HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/CS/HB 637 Motor Vehicle Dealers, Manufacturers, Importers, and Distributors
SPONSOR(S): Commerce Committee, Civil Justice Subcommittee, Shoaf
TIED BILLS: IDEN./SIM. BILLS: SB 712
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform & Economic Development 12 Y, 0 N Thompson Anstead
Subcommittee
2) Civil Justice Subcommittee 15 Y, 0 N, As CS Mawn Jones
3) Commerce Committee 16 Y, 1 N, As CS Thompson Hamon
SUMMARY ANALYSIS
The Division of Motor Vehicles (“Division”) within the Department of Highway Safety and Motor Vehicles
(“DHSMV”) is responsible for administering and enforcing the “Florida Automobile Dealers Act” (“Act”), which
regulates the contractual business relationship between franchised motor vehicle dealers (“dealers”) and
manufacturers, distributors, and importers operating in the state.
The bill, in part:
 Broadens the definitions of “common entity”; “unfair”; “independent person”; and “sell” and related
terms, and defines “motor vehicle dealer association.”
 Prohibits new franchise agreements with licensees that do not include all types of “line-make.”
 Expands the actions which a licensee is prohibited from taking to include:
o Reserving or incentivizing the sale or lease of a motor vehicle.
o Requiring or incentivizing dealers to sell or lease vehicles at a specified price or profit margin.
o Engaging in certain motor vehicle dealer activities.
o Refusing to provide a dealer with an “equitable supply” of new vehicles by model, mix, or color
as it offers or allocates to dealers.
o Using the number of motor vehicles pre-ordered or reserved by consumers when determining
allocations to dealers.
o Controlling by contract, agreement or otherwise a dealership for any “line-make” which is or has
been offered for sale in Florida by a franchise agreement with an “independent person.”
 Authorizes licensees to sell certain motor vehicle features or improvements through remote electronic
transmission, and requires the licensee to pay the dealer at least eight percent of the payment under
certain conditions.
 Prohibits distributors and affiliates from being licensed as a motor vehicle dealer or owning or operating
a dealership that sells or services motor vehicles of the line-make of motor vehicles distributed by the
distributor.
 Limits the administrative authority of the Department of Highway Safety and Motor Vehicles (DHSMV)
to provide certain exceptions to the restriction on dealer ownership by licensees that have established
dealers.
 Creates a timeline and process for DHSMV to conduct an inquiry of a manufacturer relating to a written
complaint alleging a violation of the Act, when such complaint is made by a franchised motor vehicle
dealer or a motor vehicle dealer association with at least one member with a current franchise
agreement issued by the manufacturer.
The bill does not appear to have a fiscal impact on state or local governments.
The bill provides an effective date of July 1, 2023.
This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives .
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DATE: 4/20/2023
 FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Background
Florida Automobile Dealership Act
General Motors established the first motor vehicle franchise in the United States in 1898. 1 Franchise
agreements 2 were initially voluntary and unregulated, but in 1970, the Florida Legislature adopted
comprehensive regulations, embodied as the Florida Motor Vehicle Dealership Act (“Act”) in Ch. 320,
F.S.,3 which chapter generally regulates motor vehicle manufacturer, 4 distributor,5 and importer6
licensing and the contractual relationship between such entities and franchised dealers, providing
substantial protections for franchised dealers.7
General Provisions
The Act, which charges the Division of Motor Vehicles (“Division”) within the Department of Highway
Safety and Motor Vehicles (“DHSMV”) with administering and enforcing the Act, generally specifies:
 That motor vehicle manufacturers, distributors, and importers (“licensees”) must be licensed
under the Act to engage in business in Florida and the conditions and situations under which the
DHSMV may deny, suspend, or revoke such licenses;
 The requirements for licensees wishing to discontinue, cancel, modify, or otherwise replace a
franchise agreement with a dealer, and the conditions under which the DHSMV may deny such
a request;
 The procedures licensees must follow to add a franchised dealership in an area already served
by a franchised dealer, the protest process, and the DHSMV’s role in such circumstances;
 The damages assessable against a licensee who violates the Act; and
 The DHSMV’s authority to adopt rules to implement these sections of law. 8
Further, the Act provides that all presently existing or future systems of motor vehicle distribution in
Florida and all franchise agreements that are renewed, amended, or entered into after October 1, 1988,
are governed by the Act and any amendments thereto, unless the amendment specifically provides
1
Francine Lafontaine and Fiona Scott M orton, State Franchise Laws, Dealer Terminations, and the Auto Crisis, 24 J. Econ. Persp. 233, 234 (2010),
https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.3.233 (last visited M arch 27, 2023).
2
“Franchise agreement” means a contract, franchise, new motor vehicle franchise, sales and service agreement, ore dealer agreement or any other
terminology used to describe the contractual relationship between a manufacturer, factory branch, distributor, or importer, and a motor vehicle dealer,
pursuant to which the motor vehicle dealer is authorized to transact business pertaining to motor vehicles of a particular line-make. “Line-make
vehicles”, in turn, means motor vehicles which are offered for sale, lease, or distribution under a common name, trademark, s ervice mark, or brand
name of the manufacturer of same (such as Ford, General M otors, or Honda). However, motor vehicles sold or leased under multiple brand names or
marks constitute a single line-make when they are included in a single franchise agreement, and every motor vehicle dealer in this state authorized to
sell or lease any such vehicles has been offered the right to sell or lease all of the multiple brand names or marks covered by the single franchise
agreement. S. 320.60(1) and (14), F.S.
3
Ch. 70-424, Laws of Fla.
4
“M otor vehicle manufacturer” means any person, whether a resident or non-resident of this state, who manufactures or assembles motor vehicles or
who manufactures or installs on previously assembled truck chassis special bodies or equipment which, when installed, form an integral part of the
motor vehicle and which constitute a major manufacturing alteration. This term includes a central or principal sales corporat ion or other entity
through which, by contractual agreement or otherwise, it distributes its products. S. 320.60(9), F.S.
5
“Distributor” means a person, resident or nonresident, who, in whole or in part, sells or distributes motor vehicles to motor vehicle dealers or who
maintains distributor representatives. S. 320.60(5), F.S.
6
“Importers” means a person who imports vehicles from a foreign country into the United States or into this state for the purpose of sale or lease. S.
320.60(7), F.S.
7
“M otor vehicle dealer” means any person, firm, company, corporation, or entity who holds a license under s. 32.27, F.S., as a “franchised motor
vehicle dealer” and, for commission, money, or other things of value, repairs or services motor vehicles pursuant to a franchise agreement; sells,
exchanges, buys, leases or rents, or offers, or attempts to negotiate a sale or exchange of any interest in, motor vehicles,; or is engaged wholly or in
party in the business of selling motor vehicles, whether or not such motor vehicles are owned by such person, firm, company, or corporation. Further,
any person who repairs or services three or more motor vehicles; buys, sells, or deals in three or more motor vehicles in any 12-month period; or
offers or displays for sale three or more motor vehicles is presumed to be a motor vehicle dealer, with exceptions. S. 32.60(11), F.S.
8
S. 320.011, F.S.; ss. 320.60-320.70, F.S.
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 otherwise and except to the extent that such application would impair valid contractual agreements in
violation of the State and Federal Constitutions.9
Manufacturer, Factory Branch, Distributor, and Importer Licenses
An application for a motor vehicle manufacturer, distributor, or importer license (“applicant”) may be
denied on various grounds as specified in the Act, and, for the same grounds, such a license, once
issued, may be revoked or suspended at any specific location or across the state. 10 Generally, such
grounds arise principally out of the applicant’s or licensee’s dealings with motor vehicle dealers with
whom the applicant or licensee has a franchise agreement, including that the applicant or licensee, or
in some cases a common entity11 thereof:
 Coerced or attempted to coerce any motor vehicle dealer to enter into any agreement;
 Threatened to discontinue, cancel, or not to renew a franchise agreement of a licensed motor
vehicle dealer, where the threatened discontinuation, cancellation, or nonrenewal, if
implemented, would violate the Act;
 Threatened to modify or replace, or has modified or replaced, a franchise agreement with a
succeeding franchise agreement which would adversely alter the rights or obligations of a motor
vehicle dealer under an existing franchise agreement or which substantially impairs the sales,
service obligations, or investment of the motor vehicle dealer;
 Without good cause shown, delayed, refused, or failed to provide a supply of motor vehicles by
series in reasonable quantities, including the models publicly advertised by the applicant or
licensee as being available, or has delayed, refused, or failed to deliver motor vehicle parts and
accessories within a reasonable time after receipt of an order by a franchised dealer; or
 Established a system of motor vehicle allocation or distribution or has implemented a system of
allocation or distribution of motor vehicles to one or more of its franchised motor vehicle dealers
which reduces or alters allocations or supplies of new motor vehicles to the dealer to achieve,
directly or indirectly, a purpose that is prohibited by the Act, or which otherwise is unfair, 12
inequitable, unreasonably discriminatory, or not supportable by reason and good cause after
considering the equities of the affected motor vehicles dealer or dealers.13
Further, licensees and applicants:
 Must maintain for three years records describing their methods or formula for vehicle allocation
and distribution, and of their actual allocation and distribution, to their franchised dealers; and
 Are prohibited from:
o Competing (with respect to any activity covered by the franchise agreement) with a
franchised dealer of the same line-make vehicles located in this state with whom the
licensees or applicants have entered into a franchise agreement. 14
o Selling a motor vehicle to any retail consumer in the state except through a dealer
holding a franchise agreement for the line-make vehicles that includes the motor vehicle
sold.15
Dealer Licenses in Areas Previously Served
Any manufacturer, distributor, or importer who proposes to establish a motor vehicle dealership, or
relocate an existing dealership, to a location within a community or territory where the same line-make
vehicle is presently represented by a franchised dealer must give written notice of its intention to the
DHSMV.16 An existing franchised dealer has standing to protest a proposed additional or relocated
9
See Article I, s. 10 of the Florida Constitution and Article 1, s. 10 of the United States Constitution. 320.701, F.S.S. 320.6992, F.S.
10
S. 320.64, F.S.
11
“Common entity” means a person who is either controlled or owned, beneficially or of record, by one or more persons who also control or own
more than 40 percent of the voting equity interests of a manufacturer; or who shares directors, officers, or partners with a manufacturer.
12
As used in this section, “unfair” includes, without limitation, the refusal or failure to offer to any dealer an equitable supply of new vehicles under
its franchise, by model, mix, or colors as the manufacturer offers or allocates to its other same line-make dealers in the state.
13
Id.
14
S. 320.64(23), F.S.
15
This does not apply to sales to current employees and to employees of companies affiliated by common ownership, charitable not-for-profit
organizations, and the federal government. S. 320.64(24), F.S.
16
S. 320.642(1), F.S.
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 motor vehicle dealership when the existing dealer has a franchise agreement for the same line-make
vehicle to be sold or serviced by the proposed dealership and certain physical location mileage
requirements are met.17 Specifically, in counties with a population of:
 Less than 300,000, an existing dealer of the same line-make vehicles has standing if the dealer:
o Has a franchise agreement designating the same area of responsibility in which the
proposed dealership is to be located;
o Has a licensed franchise location within a 20-mile radius of the proposed dealership’s
location; or
o Can establish that during any 12-month period of the 36-month period preceding the
filing of the application for the proposed dealership, the dealer or its predecessor made
25 percent of its retail sales of new motor vehicles to persons whose registered
household addresses were located within a 20-mile radius of the proposed dealership’s
location, so long as the existing dealer is located in the same county as or any county
contiguous to the county of the proposed dealership’s location. 18
 Over 300,000, an existing dealer of the same line-make vehicles has standing if the dealer:
o Has a licensed franchise location within a radius of 12.5 miles of the location of the
proposed dealership; or
o Can establish that during any 12-month period of the 36-month period preceding the
filing of the application for the proposed dealership, the dealer or its predecessor made
25 percent of its retail sales of new motor vehicles to persons whose registered
household addresses were located within a 12.5-mile radius of the proposed
dealership’s location, so long as the existing dealer is located in the same county as or
any county contiguous to the county of the proposed dealership’s location. 19
However, different procedures apply where the proposed dealership is a dealership which only services
vehicles and does not sell or lease new vehicles (“service-only dealership”). Specifically, an existing
dealer only has standing to protest such a proposed dealership when the dealer is within a 20-mile
radius in counties with a population less than 300,000 and a 12.5-mile radius in counties with a
population over 300,000.20 Further, a proposed service-only dealership is not subject to protest if:
 The applicant for the service-only dealership location is an existing motor vehicle dealer of the
same line-make as the proposed additional or relocated service-only dealership;
 There is no existing dealer of the same line-make closer than the applicant to the proposed
location of the additional or relocated service-only dealership; and
 The proposed location of the additional or relocated service-only dealership is at least seven
miles from all existing motor vehicle dealerships of the same line-make, other than motor
vehicle dealerships owned by the applicant.21
If a service-only dealership subsequently seeks to sell new motor vehicles at its location, however, all
notice and protest provisions apply.22
1