GENERAL ASSEMBLY OF NORTH CAROLINA
1991 SESSION
CHAPTER 510
The General Assembly of North Carolina enacts:
Section 1. G.S. 20-301(e) reads as rewritten:
"(e) The Commissioner shall limit the time for discovery in any contested administrative hearing conducted pursuant to Article 12 to a time not to exceed 60 days. The Commissioner may extend the time for discovery beyond 60 days either upon the consent of all parties to the proceeding or upon application of one or more parties to the proceeding for good cause shown."
Sec. 2. G.S. 20-305(4) reads as rewritten:
"(4) Notwithstanding the
terms of any franchise agreement, to prevent or refuse to approve the sale or
transfer of the ownership of a dealership by the sale of the business, stock
transfer, or otherwise, or the transfer, sale or assignment of a dealer
franchise, or a change in the executive management or principal operator of the
dealership, or relocation of the dealership to another site within the
dealership's relevant market area, if the Commissioner has determined, if
requested in writing by the dealer within 30 days after receipt of an objection
to the proposed sale, transfer transfer, sale, assignment,
relocation, or change, and after a hearing on the matter, that the failure
to permit or honor such sale, the transfer, sale, assignment,
relocation, or change is unreasonable under the circumstances; circumstances.
provided, however, that no No franchise may be sold or
assigned or transferred transferred, sold, assigned, relocated, or the
executive management or principal operators changed, unless (i) the
franchisor has been given at least 30 days' prior written notice as to the
identity, financial ability ability, and qualifications of the
proposed transferee, and (ii) the sale or transfer of the franchise and
business will not involve, without the franchisor's consent, a relocation of
the the buisness; the identity and qualifications of the persons
proposed to be involved in executive management or as principal operators, and
the location and site plans of any proposed relocation. The franchisor
shall send the dealership notice of objection, by registered or certified mail,
return receipt requested, to the proposed transfer, sale, assignment,
relocation, or change within 30 days after receipt of notice from the dealer,
as provided in this section. Failure by the franchisor to send notice of
objection within 30 days shall constitute waiver by the franchisor of any right
to object to the proposed transfer, sale, assignment, relocation, or change.
The manufacturer or distributor has the burden of proving that the proposed
transfer, sale, assignment, relocation, or change is unreasonable under the
circumstances."
Sec. 3. G.S. 20-305(5) reads as rewritten:
"(5) To enter into a
franchise establishing an additional new motor vehicle dealer or relocating an
existing new motor vehicle dealer into a relevant market area where the same
line make is then represented without first notifying in writing the
Commissioner and each new motor vehicle dealer in such that line
make in the relevant market area of the intention to establish an additional
dealer or to relocate an existing dealer within or into that market area.
Within 30 days of receiving notice or within 30 days after the end of any
appeal procedure provided by the manufacturer, any such new motor
vehicle dealer may file with the Commissioner a protest to the establishing or
relocating of the new motor vehicle dealer. When such a protest is
filed, the Commissioner shall promptly inform the manufacturer that a timely
protest has been filed, and that the manufacturer shall not establish or
relocate the proposed new motor vehicle dealer until the Commissioner has held
a hearing, nor thereafter, if the Commissioner has determined that there is
good cause for not permitting the addition or relocation of such new motor
vehicle dealer.
a. This section does not apply:
1. To the relocation of an existing new motor vehicle dealer within that dealer's relevant market area, provided that the relocation not be at a site within 10 miles of a licensed new motor vehicle dealer for the same line make of motor vehicle; or
2. If the proposed additional new motor vehicle dealer is to be established at or within two miles of a location at which a former licensed new motor vehicle dealer for the same line make of new motor vehicle had ceased operating within the previous two years;
3. To the relocation of an existing new motor vehicle dealer within two miles of the existing site of the new motor vehicle dealership;
4. To the relocation of an existing new motor vehicle dealer if the proposed site of the relocated new motor vehicle dealership is further away from all other new motor vehicle dealers of the same line make in that relevant market area.
b. In determining whether good cause has been established for not entering into or relocating an additional new motor vehicle dealer for the same line make, the Commissioner shall take into consideration the existing circumstances, including, but not limited to:
1. The permanency of the investment of both the existing and proposed additional new motor vehicle dealers;
2. Growth or decline in population, density of population, and new car registrations in the relevant market area;
3. Effect on the consuming public in the relevant market area;
4. Whether it is injurious or beneficial to the public welfare for an additional new motor vehicle dealer to be established;
5. Whether the new motor vehicle dealers of the same line make in that relevant market area are providing adequate competition and convenient customer care for the motor vehicles of the same line make in the market area which shall include the adequacy of motor vehicle sales and service facilities, equipment, supply of motor vehicle parts, and qualified service personnel;
6. Whether the establishment of an additional new motor vehicle dealer or relocation of an existing new motor vehicle in the relevant market area would increase competition in a manner such as to be in the long-term public interest; and
7. The effect on the relocating dealer of a denial of its relocation into the relevant market area.
c. The Commissioner must conduct the hearing and render his final determination as expeditiously as possible, but in any event no later than 180 days after a protest is filed. Unless waived by the parties, failure to do so shall be deemed the equivalent of a determination that good cause does not exist for refusing to permit the proposed additional or relocated motor vehicle dealer, unless such delay is caused by acts of the manufacturer, or the relocating or additional dealer.
d. Any parties
to a hearing by the Commissioner concerning the establishment or relocating of
a new motor vehicle dealer shall have a right of review of the decision in a court
of competent jurisdiction pursuant to Chapter 150A 150B of the
General Statutes.
e. In a hearing involving a proposed additional dealership, the manufacturer or distributor has the burden of proof under this section. In a proceeding involving the relocation of an existing dealership, the dealer seeking to relocate has the burden of proof under this section.
f. If the Commissioner determines, following a hearing, that good cause does not exist for refusing to permit the proposed additional or relocated motor vehicle dealership, the dealer seeking the proposed additional or relocated motor vehicle dealership must, within two years, obtain a license from the Commissioner for the sale of vehicles at the relevant site, and actually commence operations at the site selling new motor vehicles of all line makes, as permitted by the Commissioner. Failure to obtain a permit and commence sales within two years shall constitute waiver by the dealer of the dealer's right to the additional or relocated dealership, requiring renotification, a new hearing, and a new determination as provided in this section."
Sec. 4. G.S. 20-305(6) reads as rewritten:
"(6) Notwithstanding the
terms, provisions or conditions of any franchise or notwithstanding the terms
or provisions of any waiver, to terminate, cancel or fail to renew any
franchise with a licensed new motor vehicle dealer unless the manufacturer has:
has satisfied the notice requirements of subparagraph c.; subparagraph
c. and the Commissioner has determined, if requested in writing by the
dealer within the time period specified in G.S. 20-305(6)c1II, III or IV, as
applicable, and after a hearing on the matter, that there is good cause for the
termination, cancellation, or nonrenewal of the franchise and that the
manufacturer has acted in good faith as defined in this act regarding the
termination, cancellation or nonrenewal. When such a petition is made to the
Commissioner by a dealer for determination as to the existence of good cause
and good faith for the termination, cancellation or nonrenewal of a franchise,
the Commissioner shall promptly inform the manufacturer that a timely petition
has been filed, and the franchise in question shall continue in effect pending
the Commissioner's decision. The Commissioner must conduct the hearing and
render his a final determination as expeditiously as possible,
but in any event no later than 180 days after a petition has been filed.
filed; provided, however, that the Commissioner may extend such period
of time upon application of a party and for good cause shown, or upon the
consent of all parties to the proceeding. If the termination,
cancellation or nonrenewal is pursuant to G.S. 20-305(6)c1III then the
Commissioner shall give the proceeding priority consideration and shall render
his final determination no later than 60 days after the petition has been
filed. Any parties to a hearing by the Commissioner under this section shall
have a right of review of the decision in a court of competent jurisdiction pursuant
to Chapter 150B of the General Statutes.
a. Notwithstanding the terms, provisions or conditions of any franchise or the terms or provisions of any waiver, good cause shall exist for the purposes of a termination, cancellation or nonrenewal when:
1. There is a failure by the new motor vehicle dealer to comply with a provision of the franchise which provision is both reasonable and of material significance to the franchise relationship provided that the dealer has been notified in writing of the failure within 180 days after the manufacturer first acquired knowledge of such failure;
2. If the
failure by the new motor vehicle dealer, defined in 1 above, dealer relates
to the performance of the new motor vehicle dealer in sales or service, then
good cause shall be defined as the failure of the new motor vehicle dealer to
comply with reasonable performance criteria established by the manufacturer if
the new motor vehicle dealer was apprised by the manufacturer in writing of such
the failure; and
I. Said
The notification stated that notice was provided of failure of
performance pursuant to this section;
II. The new
motor vehicle dealer was afforded a reasonable opportunity, for a period of not
less than 180 days, to comply with such the criteria; and
III. The new motor vehicle dealer failed to demonstrate substantial progress towards compliance with the manufacturer's performance criteria during such period and the new motor vehicle dealer's failure was not primarily due to economic or market factors within the dealer's relevant market area which were beyond the dealer's control.
b. The manufacturer shall have the burden of proof under this section.
c. Notification of Termination, Cancellation and Nonrenewal.
1.
Notwithstanding the terms, provisions or conditions of any franchise prior to
the termination, cancellation or nonrenewal of any franchise, the manufacturer
shall furnish notification of such termination, cancellation or
nonrenewal to the new motor vehicle dealer as follows:
I. In the manner described in G.S. 20-305(6)c2 below; and
II. Not less than 90 days prior to the effective date of such termination, cancellation or nonrenewal; or
III. Not less than 15 days prior to the effective date of such termination, cancellation or nonrenewal with respect to any of the following:
A. Insolvency of the new motor vehicle dealer, or filing of any petition by or against the new motor vehicle dealer under any bankruptcy or receivership law;
B. Failure of the new motor vehicle dealer to conduct its customary sales and service operations during its customary business hours for seven consecutive business days, except for acts of God or circumstances beyond the direct control of the new motor vehicle dealer;
C. Revocation of any license which the new motor vehicle dealer is required to have to operate a dealership;
D. Conviction of a felony involving moral turpitude, under the laws of this State or any other state, or territory, or the District of Columbia.
IV. Not less than 180 days prior to the effective date of such termination or cancellation where the manufacturer or distributor is discontinuing the sale of the product line.
2. Notification under this section shall be in writing; shall be by certified mail or personally delivered to the new motor vehicle dealer; and shall contain:
I. A statement of intention to terminate, cancel or not to renew the franchise;
II. A statement of the reasons for the termination, cancellation or nonrenewal; and
III. The date on which such
the termination, cancellation or nonrenewal takes effect.
3.
Notification provided in G.S. 20-305(6)c1II of 90 days prior to the effective
date of such termination, cancellation or renewal may run concurrent with the
180 days designated in G.S. 20-305(6)a2II provided such the notification
is clearly designated by a separate written document mailed by certified mail
or personally delivered to the new motor vehicle dealer.
d. Payments. -
1. Upon the termination, nonrenewal or cancellation of any franchise by the manufacturer or distributor, pursuant to this section, the new motor vehicle dealer shall be allowed fair and reasonable compensation by the manufacturer for the:
I. New
motor vehicle inventory which that has been acquired from the
manufacturer within 18 months, at a price not to exceed the original
manufacturer's price to the dealer, and which has not been altered or damaged,
and which has not been driven more than 200 miles, and for which no certificate
of title has been issued;
II. Unused, undamaged and unsold supplies and parts purchased from the manufacturer, at a price not to exceed the original manufacturer's price to the dealer, provided such supplies and parts are currently offered for sale by the manufacturer or distributor in its current parts catalogs and are in salable condition;
III. Equipment and
furnishings which that have not been altered or damaged and which
that have been required by the manufacturer or distributor to be
purchased by the new motor vehicle dealer from the manufacturer or distributor,
or their approved sources; and
IV. Special tools which
that have not been altered or damaged and which that have
been required by the manufacturer or distributor to be purchased by the new
motor vehicle dealer from the manufacturer or distributor, or their approved
sources within five years immediately preceding the termination, nonrenewal or
cancellation of the franchise.
2. Such
fair Fair and reasonable compensation for the above shall be paid by
the manufacturer within 90 days of the effective date of termination,
cancellation or nonrenewal, provided the new motor vehicle dealer has clear
title to the inventory and has conveyed title and possession to the
manufacturer.
e. Dealership Facilities Assistance upon Termination, Cancellation or Nonrenewal. -
In the event of the termination, cancellation or nonrenewal by the manufacturer or distributor under this section, except termination, cancellation or nonrenewal for insolvency, license revocation, conviction of a crime involving moral turpitude, or fraud by a dealer-owner:
1. Subject to paragraph 3, if the new motor vehicle dealer is leasing the dealership facilities from a lessor other than the manufacturer, the manufacturer shall pay the new motor vehicle dealer a sum equivalent to the rent for the unexpired term of the lease or one year's rent, whichever is less, or such longer term as is provided in the franchise agreement between the dealer and manufacturer; or
2. Subject to paragraph 3, if the new motor vehicle dealer owns the dealership facilities, the manufacturer shall pay the new motor vehicle dealer a sum equivalent to the reasonable rental value of the dealership facilities for one year.
3. Provided
nothing in this section e paragraph e. shall relieve a lessee or
owner, as the case may be, from the obligation to mitigate damages under the
lease, nor prevent a manufacturer from occupying and using the dealership
facilities while paying rent under subsections 1 and 2, nor prevent a
manufacturer from obligations by negotiating a lease termination, a sublease or
a new lease. Any amounts recovered by the lessee or owner resulting from
mitigation of damages shall be deducted from the amount due from the
manufacturer.
f. The provisions of paragraphs d. and e. above shall not be applicable when the termination, nonrenewal or cancellation of the franchise agreement is the result of the voluntary act of the dealer."
Sec. 5. G.S. 20-308.1(a) reads as rewritten:
"(a) Notwithstanding the
terms, provisions or conditions of any agreement or franchise or other terms or
provisions of any novation, waiver or other written instrument, any person who
is or may be injured by a violation of a provision of this Article, or any
party to a franchise who is so injured in his business or property by a
violation of a provision of this Article relating to that franchise, or any
person so injured because he refuses to accede to a proposal for or an
arrangement which, if consummated, would be in violation of this Article may,
notwithstanding the initiation or pendency of of, or failure to
initiate an administrative proceeding before the Commissioner concerning
the same parties or subject matter, bring an action for damages and equitable
relief, including injunctive relief, in any court of competent jurisdiction
with regard to any matter not within the jurisdiction of the Commissioner. Commissioner
or that seeks relief wholly outside the authority or jurisdiction of the
Commissioner to award."
Sec. 6. This act becomes effective October 1, 1991.
In the General Assembly read three times and ratified this the 2nd day of July, 1991.
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James C. Gardner
President of the Senate
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Daniel Blue, Jr.
Speaker of the House of Representatives