that has been signed
2by both parties.
3(2) A recreational vehicle dealer shall not receive a new
4recreational vehicle from a recreational vehicle manufacturer,
5manufacturer branch, distributor, or distributor branch on or after
6January 1, 2009, without a recreational vehicle franchise that has
7been signed by both parties.
8(d) Any new recreational vehicle inventory that has been
9purchased by a recreational vehicle dealer, or shipped by a
10manufacturer, manufacturer branch, distributor, or distributor
11branch, before January 1, 2009, may be sold at any time without
12a recreational vehicle franchise.
21 This section applies only to a dealer and manufacturer
22agreement involving recreational vehicles, as defined in subdivision
23(a) of Section 18010 of the Health and Safety Code, but does not
24include an agreement with a dealer who deals exclusively in truck
No reimbursement is required by this act pursuant to
27Section 6 of Article XIII B of the California Constitution because
28the only costs that may be incurred by a local agency or school
29district will be incurred because this act creates a new crime or
30infraction, eliminates a crime or infraction, or changes the penalty
31for a crime or infraction, within the meaning of Section 17556 of
32the Government Code, or changes the definition of a crime within
33the meaning of Section 6 of Article XIII B of the California