AB 759, as amended, 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 Article 5 (commencing with
9Section 3070) and the consideration of a petition pursuant to
10subdivision (c) of Section 3050 that involves a dispute between a
11franchisee and franchisor.
(a) The board may adopt stipulated decisions and
14orders, without a hearing pursuant to
begin delete Section 3066,end delete to resolve one or more issues raised by a protest or petition
16filed with the board. Whenever the parties to a protest or petition
17submit a proposed stipulated decision and order of the board, a
18copy of the proposed stipulated decision and order shall be
19transmitted by the executive director of the board to each member
20of the board. The proposed stipulated decision and order shall be
21deemed to be adopted by the board unless a member of the board
22notifies the executive director of the board of an objection thereto
23 within 10 days after that board member has received a copy of the
24proposed stipulated decision and order.
25(b) If the board adopts a stipulated decision and order to resolve
26a protest filed pursuant to Section 3060 or 3070 in which the parties
27stipulate that good cause exists for the termination of the franchise
28of the protestant, and the order provides for a conditional or
29unconditional termination of the franchise of the protestant,
30paragraph (2) of subdivision (a) of Section 3060 and paragraph
P4 1(2) of subdivision (a) of Section 3070, which require a hearing to
2determine whether good cause exists for termination of the
3franchise, is inapplicable to the proceedings. If the stipulated
4decision and order provides for an unconditional termination of
5the franchise, the franchise may be terminated without further
6proceedings by the board. If the stipulated decision and order
7provides for the termination of the franchise, conditioned upon the
8failure of a party to comply with specified conditions, the franchise
9may be terminated upon a determination, according to the terms
10of the stipulated decision and order, that the conditions have not
11been met. If the stipulated decision and order provides for the
12termination of the franchise conditioned upon the occurrence of
13specified conditions, the franchise may be terminated upon a
14determination, according to the terms of the stipulated decision
15and order, that the stipulated conditions have occurred.
Section 3066 of the Vehicle Code is amended to read:
(a) Upon receiving a protest pursuant to Section 3060,
193062, 3064, 3065, or 3065.1, the board shall fix a time within 60
20days of the order, and place of hearing, and shall send by certified
21mail a copy of the order to the franchisor, the protesting franchisee,
22and all individuals and groups that have requested notification by
23the board of protests and decisions of the board. Except in a case
24involving a franchisee who deals exclusively in motorcycles, the
25board or its executive director may, upon a showing of good cause,
26accelerate or postpone the date initially established for a hearing,
27but the hearing shall not be rescheduled more than 90 days after
28the board’s initial order. For the purpose of accelerating or
29postponing a hearing date, “good cause” includes, but is not limited
30to, the effects upon, and any irreparable harm to, the parties or
31interested persons or groups if the request for a change in hearing
32date is not granted. The board or an administrative law judge
33designated by the board shall hear and consider the oral and
34documented evidence introduced by the parties and other interested
35individuals and groups, and the board shall make its decision solely
36on the record so made. Chapter 4.5 (commencing with Section
3711400) of Part 1 of Division 3 of Title 2 of the Government Code
38and Sections 11507.3, 11507.6, 11507.7, 11511, 11511.5, 11513,
3911514, 11515, and 11517 of the Government Code apply to these
P5 1(b) In a hearing on a protest filed pursuant to Section 3060 or
23062 the franchisor shall have the burden of proof to establish that
3there is good cause to modify, replace, terminate, or refuse to
4continue a franchise. The franchisee shall have the burden of proof
5to establish that there is good cause not to enter into a franchise
6establishing an additional motor vehicle dealership or relocating
7an existing motor vehicle dealership.
8(c) Except as otherwise provided in this chapter, in a hearing
9on a protest alleging a violation of, or filed pursuant to, Section
begin delete 3065end delete or 3065.1, the franchisee shall have the burden
11of proof, but the franchisor has the burden of proof to establish
12that a franchisee acted with intent to defraud the franchisor when
13that issue is material to a protest filed pursuant to Section 3065 or
15(d) A member of the board who is a new motor vehicle dealer
16may not participate in, hear, comment, or advise other members
17upon, or decide, a matter involving a protest filed pursuant to this
18article 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
22shall contain findings of fact and a determination of the issues
23presented. The decision shall sustain, conditionally sustain,
24overrule, or conditionally overrule the protest. Conditions imposed
25by the board shall be for the purpose of assuring performance of
26binding contractual agreements between franchisees and franchisors
27or otherwise serving the purposes of this article. If the board fails
28to act within 30 days after the hearing, within 30 days after the
29board receives a proposed decision when the case is heard before
30an administrative law judge alone, or within a period necessitated
31by Section 11517 of the Government Code, or as may be mutually
32agreed upon by the parties, then the proposed action shall be
33deemed to be approved. Copies of the board’s decision shall be
34delivered to the parties personally or sent to them by certified mail,
35as well as to all individuals and groups that have requested
36notification by the board of protests and decisions by the board.
37The board’s decision shall be final upon its delivery or mailing
38and a reconsideration or rehearing is not permitted.
39(b) Notwithstanding subdivision (c) of Section 11517 of the
40Government Code, if a protest is heard by an administrative law
P6 1judge alone, 10 days after receipt by the board of the administrative
2law judge’s proposed decision, a copy of the proposed decision
3shall be filed by the board as a public record and a copy shall be
4served 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
8of the board. Time for filing for the review shall not be more than
945 days from the date on which the final order of the board is made
10public and is delivered to the parties personally or is sent to them
11by certified mail.
Section 3072 of the Vehicle Code is amended to read:
(a) (1) Except as otherwise provided in subdivision (b),
15if a franchisor seeks to enter into a franchise establishing an
16additional recreational vehicle dealership, or seeks to relocate an
17existing recreational vehicle dealership, that has a relevant market
18area in which the same recreational vehicle line-make is
19represented, the franchisor shall, in writing, first notify the board
20and each franchisee in that recreational vehicle line-make in the
21relevant market area of the franchisor’s intention to establish an
22additional dealership or to relocate an existing dealership. Within
2320 days of receiving the notice, satisfying the requirements of this
24section, or within 20 days after the end of any appeal procedure
25provided by the franchisor, any franchisee required to be given
26the notice may file with the board a protest to the proposed
27dealership establishment or relocation described in the franchisor’s
28notice. If, within this time, a franchisee files with the board a
29request for additional time to file a protest, the board or its
30executive director, upon a showing of good cause, may grant an
31additional 10 days to file the protest. When a protest is filed, the
32board shall inform the franchisor that a timely protest has been
33filed, that a hearing is required pursuant to Section 3080, and that
34the franchisor shall not establish the proposed dealership or relocate
35the existing dealership until the board has held a hearing as
36provided in Section 3080, nor thereafter, if the board has
37determined that there is good cause for not permitting the
38establishment of the proposed recreational vehicle dealership or
39relocation of the existing recreational vehicle dealership. In the
P7 1event of multiple protests, hearings may be consolidated to expedite
2the disposition of the issue.
3(2) The written notice shall contain, on the first page thereof in
4at least 12-point bold type and circumscribed by a line to segregate
5it from the rest of the text, the following statement:
6“NOTICE TO DEALER: You have the right to file a protest
7with the NEW MOTOR VEHICLE BOARD in Sacramento and
8have a hearing on your protest under the terms of the California
9Vehicle Code if you oppose this action. You must file your protest
10with the board within 20 days of your receipt of this notice, or
11within 20 days after the end of any appeal procedure that is
12provided by us to you. If, within this time, you file with the board
13a request for additional time to file a protest, the board or its
14executive director, upon a showing of good cause, may grant you
15an additional 10 days to file the protest.”
16(b) Subdivision (a) does not apply to any of the following:
17(1) The relocation of an existing dealership to any location that
18is both within the same city as, and within one mile of, the existing
20(2) The establishment at any location that is both within the
21same city as, and within one-quarter mile of, the location of a
22dealership of the same recreational vehicle line-make that has been
23out of operation for less than 90 days.
24(3) A display of vehicles at a fair, exposition, or
25if no actual sales are made at the event and the display does not
26exceed 30 days. This paragraph may not be construed to prohibit
27a new vehicle dealer from establishing a branch office for the
28purpose of selling vehicles at the fair, exposition, or similar exhibit,
29even though that event is sponsored by a financial institution, as
30defined in Section 31041 of the Financial Code, or by a financial
31institution and a licensed dealer. The establishment of these branch
32offices, however, shall be in accordance with subdivision (a) where
34(4) An annual show sponsored by a national trade association
35of recreational vehicle manufacturers that complies with all of the
36requirements of subdivision (d) of Section 11713.15.
37(c) For the purposes of this section, the
reopening of a dealership
38that has not been in operation for one year or more shall be deemed
39the establishment of an additional recreational vehicle dealership.
P8 1(d) For the purposes of this section and Section 3073, a
2“recreational vehicle dealership” or “dealership” is any authorized
3facility at which a franchisee offers for sale or lease, displays for
4sale or lease, or sells or leases new recreational vehicles, as defined
5in subdivision (a) of Section 18010 of the Health and Safety Code.
6A “recreational vehicle dealership” or “dealership” does not include
7a 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
12line-make” is a group or groups of recreational vehicles defined
13by the terms of a written agreement that complies with Section
Section 3073 of the Vehicle Code is amended to read:
In determining whether good cause has been established
18for not entering into a recreational vehicle franchise or relocating
19an existing dealership of the same recreational vehicle line-make,
20the board shall take into consideration the existing circumstances,
21including, but not limited to, all of the following:
22(a) The permanency of the investment.
23(b) The effect on the retail recreational vehicle business and the
24consuming public in the relevant market area.
25(c) Whether it is injurious to the public welfare for an additional
26recreational vehicle franchise to be established or an existing
27dealership be relocated.
28(d) Whether the franchisees of the same recreational vehicle
29line-make in the relevant market area are providing adequate
30competition and convenient consumer care for the motor vehicles
31of the recreational vehicle line-make in the market area. In making
32this determination, the board shall consider the adequacy of
33recreational vehicle sales and, if required by the franchise, service
34facilities, equipment, supply of vehicle parts, and qualified service
36(e) Whether the establishment of an additional franchise would
37increase 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
2delivery and preparation obligations of the franchisees prior to
3delivery of new recreational vehicles to retail buyers. A copy of
4the delivery and preparation obligations, which shall constitute
5the franchisee’s only responsibility for product liability between
6the franchisee and the franchisor but which shall not in any way
7affect the franchisee’s responsibility for product liability between
8the purchaser and either the franchisee or the franchisor, and a
9schedule of compensation to be paid franchisees for the work and
10services they shall be required to perform in connection with the
11delivery and preparation obligations shall be filed with the board
12by franchisors, and shall constitute the compensation as set forth
13on the schedule. The schedule of compensation shall be reasonable,
14with the reasonableness thereof being subject to the approval of
15the board, if a franchisee files a notice of protest with the board.
16In determining the reasonableness of the schedules, the board shall
17consider all relevant circumstances, including, but not limited to,
18the time required to perform each function that the dealer is
19obligated to perform and the appropriate labor rate.
20(b) Upon delivery of the vehicle, the franchisee shall give a
21copy of the delivery and preparation obligations to the purchaser
22and a written certification that the franchisee has fulfilled these
Section 3078 of the Vehicle Code is amended to read:
(a) If the board receives a complaint from a member of
27the public seeking a refund involving the sale or lease of, or a
28replacement of, a recreational vehicle, as defined in subdivision
29(a) of Section 18010 of the Health and Safety Code, from a
30recreational vehicle dealership, as defined in subdivision (d) of
31Section 3072, the board shall recommend that the complainant
32consult with the Department of Consumer Affairs.
33(b) This chapter does not affect a person’s rights regarding a
34transaction involving a recreational vehicle as defined in
35subdivision (a), to maintain an action under any other statute,
36including, but not limited to, applicable provisions of Title 1.7
37(commencing with Section 1790) of Part 4 of Division 3 of the
Section 3079 of the Vehicle Code is amended to read:
This article applies only to a recreational vehicle
2franchise 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,
63072, 3074, 3075, or 3076, the board shall fix a time and place of
7hearing within 60 days of the order, and shall send by certified
8mail a copy of the order to the franchisor, the protesting franchisee,
9and all individuals and groups that have requested notification by
10the board of protests and decisions of the board. The board or its
11executive director may, upon a showing of good cause, accelerate
12or postpone the date initially established for a hearing, but the
13hearing shall not be rescheduled more than 90 days after the board’s
14initial order. For the purpose of accelerating or postponing a
15hearing date, “good cause” includes, but is not limited to, the
16effects upon, and any irreparable harm to, the parties or interested
17persons or groups if the request for a change in hearing date is not
18granted. The board or an administrative law judge designated by
19the board shall hear and consider the oral and documented evidence
20introduced by the parties and other interested individuals and
21groups, and the board shall make its decision solely on the record
22so made. Chapter 4.5 (commencing with Section 11400) of Part
231 of Division 3 of Title 2 of the Government Code and Sections
2411507.3, 11507.6, 11507.7, 11511, 11511.5, 11513, 11514, 11515,
25and 11517 of the Government Code apply to these proceedings.
26(b) In a hearing on a protest filed pursuant to Section 3070 or
273072, the franchisor shall have the burden of proof to establish
28that there is good cause to modify, replace, terminate, or refuse to
29continue a franchise. The franchisee shall have the burden of proof
30to establish that there is good cause not to enter into a franchise
31establishing an additional recreational vehicle dealership or
32relocating an existing recreational vehicle dealership.
33(c) Except as otherwise provided in this chapter, in a hearing
34on a protest alleging a violation of, or filed pursuant to, Section
353074, 3075, or 3076, the franchisee shall have the burden of proof,
36but the franchisor has the burden of proof to establish that a
37franchisee acted with intent to defraud the franchisor when that
38issue is material to a protest filed pursuant to Section 3075 or 3076.
Section 3081 is added to the Vehicle Code, to read:
(a) The decision of the board shall be in writing and
2shall contain findings of fact and a determination of the issues
3presented. The decision shall sustain, conditionally sustain,
4overrule, or conditionally overrule the protest. Conditions imposed
5by the board shall be for the purpose of assuring performance of
6binding contractual agreements between franchisees and franchisors
7or otherwise serving the purposes of this article. If the board fails
8to act within 30 days after the hearing, within 30 days after the
9board receives a proposed decision when the case is heard before
10an administrative law judge alone, or within a period necessitated
11by Section 11517 of the Government Code, or as may be mutually
12agreed upon by the parties, then the proposed action shall be
13deemed to be approved. Copies of the board’s decision shall be
14delivered to the parties personally or sent to them by certified mail,
15as well as to all individuals and groups that have requested
16notification by the board of protests and decisions by the board.
17The board’s decision shall be final upon its delivery or mailing
18and a reconsideration or rehearing is not permitted.
19(b) Notwithstanding subdivision (c) of Section 11517 of the
20Government Code, if a protest is heard by an administrative law
21judge alone, 10 days after receipt by the board of the administrative
22law judge’s proposed decision, a copy of the proposed decision
23shall be filed by the board as a public record and a copy shall be
24served 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
28of the board. Time for filing for the review shall not be more than
2945 days from the date on which the final order of the board is made
30public and is delivered to the parties personally or is sent to them
31by certified mail.
Section 11705 of the Vehicle Code is amended to
(a) The department, after notice and hearing, may
36suspend or revoke the license issued to a dealer, transporter,
37manufacturer, manufacturer branch, remanufacturer,
38remanufacturer branch, distributor, or distributor branch upon
39determining that the person to whom the license was issued is not
40lawfully entitled thereto, or has done any of the following:
P12 1(1) Filed an application for the license using a false or fictitious
2name not registered with the proper authorities, or knowingly made
3a false statement or knowingly concealed a material fact, in the
4application for the license.
5(2) Made, or knowingly or negligently
permitted, an illegal use
6of the special plates issued to the licensee.
7(3) Used a false or fictitious name, knowingly made a false
8statement, or knowingly concealed a material fact, in an application
9for the registration of a vehicle, or otherwise committed a fraud
10in the application.
11(4) Failed to deliver to a transferee lawfully entitled thereto a
12properly endorsed certificate of ownership.
13(5) Knowingly purchased, sold, or otherwise acquired or
14disposed of a stolen motor vehicle.
15(6) Failed to provide and maintain a clear physical division
16between the type of business licensed pursuant to this chapter and
17any other type of business conducted at the established place of
19(7) Willfully violated Section 3064, 3065, 3074, or 3075 or any
20rule or regulation adopted pursuant thereto.
21(8) Violated any provision of Division 3 (commencing with
22Section 4000) or any rule or regulation adopted pursuant thereto,
23or subdivision (a) of Section 38200.
24(9) Violated any provision of Division 4 (commencing with
25Section 10500) or any rule or regulation adopted pursuant thereto.
26(10) Violated any provision of Article 1 (commencing with
27Section 11700) of Chapter 4 of Division 5 or any rule or regulation
28adopted pursuant thereto.
29(11) Violated any provision of Part
5 (commencing with Section
3010701) of Division 2 of the Revenue and Taxation Code or any
31rule or regulation adopted pursuant thereto.
32(12) Violated any provision of Chapter 2b (commencing with
33Section 2981) of Title 14 of Part 4 of Division 3 of the Civil Code
34or any rule or regulation adopted pursuant thereto.
35(13) Submitted a check, draft, or money order to the department
36for any obligation or fee due the state which was dishonored or
37refused payment upon presentation.
38(14) Has caused any person to suffer any loss or damage by
39reason of any fraud or deceit practiced on that person or fraudulent
P13 1representations made to that person in the course of the licensed
purposes of this paragraph, “fraud” includes any act or
4omission which is included within the definition of either “actual
5fraud” or “constructive fraud” as defined in Sections 1572 and
61573 of the Civil Code, and “deceit” has the same meaning as
7defined in Section 1710 of the Civil Code. In addition, “fraud”
8and “deceit” include, but are not limited to, a misrepresentation in
9any manner, whether intentionally false or due to gross negligence,
10of a material fact; a promise or representation not made honestly
11and in good faith; an intentional failure to disclose a material fact;
12and any act within Section 484 of the Penal Code.
13For purposes of this paragraph, “person” also includes a
15(15) Failed to meet the terms and conditions of an agreement
16entered into pursuant to Section 11707.
17(16) Violated Section 43151, 43152, or 43153 of, or subdivision
18(b) of Section 44072.10 of, the Health and Safety Code.
19(17) Failed to repay a claim paid by the Consumer Motor
20Vehicle Recovery Corporation as provided in subdivision (i) of
22(18) As a buy-here-pay-here dealer, violated any provision of
23Chapter 11 (commencing with Section 7500) of
begin delete Divisionsend delete
24 3 of the Business and Professions Code or any rule or regulation
25adopted pursuant to those provisions.
26(b) Any of the causes specified in this chapter as a cause for
27refusal to issue a license to a transporter, manufacturer,
28manufacturer branch, remanufacturer, remanufacturer branch,
29distributor, distributor branch, or dealer applicant is cause to
30suspend or revoke a license issued to a transporter, manufacturer,
31manufacturer branch, remanufacturer, remanufacturer branch,
32distributor, distributor branch, or dealer.
33(c) Except as provided in Section 11707, every hearing provided
34for in this section shall be conducted pursuant to Chapter 5
35(commencing with Section 11500) of Part 1 of Division 3 of Title
362 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
2license issued under this article to do any of the following:
3(a) Advertise a specific vehicle for sale without identifying the
4vehicle by its model, model-year, and either its license number or
5that portion of the vehicle identification number that distinguishes
6the vehicle from all other vehicles of the same make, model, and
7model-year. Model-year is not required to be advertised for current
8model-year vehicles. Year models are no longer current when
9ensuing year models are available for purchase at retail in
10California. An advertisement that offers for sale a class of new
11vehicles in a dealer’s inventory, consisting of five or more vehicles,
12that are all of the same make, model, and model-year is not required
13to include in the advertisement the vehicle identification numbers
14or license numbers of those vehicles.
15(b) Advertise the total price of a vehicle without including all
16costs to the purchaser at time of sale, except taxes, vehicle
17registration fees, the California tire fee, as defined in Section 42885
18of the Public Resources Code, emission testing charges not
19exceeding fifty dollars ($50), actual fees charged for certificates
20pursuant to Section 44060 of the Health and Safety Code, finance
21charges, and any dealer document processing charge or charge to
22electronically register or transfer the vehicle.
23(c) (1) Exclude from an advertisement of a vehicle for sale that
24there will be added to the advertised total price at the time of sale,
25charges for sales tax, vehicle registration fees, the California tire
26fee, the fee charged by the state for the issuance of a certificate of
27 compliance or noncompliance pursuant to a statute, finance
28charges, a charge to electronically register or transfer the vehicle,
29and a dealer document processing charge.
30(2) The obligations imposed by paragraph (1) are satisfied by
31adding to the advertisement a statement containing no abbreviations
32and that is worded in substantially the following form: “Plus
33government fees and taxes, any finance charges, any dealer
34document processing charge, any electronic filing charge, and any
35emission testing charge.”
36(3) For purposes of paragraph (1), “advertisement” means an
37advertisement in a newspaper, magazine, or direct mail publication
38that is two or more columns in width or one column in width and
39more than seven inches in length, or on a Web page of a dealer’s
40Internet Web site that displays the price of a vehicle offered for
P15 1sale on the Internet, as that term is defined in paragraph (6) of
2subdivision (f) of Section 17538 of the Business and Professions
4(d) Represent the dealer document processing charge, electronic
5registration or transfer charge, or emission testing charge, as a
7(e) Fail to sell a vehicle to a person at the advertised total price,
8exclusive of taxes, vehicle registration fees, the California tire fee,
9the fee charged by the state for the issuance of a certificate of
10compliance or noncompliance pursuant to a statute, finance
11charges, mobilehome escrow fees, the amount of a city, county,
12or city and county imposed fee or tax for a mobilehome, a dealer
13document processing charge, an electronic registration or transfer
14charge, and a charge for emission testing not to exceed fifty dollars
15($50) plus the actual fees charged for certificates pursuant to
16Section 44060 of the Health and Safety Code, while the vehicle
17remains unsold, unless the advertisement states the advertised total
18price is good only for a specified time and the time has elapsed.
19Advertised vehicles shall be sold at or below the advertised total
20price, with statutorily permitted exclusions, regardless of whether
21the purchaser has knowledge of the advertised total price.
22(f) (1) Advertise for sale, sell, or purchase for resale a new
23vehicle of a line-make for which the dealer does not hold a
25(2) This subdivision does not apply to a transaction involving
27(A) A mobilehome.
28(B) A commercial coach, as defined in Section 18001.8 of the
29Health and Safety Code.
30(C) An off-highway motor vehicle subject to identification as
31defined in Section 38012.
32(D) A manufactured home.
33(E) A new vehicle that will be substantially altered or modified
34by a converter prior to resale.
35(F) A commercial vehicle with a gross vehicle weight rating of
36more than 10,000 pounds.
37(G) A vehicle purchased for export and exported outside the
38territorial limits of the United States without being registered with
P16 1(H) A vehicle acquired in the ordinary course of business as a
2new vehicle by a dealer franchised to sell that vehicle, if all of the
4(i) The manufacturer or distributor of the vehicle files a
6(ii) The franchise agreement of the dealer is terminated,
7canceled, or rejected by the manufacturer or distributor as part of
8the bankruptcy proceedings and the termination, cancellation, or
9rejection is not a result of the revocation by the department of the
10dealer’s license or the dealer’s conviction of a crime.
11(iii) The vehicle is held in the inventory
of the dealer on the
12date the bankruptcy petition is filed.
13(iv) The vehicle is sold by the dealer within six months of the
14date the bankruptcy petition is filed.
15(3) Subparagraph (H) of paragraph (2) does not entitle a dealer
16whose franchise agreement has been terminated, canceled, or
17rejected to continue to perform warranty service repairs or continue
18to be eligible to offer or receive consumer or dealer incentives
19offered by the manufacturer or distributor.
20(g) Sell a park trailer, as specified in Section 18009.3 of the
21Health and Safety Code, without disclosing in writing to the
22purchaser that a park trailer is required to be moved by a transporter
23or a licensed manufacturer or dealer under a permit issued by the
24Department of Transportation or a local authority with respect to
25highways under their respective jurisdictions.
26(h) Advertise free merchandise, gifts, or services provided by
27a dealer contingent on the purchase of a vehicle. “Free” includes
28merchandise or services offered for sale at a price less than the
29seller’s cost of the merchandise or services.
30(i) (1) Advertise vehicles, and related goods or services, at a
31specified dealer price, with the intent not to supply reasonably
32expectable demand, unless the advertisement discloses the number
33of vehicles in stock at the advertised price. In addition, whether
34or not there are sufficient vehicles in stock to supply a reasonably
35expectable demand, when phrases such as “starting at,” “from,”
36“beginning as low as,” or words of similar import are used in
37reference to an advertised price, the advertisement shall disclose
38the number of vehicles available at that advertised price.
39(2) For purposes of this subdivision, in a newspaper
40advertisement for a vehicle that is two model-years old or newer,
P17 1the actual phrase that states the number of vehicles in stock at the
2advertised price shall be printed in a type size that is at least equal
3to one-quarter of the type size, and in the same style and color of
4type, used for the advertised price. However, in no case shall the
5phrase be printed in less than 8-point type size, and the phrase
6shall be disclosed immediately above, below, or beside the
7advertised price without intervening words, pictures, marks, or
9(3) The disclosure required by this
subdivision is in addition to
10any other disclosure required by this code or any regulation
11regarding identifying vehicles advertised for sale.
12(j) Use “rebate” or similar words, including, but not limited to,
13“cash back,” in advertising the sale of a vehicle unless the rebate
14is expressed in a specific dollar amount and is in fact a rebate
15offered by the vehicle manufacturer or distributor, a finance
16company affiliated with a vehicle manufacturer or distributor, a
17regulated utility, or a governmental entity directly to the retail
18purchaser of the vehicle or to the assignee of the retail purchaser.
19(k) Require a person to pay a higher price for a vehicle and
20related goods or services for receiving advertised credit terms than
21the cash price the same person would have to pay to purchase the
22same vehicle and related goods or services. For the purpose of this
23subdivision, “cash price” has the same meaning as defined in
24subdivision (e) of Section 2981 of the Civil Code.
25(l) Advertise a guaranteed trade-in allowance.
26(m) Misrepresent the authority of a salesperson, representative,
27or agent to negotiate the final terms of a transaction.
28(n) (1) Use “invoice,” “dealer’s invoice,” “wholesale price,”
29or similar terms that refer to a dealer’s cost for a vehicle in an
30advertisement for the sale of a vehicle or advertise that the selling
31 price of a vehicle is above, below, or at either of the following:
32(A) The manufacturer’s or distributor’s invoice price to a dealer.
33(B) A dealer’s cost.
34(2) This subdivision does not apply to either of the following:
35(A) A communication occurring during face-to-face negotiations
36for the purchase of a specific vehicle if the prospective purchaser
37initiates a discussion of the vehicle’s invoice price or the dealer’s
38cost for that vehicle.
39(B) A communication between a dealer and a prospective
40commercial purchaser that is not disseminated to the general public.
P18 1For purposes of this subparagraph, a “commercial purchaser”
2means a dealer, lessor, lessor-retailer, manufacturer,
3remanufacturer, distributor, financial institution, governmental
4entity, or person who purchases 10 or more vehicles during a year.
5(o) Violate a law prohibiting bait and switch advertising,
6including, but not limited to, the guides against bait advertising
7set forth in Part 238 (commencing with Section 238) of Title 16
8of the Code of Federal Regulations, as those regulations read on
9January 1, 1988.
10(p) Make an untrue or misleading statement indicating that a
11vehicle is equipped with all the factory-installed optional equipment
12the manufacturer offers, including, but not limited to, a false
13statement that a vehicle is “fully factory equipped.”
14(q) Affix on a new vehicle a supplemental price sticker
15containing a price that represents the dealer’s asking price that
16exceeds the manufacturer’s suggested retail price unless all of the
17 following occur:
18(1) The supplemental sticker clearly and conspicuously discloses
19in the largest print appearing on the sticker, other than the print
20size used for the dealer’s name, that the supplemental sticker price
21is the dealer’s asking price, or words of similar import, and that it
22is not the manufacturer’s suggested retail price.
23(2) The supplemental sticker clearly and conspicuously discloses
24the manufacturer’s suggested retail price.
25(3) The supplemental sticker lists each item that is not included
26in the manufacturer’s suggested retail price, and discloses the
27additional price of each item. If the supplemental sticker price is
28greater than the sum of the manufacturer’s suggested retail price
29and the price of the items added by the dealer, the supplemental
30sticker price shall set forth that difference and describe it as “added
32(r) Advertise an underselling claim, including, but not limited
33to, “we have the lowest prices” or “we will beat any dealer’s price,”
34unless the dealer has conducted a recent survey showing that the
35dealer sells its vehicles at lower prices than another licensee in its
36trade area and maintains records to adequately substantiate the
37claims. The substantiating records shall be made available to the
38department upon request.
39(s) (1) Advertise an incentive offered by the manufacturer or
40distributor if the dealer is required to contribute to the cost of the
P19 1incentive as a condition of participating in the incentive program,
2unless the dealer discloses in a clear and conspicuous manner that
3dealer participation may affect consumer cost.
4(2) For purposes of this subdivision, “incentive” means anything
5of value offered to induce people to purchase a vehicle, including,
6but not limited to, discounts, savings claims, rebates, below-market
7finance rates, and free merchandise or services.
8(t) Display or offer for sale a used vehicle unless there is affixed
9to the vehicle the Federal Trade Commission’s Buyer’s Guide as
10required by Part 455 of Title 16 of the Code of Federal Regulations.
11(u) Fail to disclose in writing to the franchisor of a new motor
12vehicle dealer the name of the purchaser, date of sale, and the
13vehicle identification number of each new motor vehicle sold of
14the line-make of that franchisor, or intentionally submit to that
15franchisor a false name for the purchaser or false date for the date
17(v) Enter into a contract for the retail sale of a motor vehicle
18 unless the contract clearly and conspicuously discloses whether
19the vehicle is being sold as a new vehicle or a used vehicle, as
20defined in this code.
21(w) Use a simulated check, as defined in subdivision (a) of
22Section 22433 of the Business and Professions Code, in an
23advertisement for the sale or lease of a vehicle.
24(x) Fail to disclose, in a clear and conspicuous manner in at
25least 10-point boldface type on the face of a contract for the retail
26sale of a new motor vehicle that this transaction is, or is not, subject
27to a fee received by an autobroker from the selling new motor
28vehicle dealer, and the name of the autobroker, if applicable.
29(y) Sell or lease a new motor vehicle after October 1, 2012,
30unless the dealer has a contractual agreement with the department
31to be a private industry partner pursuant to Section 1685. This
32subdivision does not apply to the sale or lease of a motorcycle or
33off-highway motor vehicle subject to identification under Section
3438010 or a recreational vehicle as defined in Section 18010 of the
35Health and Safety Code.
36(z) As used in this section, “make” and “model” have the same
37meaning as is provided in Section 565.12 of Title 49 of the Code
38of Federal Regulations.
Section 11713.3 of the Vehicle Code is amended to
It is unlawful and a violation of this code for a
5manufacturer, manufacturer branch, distributor, or distributor
6branch licensed pursuant to this code to do, directly or indirectly
7through an affiliate, any of the following:
8(a) To refuse or fail to deliver in reasonable quantities and within
9a reasonable time after receipt of an order from a dealer having a
10franchise for the retail sale of a new vehicle sold or distributed by
11the manufacturer or distributor, a new vehicle or parts or
12accessories to new vehicles as are covered by the franchise, if the
13vehicle, parts, or accessories are publicly advertised as being
14available for delivery or actually being delivered. This subdivision
15is not violated, however, if the failure is caused by acts or causes
16beyond the control of the manufacturer, manufacturer branch,
17distributor, or distributor branch.
18(b) To prevent or require, or attempt to prevent or require, by
19contract or otherwise, a change in the capital structure of a
20dealership or the means by or through which the dealer finances
21the operation of the dealership, if the dealer at all times meets
22reasonable capital standards agreed to by the dealer and the
23manufacturer or distributor, and if a change in capital structure
24does not cause a change in the principal management or have the
25effect of a sale of the franchise without the consent of the
26manufacturer or distributor.
27(c) To prevent or require, or attempt to prevent or require, a
28dealer to change the executive management of a dealership, other
29than the principal dealership operator or operators, if the franchise
30was granted to the dealer in reliance upon the personal
31qualifications of that person.
32(d) (1) Except as provided in subdivision (t), to prevent or
33require, or attempt to prevent or require, by contract or otherwise,
34a dealer, or an officer, partner, or stockholder of a dealership, the
35sale or transfer of a part of the interest of any of them to another
36person. A dealer, officer, partner, or stockholder shall not, however,
37have the right to sell, transfer, or assign the franchise, or a right
38thereunder, without the consent of the manufacturer or distributor
39except that the consent shall not be unreasonably withheld.
P21 1(2) (A) For the transferring
franchisee to fail, prior to the sale,
2transfer, or assignment of a franchisee or the sale, assignment, or
3transfer of all, or substantially all, of the assets of the franchised
4business or a controlling interest in the franchised business to
5another person, to notify the manufacturer or distributor of the
6franchisee’s decision to sell, transfer, or assign the franchise. The
7notice shall be in writing and shall include all of the following:
8(i) The proposed transferee’s name and address.
9(ii) A copy of all of the agreements relating to the sale,
10assignment, or transfer of the franchised business or its assets.
11(iii) The proposed transferee’s application for approval to
12become the successor franchisee. The application shall include
13forms and related information generally utilized by the
14manufacturer or distributor in reviewing prospective franchisees,
15if those forms are readily made available to existing franchisees.
16As soon as practicable after receipt of the proposed transferee’s
17application, the manufacturer or distributor shall notify the
18franchisee and the proposed transferee of information needed to
19make the application complete.
20(B) For the manufacturer or distributor, to fail, on or before 60
21days after the receipt of all of the information required pursuant
22to subparagraph (A), or as extended by a written agreement
23between the manufacturer or distributor and the franchisee, to
24notify the franchisee of the approval or the disapproval of the sale,
25transfer, or assignment of the franchise. The notice shall be in
26writing and shall be personally served or sent by certified mail,
27return receipt requested, or by guaranteed overnight delivery
28service that provides verification of delivery and shall be directed
29to the franchisee. A proposed sale, assignment, or transfer shall
30be deemed approved, unless disapproved by the franchisor in the
31manner provided by this subdivision. If the proposed sale,
32assignment, or transfer is disapproved, the franchisor shall include
33in the notice of disapproval a statement setting forth the reasons
34for the disapproval.
35(3) In an action in which the manufacturer’s or distributor’s
36withholding of consent under this subdivision or subdivision (e)
37is an issue, whether the withholding of consent was unreasonable
38is a question of fact requiring consideration of all the existing
P22 1(e) To
prevent, or attempt to prevent, a dealer from receiving
2fair and reasonable compensation for the value of the franchised
3business. There shall not be a transfer or assignment of the dealer’s
4franchise without the consent of the manufacturer or distributor,
5which consent shall not be unreasonably withheld or conditioned
6upon the release, assignment, novation, waiver, estoppel, or
7modification of a claim or defense by the dealer.
8(f) To obtain money, goods, services, or another benefit from
9a person with whom the dealer does business, on account of, or in
10relation to, the transaction between the dealer and that other person,
11other than for compensation for services rendered, unless the
12benefit is promptly accounted for, and transmitted to, the dealer.
13(g) (1) Except as provided in paragraph (3), to obtain from a
14dealer or enforce against a dealer an agreement, provision, release,
15assignment, novation, waiver, or estoppel that does any of the
17(A) Modifies or disclaims a duty or obligation of a manufacturer,
18manufacturer branch, distributor, distributor branch, or
19representative, or a right or privilege of a dealer, pursuant to
20Chapter 4 (commencing with Section 11700) of Division 5 or
21Chapter 6 (commencing with Section 3000) of Division 2.
22(B) Limits or constrains the right of a dealer to file, pursue, or
23submit evidence in connection with a protest before the board.
24(C) Requires a dealer to terminate a franchise.
25(D) Requires a controversy between a manufacturer,
26manufacturer branch, distributor, distributor branch, or
27representative and a dealer to be referred to a person for a binding
28determination. However, this subparagraph does not prohibit
29arbitration before an independent arbitrator, provided that whenever
30a motor vehicle franchise contract provides for the use of arbitration
31to resolve a controversy arising out of, or relating to, that contract,
32arbitration may be used to settle the controversy only if, after the
33controversy arises, all parties to the controversy consent in writing
34to use arbitration to settle the controversy. For the purpose of this
35subparagraph, the terms “motor vehicle” and “motor vehicle
36franchise contract” shall have the same meaning as defined in
37Section 1226 of Title 15 of the United States Code. If arbitration
38is elected to settle a dispute under a motor vehicle franchise
39contract, the arbitrator shall provide the parties to the arbitration
P23 1with a written explanation of the factual and legal basis for the
3(2) An agreement, provision, release, assignment, novation,
4waiver, or estoppel prohibited by this subdivision shall be
5unenforceable and void.
6(3) This subdivision does not do any of the following:
7(A) Limit or restrict the terms upon which parties to a protest
8before the board, civil action, or other proceeding can settle or
9resolve, or stipulate to evidentiary or procedural matters during
10the course of, a protest, civil action, or other proceeding.
11(B) Affect the enforceability of any stipulated
order or other
12order entered by the board.
13(C) Affect the enforceability of any provision in a contract if
14the provision is not prohibited under this subdivision or any other
16(D) Affect the enforceability of a provision in any contract
17entered into on or before December 31, 2011.
18(E) Prohibit a dealer from waiving its right to file a protest
19pursuant to Section 3065.1 if the waiver agreement is entered into
20after a franchisor incentive program claim has been disapproved
21by the franchisor and the waiver is voluntarily given as part of an
22agreement to settle that claim.
23(F) Prohibit a voluntary agreement supported by valuable
24consideration, other than granting or renewing a franchise, that
25does both of the following:
26(i) Provides that a dealer establish or maintain exclusive
27facilities, personnel, or display space or provides that a dealer
28make a material alteration, expansion, or addition to a dealership
30(ii) Contains no waiver or other provision prohibited by
31subparagraph (A), (B), (C), or (D) of paragraph (1).
32(G) Prohibit an agreement separate from the franchise agreement
33that implements a dealer’s election to terminate the franchise if
34the agreement is conditioned only on a specified time for
35termination or payment of consideration to the dealer.
36(H) (i) Prohibit a
voluntary waiver agreement, supported by
37valuable consideration, other than the consideration of renewing
38a franchise, to waive the right of a dealer to file a protest under
39Section 3062 for the proposed establishment or relocation of a
P24 1specific proposed dealership, if the waiver agreement provides all
2of the following:
3(I) The approximate address at which the proposed dealership
4will be located.
5(II) The planning potential used to establish the proposed
6dealership’s facility, personnel, and capital requirements.
7(III) An approximation of projected vehicle and parts sales, and
8number of vehicles to be serviced at the proposed dealership.
9(IV) Whether the
franchisor or affiliate will hold an ownership
10interest in the proposed dealership or real property of the proposed
11dealership, and the approximate percentage of any franchisor or
12affiliate ownership interest in the proposed dealership.
13(V) The line-makes to be operated at the proposed dealership.
14(VI) If known at the time the waiver agreement is executed, the
15identity of the dealer who will operate the proposed dealership.
16(VII) The date the waiver agreement is to expire, which may
17not be more than 30 months after the date of execution of the
19(ii) Notwithstanding the provisions of a waiver agreement
20entered into pursuant to the provisions of this subparagraph, a
21dealer may file a protest under Section 3062 if any of the
22information provided pursuant to clause (i) has become materially
23inaccurate since the waiver agreement was executed. Any
24determination of the enforceability of a waiver agreement shall be
25determined by the board and the franchisor shall have the burden
26 of proof.
27(h) To increase prices of motor vehicles that the dealer had
28ordered for private retail consumers prior to the dealer’s receipt
29of the written official price increase notification. A sales contract
30signed by a private retail consumer is evidence of the order. In the
31event of manufacturer price reductions, the amount of the reduction
32received by a dealer shall be passed on to the private retail
33consumer by the dealer if the retail price was negotiated on the
34basis of the previous higher price to the dealer. Price reductions
35apply to all vehicles in the dealer’s inventory that were subject to
36the price reduction. Price differences applicable to new model or
37series motor vehicles at the time of the introduction of new models
38or series shall not be considered a price increase or price decrease.
39This subdivision does not apply to price changes caused by either
40of the following:
P25 1(1) The addition to a motor vehicle of required or optional
2equipment pursuant to state or federal law.
3(2) Revaluation of the United States dollar in the case of a
5(i) To fail to pay to a dealer, within a reasonable time following
6receipt of a valid claim by a dealer thereof, a payment agreed to
7be made by the manufacturer or distributor to the dealer by reason
8of the fact that a new vehicle of a prior year model is in the dealer’s
9inventory at the time of introduction of new model vehicles.
10(j) To deny the widow, widower, or heirs designated by a
11deceased owner of a dealership the opportunity to participate in
12the ownership of the dealership or successor dealership under a
13valid franchise for a reasonable time after the death of the owner.
14(k) To offer refunds or other types of inducements to a person
15for the purchase of new motor vehicles of a certain line-make to
16be sold to the state or a political subdivision of the state without
17making the same offer to all other dealers in the same line-make
18within the relevant market area.
19(l) To modify, replace, enter into, relocate, terminate, or refuse
20to renew a franchise in violation of Article 4 (commencing with
21Section 3060) or Article 5 (commencing with Section 3070) of
22Chapter 6 of Division 2.
23(m) To employ a person as a representative who has
24licensed pursuant to Article 3 (commencing with Section 11900)
25of Chapter 4 of Division 5.
26(n) To deny a dealer the right of free association with another
27dealer for a lawful purpose.
28(o) (1) To compete with a dealer in the same line-make
29operating under an agreement or franchise from a manufacturer
30or distributor in the relevant market area.
31(2) A manufacturer, branch, or
begin delete distributorend delete or an
begin delete controlsend delete or is controlled by, a manufacturer,
33branch, or distributor, shall not, however, be deemed to be
34competing in the following limited circumstances:
35(A) Owning or operating a dealership for a temporary period,
36not to exceed one year at the location of a former dealership of the
37same line-make that has been out of operation for less than six
38months. However, after a showing of good cause by a
39manufacturer, branch, or distributor that it needs additional time
P26 1to operate a dealership in preparation for sale to a successor
2independent franchisee, the board may extend the time period.
3(B) Owning an interest in a dealer as part of a bona fide dealer
4development program that satisfies all of the following
6(i) The sole purpose of the program is to make franchises
7available to persons lacking capital, training, business experience,
8or other qualities ordinarily required of prospective franchisees
9and the dealer development candidate is an individual who is
10unable to acquire the franchise without assistance of the program.
11(ii) The dealer development candidate has made a significant
12investment subject to loss in the franchised business of the dealer.
13(iii) The program requires the dealer development candidate to
14manage the day-to-day operations and business affairs of the dealer
15and to acquire, within a reasonable time and on reasonable terms
16and conditions, beneficial ownership and control of a majority
17interest in the dealer and disassociation of any direct or indirect
18ownership or control by the manufacturer, branch, or distributor.
19(C) Owning a wholly owned subsidiary corporation of a
20distributor that sells motor vehicles at retail, if, for at least three
21years prior to January 1, 1973, the subsidiary corporation has been
22a wholly owned subsidiary of the distributor and engaged in the
23sale of vehicles at retail.
24(3) (A) A manufacturer, branch, and distributor that owns or
25operates a dealership in the manner described in subparagraph (A)
26of paragraph (2) shall give written notice to the board, within 10
27days, each time it commences or terminates operation of a
28dealership and each time it acquires, changes, or divests itself of
29an ownership interest.
30(B) A manufacturer, branch, and distributor that owns an interest
31in a dealer in the manner described in subparagraph (B) of
32paragraph (2) shall give written notice to the board, annually, of
33the name and location of each dealer in which it has an ownership
34interest, the name of the bona fide dealer development owner or
35owners, and the ownership interests of each owner expressed as a
37(p) To unfairly discriminate among its franchisees with respect
38to warranty reimbursement or authority granted to its franchisees
39to make warranty adjustments with retail customers.
P27 1(q) To sell vehicles to a person not licensed pursuant to this
2chapter for resale.
3(r) To fail to affix an identification number to a park trailer, as
4described in Section 18009.3 of the Health and Safety Code, that
5is manufactured on or after January 1, 1987, and that does not
6clearly identify the unit as a park trailer to the department. The
7configuration of the identification number shall be approved by
9(s) To dishonor a warranty, rebate, or other incentive offered
10to the public or a dealer in connection with the retail sale of a new
11motor vehicle, based solely upon the fact that an autobroker
12arranged or negotiated the sale. This subdivision shall not prohibit
13the disallowance of that rebate or incentive if the purchaser or
14dealer is ineligible to receive the rebate or incentive pursuant to
15any other term or condition of a rebate or incentive program.
16(t) To exercise a right of first refusal or other right requiring a
17franchisee or an owner of the franchise to sell, transfer, or assign
18to the franchisor, or to a nominee of the franchisor, all or a material
19part of the franchised business or of the assets of the franchised
20business unless all of the following requirements are met:
21(1) The franchise authorizes the franchisor to exercise a right
22of first refusal to acquire the franchised business or assets of the
23franchised business in the event of a proposed sale, transfer, or
25(2) The franchisor gives written notice of its exercise of the
26right of first refusal no later than 45 days after the franchisor
27receives all of the information required pursuant to subparagraph
28(A) of paragraph (2) of subdivision (d).
29(3) The sale, transfer, or assignment being proposed relates to
30not less than all or substantially all of the assets of the franchised
31business or to a controlling interest in the franchised business.
32(4) The proposed transferee is neither a family member of an
33owner of the franchised business, nor a managerial employee of
34the franchisee owning 15 percent or more of the franchised
35business, nor a corporation, partnership, or other legal entity owned
36by the existing owners of the franchised business. For purposes of
37this paragraph, a “family member” means the spouse of an owner
38of the franchised business, the child, grandchild, brother, sister,
39or parent of an owner, or a spouse of one of those family members.
P28 1This paragraph does not limit the rights of the franchisor to
2disapprove a proposed transferee as provided in subdivision (d).
3(5) Upon the franchisor’s exercise of the right of first refusal,
4the consideration paid by the franchisor to the franchisee and
5owners of the franchised business shall equal or exceed all
6consideration that each of them were to have received under the
7terms of, or in connection with, the proposed sale, assignment, or
8transfer, and the franchisor shall comply with all the terms and
9conditions of the agreement or agreements to sell, transfer, or
10assign the franchised business.
11(6) The franchisor shall reimburse the proposed transferee for
12expenses paid or incurred by the proposed transferee in evaluating,
13investigating, and negotiating the proposed transfer to the extent
14those expenses do not exceed the usual, customary, and reasonable
15fees charged for similar work done in the area in which the
16 franchised business is located. These expenses include, but are not
17limited to, legal and accounting expenses, and expenses incurred
18for title reports and environmental or other investigations of real
19property on which the franchisee’s operations are conducted. The
20proposed transferee shall provide the franchisor a written
21itemization of those expenses, and a copy of all nonprivileged
22reports and studies for which expenses were incurred, if any, within
2330 days of the proposed transferee’s receipt of a written request
24from the franchisor for that accounting. The franchisor shall make
25payment within 30 days of exercising the right of first refusal.
26(u) (1) To unfairly discriminate in favor of a dealership owned
27or controlled, in whole or in part, by a manufacturer or distributor
28or an entity that controls or is controlled by the manufacturer or
29distributor. Unfair discrimination includes, but is not limited to,
31(A) The furnishing to a franchisee or dealer that is owned or
32controlled, in whole or in part, by a manufacturer, branch, or
33distributor of any of the following:
34(i) A vehicle that is not made available to each franchisee
35pursuant to a reasonable allocation formula that is applied
36uniformly, and a part or accessory that is not made available to all
37franchisees on an equal basis when there is no reasonable allocation
38formula that is applied uniformly.
39(ii) A vehicle, part, or accessory that is not made available to
40each franchisee on comparable delivery terms, including the time
P29 1of delivery after the placement of an order. Differences in delivery
2terms due to geographic distances or other factors beyond the
3control of the manufacturer, branch, or distributor shall not
4constitute unfair competition.
5(iii) Information obtained from a franchisee by the manufacturer,
6branch, or distributor concerning the business affairs or operations
7of a franchisee in which the manufacturer, branch, or distributor
8does not have an ownership interest. The information includes,
9but is not limited to, information contained in financial statements
10and operating reports, the name, address, or other personal
11information or buying, leasing, or service behavior of a dealer
12customer, and other information that, if provided to a franchisee
13or dealer owned or controlled by a manufacturer or distributor,
14would give that franchisee or dealer a competitive advantage. This
15clause does not apply if the information is provided pursuant to a
16subpoena or court order, or to aggregated information made
17available to all franchisees.
18(iv) Sales or service incentives, discounts, or promotional
19programs that are not made available to all California franchises
20of the same line-make on an equal basis.
21(B) Referring a prospective purchaser or lessee to a dealer in
22which a manufacturer, branch, or distributor has an ownership
23interest, unless the prospective purchaser or lessee resides in the
24area of responsibility assigned to that dealer or the prospective
25purchaser or lessee requests to be referred to that dealer.
26(2) This subdivision does not prohibit a franchisor from granting
27a franchise to prospective franchisees or assisting those franchisees
28during the course of the franchise relationship as part of a program
29or programs to make franchises available to persons lacking capital,
30training, business experience, or other qualifications ordinarily
31required of prospective franchisees.
32(v) (1) To access, modify, or extract information from a
33confidential dealer computer record, as defined in Section
3411713.25, without obtaining the prior written consent of the dealer
35and without maintaining administrative, technical, and physical
36safeguards to protect the security, confidentiality, and integrity of
38(2) Paragraph (1) does not limit a duty that a dealer may have
39to safeguard the security and privacy of records maintained by the
P30 1(w) (1) To use electronic, contractual, or other means to prevent
2or interfere with any of the following:
3(A) The lawful efforts of a dealer to comply with federal and
4state data security and privacy laws.
5(B) The ability of a dealer to do either of the following:
6(i) Ensure that specific data accessed from the dealer’s computer
7system is within the scope of consent specified in subdivision (v).
8(ii) Monitor specific data accessed from or written to the dealer’s
10(2) Paragraph (1) does not limit a duty that a
dealer may have
11to safeguard the security and privacy of records maintained by the
13(x) (1) To unfairly discriminate against a franchisee selling a
14service contract, debt cancellation agreement, maintenance
15agreement, or similar product not approved, endorsed, sponsored,
16or offered by the manufacturer, manufacturer branch, distributor,
17or distributor branch or affiliate. For purposes of this subdivision,
18unfair discrimination includes, but is not limited to, any of the
20(A) Express or implied statements that the dealer is under an
21obligation to exclusively sell or offer to sell service contracts, debt
22cancellation agreements, or similar products approved, endorsed,
23sponsored, or offered by the manufacturer, manufacturer branch,
24distributor, or distributor branch or affiliate.
25(B) Express or implied statements that selling or offering to sell
26service contracts, debt cancellation agreements, maintenance
27agreements, or similar products not approved, endorsed, sponsored,
28or offered by the manufacturer, manufacturer branch, distributor,
29or distributor branch or affiliate, or the failure to sell or offer to
30sell service contracts, debt cancellation agreements, maintenance
31agreements, or similar products approved, endorsed, sponsored,
32or offered by the manufacturer, manufacturer branch, distributor,
33or distributor branch or affiliate will have any negative
34consequences for the dealer.
35(C) Measuring a dealer’s performance under a franchise
36agreement based upon the sale of service contracts, debt
37cancellation agreements, or similar products approved, endorsed,
38sponsored, or offered by the manufacturer, manufacturer branch,
39distributor, or distributor branch or affiliate.
P31 1(D) Requiring a dealer to actively promote the sale of service
2contracts, debt cancellation agreements, or similar products
3approved, endorsed, sponsored, or offered by the manufacturer,
4manufacturer branch, distributor, or distributor branch or affiliate.
5(E) Conditioning access to vehicles or parts, or vehicle sales or
6service incentives upon the sale of service contracts, debt
7cancellation agreements, or similar products approved, endorsed,
8sponsored, or offered by the manufacturer, manufacturer branch,
9distributor, or distributor branch or affiliate.
discrimination does not include, and nothing shall
11prohibit a manufacturer from, offering an incentive program to
12vehicle dealers who voluntarily sell or offer to sell service
13contracts, debt cancellation agreements, or similar products
14approved, endorsed, sponsored, or offered by the manufacturer,
15manufacturer branch, distributor, or distributor branch or affiliate,
16if the program does not provide vehicle sales or service incentives.
17(3) This subdivision does not prohibit a manufacturer,
18manufacturer branch, distributor, or distributor branch from
19requiring a franchisee that sells a used vehicle as “certified” under
20a certified used vehicle program established by the manufacturer,
21manufacturer branch, distributor, or distributor branch to provide
22a service contract approved, endorsed, sponsored, or offered by
23the manufacturer, manufacturer branch, distributor, or distributor
25(4) Unfair discrimination does not include, and nothing shall
26prohibit a franchisor from requiring a franchisee to provide, the
27following notice prior to the sale of the service contract if the
28service contract is not provided or backed by the franchisor and
29the vehicle is of the franchised line-make:
31“Service Contract Disclosure
32The service contract you are purchasing is not provided or backed
33by the manufacturer of the vehicle you are purchasing. The
34manufacturer of the vehicle is not responsible for claims or repairs
35under this service contract.
37Signature of Purchaser”
39(y) To take or threaten to take any adverse action against a
40pursuant to an export or sale-for-resale prohibition because the
P32 1dealer sold or leased a vehicle to a customer who either exported
2the vehicle to a foreign country or resold the vehicle in violation
3of the prohibition, unless the export or sale-for-resale prohibition
4policy was provided to the dealer in writing prior to the sale or
5lease, and the dealer knew or reasonably should have known of
6the customer’s intent to export or resell the vehicle in violation of
7the prohibition at the time of sale or lease. If the dealer causes the
8vehicle to be registered in this or any other state, and collects or
9causes to be collected any applicable sales or use tax due to this
10state, a rebuttable presumption is established that the dealer did
11not have reason to know of the customer’s intent to export or resell
used in this section, “area of responsibility” is a
14geographic area specified in a franchise that is used by the
15franchisor for the purpose of evaluating the franchisee’s
16performance of its sales and service obligations.
Section 11713.23 of the Vehicle Code is amended to
(a) A recreational vehicle manufacturer,
21manufacturer branch, distributor, or distributor branch licensed
22under this code shall not sell a new recreational vehicle in this
23state to or through a recreational vehicle dealer without having
24first entered into a written recreational vehicle franchise with that
25recreational vehicle dealer, that complies with the requirements
26of Section 331.3 and that has been signed by both parties.
27(b) A recreational vehicle dealer shall not sell a new recreational
28vehicle in this state without having first entered into a written
29recreational vehicle franchise, that complies with the requirements
30of Section 331.3, with a recreational vehicle manufacturer,
31manufacturer branch, distributor, or distributor branch licensed
32under this code, that has been signed by both parties.
33(c) (1) A recreational vehicle manufacturer, manufacturer
34branch, distributor, or distributor branch shall not ship a new
35recreational vehicle to a recreational dealer on or after January 1,
362009, without a recreational vehicle franchise that has been signed
37by both parties.
38(2) A recreational vehicle dealer shall not receive a new
39recreational vehicle from a recreational vehicle manufacturer,
40manufacturer branch, distributor, or distributor branch on or after
P33 1January 1, 2009, without a recreational vehicle franchise that has
2been signed by both parties.
3(d) Any new recreational vehicle inventory that has been
4purchased by a recreational vehicle dealer, or shipped by a
5manufacturer, manufacturer branch, distributor, or distributor
6branch, before January 1, 2009, may be sold at any time without
7a recreational vehicle franchise.
8(e) Following the termination, cancellation, or nonrenewal of
9a recreational vehicle franchise, any new recreational vehicle
10inventory that was purchased by the recreational vehicle dealer,
11or shipped by a manufacturer, manufacturer branch, distributor,
12or distributor branch, during the period that the written recreational
13vehicle franchise was in effect, may be sold by that recreational
14vehicle dealer at any time.
15(f) This section applies only to a dealer and manufacturer
16agreement involving recreational vehicles, as defined in subdivision
17(a) of Section 18010 of the Health and Safety Code, but does not
18include an agreement with a dealer who deals exclusively in truck
No reimbursement is required by this act pursuant to
22Section 6 of Article XIII B of the California Constitution because
23the only costs that may be incurred by a local agency or school
24district will be incurred because this act creates a new crime or
25infraction, eliminates a crime or infraction, or changes the penalty
26for a crime or infraction, within the meaning of Section 17556 of
27the Government Code, or changes the definition of a crime within
28the meaning of Section 6 of Article XIII B of the California