Bill Summary – FastDemocracy

Enrolled Copy                                                                     S.B. 128
            NON-VEHICLE FRANCHISE AGREEMENT AMENDMENTS
                                      2020 GENERAL SESSION
                                           STATE OF UTAH
                               Chief Sponsor: Curtis S. Bramble
                               House Sponsor: Francis D. Gibson
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 LONG TITLE
 General Description:
        This bill amends provisions of the New Automobile Franchise Act and the Motor
 Vehicle Business Regulation Act.
 Highlighted Provisions:
        This bill:
        < defines terms;
        < excludes certain trailers from the New Automobile Franchise Act;
        < amends provisions related to prohibitions and requirements of license holders; and
        < makes technical and conforming changes.
 Money Appropriated in this Bill:
        None
 Other Special Clauses:
        This bill provides a special effective date.
 Utah Code Sections Affected:
 AMENDS:
        13-14-102, as last amended by Laws of Utah 2018, Chapter 245
        41-3-102, as last amended by Laws of Utah 2019, Chapter 424
        41-3-210, as last amended by Laws of Utah 2018, Chapter 387
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 Be it enacted by the Legislature of the state of Utah:
        Section 1. Section 13-14-102 is amended to read:
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        13-14-102. Definitions.
        As used in this chapter:
        (1) "Advisory board" or "board" means the Utah Motor Vehicle Franchise Advisory
 Board created in Section 13-14-103.
        (2) "Affected municipality" means an incorporated city or town:
        (a) that is located in the notice area; and
        (b) (i) within which a franchisor is proposing a new or relocated dealership that is
 within the relevant market area of an existing dealership of the same line-make owned by
 another franchisee; or
        (ii) within which an existing dealership is located and a franchisor is proposing a new
 or relocated dealership within the relevant market area of that existing dealership of the same
 line-make.
        (3) "Affiliate" has the meaning set forth in Section 16-10a-102.
        (4) "Aftermarket product" means any product or service not included in the franchisor's
 suggested retail price of the new motor vehicle, as that price appears on the label required by
 15 U.S.C. Sec. 1232(f).
        (5) "Dealership" means a site or location in this state:
        (a) at which a franchisee conducts the business of a new motor vehicle dealer; and
        (b) that is identified as a new motor vehicle dealer's principal place of business for
 licensing purposes under Section 41-3-204.
        (6) "Department" means the Department of Commerce.
        (7) "Do-not-drive order" means an order issued by a franchisor that instructs an
 individual not to operate a motor vehicle of the franchisor's line-make due to a recall.
        (8) "Executive director" means the executive director of the Department of Commerce.
        (9) (a) "Franchise" or "franchise agreement" means a written agreement, or in the
 absence of a written agreement, then a course of dealing or a practice for a definite or indefinite
 period, in which:
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           (i) a person grants to another person a license to use a trade name, trademark, service
 mark, or related characteristic; and
           (ii) a community of interest exists in the marketing of new motor vehicles, new motor
 vehicle parts, and services related to the sale or lease of new motor vehicles at wholesale or
 retail.
           (b) "Franchise" or "franchise agreement" includes a sales and service agreement.
           (10) "Franchisee" means a person with whom a franchisor has agreed or permitted, in
 writing or in practice, to purchase, sell, or offer for sale new motor vehicles manufactured,
 produced, represented, or distributed by the franchisor.
           (11) "Franchisor" means a person who has, in writing or in practice, agreed with or
 permits a franchisee to purchase, sell, or offer for sale new motor vehicles manufactured,
 produced, assembled, represented, or distributed by the franchisor, and includes:
           (a) the manufacturer, producer, assembler, or distributor of the new motor vehicles;
           (b) an intermediate distributor; and
           (c) an agent, officer, or field or area representative of the franchisor.
           (12) "Lead" means the referral by a franchisor to a franchisee of a potential customer
 whose contact information was obtained from a franchisor's program, process, or system
 designed to generate referrals for the purchase or lease of a new motor vehicle, or for service
 work related to the franchisor's vehicles.
           (13) "Line-make" means:
           (a) for other than a recreational vehicle, the motor vehicles that are offered for sale,
 lease, or distribution under a common name, trademark, service mark, or brand name of the
 franchisor; or
           (b) for a recreational vehicle, a specific series of recreational vehicle product that:
           (i) is identified by a common series trade name or trademark;
           (ii) is targeted to a particular market segment, as determined by decor, features,
 equipment, size, weight, and price range;
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          (iii) has a length and floor plan that distinguish the recreational vehicle from other
 recreational vehicles with substantially the same decor, features, equipment, size, weight, and
 price;
          (iv) belongs to a single, distinct classification of recreational vehicle product type
 having a substantial degree of commonality in the construction of the chassis, frame, and body;
 and
          (v) a franchise agreement authorizes a dealer to sell.
          (14) "Mile" means 5,280 feet.
          (15) "Motor home" means a self-propelled vehicle, primarily designed as a temporary
 dwelling for travel, recreational, or vacation use.
          (16) (a) "Motor vehicle" means:
          (i) except as provided in Subsection (16)(b), a trailer;
          [(i)] (ii) a travel trailer;
          [(ii)] (iii) except as provided in Subsection (16)(b), a motor vehicle as defined in
 Section 41-3-102;
          [(iii)] (iv) a semitrailer as defined in Section 41-1a-102; and
          [(iv) a trailer as defined in Section 41-1a-102; and]
          (v) a recreational vehicle.
          (b) "Motor vehicle" does not include:
          (i) a motorcycle as defined in Section 41-1a-102;
          (ii) an off-highway vehicle as defined in Section 41-3-102; [and]
          (iii) a small trailer [as defined in Section 41-3-102.];
          (iv) a trailer that:
          (A) is not designed for human habitation; and
          (B) has a gross vehicle weight rating of less than 26,000 pounds;
          (v) a mobile home as defined in Section 41-1a-102;
          (vi) a trailer of 750 pounds or less unladen weight; and
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        Enrolled Copy                                                                               S.B. 128
         (vii) a farm tractor or other machine or tool used in the production, harvesting, or care
 of a farm product.
         (17) "New motor vehicle" means a motor vehicle that:
         (a) has never been titled or registered; and
         (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
 less than 7,500 miles.
         (18) "New motor vehicle dealer" is a person who is licensed under Subsection
 41-3-202(1)[(a)] to sell new motor vehicles.
         (19) "Notice" or "notify" includes both traditional written communications and all
 reliable forms of electronic communication unless expressly prohibited by statute or rule.
         (20) "Notice area" means the geographic area that is:
         (a) within a radius of at least six miles and no more than 10 miles from the site of an
 existing dealership; and
         (b) located within a county with a population of at least 225,000.
         (21) "Primary market area" means:
         (a) for an existing dealership, the geographic area established by the franchisor that the
 existing dealership is intended to serve; or
         (b) for a new or relocated dealership, the geographic area proposed by the franchisor
 that the new or relocated dealership is intended to serve.
         (22) "Recall" means a determination by a franchisor or the National Highway Traffic
 Safety Administration that a motor vehicle has a safety-related defect or fails to meet a federal
 safety or emissions standard.
         (23) "Recall repair" means any diagnostic work, labor, or part necessary to resolve an
 issue that is the basis of a recall.
         (24) (a) "Recreational vehicle" means a vehicular unit other than a mobile home,
 primarily designed as a temporary dwelling for travel, recreational, or vacation use, that is
 either self-propelled or pulled by another vehicle.
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         (b) "Recreational vehicle" includes:
         (i) a travel trailer;
         (ii) a camping trailer;
         (iii) a motor home;
         (iv) a fifth wheel trailer; and
         (v) a van.
         (25) (a) "Relevant market area," except with respect to recreational vehicles, means:
         (i) as applied to an existing dealership that is located in a county with a population of
 less than 225,000:
         (A) the county in which the existing dealership is located; and
         (B) the area within a 15-mile radius of the existing dealership; or
         (ii) as applied to an existing dealership that is located in a county with a population of
 225,000 or more, the area within a 10-mile radius of the existing dealership.
         (b) "Relevant market area," with respect to recreational vehicles, means:
         (i) the county in which the dealership is to be established or relocated; and
         (ii) the area within a 35-mile radius from the site of the existing dealership.
         (26) "Sale, transfer, or assignment" means any disposition of a franchise or an interest
 in a franchise, with or without consideration, including a bequest, inheritance, gift, exchange,
 lease, or license.
         (27) "Serve" or "served," unless expressly indicated otherwise by statute or rule,
 includes any reliable form of communication.
         (28) "Site-control agreement" means an agreement, however denominated and
 regardless of the agreement's form or of the parties to the agreement, that has the effect of:
         (a) controlling in any way the use and development of the premises upon which a
 franchisee's business operations are located;
         (b) requiring a franchisee to establish or maintain an exclusive dealership facility on
 the premises upon which the franchisee's business operations are located; or
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        Enrolled Copy                                                                              S.B. 128
        (c) restricting the ability of the franchisee or, if the franchisee leases the dealership
 premises, the franchisee's lessor to transfer, sell, lease, develop, redevelop, or change the use of
 some or all of the dealership premises, whether by sublease, lease, collateral pledge of lease,
 right of first refusal to purchase or lease, option to purchase or lease, or any similar
 arrangement.
        (29) "Small trailer" means the same as that term is defined in Section 41-3-102.
        [(29)] (30) "Stop-sale order" means an order issued by a franchisor that prohibits a
 franchisee from selling or leasing a certain used motor vehicle of the franchisor's line-make,
 which then or thereafter is in the franchisee's inventory, due to a recall.
        (31) "Trailer" means the same as that term is defined in Section 41-3-102.
        [(30)] (32) "Travel trailer," "camping trailer," or "fifth wheel trailer" means a portable
 vehicle without motive power, designed as a temporary dwelling for travel, recreational, or
 vacation use that does not require a special highway movement permit when drawn by a
 self-propelled motor vehicle.
        [(31)] (33) "Used motor vehicle" means a motor vehicle that:
        (a) has been titled and registered to a purchaser other than a franchisee; or
        (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
 7,500 or more miles.
        [(32)] (34) "Value of a used motor vehicle" means the average trade-in value for a used
 motor vehicle of the same year, make, and model as reported in a recognized, independent
 third-party used motor vehicle guide.
        [(33)] (35) "Written," "write," "in writing," or other variations of those terms shall
 include all reliable forms of electronic communication.
        Section 2. Section 41-3-102 is amended to read:
        41-3-102. Definitions.
        As used in this chapter:
        (1) "Administrator" means the motor vehicle enforcement administrator.
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        (2) "Agent" means a person other than a holder of any dealer's or salesperson's license
 issued under this chapter, who for salary, commission, or compensation of any kind, negotiates
 in any way for the sale, purchase, order, or exchange of three or more motor vehicles for any
 other person in any 12-month period.
        (3) "Auction" means a dealer engaged in the business of auctioning motor vehicles,
 either owned or consigned, to the general public.
        (4) "Authorized service center" means an entity that:
        (a) is in the business of repairing exclusively the motor vehicles of the same line-make
 as the motor vehicles a single direct-sale manufacturer manufactures;
        (b) the direct-sale manufacturer described in Subsection (4)(a) authorizes to complete
 warranty repair work for motor vehicles that the direct-sale manufacturer sells, displays for
 sale, or offers for sale or exchange; and
        (c) conducts business primarily from an enclosed commercial repair facility that is
 permanently located in the state.
        (5) "Board" means the advisory board created in Section 41-3-106.
        (6) "Body shop" means a person engaged in rebuilding, restoring, repairing, or painting
 the body of motor vehicles for compensation.
        (7) "Commission" means the State Tax Commission.
        (8) "Crusher" means a person who crushes or shreds motor vehicles subject to
 registration under Title 41, Chapter 1a, Motor Vehicle Act, to reduce the useable materials and
 metals to a more compact size for recycling.
        (9) (a) "Dealer" means a person:
        (i) whose business in whole or in part involves selling new, used, or new and used
 motor vehicles or off-highway vehicles; and
        (ii) who sells, displays for sale, or offers for sale or exchange three or more new or
 used motor vehicles or off-highway vehicles in any 12-month period.
        (b) "Dealer" includes a representative or consignee of any dealer.
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        Enrolled Copy                                                                             S.B. 128
        (10) "Direct-sale manufacturer" means a person:
        (a) that is both a manufacturer and a dealer;
        (b) that, in this state, sells, displays for sale, or offers for sale or exchange only new
 motor vehicles of the person's own line-make that are:
        (i) exclusively propelled through the use of electricity, a hydrogen fuel cell, or another
 non-fossil fuel source;
        (ii) (A) passenger vehicles with a gross vehicle weight rating of 14,000 pounds or less;
 or
        (B) trucks with a gross vehicle weight rating of 14,000 pounds or less; and
        (iii) manufactured by the person;
        (c) that is not a franchise holder;
        (d) that is domiciled in the United States; and
        (e) whose chief officers direct, control, and coordinate the person's activities as a
 direct-sale manufacturer from a physical location in the United States.
        (11) "Direct-sale manufacturer salesperson" means an individual who for a salary,
 commission, or compensation of any kind, is employed either directly, indirectly, regularly, or
 occasionally by a direct-sale manufacturer to sell, purchase, or exchange or to negotiate for the
 sale, purchase, or exchange of a motor vehicle manufactured by the direct-sale manufacturer
 who employs the individual.
        (12) (a) "Dismantler" means a person engaged in the business of dismantling motor
 vehicles subject to registration under Title 41, Chapter 1a, Motor Vehicle Act,