Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 90 (2023GS)

Sponsor

Sen. Bramble, C.

Final action

Governor Signed 3/14/2023

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• requires an automobile franchisor to:
• provide a franchisee with certain written disclosures that may be provided to a potential buyer of the new motor vehicle; and
• provide reasonable compensation to a franchisee assisting a customer whose vehicle was subjected to an over the air or remote change, repair, or update;
• amends requirements for changes to a franchisee's retail labor rate and retail parts markup; and
• defines terms.

Every vote on this bill

Bill text

AUTOMOBILE FRANCHISE AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Curtis S. Bramble
House Sponsor: 
 Steve Eliason
LONG TITLE
General Description:
This bill makes changes to the New Automobile Franchise Act.
Highlighted Provisions:
This bill:
▸ requires an automobile franchisor to:
• provide a franchisee with certain written disclosures that may be provided to a
potential buyer of the new motor vehicle; and
• provide reasonable compensation to a franchisee assisting a customer whose
vehicle was subjected to an over the air or remote change, repair, or update;
▸ amends requirements for changes to a franchisee's retail labor rate and retail parts
markup; and
▸ defines terms.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
13-14-201
, as last amended by Laws of Utah 2018, Chapter 245
13-14-204
, as last amended by Laws of Utah 2022, Chapter 455
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
13-14-201
 is amended to read:
13-14-201.
Prohibited acts by franchisors -- Affiliates -- Disclosures.
(1) A franchisor may not in this state:
(a) except as provided in Subsection (3), require a franchisee to order or accept
delivery of any new motor vehicle, part, accessory, equipment, or other item not otherwise
required by law that is not voluntarily ordered by the franchisee;
(b) require a franchisee to:
(i) participate monetarily in any advertising campaign; or
(ii) contest, or purchase any promotional materials, display devices, or display
decorations or materials;
(c) require a franchisee to change the capital structure of the franchisee's dealership or
the means by or through which the franchisee finances the operation of the franchisee's
dealership, if the dealership at all times meets reasonable capital standards determined by and
applied in a nondiscriminatory manner by the franchisor;
(d) require a franchisee to refrain from participating in the management of, investment
in, or acquisition of any other line of new motor vehicles or related products, if the franchisee:
(i) maintains a reasonable line of credit for each make or line of vehicles; and
(ii) complies with reasonable capital and facilities requirements of the franchisor;
(e) require a franchisee to prospectively agree to a release, assignment, novation,
waiver, or estoppel that would:
(i) relieve a franchisor from any liability, including notice and hearing rights imposed
on the franchisor by this chapter; or
(ii) require any controversy between the franchisee and a franchisor to be referred to a
third party if the decision by the third party would be binding;
(f) require a franchisee to change the location of the principal place of business of the
franchisee's dealership or make any substantial alterations to the dealership premises, if the
change or alterations would be unreasonable or cause the franchisee to lose control of the
premises or impose any other unreasonable requirement related to the facilities or premises;
(g) coerce or attempt to coerce a franchisee to join, contribute to, or affiliate with an
advertising association;
(h) require, coerce, or attempt to coerce a franchisee to enter into an agreement with the
franchisor or do any other act that is unfair or prejudicial to the franchisee, by threatening to
cancel a franchise agreement or other contractual agreement or understanding existing between
the franchisor and franchisee;
(i) adopt, change, establish, enforce, modify, or implement a plan or system for the
allocation, scheduling, or delivery of new motor vehicles, parts, or accessories to the
franchisor's franchisees so that the plan or system is not fair, reasonable, and equitable,
including a plan or system that imposes a vehicle sales objective, goal, or quota on a
franchisee, or that evaluates a franchisee's sales effectiveness or overall sales performance,
without providing a reasonable opportunity for the franchisee to acquire the necessary vehicles
in a timely manner from the franchisor on commercially reasonable terms;
(j) increase the price of any new motor vehicle that the franchisee has ordered from the
franchisor and for which there exists at the time of the order a bona fide sale to a retail
purchaser if the order was made prior to the franchisee's receipt of an official written price
increase notification;
(k) fail to indemnify and hold harmless the franchisor's franchisee against any
judgment for damages or settlement approved in writing by the franchisor:
(i) including court costs and attorney fees arising out of actions, claims, or proceedings
including those based on:
(A) strict liability;
(B) negligence;
(C) misrepresentation;
(D) express or implied warranty;
(E) revocation as described in Section 
70A-2-608
; or
(F) rejection as described in Section 
70A-2-602
; and
(ii) to the extent the judgment or settlement relates to alleged defective or negligent
actions by the franchisor;
(l) threaten or coerce a franchisee to waive or forbear the franchisee's right to protest
the establishment or relocation of a same line-make franchisee in the relevant market area of
the affected franchisee;
(m) fail to ship monthly to a franchisee, if ordered by the franchisee, the number of
new motor vehicles of each make, series, and model needed by the franchisee to achieve a
percentage of total new vehicle sales of each make, series, and model equitably related to the
total new vehicle production or importation being achieved nationally at the time of the order
by each make, series, and model covered under the franchise agreement;
(n) require or otherwise coerce a franchisee to under-utilize the franchisee's existing
dealer facility or facilities, including by:
(i) requiring or otherwise coercing a franchisee to exclude or remove from the
franchisee's facility operations the selling or servicing of a line-make of vehicles for which the
franchisee has a franchise agreement to utilize the facilities; or
(ii) prohibiting the franchisee from locating, relocating, or occupying a franchise or
line-make in an existing facility owned or occupied by the franchisee that includes the selling
or servicing of another franchise or line-make at the facility provided that the franchisee gives
the franchisor written notice of the franchise co-location;
(o) fail to include in any franchise agreement or other agreement governing a
franchisee's ownership of a dealership or a franchisee's conduct of business under a franchise
the following language or language to the effect that: "If any provision in this agreement
contravenes the laws or regulations of any state or other jurisdiction where this agreement is to
be performed, or provided for by such laws or regulations, the provision is considered to be
modified to conform to such laws or regulations, and all other terms and provisions shall
remain in full force.";
(p) engage in the distribution, sale, offer for sale, or lease of a new motor vehicle to
purchasers who acquire the vehicle in this state except through a franchisee with whom the
franchisor has established a written franchise agreement, if the franchisor's trade name,
trademark, service mark, or related characteristic is an integral element in the distribution, sale,
offer for sale, or lease;
(q) engage in the distribution or sale of a recreational vehicle that is manufactured,
rented, sold, or offered for sale in this state without being constructed in accordance with the
standards set by the American National Standards Institute for recreational vehicles and
evidenced by a seal or plate attached to the vehicle;
(r) except as provided in Subsection (2), authorize or permit a person to perform
warranty service repairs on motor vehicles, except warranty service repairs:
(i) by a franchisee with whom the franchisor has entered into a franchise agreement for
the sale and service of the franchisor's motor vehicles; or
(ii) on owned motor vehicles by a person or government entity who has purchased new
motor vehicles pursuant to a franchisor's fleet discount program;
(s) fail to provide a franchisee with a written franchise agreement;
(t) (i) except as provided in Subsection (1)(t)(ii) and notwithstanding any other
provisions of this chapter:
(A) unreasonably fail or refuse to offer to its same line-make franchised dealers all
models manufactured for that line-make;
(B) unreasonably require a dealer to:
(I) pay any extra fee, remodel, renovate, recondition the dealer's existing facilities; or
(II) purchase unreasonable advertising displays or other materials as a prerequisite to
receiving a model or series of vehicles;
(ii) notwithstanding Subsection (1)(t)(i), a recreational vehicle franchisor may split a
line-make between motor home and travel trailer products;
(u) except as provided in Subsection (6), directly or indirectly:
(i) own an interest in a new motor vehicle dealer or dealership;
(ii) operate or control a new motor vehicle dealer or dealership;
(iii) act in the capacity of a new motor vehicle dealer, as defined in Section 
13-14-102
;
or
(iv) operate a motor vehicle service facility;
(v) fail to timely pay for all reimbursements to a franchisee for incentives and other
payments made by the franchisor;
(w) directly or indirectly influence or direct potential customers to franchisees in an
inequitable manner, including:
(i) charging a franchisee a fee for a referral regarding a potential sale or lease of any of
the franchisee's products or services in an amount exceeding the actual cost of the referral;
(ii) giving a customer referral to a franchisee on the condition that the franchisee agree
to sell the vehicle at a price fixed by the franchisor; or
(iii) advising a potential customer as to the amount that the potential customer should
pay for a particular product;
(x) fail to provide comparable delivery terms to each franchisee for a product of the
franchisor, including the time of delivery after the placement of an order by the franchisee;
(y) if a franchisor provides personnel training to the franchisor's franchisees,
unreasonably fail to make that training available to each franchisee on proportionally equal
terms;
(z) condition a franchisee's eligibility to participate in a sales incentive program on the
requirement that a franchisee use the financing services of the franchisor or a subsidiary or
affiliate of the franchisor for inventory financing;
(aa) make available for public disclosure, except with the franchisee's permission or
under subpoena or in any administrative or judicial proceeding in which the franchisee or the
franchisor is a party, any confidential financial information regarding a franchisee, including:
(i) monthly financial statements provided by the franchisee;
(ii) the profitability of a franchisee; or
(iii) the status of a franchisee's inventory of products;
(bb) use any performance standard, incentive program, or similar method to measure
the performance of franchisees unless the standard or program:
(i) is designed and administered in a fair, reasonable, and equitable manner;
(ii) if based upon a survey, utilizes an actuarially generally acceptable, valid sample;
and
(iii) is, upon request by a franchisee, disclosed and explained in writing to the
franchisee, including:
(A) how the standard or program is designed;
(B) how the standard or program will be administered; and
(C) the types of data that will be collected and used in the application of the standard or
program;
(cc) other than sales to the federal government, directly or indirectly, sell, lease, offer
to sell, or offer to lease, a new motor vehicle or any motor vehicle owned by the franchisor,
except through a franchised new motor vehicle dealer;
(dd) compel a franchisee, through a finance subsidiary, to agree to unreasonable
operating requirements, except that this Subsection (1)(dd) may not be construed to limit the
right of a financing subsidiary to engage in business practices in accordance with the usage of
trade in retail and wholesale motor vehicle financing;
(ee) condition the franchisor's participation in co-op advertising for a product category
on the franchisee's participation in any program related to another product category or on the
franchisee's achievement of any level of sales in a product category other than that which is the
subject of the co-op advertising;
(ff) except as provided in Subsections (7) through (9), discriminate against a franchisee
in the state in favor of another franchisee of the same line-make in the state:
(i) by selling or offering to sell a new motor vehicle to one franchisee at a higher actual
price, including the price for vehicle transportation, than the actual price at which the same
model similarly equipped is offered to or is made available by the franchisor to another
franchisee in the state during a similar time period;
(ii) except as provided in Subsection (8), by using a promotional program or device or
an incentive, payment, or other benefit, whether paid at the time of the sale of the new motor
vehicle to the franchisee or later, that results in the sale of or offer to sell a new motor vehicle
to one franchisee in the state at a higher price, including the price for vehicle transportation,
than the price at which the same model similarly equipped is offered or is made available by
the franchisor to another franchisee in the state during a similar time period;
(iii) except as provided in Subsection (9), by failing to provide or direct a lead in a fair,
equitable, and timely manner; or
(iv) if the franchisee complies with any reasonable requirement concerning the sale of
new motor vehicles, by using or considering the performance of any of its franchisees located
in this state relating to the sale of the franchisor's new motor vehicles in determining the:
(A) dealer's eligibility to purchase program, certified, or other used motor vehicles
from the franchisor;
(B) volume, type, or model of program, certified, or other used motor vehicles the
dealer is eligible to purchase from the franchisor;
(C) price of any program, certified, or other used motor vehicles that the dealer is
eligible to purchase from the franchisor; or
(D) availability or amount of any discount, credit, rebate, or sales incentive the dealer
is eligible to receive from the manufacturer for the purchase of any program, certified, or other
motor vehicle offered for sale by the franchisor;
(gg) (i) take control over funds owned or under the control of a franchisee based on the
findings of a warranty audit, sales incentive audit, or recall repair audit, unless the following
conditions are satisfied:
(A) the franchisor fully identifies in writing the basis for the franchisor's claim or
charge back arising from the audit, including notifying the franchisee that the franchisee has 20
days from the day on which the franchisee receives the franchisor's claim or charge back to
assert a protest in writing to the franchisor identifying the basis for the protest;
(B) the franchisee's protest shall inform the franchisor that the protest shall be
submitted to a mediator in the state who is identified by name and address in the franchisee's
notice to the franchisor;
(C) if mediation is requested under Subsection (1)(gg)(i)(B), mediation shall occur no
later than 30 days after the day on which the franchisor receives the franchisee's protest of a
claim or charge back;
(D) if mediation does not lead to a resolution of the protest, the protest shall be set for
binding arbitration in the same venue in which the mediation occurred;
(E) binding arbitration under Subsection (1)(gg)(i)(D) shall be conducted:
(I) by an arbitrator mutually agreed upon by the franchisor and the franchisee; and
(II) on a date mutually agreed upon by the franchisor and the franchisee, but shall be
held no later than 90 days after the franchisor's receipt of the franchisee's notice of protest;
(F) this Subsection (1)(gg)(i) applies exclusively to warranty audits, recall repair
audits, and sales incentive audits;
(G) Subsections (1)(gg)(i)(A) through (E) do not apply if the franchisor reasonably
believes that the amount of the claim or charge back is related to a fraudulent act by the
franchisee; and
(H) the costs of the mediator or arbitrator instituted under this Subsection (1)(gg) shall
be shared equally by the franchisor and the franchisee; or
(ii) require a franchisee to execute a written waiver of the requirements of Subsection
(1)(gg)(i);
(hh) coerce, or attempt to coerce a franchisee to purchase or sell an aftermarket product
manufactured by the franchisor, or obtained by the franchisor for resale from a third-party
supplier and the franchisor or its affiliate derives a financial benefit from the franchisee's sale
or purchase of the aftermarket product as a condition to obtaining preferential status from the
franchisor;
(ii) through an affiliate, take any action that would otherwise be prohibited under this
chapter;
(jj) impose any fee, surcharge, or other charge on a franchisee designed to recover the
cost of a warranty repair for which the franchisor pays the franchisee;
(kk) except as provided by the audit provisions of this chapter, take an action designed
to recover a cost related to a recall, including:
(i) imposing a fee, surcharge, or other charge on a franchisee;
(ii) reducing the compensation the franchisor owes to a franchisee;
(iii) removing the franchisee from an incentive program; or
(iv) reducing the amount the franchisor owes to a franchisee under an incentive
program;
(ll) directly or indirectly condition any of the following actions on the willingness of a
franchisee, prospective new franchisee, or owner of an interest in a dealership facility to enter
into a site-control agreement:
(i) the awarding of a franchise to a prospective new franchisee;
(ii) the addition of a line-make or franchise to an existing franchisee;
(iii) the renewal of an existing franchisee's franchise;
(iv) the approval of the relocation of an existing franchisee's dealership facility, unless
the franchisor pays, and the franchisee voluntarily accepts, additional specified cash
consideration to facilitate the relocation; or
(v) the approval of the sale or transfer of a franchise's ownership, unless the franchisor
pays, and the buyer voluntarily accepts, additional specified cash consideration to facilitate the
sale or transfer;
(mm) subject to Subsection (11), deny a franchisee the right to return any or all parts or
accessories that:
(i) were specified for and sold to the franchisee under an automated ordering system
required by the franchisor; and
(ii) (A) are in good, resalable condition; and
(B) (I) the franchisee received within the previous 12 months; or
(II) are listed in the current parts catalog;
(nn) subject to Subsection (12), obtain from a franchisee a waiver of a franchisee's
right, by threatening:
(i) to impose a detriment upon the franchisee's business; or
(ii) to withhold any entitlement, benefit, or service:
(A) to which the franchisee is entitled under a franchise agreement, contract, statute,
rule, regulation, or law; or
(B) that has been granted to more than one other franchisee of the franchisor in the
state;
(oo) coerce a franchisee to establish, or provide by agreement, program, or incentive
provision that a franchisee must establish, a price at which the franchisee is required to sell a
product or service that is:
(i) sold in connection with the franchisee's sale of a motor vehicle; and
(ii) (A) in the case of a product, not manufactured, provided, or distributed by the
franchisor or an affiliate; or
(B) in the case of a service, not provided by the franchisor or an affiliate;
(pp) except as necessary to comply with a health or safety law, or to comply with a
technology requirement compliance with which is necessary to sell or service a motor vehicle
that the franchisee is authorized or licensed by the franchisor to sell or service, coerce or
require a franchisee, through a penalty or other detriment to the franchisee's business, to:
(i) construct a new dealer facility or materially alter or remodel an existing dealer
facility before the date that is 10 years after the date the construction of the new dealer facility
at that location was completed, if the construction substantially complied with the franchisor's
brand image standards or plans that the franchisor provided or approved; or
(ii) materially alter or remodel an existing dealer facility before the date that is 10 years
after the date the previous alteration or remodeling at that location was completed, if the
previous alteration or remodeling substantially complied with the franchisor's brand image
standards or plans that the franchisor provided or approved; [
or
]
(qq) notwithstanding the terms of a franchise agreement providing otherwise and
subject to Subsection (14):
(i) coerce or require a franchisee, including by agreement, program, or incentive
provision, to purchase a good or service, relating to a facility construction, alteration, or
remodel, from a vendor that a franchisor or its affiliate selects, identifies, or designates, without
allowing the franchisee, after consultation with the franchisor, to obtain a like good or service
of substantially similar quality from a vendor that the franchisee chooses; or
(ii) coerce or require a franchisee, including by agreement, program, or incentive
provision, to lease a sign or other franchisor image element from the franchisor or an affiliate
without providing the franchisee the right to purchase a sign or other franchisor image element
of like kind and quality from a vendor that the franchisee chooses[
.
]
;
(rr) when providing a new motor vehicle to a franchisee for offer or sale to the public,
fail to provide to the franchisee a written disclosure that may be provided to a potential buyer
of the new motor vehicle of each accessory or function of the vehicle that may be initiated,
updated, changed, or maintained by the franchisor or affiliate through over the air or remote
means, and the charge to the customer at the time of sale for such initiation, update, change, or
maintenance; or
(ss) fail to provide reasonable compensation to a franchisee for assistance requested by
a customer whose vehicle was subjected to an over the air or remote change, repair, or update
to any part, system, accessory, or function by the franchisor or affiliate and performed at the
franchisee's dealership in order to satisfy the customer.
(2) Notwithstanding Subsection (1)(r), a franchisor may authorize or permit a person to
perform warranty service repairs on motor vehicles if the warranty services is for a franchisor
of recreational vehicles.
(3) Subsection (1)(a) does not prevent the franchisor from requiring that a franchisee
carry a reasonable inventory of:
(a) new motor vehicle models offered for sale by the franchisor; and
(b) parts to service the repair of the new motor vehicles.
(4) Subsection (1)(d) does not prevent a franchisor from requiring that a franchisee
maintain separate sales personnel or display space.
(5) Upon the written request of any franchisee, a franchisor shall disclose in writing to
the franchisee the basis on which new motor vehicles, parts, and accessories are allocated,
scheduled, and delivered among the franchisor's dealers of the same line-make.
(6) (a) A franchisor may engage in any of the activities listed in Subsection (1)(u), for a
period not to exceed 12 months if:
(i) (A) the person from whom the franchisor acquired the interest in or control of the
new motor vehicle dealership was a franchised new motor vehicle dealer; and
(B) the franchisor's interest in the new motor vehicle dealership is for sale at a
reasonable price and on reasonable terms and conditions; or
(ii) the franchisor is engaging in the activity listed in Subsection (1)(u) for the purpose
of broadening the diversity of its dealer body and facilitating the ownership of a new motor
vehicle dealership by a person who:
(A) is part of a group that has been historically underrepresented in the franchisor's
dealer body;
(B) would not otherwise be able to purchase a new motor vehicle dealership;
(C) has made a significant investment in the new motor vehicle dealership which is
subject to loss;
(D) has an ownership interest in the new motor vehicle dealership; and
(E) operates the new motor vehicle dealership under a plan to acquire full ownership of
the dealership within a reasonable period of time and under reasonable terms and conditions.
(b) After receipt of the advisory board's recommendation, the executive director may,
for good cause shown, extend the time limit set forth in Subsection (6)(a) for an additional
period not to exceed 12 months.
(c) A franchisor who was engaged in any of the activities listed in Subsection (1)(u) in
this state prior to May 1, 2000, may continue to engage in that activity, but may not expand that
activity to acquire an interest in any other new motor vehicle dealerships or motor vehicle
service facilities after May 1, 2000.
(d) Notwithstanding Subsection (1)(u), a franchisor may own, operate, or control a new
motor vehicle dealership trading in a line-make of motor vehicle if:
(i) as to that line-make of motor vehicle, there are no more than four franchised new
motor vehicle dealerships licensed and in operation within the state as of January 1, 2000;
(ii) the franchisor does not own directly or indirectly, more than a 45% interest in the
dealership;
(iii) at the time the franchisor first acquires ownership or assumes operation or control
of the dealership, the distance between the dealership thus owned, operated, or controlled and
the nearest unaffiliated new motor vehicle dealership trading in the same line-make is not less
than 150 miles;
(iv) all the franchisor's franchise agreements confer rights on the franchisee to develop
and operate as many dealership facilities as the franchisee and franchisor shall agree are
appropriate within a defined geographic territory or area; and
(v) as of January 1, 2000, no fewer than half of the franchisees of the line-make within
the state own and operate two or more dealership facilities in the geographic area covered by
the franchise agreement.
(7) Subsection (1)(ff) does not apply to recreational vehicles.
(8) Subsection (1)(ff)(ii) does not prohibit a promotional or incentive program that is
functionally available to all competing franchisees of the same line-make in the state on
substantially comparable terms.
(9) Subsection (1)(ff)(iii) may not be construed to:
(a) permit provision of or access to customer information that is otherwise protected
from disclosure by law or by contract between a franchisor and a franchisee; or
(b) require a franchisor to disregard the preference volunteered by a potential customer
in providing or directing a lead.
(10) Subsection (1)(ii) does not limit the right of an affiliate to engage in business
practices in accordance with the usage of trade in which the affiliate is engaged.
(11) (a) Subsection (1)(mm) does not apply to parts or accessories that the franchisee
ordered and purchased outside of an automated parts ordering system required by the
franchisor.
(b) In determining whether parts or accessories in a franchisee's inventory were
specified and sold under an automated ordering system required by the franchisor, the parts and
accessories in the franchisee's inventory are presumed to be the most recent parts and
accessories that the franchisor sold to the franchisee.
(12) (a) Subsection (1)(nn) does not apply to a good faith settlement of a dispute,
including a dispute relating to contract negotiations, in which the franchisee gives a waiver in
exchange for fair consideration in the form of a benefit conferred on the franchisee.
(b) Subsection (12)(a) may not be construed to defeat a franchisee's claim that a waiver
has been obtained in violation of Subsection (1)(nn).
(13) (a) As used in Subsection (1)(pp):
(i) "Materially alter":
(A) means to make a material architectural, structural, or aesthetic alteration; and
(B) does not include routine maintenance, such as interior painting, reasonably
necessary to keep a dealership facility in attractive condition.
(ii) "Penalty or other detriment" does not include a payment under an agreement,
incentive, or program that is offered to but declined or not accepted by a franchisee, even if a
similar payment is made to another franchisee in the state that chooses to participate in the
agreement, incentive, or program.
(b) Subsection (1)(pp) does not apply to:
(i) a program that provides a lump sum payment to assist a franchisee to make a facility
improvement or to pay for a sign or a franchisor image element, if the payment is not
dependent on the franchisee selling or purchasing a specific number of new vehicles;
(ii) a program that is in effect on May 8, 2012, with more than one franchisee in the
state or to a renewal or modification of the program;
(iii) a program that provides reimbursement to a franchisee on reasonable, written
terms for a substantial portion of the franchisee's cost of making a facility improvement or
installing signage or a franchisor image element; or
(iv) a written agreement between a franchisor and franchisee, in effect before May 8,
2012, under which a franchisee agrees to construct a new dealer facility.
(14) (a) Subsection (1)(qq)(i) does not apply to:
(i) signage purchased by a franchisee in which the franchisor has an intellectual
property right; or
(ii) a good used in a facility construction, alteration, or remodel that is:
(A) a moveable interior display that contains material subject to a franchisor's
intellectual property right; or
(B) specifically eligible for reimbursement of over one-half its cost pursuant to a
franchisor or distributor program or incentive granted to the franchisee on reasonable, written
terms.
(b) Subsection (1)(qq)(ii) may not be construed to allow a franchisee to:
(i) impair or eliminate a franchisor's intellectual property right; or
(ii) erect or maintain a sign that does not conform to the franchisor's reasonable
fabrication specifications and intellectual property usage guidelines.
(15) A franchisor may comply with Subsection (1)(rr) by notifying the franchisee that
the information in a written disclosure described in Subsection (1)(rr) is available on a website
or by other digital means.
Section 2. Section 
13-14-204
 is amended to read:
13-14-204.
Franchisor's obligations related to service -- Franchisor audits -- Time
limits.
(1) Each franchisor shall specify in writing to each of the franchisor's franchisees
licensed as a new motor vehicle dealer in this state:
(a) the franchisee's obligations for new motor vehicle preparation, delivery, [
and
]
warranty service
, and recalls
 on the franchisor's products;
(b) the schedule of compensation to be paid to the franchisee for parts, work, and
service; and
(c) the time allowance for the performance of work and service.
(2) (a) The schedule of compensation described in Subsection (1) shall include
reasonable compensation for diagnostic work, as well as repair service, parts, and labor.
(b) Time allowances described in Subsection (1) for the diagnosis and performance of
warranty work and service shall be reasonable and adequate for the work to be performed.
(3) (a) [
In the determination of what constitutes reasonable compensation under this
section, the principal factor to be considered is the prevailing wage rates being paid by
franchisees in the relevant market area in which the franchisee is doing business.
] 
As used in
this Subsection (3):
(i) "Qualified repair" means a repair to a motor vehicle that:
(A) would have come within the franchisor's new motor vehicle warranty but for such
motor vehicle having exceeded the time or mileage limits of such warranty; and
(B) does not otherwise constitute warranty work.
(ii) "Qualified repair" does not include:
(A) routine maintenance, including without limitation the replacement of fluids, filters,
non-electric vehicle batteries, bulbs, belts, brake pads, rotors, nuts, bolts, or fasteners;
(B) a replacement of or work on tires, wheels, or elements related to either, including
without limitation wheel alignments and tire or wheel rotations;
(C) a repair for a government agency, an insurer, or an extended warranty or service
contract provider;
(D) a repair that is the subject of a franchisor special event, promotion, or service
campaign, or otherwise is subject to a franchisor discount;
(E) a repair of a motor vehicle owned by the franchisee or an employee of the
franchisee;
(F) an installation of an accessory;
(G) a safety or vehicle emission inspection required by law;
(H) motor vehicle reconditioning;
(I) a part sold at wholesale;
(J) a repair or replacement with or to an aftermarket part;
(K) a franchisor-approved goodwill or policy repair or replacement; or
(L) a repair performed on a motor vehicle of a line-make other than that for which the
franchisee is franchised by the franchisor.
(b) (i) [
Compensation
] 
Reasonable compensation
 of the franchisee for 
parts and service
in
 warranty [
service
] or recall repair work may not be less than the [
amount
] 
rates
 charged by
the franchisee for like parts and service to retail [
or fleet customers, if the amounts are
reasonable
] 
customers
.
(ii) In the case of a recreational vehicle franchisee, reimbursement for parts used in the
performance of warranty repairs, including those parts separately warranted directly to the
consumer by a recreational vehicle parts supplier, may not be less than the franchisee's cost
plus 20%.
(iii) For purposes of Subsection (3)(b)(ii), the term "cost" shall be that same price paid
by a franchisee to a franchisor or supplier for the part when the part is purchased for a
nonwarranty repair.
(c) A franchisee seeking to establish or modify the franchisee's retail labor rate, retail
parts markup, or both, shall submit in writing or electronically to the franchisee's franchisor at
the location and materially in the format theretofore specified by the franchisor in writing to the
franchisee whichever of the following produces the fewer number of repair orders, all of which
must be for repairs made no more than 180 days before such submission:
(i) all consecutive repair orders that include 100 sequential repair orders reflecting
qualified repairs; or
(ii) all repair orders reflecting qualified repairs closed during any period of 90
consecutive days.
(d) A franchisee shall calculate the franchisee's:
(i) retail labor rate by determining the total charges for labor in the qualified repairs
submitted and dividing that amount by the total number of hours in the qualified repairs that
generated such charges; and
(ii) retail parts markup by determining the total charges for parts in the qualified repairs
submitted, dividing such amount by the franchisee's total cost of the purchase of such parts,
subtracting one, and multiplying by 100 to produce a percentage.
(e) (i) A retail labor rate or retail parts markup described in Subsection (3)(c) is
effective 30 days after the franchisee submits the notice described in Subsection (3)(c), unless,
within 30 days after receiving the franchisee's submission, the franchisor delivers to the
franchisee:
(A) a written objection to the material accuracy of the retail labor rate or retail parts
markup; or
(B) a written request for supplemental repair orders pursuant to Subsection (3)(e)(ii).
(ii) (A) If a franchisor determines from the franchisee's set of repair orders submitted
pursuant to Subsections (3)(c) and (d) that the franchisee's submission for a retail labor rate or
retail parts markup is substantially higher than the franchisee's current warranty rate, the
franchisor may request, in writing, within 30 days after the franchisor's receipt of the notice
described in Subsection (3)(c), all repair orders closed within the period of 30 days
immediately preceding, or 30 days immediately following, the set of repair orders submitted by
the franchisee.
(B) All time periods under this section shall be suspended until the franchisee submits
the supplemental repair orders described in Subsection (3)(e)(ii)(A).
(iii) If a franchisor requests supplemental repair orders described in Subsection
(3)(e)(ii), the franchisor may, within 30 days after receiving the supplemental repair orders,
calculate a proposed adjusted retail labor rate or retail parts markup, as applicable, based upon
any set of the qualified repair orders submitted by the franchisee, if the franchisor:
(A) uses the same requirements applicable to the franchisee's submission described in
Subsection (3)(c);
(B) uses the formula to calculate the retail labor rate or retail parts markup described in
Subsection (3)(d); and
(C) omits all charges in the repair orders described in Subsection (3)(a)(ii).
(f) A franchisee may not seek to establish or modify the franchisee's:
(i) retail labor rate more frequently than once in a 12-month period; and
(ii) retail parts markup more frequently than once in a 12-month period.
(g) An approved adjusted retail labor rate or retail parts markup shall be effective on
the later of 30 days after a franchisor receives:
(i) a submission described in Subsection (3)(c); or
(ii) supplemental repair orders described in Subsection (3)(e)(ii).
(h) A franchisor shall begin compensating the franchisee according to the effective
retail labor rate and retail parts markup rate no later than 15 days after the effective date of the
rate or rates.
(4) A franchisor may not fail to:
(a) perform any warranty obligation;
(b) include in written notices of franchisor's recalls to new motor vehicle owners and
franchisees the expected date by which necessary parts and equipment will be available to
franchisees for the correction of the defects; or
(c) in accordance with Subsections (2) and (3), compensate a franchisee for all
diagnostic work, labor, and parts the franchisor requires to perform a recall repair.
(5) If a franchisor disallows a franchisee's claim for a defective part, alleging that the
part is not defective, the franchisor at the franchisor's option shall:
(a) return the part to the franchisee at the franchisor's expense; or
(b) pay the franchisee the cost of the part.
(6) (a) A claim made by a franchisee pursuant to this section for diagnostic work, labor,
or parts shall be paid within 30 days after the claim's approval.
(b) The franchisor shall approve or disapprove a claim within 30 days after receipt of
the claim on a form generally used by the franchisor and containing the generally required
information. Any claim not specifically disapproved of in writing within 30 days after the
receipt of the form is considered to be approved and payment shall be made within 30 days.
(7) A franchisor may conduct warranty service audits and recall repair audits of the
franchisor's franchisee records on a reasonable basis.
(8) A franchisor may deny a franchisee's claim for warranty compensation or recall
repair compensation only if:
(a) the franchisee's claim is based on a nonwarranty repair or a nonrecall repair;
(b) the franchisee lacks material documentation for the claim;
(c) the franchisee fails to comply materially with specific substantive terms and
conditions of the franchisor's warranty compensation program or recall repair compensation
program; or
(d) the franchisor has a bona fide belief based on competent evidence that the
franchisee's claim is intentionally false, fraudulent, or misrepresented.
(9) (a) Any charge back for a warranty part or service compensation, recall repair
compensation, or service incentive is only enforceable for the six-month period immediately
following the day on which the franchisor makes the payment compensating the franchisee for
the warranty part or service, recall repair, or service incentive.
(b) Except as provided in Subsection (9)(e), all charge backs levied by a franchisor for
sales compensation or sales incentives arising out of the sale or lease of a motor vehicle sold or
leased by a franchisee shall be compensable only if written notice of the charge back is
received by the franchisee within six months immediately following the sooner of:
(i) the day on which the franchisee reports the sale to the franchisor; or
(ii) the day on which the franchisor makes the payment for the sales compensation or
sales incentive to the franchisee.
(c) (i) Upon an audit, the franchisor shall provide the franchisee automated or written
notice explaining the amount of and reason for a charge back.
(ii) A franchisee may respond in writing within 30 days after the notice under
Subsection (9)(c)(i) to:
(A) explain a deficiency; or
(B) provide materials or information to correct and cure compliance with a provision
that is a basis for a charge back.
(d) A charge back:
(i) may not be based on a nonmaterial error that is clerical in nature; and
(ii) (A) shall be based on one or more specific instances of material noncompliance
with the franchisor's warranty compensation program, sales incentive program, recall repair
program, or recall compensation program; and
(B) may not be extrapolated from a sampling of warranty claims, recall repair claims,
or sales incentive claims.
(e) The time limitations of this Subsection (9) do not preclude charge backs for any
fraudulent claim that was previously paid.
(10) (a) If within 30 days after the day on which a franchisor issues an initial notice of
recall a part or remedy is not reasonably available to perform the recall repair on a used motor
vehicle, each calendar month thereafter the franchisor shall pay the franchisee an amount equal
to at least 1.35% of the value of the used motor vehicle, if:
(i) the franchisee holding the used motor vehicle for sale is authorized to sell and
service a new vehicle of the same line-make;
(ii) after May 7, 2018, the franchisor issues a stop-sale or do-not-drive order on the
used motor vehicle; and
(iii) (A) the used motor vehicle is in the franchisee's inventory at the time the
franchisor issued the order described in Subsection (10)(a)(ii); or
(B) after the franchisor issues the order described in Subsection (10)(a)(ii), the
franchisee takes the used motor vehicle into the franchisee's inventory at the termination of the
consumer lease for the vehicle, as a consumer trade-in accompanying the purchase of a new
vehicle from the franchisee, or for any other reason in the ordinary course of business.
(b) A franchisor shall pay the compensation described in Subsection (10)(a):
(i) beginning:
(A) 30 days after the day on which the franchisee receives the stop-sale or do-not-drive
order; or
(B) if a franchisee obtains the used motor vehicle more than 30 days after the day on
which the franchisee receives the stop-sale or do-not-drive order, the day on which the
franchisee obtains the used motor vehicle; and
(ii) ending the earlier of the day on which:
(A) the franchisor makes the recall part or remedy available for order and prompt
shipment to the franchisee; or
(B) the franchisee sells, trades, or otherwise disposes of the used motor vehicle.
(c) A franchisor shall prorate the first and last payment for a used motor vehicle to a
franchisee under this Subsection (10).
(d) A franchisor may direct the manner in which a franchisee demonstrates the
inventory status of an affected used motor vehicle to determine eligibility under this Subsection
(10), if the manner is not unduly burdensome.
(11) (a) A franchisee that offsets recall repair compensation received from a franchisor
under this section against recall repair compensation the franchisee receives under a state or
federal recall repair compensation remedy may pursue any other available remedy against the
franchisor.
(b) As an alternative to providing recall repair compensation under this section, a
franchisor may compensate a franchisee for a recall repair:
(i) under a national recall repair compensation program, if the compensation is equal to
or greater than the compensation provided under this section; or
(ii) as the franchisor and franchisee otherwise agree, if the compensation is equal to or
greater than the compensation provided under this section.
(c) Nothing in this section requires a franchisor to provide compensation to a
franchisee that exceeds the value of the used motor vehicle affected by a recall.
(12) During an audit under this section, a franchisor may not request a document from
the franchisee that originated from the franchisor or a subsidiary of the franchisor, unless the
document required additional information from the customer.