HOUSE BILL NO. 1914 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE CASTEEL.
5454H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To repeal section 407.828, RSMo, and to enact in lieu thereof one new section relating to franchisor warranty duties.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 407.828, RSMo, is repealed and one new section enacted in lieu 2 thereof, to be known as section 407.828, to read as follows: 407.828. 1. Notwithstanding any provision in a franchise to the contrary, each 2 franchisor shall specify in writing to each of its franchisees in this state the franchisee's 3 obligations for [preparation, delivery, and] warranty service on its products. The franchisor 4 shall fairly and reasonably compensate the franchisee for preparation, delivery, and warranty 5 service required of the franchisee by the franchisor. [The franchisor shall provide the 6 franchisee with the schedule of compensation to be paid to the franchisee for parts, labor, and 7 service, and the time allowance for the performance of the labor and service for the 8 franchisee's obligations for preparation, delivery, and warranty service. 9 2. The schedule of compensation shall include reasonable compensation for 10 diagnostic work, as well as repair service and labor for the franchisee to meet its obligations 11 for preparation, delivery, and warranty service. The schedule shall also include reasonable 12 and adequate time allowances for the diagnosis and performance of preparation, delivery, and 13 warranty service to be performed in a careful and professional manner. In the determination 14 of what constitutes reasonable compensation for labor and service pursuant to this section, the 15 principal factor to be given consideration shall be the prevailing wage rates being charged for 16 similar labor and service by the franchisee for similar labor and service to retail customers for 17 nonwarranty labor and service.] The franchisor shall compensate the franchisee for
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 1914 2
18 warranty service parts and labor required of the franchisee by the franchisor under the 19 provisions of this section. 20 2. Compensation for parts used in warranty service shall be reasonable. For 21 purposes of this section, the primary factor in determining reasonable compensation for parts 22 [under this section] shall be the amount charged by the franchisee for similar parts to retail 23 customers for nonwarranty repair parts. A franchisor may request such documentation as 24 is reasonable from the franchisee to substantiate the amount charged by the franchisee 25 for parts used in nonwarranty repairs, but a franchisor shall not request documentation 26 of a type or amount that is unduly or unnecessarily burdensome to the franchisee. 27 Compensation for labor used in warranty service shall be reasonable and may be 28 determined at the election of the dealer as described in subsection 3 of this section in lieu 29 of any labor compensation schedule prescribed by the franchisor. 30 3. Compensation for warranty labor shall equal the dealer's labor rate for 31 nonwarranty repairs multiplied by the time provided in whichever generally accepted 32 industry labor time guide is used by the dealer for nonwarranty customer-paid service 33 repair orders. If no time guide exists for a warranty repair, compensation for warranty 34 labor shall equal the dealer's nonwarranty labor rate being charged at the time the 35 repair is completed multiplied by the time actually spent to complete the repair order 36 and shall not be less than the time charged to retail customers for the same or similar 37 work performed. Compensation for warranty labor shall include all diagnostic time for 38 repairs performed under this section including, but not limited to, all time spent 39 communicating with the manufacturer's technical assistants or external manufacturer 40 source in order to provide a warranty repair, and shall not be less than the time charged 41 to retail customers for the same or similar work performed. 42 [3.] 4. A franchisor shall perform all warranty obligations, including recall notices; 43 include in written notices of franchisor recalls to new motor vehicle owners and franchisees 44 the expected date by which necessary parts and equipment will be available to franchisees for 45 the correction of the defects; and compensate any of the franchisees in this state for repairs 46 required by the recall. Compensation for parts and labor for recall repairs shall be determined 47 under [subsection 2] the provisions of this section. 48 [4.] 5. No franchisor shall require a franchisee to submit a claim authorized under this 49 section sooner than thirty days after the franchisee completes the [preparation, delivery, or] 50 warranty service [authorizing the claim for preparation, delivery, or warranty service]. All 51 claims made by a franchisee under this section shall be paid within thirty days after their 52 approval. All claims shall be either approved or disapproved by the franchisor within thirty 53 days after their receipt on a proper form generally used by the franchisor and containing the 54 usually required information therein. Any claims not specifically disapproved in writing HB 1914 3
55 within thirty days after the receipt of the form shall be considered [to be] approved and 56 payment shall be made by the franchisor within fifteen days thereafter. A franchisee shall 57 not be required to maintain defective parts for more than thirty days after submission of a 58 claim. 59 [5.] 6. A franchisor shall compensate the franchisee for franchisor-sponsored sales or 60 service promotion events, including but not limited to, rebates, programs, or activities in 61 accordance with established written guidelines for such events, programs, or activities, which 62 guidelines shall be provided to each franchisee. 63 [6.] 7. No franchisor shall require a franchisee to submit a claim authorized under 64 [subsection 5 of] this section sooner than thirty days after the franchisee becomes eligible to 65 submit the claim. All claims made by a franchisee [pursuant to subsection 5 of this section] 66 under this section for promotion events, including but not limited to rebates, programs, or 67 activities shall be paid within ten days after their approval. All claims shall be either 68 approved or disapproved by the franchisor within thirty days after their receipt on a proper 69 form generally used by the franchisor and containing the usually required information therein. 70 Any claim not specifically disapproved in writing within thirty days after the receipt of this 71 form shall be [considered to be] deemed approved and payment shall be made within fifteen 72 days. 73 [7.] 8. In calculating the retail rate customarily charged by the franchisee for parts, 74 service, and labor, the following work shall not be included in the calculation: 75 (1) Repairs for franchisor, manufacturer, or distributor special events, specials, or 76 promotional discounts for retail customer repairs; 77 (2) Parts sold at wholesale; 78 (3) Engine assemblies and transmission assemblies; 79 (4) Routine maintenance not covered under any retail customer warranty, such as 80 fluids, filters, and belts not provided in the course of repairs; 81 (5) Nuts, bolts, fasteners, and similar items that do not have an individual part 82 number; 83 (6) Tires; and 84 (7) Vehicle reconditioning. 85 [8.] 9. If a franchisor, manufacturer, importer, or distributor furnishes a part or 86 component to a franchisee, at no cost, to use in performing repairs under a recall, campaign 87 service action, or warranty repair, the franchisor shall compensate the franchisee for the part 88 or component in [the same manner as warranty parts compensation under this section by 89 compensating the franchisee at the average markup on the cost for the part or component as 90 listed in the price schedule of the franchisor, manufacturer, importer, or distributor, less the 91 cost for the part or component] an amount that is reasonable, and the primary factor in HB 1914 4
92 determining reasonable compensation for parts under this subsection shall be the 93 amount charged by the franchisee for similar parts to retail customers for nonwarranty 94 repair parts. This subsection shall not apply to entire engine assemblies, propulsion engine 95 assemblies, including electric vehicle batteries, or entire transmission assemblies. 96 [9.] 10. A franchisor shall not require a franchisee to establish the retail rate 97 customarily charged by the franchisee for parts, service, or labor by an unduly burdensome or 98 time-consuming method or by requiring information that is unduly burdensome or time 99 consuming to provide, including, but not limited to, part-by-part or transaction-by-transaction 100 calculations. A franchisee shall not request a franchisor to approve a different labor rate or 101 parts rate more than twice in one calendar year. 102 [10.] 11. If a franchisee submits any claim under this section to a franchisor that is 103 incomplete, inaccurate, or lacking any information usually required by the franchisor, then the 104 franchisor shall promptly notify the franchisee, and the time limit to submit the claim shall be 105 extended for a reasonable length of time, not less than five business days following notice by 106 the franchisor to the franchisee, for the franchisee to provide the complete, accurate, or 107 lacking information to the franchisor. 108 [11.] 12. (1) A franchisor may only audit warranty, sales, or incentive claims and 109 charge-back to the franchisee unsubstantiated claims for a period of twelve months following 110 payment, subject to all of the provisions of this section. Furthermore, if the franchisor has 111 good cause to believe that a franchisee has submitted fraudulent claims, then the franchisor 112 may only audit suspected fraudulent warranty, sales, or incentive claims and charge-back to 113 the franchisee fraudulent claims for a period of two years following payment, subject to all 114 provisions of this section. 115 (2) A franchisor shall not require documentation for warranty, sales, or incentive 116 claims more than twelve months after the claim was paid. 117 (3) Prior to requiring any charge-back, reimbursement, or credit against a future 118 transaction arising out of an audit, the franchisor shall submit written notice to the franchisee 119 along with a copy of its audit and the detailed reason for each intended charge-back, 120 reimbursement, or credit. 121 [12.] 13. A franchisee may file a complaint with the administrative hearing 122 commission pursuant to section 407.822 within sixty days after receipt of any written notice 123 by a franchisor of any adverse decision on any claim for reimbursement submitted pursuant to 124 this section, including, but not limited to, specific claims for reimbursement in individual 125 warranty repair transactions, and requests for an increase in labor or parts rate. If a complaint 126 is filed within the sixty days, then the denial or reduction of reimbursement, denial of a 127 request for an increase in labor or parts rate, charge-back, or other determination by a 128 franchisor which is adverse to a franchisee shall be stayed pending a hearing and HB 1914 5
129 determination of the matter under section 407.822. The franchisor shall file an answer to the 130 complaint within thirty days after service of the complaint. If, following a hearing which 131 shall be held within sixty days following service of the franchisor's answer, the administrative 132 hearing commission determines that a franchisor has violated any requirements of this 133 section, then the denial or reduction of reimbursement, denial of a request for an increase in 134 labor or parts rate, or charge-back shall be void and the franchisor shall, within fifteen days of 135 the commission's order, fairly compensate the franchisee as required by the provisions of this 136 section. Section 407.835 shall apply to proceedings pursuant to this section. ✔
Statutes affected: