HB444 By Representative Williams (JD) RFD County and Municipal Government Rd 1 09-APR-15

SYNOPSIS: Existing law does not specifically prohibit manufacturers, distributors, and dealers of powersports vehicles from selling the vehicles without first entering into a manufacturer's and dealer's agreement.

This bill would prohibit manufacturers, distributors, and dealers of powersports vehicles from selling the vehicles without first entering into a manufacturer's and dealer's agreement.

This bill would provide the requirements for the agreement.

This bill would provide for the termination, cancellation, nonrenewal, or alteration of the agreement.

This bill would provide for the repurchase of the inventory.

This bill would provide for the transfer of the ownership interest in a dealership.

This bill would provide for the obligation of a warrantor.

A BILL TO BE ENTITLED AN ACT

Relating to manufacturers, distributors, and dealers of powersports vehicles; to prohibit manufacturers, distributors, and dealers from selling powersports vehicles without having first entered into a dealer agreement; to provide for termination, cancellation, nonrenewal, or alteration of the agreement; to provide for repurchase of inventory; to provide for the transfer of an ownership interest in a dealership; to provide for obligations of a warrantor; and to amend Section 8-20-2, Code of Alabama 1975, to provide that the Motor Vehicle Franchise Act will not apply to any dealer agreement between powersports vehicle manufacturers and dealers to the extent that such agreement relates to the sales of powersports vehicles.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. It is the intent of the Legislature to protect the public health, safety, and welfare of the residents of the state by regulating the relationship between powersports vehicle dealers, manufacturers, and distributors, by maintaining competition, and by providing consumer protection and fair trade.

Section 2. As used in this act, the following words shall have the following meanings:

(1) COERCE. The failure to act in good faith in performing or complying with any term or provision of the dealer agreement, except that recommendation, persuasion, urging, or argument shall not be deemed to constitute a lack of good faith.

(2) DEALER. Any person, firm, corporation, or business engaged regularly in the business of selling powersports vehicles to the general public and that maintains a permanent business establishment including a service and repair facility which offers mechanical services for the powersports vehicles it sells.

(3) DEALER AGREEMENT OR FRANCHISE. The written contract entered into between a manufacturer or a distributor and a dealer that fixes the rights and responsibilities of the parties and pursuant to which the dealer purchases and resells new powersports vehicles.

(4) DISTRIBUTOR. Any person, firm, corporation, or business entity, other than manufacturer, that purchases new powersports vehicles for resale to dealers.

(5) FAMILY MEMBER. A spouse or a child, grandchild, parent, sibling, niece, or nephew, or the spouse thereof.

(6) GOOD FAITH. Honesty in fact and the observation of reasonable commercial standards of fair dealing in the trade as is defined and interpreted in subdivision (1)(b) of Section 7-2-103, Code of Alabama 1975.

(7) LINE-MAKE. A specific series of powersports vehicle products that meets all of the following specifications:

a. Is identified by a common series trade name or trademark.

b. Is a product that the dealer agreement authorizes the dealer to sell.

(8) MANUFACTURER. Any person, firm, corporation, or business entity that engages in the manufacture of powersports vehicles.

(9) NEW POWERSPORTS VEHICLE. A powersports vehicle which has been sold to a new powersports dealer and which has not been used for other than demonstration purposes.

(10) POWERSPORTS VEHICLE. A self-propelled land vehicle, other than a motor vehicle intended for use and operation on the public highways or a recreational vehicle as defined by Section 8-21C-2(13), including vehicles designated as "all terrain vehicles," "UTVs," and motorcycles intended for use and operation other than on the public highways.

(11) RELEVANT MARKET AREA. The area within a radius of 20 miles around an existing dealer.

(12) WARRANTOR. Any person, firm, corporation, or business entity, including any manufacturer or distributor, that provides an express written warranty to the consumer in connection with a new powersports vehicle or parts, accessories, or components thereof. The term does not include service contracts, mechanical or other insurance, or extended warranties sold for separate consideration by a dealer or other person not controlled by a manufacturer or distributor.

Section 3. (a) After June 1, 2015, a manufacturer or distributor may not sell a powersports vehicle in this state to or through a dealer without having first entered into a dealer agreement with the dealer which has been signed by both parties.

(b) A dealer may not sell a new powersports vehicle in this state without having first entered into a dealer agreement with a manufacturer or distributor which has been signed by both parties.

Section 4. Notwithstanding the terms, provisions, or conditions of any dealer agreement prior to the termination, cancellation, or nonrenewal of any dealer agreement, the following acts or conduct shall constitute unfair and deceptive trade practices:

(1) For any manufacturer, manufacturer representative, distributor, or wholesaler or distributor representative to coerce or attempt to coerce any powersports dealer to do any of the following:

a. Accept, buy or order any powersports vehicle or vehicles, appliances, equipment, parts, or accessories therefor, or any other commodity or commodities or service or services which such powersports dealer has not voluntarily ordered or requested except items required by applicable local, state, or federal law; or to require a powersports dealer to accept, buy, order, or purchase such items in order, to obtain any powersports vehicle or any other commodity or commodities which have been ordered or requested by such powersports dealer.

b. Order or accept delivery of any powersports vehicle with special features, appliances, accessories, or equipment not included in the list price of the powersports vehicle as publicly advertised by the manufacturer thereof, except items required by applicable law.

c. Enter into any agreement with such manufacturer, manufacturer representative, distributor, or wholesaler, distributor branch or distributor representative, to do any other act prejudicial to the dealer, the effect of which is to reduce the powersports dealer's allocation of powersports vehicles or cancel or fail to renew any dealer agreement existing between the parties other than as hereinafter provided; provided, however, that this subsection is not intended to preclude the manufacturer or distributor from insisting on compliance with the reasonable terms or provisions of the franchise, and notice in good faith to any powersports vehicle dealer of the dealer's violation of any reasonable terms or provisions of such dealer agreement or of any law or regulation applicable to the conduct of a powersports vehicle dealer shall not constitute a violation of this act; provided further, that this subsection is not intended to preclude the dealer from entering any voluntary agreement with the manufacturer or distributor.

d. Participate monetarily in an advertising campaign or contest, or to purchase any promotional materials, training materials, showroom or other display decorations, or materials at the expense of the powersports vehicle dealer. This paragraph is not intended to modify any reasonable and uniformly applied provision of the franchise which requires the powersports vehicle dealer to advertise and promote the sale of vehicles and does not apply to campaigns, contests, advertising, and other promotional programs in which the powersports vehicle dealer voluntarily elects to participate.

e. Refrain from participation in the management of, investment in, or the acquisition of any other line of powersports vehicles or related products; provided that the powersports vehicle dealer maintains a reasonable line of credit, and that the powersports dealer remains in substantial compliance with the terms and conditions of the dealer agreement and with any reasonable facilities and capitalization requirements of the manufacturer.

f. Change the location of the powersports vehicle dealership or, during the course of the agreement, to make any substantial alterations to the dealership premises when to do so would be unreasonable.

g. Establish or maintain exclusive sales facilities, personnel, or sales display space for a powersports vehicle line-make unless such exclusive sales facilities or sales display space is reasonable and is otherwise justified by reasonable business considerations.

h. Adhere to performance standards that are not fair, reasonable, and equitable or that are not applied uniformly to other similarly situated dealers. A performance standard, sales objective, or program for measuring dealership performance that may have a material effect on a dealer, including the dealer's right to payment under any incentive or reimbursement program shall be fair, reasonable, equitable, and based on accurate information.

i. Engage in any acts which constitute fraud, deceit, or suppression under Sections 6-5-100 to 6-5-104, inclusive, Code of Alabama 1975.

j. Offer to sell or sell any extended service contract or extended maintenance plan offered, sold, backed by, or sponsored by the manufacturer or to sell, assign, or transfer any retail installment sales contract or lease obtained by the dealer in connection with the sale or lease of a new motor vehicle manufactured by the manufacturer to a specified finance company, class of finance companies, leasing company, or class of leasing companies, or to any other specified persons.

(2) For any manufacturer, manufacturer representative, distributor, or wholesaler, distributor branch or distributor representative to engage in any action with respect to a franchise which is arbitrary, in bad faith or unconscionable, unreasonable, or is not in good faith and which causes damage to any of the parties.

(3) For any manufacturer, manufacturer representative, distributor, or wholesaler, distributor branch or distributor representative to do any of the following:

a. Adopt, change, establish, or implement a plan or system for the allocation and distribution of powersports vehicles to powersports vehicle dealers which is arbitrary, capricious, or unreasonably discriminatory or to modify an existing plan so as to cause the same to be arbitrary, capricious, or unreasonably discriminatory.

b. Fail or refuse to advise or disclose to any powersports vehicle dealer having a dealer agreement, upon written request therefor, the basis upon which powersports vehicles of the same line-make are allocated or distributed to powersports dealers in the state and the basis upon which the current allocation or distribution is being made or will be made to such powersports dealer.

c. Refuse to deliver to a powersports dealer in reasonable quantities and within a reasonable time after receipt of the powersports dealer's order any such powersports vehicles as are covered by a dealer agreement and specifically publicly advertised in the state by such manufacturer, manufacturer representative, distributor, or wholesaler, distributor branch, or distributor representative to be available for immediate delivery; provided, however, that the failure to deliver any powersports vehicle shall not be considered a violation of this act if such failure is due to an act of God, a work stoppage or delay due to a strike or labor difficulty, a shortage of materials, lack of available manufacturing capacity, limited production or availability of the vehicle, a freight embargo or other cause over which the manufacturer, manufacturer representative, distributor, or wholesaler, distributor branch, or distributor representative shall have no control.

d. Cancel or terminate the franchise or dealer agreement of a powersports dealer other than as hereinafter provided.

e. Fail or refuse to extend the franchise or dealer agreement of a motor vehicle dealer upon its expiration other than as hereinafter provided.

f. Offer a renewal, replacement, or succeeding franchise or dealer agreement containing terms and provisions the effect of which is to substantially change or modify the sales and service obligations or capital requirements of the powersports vehicle dealer other than as hereinafter provided.

g. Offer to sell or lease, or to sell or lease, any new powersports vehicle to any powersports vehicle dealer at a lower actual price therefor than the actual price offered to any other powersports vehicle dealer in the state for the same model vehicle similarly equipped or to utilize any device including, but not limited to, sales promotion plans or programs which result in such lesser actual price and which are not offered to dealers of vehicles of the same line-make; provided, however, that the provisions of this paragraph shall not apply to sale to a powersports vehicle dealer for resale to any unit of the United States government, the state, or any of its political subdivisions; provided further, that nothing in this subsection shall prohibit any sales promotion plan or program that is functionally available to all new powersports vehicle dealers in the state on substantially comparable terms.

h. Offer to sell or lease, or to sell or lease, any new powersports vehicle to any person in the state, except a wholesaler's or distributor's or manufacturer's employees, at a lower actual price therefor than the actual price offered and charged to a powersports vehicle dealer for the same model vehicle similarly equipped or to utilize any device which results in such lesser actual price and which are not offered to dealers of vehicles of the same line-make; provided, however, that the provisions of this paragraph shall not apply to sales to a powersports vehicle dealer for resale to any unit of the United States government, the state, or any of its political subdivisions.

i. Prevent or attempt to prevent by contract or otherwise any powersports vehicle dealer from changing the executive management control of the powersports vehicle dealer unless such change of executive management control will result in executive management control by a person or persons who are not of good moral character or who do not meet the manufacturer's or wholesaler's or distributor's existing and reasonable capital standards and minimum business experience standards; provided, however, that where the manufacturer or wholesaler rejects a proposed change in executive management control, the manufacturer or wholesaler shall give written notice of his or her reasons to the powersports vehicle dealer within 60 days of notice to the manufacturer or wholesaler or distributor by the powersports vehicle dealer of the proposed change accompanied by information reflecting the identity, business experience and affiliations, and source of investment funds of the proposed new management.

j. Prevent or attempt to prevent by contract or otherwise any powersports vehicle dealer from establishing or changing the capital structure of his or her dealership or the means by or through which he or she finances the operation thereof, provided the dealer meets any reasonable capital standards of the manufacturer, distributor, or wholesaler, who may require that the sources, method, and manner by which the powersports vehicle dealer finances or intends to finance its operation, equipment, or facilities be fully disclosed.

k. Refuse to give effect to or prevent or attempt to prevent by contract or otherwise any powersports vehicle dealer or any officer, partner, or stockholder of any powersports vehicle dealer from selling or transferring any part of the interest of any of them to any other person unless such sale or transfer is to a transferee who would not otherwise qualify for a new powersports vehicle dealer's license issued by the State of Alabama or a political subdivision thereof or unless such sale or transfer is to a person who is not of good moral character or who does not meet the manufacturer's or wholesaler's or distributor's existing and reasonable capital standards and minimum business experience standards in the market area; provided, however, that where such a rejection of a transfer is made the manufacturer or distributor or wholesaler shall give written notice of his or her reasons to the powersports vehicle dealer within 60 days of notice to the manufacturer or wholesaler or distributor by the dealer of the proposed transfer accompanied by information reflecting the identity of the new owner or owners, their business experience and affiliations and the pro forma balance sheet and source of investment funds of the proposed new dealership. A manufacturer or distributor may exercise a contractual right of first refusal with respect to the sale or transfer of the interest of the dealer only if each of the following requirements are met:

1. The sale or transfer is not to a family member of an owner of the dealership, nor a managerial employee of the dealership owning 15 percent or more of the dealership, nor a corporation, partnership, or other legal entity owned by the existing owners of the dealership.

2. The manufacturer or distributor notifies the dealer in writing within 60 days after receipt of the completed application forms and related information generally used by a manufacturer or distributor to conduct its review and a copy of all agreements regarding the proposed transfer of its intent to exercise its right of first refusal or its rejection of the proposed transfer. If the manufacturer or distributor fails to notify the dealer of its exercise of the right of first refusal or its rejection of the proposed transferee within the 60-day period, the effect of such failure shall constitute approval of the proposed sale or transfer. If the manufacturer or distributor exercises a right of first refusal under this section, the transfer shall be deemed to be rejected.

3. The exercise of the right of first refusal provides to the dealer the same compensation as, or greater compensation than, the dealer had negotiated to receive from the proposed buyer or transferee.

4. The manufacturer or distributor agrees to pay the reasonable expenses, including reasonable attorneys' and accountants' fees that do not exceed the usual, customary, and reasonable fees charged for similar work done for other clients incurred by the proposed buyer or transferee before the manufacturer's or distributor's exercise of its right of first refusal in negotiating and implementing the contract for the sale or transfer. The proposed buyer or transferee shall provide to the manufacturer or distributor a written itemization of the expenses incurred within 30 days of the receipt by the proposed buyer or transferee of a written request from the manufacturer or distributor for an accounting of the expenses. The manufacturer or distributor shall make payment of these expenses within 30 days of exercising the right of first refusal.

l. Unreasonably and without notice to existing powersports vehicle dealers, as hereinafter provided, enter into a franchise with an additional powersports vehicle dealer who intends to conduct its dealership operations from a place of business situated within the relevant market area of an existing powersports vehicle dealer or powersports vehicle dealers representing the same line-make. The appointment of a successor powersports vehicle dealer at the same location as its predecessor or within a two-mile radius therefrom within two years from the date on which its predecessor ceased operations or was terminated, whichever occurred later, shall not be construed as the entering into of an additional franchise. Any manufacturer, distributor, or wholesaler, factory branch, factory representative, distributor branch, or distributor representative which intends to enter into an additional franchise shall, at least 60 days prior to granting such franchise, give written notice of its intention to do so to each powersports vehicle dealer of the same line-make within the relevant market area. Such notice shall state the date on or after which such proposed franchise shall be granted or entered into. Prior to the date set forth in the notice on or after which such franchise will be entered into, any such powersports vehicle dealer may petition a court of competent jurisdiction to determine whether such appointment or proposed appointment is unreasonable in which action the manufacturer, wholesaler, or distributor shall have the burden of proof that such action is not unreasonable. No bond shall be required as a precondition to entry of an injunction enjoining appointment of an additional franchise. Such petition shall be entitled to a speedy trial. In determining whether such proposed appointment is unreasonable, the court shall consider all pertinent circumstances. These may include but are not limited to:

1. Whether the establishment of such additional franchise is warranted by economic and marketing conditions including anticipated future changes;

2. The past, present, and anticipated retail sales and service business transacted by the objecting powersports vehicle dealer or dealers and other powersports vehicle dealers of the same line-make with a place of business in the relevant market area;

3. The investment made and obligations incurred by the objecting powersports vehicle dealer or dealers and other powersports vehicle dealers of the same line-make with a place of business in the relevant market area;

4. Whether it is beneficial or injurious to the public welfare for an additional franchise to be established.

m. Prevent or refuse to give effect to the succession to the ownership or management control of a dealership upon the death or incapacity of a powersports vehicle dealer to any legatee or devisee under the will of a dealer or to an heir under the laws of descent and distribution of this state unless the successor is a person who is not of good moral character or who does not meet the manufacturer's or distributor's or wholesaler's existing and reasonable capital standards and minimum business experience standards; provided, however, that where such a rejection of succession is made, the manufacturer or distributor or wholesaler shall give written notice of his or her reasons to the proposed successor within 60 days of notice to the manufacturer or wholesaler or distributor by the proposed successor of his or her intent to succeed to the ownership or management of the dealership accompanied by information reflecting the identity of the new owner or owners, their business experience and affiliation and the pro forma balance sheet and source of investment funds of the proposed new dealership. This section does not preclude the owner of a new powersports vehicle dealer from designating any person as his or her successor by written instrument filed with and approved by the manufacturer or distributor and, in the event there is a conflict between such written instrument and the provisions of this section, the written instrument shall govern.

n. Fail to indemnify and hold harmless its powersports vehicle dealers against any losses, including, but not limited to, court costs and reasonable attorneys' fees, or damages arising out of complaints, claims, or lawsuits, including, but not limited to, strict liability, negligence, misrepresentation, warranty (express or implied), or rescission of the sale where the complaint, claim, or lawsuit relates to 1. the manufacture, assembly, or design of new powersports vehicles, parts, or accessories; 2. a defect in any forms furnished to the dealer or in the written instructions for the completion of such forms by the manufacturer, an affiliate of the manufacturer, or person controlled by the manufacturer used in connection with the sale, lease, or financing of a vehicle and associated products, unless the dealer improperly completes the forms or makes misrepresentations contrary either to the terms of the forms or the written instructions for their completion; or 3. other functions by the manufacturer, beyond the control of the dealer, including, without limitation, the selection by the manufacturer of parts or components for the vehicle, or any damages to merchandise occurring in transit to the dealer where the carrier is designated by the manufacturer.

o. Increase prices of new powersports vehicles which the new powersports vehicle dealer had ordered for retail consumers prior to the dealer's receipt of the written official price increase notification. A sales contract signed by a retail consumer shall constitute evidence of each such order; provided that the vehicle is in fact delivered to that customer. In the event of manufacturer price reductions or cash rebates, the amount of any such reduction or rebate received by a dealer shall be passed on to the retail consumer by the dealer if the retail price was negotiated on the basis of the previous higher price to the dealer. Price differences applicable to new model or series powersports vehicles at the time of the introduction of new models or series shall not be considered a price increase or price decrease. Price changes caused by either: 1. the addition to a powersports vehicle of required or optional equipment pursuant to state or federal law; 2. revaluation of the United States dollar, in the case of foreign-made vehicles or components; or 3. an increase in transportation charges due to increased rates imposed by common or contract carriers, shall not be subject to the provisions of this paragraph.

p. Offer any refunds or other types of inducements to any person for the purchase of new powersports vehicles of a certain line-make to be sold to the state or any political subdivision thereof without making the same offer to all other new powersports vehicle dealers in the same line-make within the state.

q. Release to any outside party, except under subpoena, or as otherwise required by law or in an administrative, judicial, or arbitration proceeding, any business, financial, or personal information which may be from time to time provided by the dealer to the manufacturer, without the express written consent of the dealer.

r. Own an interest in a new powersports vehicle dealership, to operate or control a dealership, to make direct sales or leases of new powersports vehicles to the public in Alabama, or to own, operate, or control a facility for performance of powersports vehicle warranty or repair service work, except as follows:

1. The manufacturer or distributor is owning or operating a new powersports vehicle dealership or a warranty repair facility for a temporary period of not more than 24 months, as long as the new powersports vehicle dealership or warranty repair center is for sale at a reasonable price and on reasonable terms and conditions; or

2. The manufacturer's or distributor's participation is in a bona fide relationship with an independent person (i) who is required to make significant investment in the new powersports vehicle dealership or warranty repair center subject to loss, (ii) and operates the dealership or warranty repair center and may reasonably be expected to acquire full ownership of the dealership or warranty repair center within a reasonable time and under reasonable terms and conditions.

3. The manufacturer or distributor is selling or leasing new powersports vehicles in Alabama to its qualified vendors, not-for-profit organizations, fleets, or the federal, state, or local government if sold or leased and delivered through new powersports vehicle dealers in this state. The manufacturer or distributor is selling or leasing new powersports vehicles in Alabama to its employees and employees' families if delivered through new powersports vehicle dealers in this state. The manufacturer or distributor is implementing a program to sell or lease or offer to sell or lease new powersports vehicles through new powersports vehicle dealers in this state.

s. Make any material change in any franchise agreement without giving the dealer written notice by certified mail of such change at least 60 days prior to the effective date of such change.

t. Fail to pay or otherwise compensate its new powersports vehicle dealers for sales incentives, service incentives, rebates, or other forms of incentive compensation earned by the dealer as a consequence of incentive programs of the manufacturer. The manufacturer shall have the right to audit any such incentive payments made to the dealer and to charge back the dealer for any fraudulent claims for incentive payments made to the dealer for a period not to exceed 12 months from the date the claim was paid. A manufacturer shall not disapprove claims for which the dealer has received preauthorization from the manufacturer or its representative nor shall the manufacturer unreasonably disapprove a claim solely based on the dealer's incidental failure to comply with a specific claim processing requirement that results only in a clerical error or administrative error; rather a claim denial must be based upon a material defect and deviation from the reasonable written claim submission requirements of the manufacturer.

u. Fail or refuse to offer its same line-make franchised dealers all models of new powersports vehicles manufactured for that line-make and offered to any dealer in this state. No unreasonable additional requirements, over the requirements originally required to obtain a franchise from the manufacturer, may be required of existing franchised dealers to receive any model by that line-make. The provisions in this paragraph shall not apply to recreational vehicles and reasonable requirements of a manufacturer that its dealers obtain tools or diagnostic equipment to properly service its line-make of powersports vehicles. The failure to deliver any such new powersports vehicle shall not be considered a violation of this section if the failure is due to a lack of manufacturing capacity or to a strike or labor difficulty, a shortage of materials, limited production or availability of the vehicle, a freight embargo, or any other cause over which the manufacturer has no control.

Section 5. (a) Notwithstanding the terms, provisions, or conditions of any dealer agreement, no manufacturer or distributor shall cancel, terminate, modify, fail to renew, or refuse to continue any dealer agreement with a powersports vehicle dealer unless the manufacturer has:

(1) Satisfied the notice requirement of this section.

(2) Acted in good faith as defined in this act with respect to the cancellation, termination, modification, nonrenewal, or noncontinance.

(3) Has good cause for the cancellation, termination, modification, nonrenewal, or noncontinuance.

(b) Notwithstanding the terms, provisions, or conditions of any dealer agreement or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation, modification, nonrenewal, or noncontinuance when there is a failure by the powersports dealer to comply with a provision of the dealer agreement which provision is both reasonable and of material significance to the contractual relationship or material failure to meet the reasonable sales or service performance standards of the manufacturer or distributor

(c) The manufacturer or distributor shall have the burden of proof for showing that it has acted in good faith, that the notice requirements have been complied with, and that there was good cause for the dealer agreement termination, cancellation, modification, nonrenewal, or noncontinuance.

(d) Notwithstanding the terms, provisions, or conditions of any dealer agreement, prior to the termination, cancellation, modification, or nonrenewal of any dealer agreement, the manufacturer or distributor shall furnish notification of such termination, cancellation, modification, or nonrenewal to the powersports vehicle dealer as follows:

(1) In the manner described in subsection (e); and

(2) Not less than 90 days prior to the effective date of such termination, cancellation, modification, or nonrenewal or not less than 30 days prior to the effective date of such termination, cancellation, or nonrenewal with respect to any of the following:

a. Filing of any petition by or against the powersports vehicle dealer under any bankruptcy or receivership law.

b. Willful or intentional misrepresentation made by the powersports vehicle dealer with the express intent to defraud the manufacturer or distributor.

c. Failure of the powersports vehicle dealer to conduct its customary sales and service operations during its customary business hours for seven consecutive business days.

d. Final conviction, including appeal, of the new powersports vehicle dealer, principal owner, or principal executive manager of any felony.

(e) Notification under this section shall be in writing and shall contain the following:

(1) A statement of intention to terminate the franchise, cancel the franchise, modify the franchise, or not to renew the franchise.

(2) A statement of the reasons for the termination, cancellation, modification, or nonrenewal.

(3) The date on which such termination, cancellation, modification, or nonrenewal takes effect.

(f) Upon the termination, cancellation, or nonrenewal by the manufacturer or distributor of any franchise for good cause, the powersports dealer shall be paid fair and reasonable compensation by the manufacturer or distributor for the following:

(1) New powersports vehicle inventory of the current and previous model year which has been acquired from the manufacturer or distributor. Any new and unused powersports vehicle repurchased by the manufacturer or distributor shall be repurchased at the net cost to the dealer less the cost of transportation, handling, packing, and loading.

(2) New, unused, unopened, and undamaged supplies and parts, which were acquired by the powersports vehicle dealer from the manufacturer or distributor or its approved sources and which are listed in the manufacturer's or distributor's current parts catalogue at the time the termination, cancellation, or nonrenewal takes effect. Any parts repurchased by the manufacturer or distributor shall be repurchased at current catalogue price, less any restocking fees, which shall not exceed 15 percent of the current catalogue price, and less the cost of transportation, handling, packing, and loading.

(3) Special tools, which shall be repurchased by the manufacturer or distributor at the current fair market value at the time the termination, cancellation, or renewal takes effect, less the cost of transportation, handling, packing, and loading.

(g) Upon the termination, cancellation, or nonrenewal by the manufacturer or distributor of any franchise without good cause, the powersports vehicle dealer shall be paid fair and reasonable compensation by the manufacturer for the personal property described in subdivisions (f)(1) through (f)(3) and fair and reasonable compensation for the value of the dealership.

(h) A powersports vehicle dealer may terminate its dealer agreement with a manufacturer or distributor voluntarily by providing written notice at least 30 days prior to the effective date of termination. In the event a dealer terminates its dealer agreement with a manufacturer or distributor voluntarily, the manufacturer or distributor shall not be required to provide the fair and reasonable compensation described in this section.

(i) The fair and reasonable compensation to the dealer shall be paid by the manufacturer within 90 days after tender by the dealer of the items in subdivisions (f)(1) through (f)(3) at the dealership premises, provided the powersports vehicle dealer has clear title to the inventory and other items and is in a position to convey that title to the manufacturer.

Section 6. (a) Each warrantor shall do all of the following:

(1) Specify in writing each of its dealer obligations, if any, for preparation, delivery, and warranty service on its products.

(2) Compensate a dealer for preparation, delivery, and warranty service required of the dealer by the warrantor. Such compensation may be made through direct payment, allowance, or other reasonable process provided by the warrantor.

(3) Provide a dealer the schedule of compensation to be paid and the time allowances for the performance of any warranty work and service. The schedule of compensation shall include reasonable compensation for diagnostic work as well as warranty labor.

(b) Time allowances for the diagnosis and performance of warranty labor shall be reasonable for the work to be performed. In the determination of what constitutes reasonable compensation under this section, the principal factors to be given consideration shall be the actual wage rates being paid by the dealer and the actual retail labor rate being charged by the dealers in the community in which the dealer is doing business.

(c) The warrantor shall provide reasonable reimbursement to the dealer for warranty parts.

(d) Warranty audits of dealer records may be conducted by the warrantor on a reasonable basis, and dealer claims for warranty compensation may not be denied except for cause, such as performance of non-warranty repairs, material noncompliance with the warrantor's published policies and procedures, lack of material documentation, fraud, or misrepresentation

(e) The dealer shall submit warranty claims within the timeframe required by the warrantor for submission of such claims, so long as such timeframe is reasonable.

(f) The warrantor shall disapprove warranty claims in writing within 60 days after the date of submission by the dealer in the manner and form prescribed by the warrantor. Claims not specifically disapproved in writing within 30 days shall be construed to be approved.

(g) It is a violation of this act for any warrantor to do any of the following:

(1) Fail to perform any of its warranty obligations with respect to its warranted products.

(2) Fail to compensate any of its dealers for authorized repairs effected by the dealer of merchandise damaged in manufacture or transit to the dealer, if the carrier is designated by the warrantor, factory branch, distributor, or distributor branch.

(3) Fail to compensate any of its dealers in accordance with the schedule of compensation provided to the dealer pursuant to this section if performed in a timely and competent manner and such claims are submitted and documented consistent with any reasonable requirements of the warrantor.

(4) Intentionally misrepresent in any way to purchasers of powersports vehicles that warranties with respect to the manufacture, performance, or design of the vehicle are made by the dealer as warrantor or co-warrantor.

(5) Require the dealer to make warranties to customers in any manner related to the manufacture of the powersports vehicle.

Section 7. (a) A dealer, manufacturer, or distributor injured by another party's violation of this act may bring a civil action in circuit court to recover actual damages.

(b) Any civil action commenced under this act shall be brought within two years after the cause of action accrued.Section 8. Section 8-20-2 of the Code of Alabama 20 1975, is amended to read as follows:

§8-20-2.

"(a) The Legislature finds and declares that the distribution and sale of motor and powersports vehicles within this state vitally affect the general economy of the state and the public interest and the public welfare, and that in order to promote the public interest and the public welfare, and in the exercise of its police power, it is necessary to regulate motor and powersports vehicle manufacturers, distributors, dealers, and their representatives and to regulate the dealings between manufacturers and distributors or wholesalers and their dealers in order to prevent fraud and other abuses upon the citizens of this state and to protect and preserve the investments and properties of the citizens of this state.

"(b) This chapter shall not apply to any recreational vehicle manufacturer and dealer agreement or franchise to which Chapter 21A, Chapter 21B, or Chapter 21C of this title applies, nor to any dealer agreement between a powersports vehicle manufacturer or distributor and a powersports dealers to the extent that such agreement applies to the sale of powersports vehicles."

Section 9. This act applies to dealer agreements entered into on or after June 1, 2015.

Chapter 20 of Title 8, Code of Alabama 1975, shall not apply to any dealer agreement between a powersports vehicle manufacturer and dealer to the extent that such agreement applies to powersports vehicles. This act does not otherwise amend or affect Chapter 20 of Title 8.

Section 10. This act shall become effective on June 1, 2015.

Motor Vehicles

Dealers

Inventories

Warranties

Code Amended